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“It&#39s a funny old world,” mused the chairman of Betelgeuse Investment Funds as he gazed across the storm-tossed waters of the Thames from his mahogany-panelled office. No one could say that the year 2000 was without significance. It was, after all, the first year of the new millennium.

There was a distinct whiff of curate&#39s egg about it, though. On the plus side was the fact that most of their retail funds had retained their S&P Fund Research rating and had not lost their quartile rankings in the performance tables. Not that performance was going to count for much in the future. Which was probably just as well, given that few funds had actually made money during the year – 2000 had been tough.

Yet sales had held up remarkably well. True, the launch of that technology fund back in February had been a masterpiece in timing. It may not be taking much in the way of new money but the redemptions were surprisingly few. Not so for European products, though, after the star fund managers had left to form their own investment boutique. New Alternative Fund Strategies. NAFS. Just about sums it up.

Turning from the window, the chairman directed his gaze at the research department beavering away outside the glass wall of his office. The new chief executive had looked a little askance at the prospect of having an executive suite adjacent to the analysts&#39 offices but the chairman had been insistent. His roots were in research. Admittedly, calling the engineering sector as the big recovery play in the early 1980s and then rubbishing the Jaguar share offer (they multiplied many times over before the Ford takeover) had not exactly been career-crowning moves. But their influence in his progress in this industry had been mightily beneficial.

When his then boss suggested that remaining in investment analysis would not be the best use of his talents, he knew at once where to head. Given that this chief investment officer was as thick as two short planks, there was only one choice – management. And what a call that proved to be. He still considered his career peak to be the day he walked into the offices of the firm he had once worked for, having acquired them, and sacked his old boss. Oh, the sweetness.

And if there was one thing he was really good at, it was acquisition strategy. That was the name of the game. Acquisitions and process. Get those two right and you could rule the industry. This was a business that was presently merger mad. Prices have been driven up as a consequence but he was lucky. He was early into this game. If anyone came for his company, though, they would have to pay the premium price that a successful business like his now demanded. Thank heavens he was not a small shareholder.

The process side had been rather more difficult, although as he looked at the banks of computer screens he realised they had made considerable progress. They could chop a company&#39s balance sheet into pieces and redistribute it in any way you wanted. EBITDA, EVA – you name it. You could screen portfolios these days in ways which would have made the buccaneering fund managers of yesteryear blanch. Indeed, the chairman wondered whether he really needed fund managers now. Well, someone to address IFAs at roadshows was useful but the thought of virtual investment managers promoting funds through computer-generated images was mightily appealing. They didn&#39t take days off for Christ mas shopping or get invited to long and boozy lunches.

A flick of a switch closed the blinds and shut off the beavering analysts from his view. The chairman slumped into his chair. All in all, 2000 had been good for him and his company, but not so kind to investors. What would 2001 have in store? He only hoped it wasn&#39t a reverse of this year.

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