Sunday, February 26, 2012

AIJ - I [Strangely] Never Knew Ye

When Bernie Came Out of The Closet, I was not the least bit surprised he was doing something illegal. But as I stated in what was the most cross-posted and commented account I've ever related through this blog, I was NOT expecting a full-frontal Ponzi. Cheating? Yes. Stealing from other market participants? Maybe. But complete total and utter fabrication over nearly twenty-years and forty-billion USDs?  Surely no one would have the chutzpah...would they?  My sensibilities were right, and these were lauded, but I was way off the actual mark and undeserving of anything other than acknowledgement of possessing some common sense.

I'd never heard of AIJ...until the day-before-yesterday. And one might well say "So What?!!?". They might even say it derisively (particularly if they've been dissed in these spaces). But after nearly twenty years in the Japanese equity markets, participating reasonably actively, and with reasonable success, I would with modesty say, that this would be unusual. Not because I myself am well known. I've paraded on no catwalks or investment beauty contests; eschewed analysts and research-salesman and  ordinary  brokers; retained as low-a-profile as humanly possible due the value I place upon privacy coupled with a curmudgeonly streak. But rather it would be unusual because I am OCD about the names that have graced my portfolio on both the long and short side, and I have always been fastidiously keen to know who I am trading both with, and against. And during these twenty years, I've fought (and won) guerilla battles against virtually everyone who was anyone in this market. And during this time I've never ever ever ever knowingly fought against AIJ, nor seen them in battle, not in the sky, or on the ground, or in the trenches.

This is unusual because the Japanese equity market is NOT a big market. It may have (or had in the past) bouts of large size capitalization, but this is not the same thing as being a big market. The majority of floats don't trade. Most brokerage houses from two decades ago do not exist anymore. Perhaps 9 of 10 stockbrokers over this period have NOT maintained the same vocation. You can get lost in the city, but out in the countryside, or in a smaller town, everyone knows everything metaphorically. Tracks are visible in one form or another. And the thing about being OCD about something like this is that one remembers everyone, and it would be most unusual for someone that large, to NEVER have left tracks, to never have been seen, directly or indirectly. And to be sizeable, and have unusual returns, returns that stick out, one has to be doing something different. And this too, would likely have been seen. And lauded. And, to raise more assets, marketed. Perhaps their alleged forte was asset allocation. Perhaps they told their clients they used futures and derivatives. Or, perhaps they, like Bernie, just fabricated it.

All I know, is I never "saw" them, ever. And I think this says something. Anyone else with similar OCD ever have a sighting of them in the markets?


Chris ( said...

I spent 5 years (1999-2004) as a fund of funds analyst responsible for Japanese & Asian hedge funds, sitting in Tokyo - and I never came across them. Their name never appeared in the industry press, they never presented at conferences, and our (considerable) local pension & insurance client base never once mentioned the name. No one I know has ever dealt with them.
The rumor-mill has it that AIJ dealt mainly in index derivs, and exclusively with one large UK/HK bank. They were not on the buy list at any of the local consultants. How in God's name Advantest managed to invest 8% of their pension fund in them is a mystery.

Anonymous said...

Jake Adelstein comments in there, worth remembering that Adelstein tends to be like a man with a hammer, every problem is a nail... or a yakuza front company

"Cassandra" said...


My sentiments precisely...!!


Anonymous said...

I find it interesting that the day the US announced it had frozen a Japanese gangsters’ financial assets ( was the same day Japan’s financial watchdog told AIJ to halt its operations on suspicion that it has “lost” over two billion US dollars in funds (