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UPDATE 1-Intuitive Surgical 3rd qtr profit jumps
* 133 da Vinci systems sold in quarterOct 18 (Reuters) - Intuitive Surgical Inc reported a higher-than-expected third-quarter profit on increased demand for its da Vinci surgical robots and a rise in procedures using the expensive systems.The company posted a net profit of $122 million, or $3.05 per share, compared with a profit of $87 million, or $2.14 per share, a year ago.Analysts on average had expected earnings of $2.76 per share, according to Thomson Reuters I/B/E/S.Revenue for the quarter jumped 30 percent to $447 million, easily surpassing Wall Street estimates of $418 million and the previous quarter’s sales of $426 in what has traditionally been a sluggish quarter.The third quarter tends to be weaker for Intuitive as many surgeons who operate the da Vinci systems take vacations during the summer months, lowering potential procedure volume.The company said procedure volume rose 30 percent from the year-ago quarter and that it sold 133 da Vinci systems in the period. -
A choice between risk and return?
By Dunny P. Moonesawmy. Head of Fund Research for Lipper in Western Europe/Middle East and Africa. The views expressed are his own. Hedge funds have delivered decent risk-return results over the past ten years. And as transparency and liquidity increased post-credit crisis, they have regained their appeal as providers of absolute return opportunities for investors. In addition, an increasing lack of market visibility globally has played to hedge funds’ supposed strengths, with total industry assets under management now exceeding the $2 trillion, according to Hedge Fund Research. There is a divide, however, with the industry split between single hedge funds — totaling more than 11,000 in the Lipper database — and some 867 funds of hedge funds (FoHFs). The general perception is that single-manager hedge funds are the more risky investment and to cushion that risk, some investors prefer to diversify their portfolio by investing in FoHFs instead. But is it worth it? An analysis of single hedge funds and FoHFs during the past ten years shows interesting results in terms of performance and risk. Indeed, whether on a cumulative basis over 3-, 5- or 10-years or accounting for calendar years in 2008, 2009 and 2010, single manager hedge funds performed significantly better on average than FoHFs. For details of performance, click on this link. Outperformance of single-manager hedge funds is clear during these periods but since the beginning of the year both single managers and multi-managers have performed poorly, in euro terms, with a little advantage for multi-manager funds. On a risk level, we have an opposite situation. Funds of hedge funds demonstrated better resistance to the downturn, with a maximum drawdown over 3 years of -19.42 percent against -24.55 percent for single hedge funds. If we take their volatility into account, we have similar results, with FoHFs showing smoother performance pattern over 3, 5 and 10 years. We have here the mirror image of the performance factor, with FoHFs demonstrating strong risk-management compared to single hedge funds. RETURNS COMPARISON These results show that FoFHs played their role in cushioning volatility and restricting the impact of the downturn but the diversification factor (through the investment in different underlying funds) had an important counterpart: it prevented funds from performing. Indeed, among the 46 Multi-strategy FoFHs with a 10-year track record, only two funds recorded a performance above 50 percent, with the best performer increasing by 86.16 percent over the period. Conversely 18 single-manager Multi-strategy funds out of 67 funds delivered a performance above 200 percent over the last 10 years. Clearly there is a big gap in performance between single-manager hedge funds and multi-manager hedge funds. Part of the gap can be explained by the double layer of fees charged by funds of funds to investors (charges from the underlying funds and from the FoHF manager). But the gap in performance can also be explained by another factor: too much focus on risk management leading to limited performance. This is particularly true when market is volatile and visibility is low, a market environment we have been experiencing these past few years. Multi-managers, in that case, tend to limit portfolio rotation, missing market rebound opportunities. There is also pressure on multi-managers to keep volatility in a defined range, making it difficult for an alternative fund to be managed properly. Talent and entrepreneurships are also important factors: while single-manager hedge funds are often the results of managers setting up their own business, it is less the case with multi-managers. Indeed, when a fund manager invests his own money in the fund (which is the case for entrepreneurial single-manager funds), we usually note better performance and the conventional wisdom is that such managers give more of themselves to make sure the business succeeds. Investors are thus in an uncomfortable position when deciding whether to invest in a single hedge fund or a FoHF: they have to choose between return and risk. It might be wiser, if time-consuming, to bring in single-manager hedge funds to a diversified portfolio to access return opportunities from their non-directional strategies and enhancing the diversification factor. Whether you have the confidence and skill to do that is another question; as is the case in any fund selection process, a strong due diligence process is fundamental before selecting a hedge fund. -
A choice between risk and return?
