Exactly seventy years ago today, in the small but strategic Belgian town of Bastogne, the 101st Airborne Division and elements of the 10th Armored Division of the United States Army were completely surrounded. Lacking proper winter uniforms and equipment, the American troops slept in foxholes during the bitingly coldest European winter of perhaps the entire century. They bravely bore incessant artillery shelling, constant snowfall which prevented supply drops of food and ammunition, and uncertain hope of reinforcement, without any auspicious military or meteorological signs. And so it was that on December 22nd, 1944, the German commanding general wrote to General McAuliffe of the 101st Airborne, urging him to surrender within two hours or face annihilation by artillery barrage. Famously, General McAuliffe initially responded “NUTS!” – and his emphatic rejection of the German general’s surrender offer concluded with this sentence: “We…

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Private Equity Case Study: Emerging Markets Our Client: A large private equity firm contemplating an emerging markets acquisition. Situation: A private equity fund was in a competitive bid situation to acquire a retail store chain in Eastern Europe. While the deal appeared attractive in local currency, it was uncertain when translated in USD. In addition, hedging seemed unattractive because forward exchange rates reflected the deep depreciation of the local currency. Summary: The investment team’s objective was to determine the most cost-effective hedging strategy, the likely key drivers of the local currency and the maximum exposure to their returns should their equity be unhedged. Chatham Financial was able to assist in exploring various hedging strategies including forwards, options and inflation-linked instruments. Also, we assisted in researching various macroeconomic data for the country to develop correlations against the investor’s base currency, modeling…

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