(January 13, 2014) — John Taylor, founder of bankrupt currency fund FX Concepts, has announced his plan to return to finance in a research note.
Taylor said he intends to revive FX Concepts in its original form: as a currency research newsletter, according to a copy of the note obtained by aiCIO, which also contains his views on foreign exchange markets.
“The market is my home, not administration; I am back,” he wrote. “The newsletter business will be the primary business asset and livelihood of John R. Taylor as it was years ago.”
Taylor called the October Chapter 11 filing an “ignominious end” for FX Concepts, which had operated for 32 years and at its peak managed $14 billion in assets. Several years of poor returns following the global financial crisis led to an evacuation of investor capital, culminating with its last major client, San Francisco’s employee pension fund, voting to redeem its investments on September 11, 2013.
Except for the newsletter, all of FX Concepts’ assets including intellectual property and models have been sold to Ruby Commodities for $7.48 million, according to court records.
One former staff member called the purchase price “insanely high” during a conversation with aiCIO. “Maybe I’m missing something, but this was a company that was losing millions of dollars a year,” the source said.
Several ex-FX Concepts staffers voiced skepticism at the viability of Taylor’s plan. When the company initially found success selling its research in the 1980s, it was filling a vacuum of solid currency market analysis. Now, analysts at every major bank and scores of specialty firms provide foreign exchange research for free or a nominal fee, they said.
Still, as one former employee noted, “John Taylor is a super smart guy… and his knowledge of history is amazing.”
In his letter, Taylor took a relatively bearish stance on the state of the global economy, comparing the rosy industry consensus to that preceding the US recession of the 1970s.
The “consensus is wrong,” he wrote. “Risk is not minimal. US growth will drive the dollar higher, causing liquidity strains around the world. Too many countries need weak dollars, but they won’t get them, which means there will be sharp currency corrections. Fundamentals will count.”
The research note, dated January 9, bore the FX Concepts brand. However, when attempting to reach Taylor for comment, the telephone number and email address on the publication proved inoperable. Furthermore, as of January 13, the link provided to aiCIO ceased to function.
“It is difficult to operate without phones, e-mail addresses, or even business cards,” Taylor acknowledged in the note, but said he had rented an office and was receiving “information galore” from friends in the industry. “I fully expect our analytical efforts will lead to many insights and profitable long term trades for those who watch this letter.”
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