By Dunny P. Moonesawmy. Head of Fund Research for Lipper in Western Europe/Middle East and Africa. The views expressed are his own. Hedge funds have delivered decent risk-return results over the past ten years. And as transparency and liquidity increased post-credit crisis, they have regained their appeal as providers of absolute return opportunities for investors. In addition, an increasing lack of market visibility globally has played to hedge funds’ supposed strengths, with total industry assets under management now exceeding the $2 trillion, according to Hedge Fund Research. There is a divide, however, with the industry split between single hedge funds — totaling more than 11,000 in the Lipper database — and some 867 funds of hedge funds (FoHFs). The general perception is that single-manager hedge funds are the more risky investment and to cushion that risk, some investors prefer to diversify their portfolio by investing in FoHFs instead. But is it worth it? An analysis of single hedge funds and FoHFs during the past ten years shows interesting results in terms of performance and risk. Indeed, whether on a cumulative basis over 3-, 5- or 10-years or accounting for calendar years in 2008, 2009 and 2010, single manager hedge funds performed significantly better on average than FoHFs. For details of performance, click on this link. Outperformance of single-manager hedge funds is clear during these periods but since the beginning of the year both single managers and multi-managers have performed poorly, in euro terms, with a little advantage for multi-manager funds. On a risk level, we have an opposite situation. Funds of hedge funds demonstrated better resistance to the downturn, with a maximum drawdown over 3 years of -19.42 percent against -24.55 percent for single hedge funds. If we take their volatility into account, we have similar results, with FoHFs showing smoother performance pattern over 3, 5 and 10 years. We have here the mirror image of the performance factor, with FoHFs demonstrating strong risk-management compared to single hedge funds. RETURNS COMPARISON These results show that FoFHs played their role in cushioning volatility and restricting the impact of the downturn but the diversification factor (through the investment in different underlying funds) had an important counterpart: it prevented funds from performing. Indeed, among the 46 Multi-strategy FoFHs with a 10-year track record, only two funds recorded a performance above 50 percent, with the best performer increasing by 86.16 percent over the period. Conversely 18 single-manager Multi-strategy funds out of 67 funds delivered a performance above 200 percent over the last 10 years. Clearly there is a big gap in performance between single-manager hedge funds and multi-manager hedge funds. Part of the gap can be explained by the double layer of fees charged by funds of funds to investors (charges from the underlying funds and from the FoHF manager). But the gap in performance can also be explained by another factor: too much focus on risk management leading to limited performance. This is particularly true when market is volatile and visibility is low, a market environment we have been experiencing these past few years. Multi-managers, in that case, tend to limit portfolio rotation, missing market rebound opportunities. There is also pressure on multi-managers to keep volatility in a defined range, making it difficult for an alternative fund to be managed properly. Talent and entrepreneurships are also important factors: while single-manager hedge funds are often the results of managers setting up their own business, it is less the case with multi-managers. Indeed, when a fund manager invests his own money in the fund (which is the case for entrepreneurial single-manager funds), we usually note better performance and the conventional wisdom is that such managers give more of themselves to make sure the business succeeds. Investors are thus in an uncomfortable position when deciding whether to invest in a single hedge fund or a FoHF: they have to choose between return and risk. It might be wiser, if time-consuming, to bring in single-manager hedge funds to a diversified portfolio to access return opportunities from their non-directional strategies and enhancing the diversification factor. Whether you have the confidence and skill to do that is another question; as is the case in any fund selection process, a strong due diligence process is fundamental before selecting a hedge fund. -
Toymaker to pay $1.1 mln over recalled toy dart gun
The commission has provisionally accepted the settlement with the Plainfield, New Jersey, company, the CPSC said in a statement.”In agreeing to the settlement, Henry Gordy denies CPSC staff allegations as to the existence of a defect or that it knowingly violated the law,” the statement said.CPSC staff alleged that Henry Gordy knew around May 2006 that its Auto Fire Target Set was defective because the soft plastic toy dart could pose a choking hazard. However, the company failed to report the defect, the agency said.CPSC staff also said that Henry Gordy “made a material misrepresentation” during agency’s investigation in 2009 by not reporting all the information the company had.The CPSC and Family Dollar Stores announced the recall of about 1.8 million of the sets in May 2010 because Henry Gordy refused to conduct the recall, the CPSC statement said.”By that time, there were three deaths associated with the target set,” the agency said. -
