Any crisis has its victims and profiteers
There are always investors who stand for profit, as in times of growth, there were losers as well. First of all, there are investors who bet on market fallout, or al least the plunge of certain shares, therefore they won the bet.
“I am convinced that players did make profit from collapses of Lehman Brothers, Washington Mutual or Bear Stearns. There are investors who bet on a final outcome of this proportion and who took the risks of short selling, or to carry out major selloff on derivatives” , said Marius Pandele, Head of Research at Vanguard.
There are certainly profiteers of the actual crisis, and liquidators are the best example, said Alex Stoian, partner in Prognosis.ro project.
Adrian Duna, financial analyst at KD Capital Management says there were and still are exaggerated emotional reactions, and when players react emotionally on the financial markets there is enough room for speculators’ profits.
“In my opinion, cold-blooded players who monitor the market evolution have major chances to react effectively and to buy at extremely low prices. Where it was possible, where instruments allow it – short selling, derivatives, earnings could have been much higher for those who anticipated, even partially the evolution of the equity market,” he stated.
Another type of winners of the crisis are companies caught by the turmoil in a solid financial situation, and who can afford to swallow a part of the competitors at a very low price, and to position in proper parameters for the future.
“There was Bank of America who took over Merrill Lynch after being on the brink of collapse, and I certainly don’t doubt there will be similar cases to come. We witnessed position reversal on various markets, such as the car industry where in times of recession, those who focus on aggressive increase of market share will not be winners anymore, but those whose main priority is a solid financial background,” Pandele added.
Moreover, companies and investors that were caught by financial crisis with few debts and major liquidity reserves may be the next winners, if they know how to profit from the opportunities that will spring out.
You can imagine what it is like for a company to have raised money in an IPO mid last year and to stay on hold in the upcoming period. In these cases, a certain situation is likely to help it in absorbing additional market share of 5-10%, by acquiring rival companies that reel from the gloomy context,” the analyst added.
Marius Pandele gave as example the climb up of Warren Buffet as the world’s richest men, and also the recent announcement on the acquisition of Metro by a less known company.
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