UPDATE 2-Google beats Q3 profit, revenue estimates
* Shares up roughly 6 percent after hours (Adds analyst comment, earnings details, byline)By Alexei OreskovicSAN FRANCISCO, Oct 13 (Reuters) - Google Inc’s third-quarter results trounced Wall Street expectations as good cost controls helped boost the Internet search leader’s profit by about 26 percent.Shares of Google were up roughly 6 percent at $592.43 in after-hours trading on Thursday.Google said its net income in the three months ended September 30 grew to $2.73 billion from $2.17 billion in the year-ago period.Excluding certain items, Google said it earned $9.72 per share in the third quarter. Analysts polled by Thomson Reuters I/B/E/S were expecting adjusted EPS of $8.74.”A lot of people were expecting spending to be out of control, but they had good control,” said Herman Leung, an analyst with Susquehanna Financial Group.Google, which faces increasing competition from social networking giant Facebook, said on Thursday that it had signed up more than 40 million users for its recently launched Google+ social network.Google said its third-quarter net revenue, which excludes fees that Google shares with partner websites, increased 37 percent year-on-year to $7.51 billion. Analysts were looking for $7.22 billion in net revenue. -
US Congress panels fail to craft deficit-cut ideas
By Richard CowanWASHINGTON, Oct 13 (Reuters) - A special committee of U.S. Congress, struggling to find bipartisan consensus on ways to cut the federal budget, is not getting much help from colleagues who have been asked for their ideas to shrink deficits.The regular committees of Congress have until Friday to submit recommendations to the “super committee” that is in charge of identifying at least $1.2 trillion in savings over a decade through spending cuts and/or revenue increases.But Republicans and Democrats on most of the congressional committees have failed to come together on budget cuts, leaving the super committee with a laundry list of partisan suggestions.”There was one meeting of all the House Ways and Means Democrats and Republicans, but nothing has emanated from that,” Representative Sandy Levin, the committee’s senior Democrat, told Reuters.The Ways and Means Committee has oversight of tax and healthcare policy — two of the biggest issues in super committee deficit-reduction negotiations. The panel’s Republican chairman, Dave Camp, is a super committee member.There is also no agreement between the political parties for another big area of potential savings — defense spending.The dearth of bipartisan deficit-reduction ideas from congressional committees underscores the reason the super committee was created in the first place last August: Lawmakers cannot agree on how to fix Washington’s annual budget deficits that have hovered around $1.5 trillion.One of the few bipartisan submissions to the panel came from the Senate Environment and Public Works Committee. But there is a hitch: The five-paragraph letter by Democratic Chairwoman Barbara Boxer and James Inhofe, the senior Republican, contained not one penny of deficit-reduction ideas.Instead they urged the super committee not to cut highway and infrastructure programs. “Congress must, at a minimum, maintain current transportation funding levels,” they wrote.POTENTIAL TARGETU.S. farm programs are a potential target, with President Barack Obama proposing $33 billion in cuts over a decade.The Senate Agriculture Committee was trying to find bipartisan agreement on $20 billion to $33 billion in savings, mostly by paring or eliminating some crop subsidies, according to Republican Senator Charles Grassley.A much larger potential pool of savings is in the defense sector, where annual budgets have skyrocketed over the past decade with the wars in Iraq and Afghanistan, and have exceeded $700 billion.If a majority of the super committee fails to reach a deal by Nov. 23, automatic spending cuts would be set in motion beginning in 2013, with half of those aimed at defense.The lead Democrat on the House Armed Services Committee, Representative Adam Smith, urged the super committee to “avoid cuts to the national defense” beyond what is already in place. Instead, he proposed “significant revenue increases” — an idea most Republicans in Congress reject.Likewise, Democrats on the House Energy and Commerce Committee said the “majority” of savings in the super committee “should be composed of revenues to balance the spending cuts already enacted.”They called for spending $16 billion in programs under their jurisdiction in the near term to help stimulate the economy. But these Democrats also called for some healthcare savings, mostly administrative changes, not benefit cuts.Asked whether congressional committees were making a challenging deficit-reduction task any easier, Senator Jon Kyl, a Republican super committee member, said, “I think it’s mixed. With some, it may not be all that helpful. With others it could well be.”
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