Macquarie's Fund Model may be unsustainable

The market seems to agree with Jim Chanos.


Macquarie's Moss Says Model Can Withstand a Decline (Update2)
By Joyce Moullakis

May 29 (Bloomberg) -- Macquarie Bank Ltd., Australia's biggest securities firm, uses a model that can withstand a decline in financial markets, Chief Executive Allan Moss said today.

``I think that our track record will continue to stand us in good stead through a whole range of market conditions,'' Moss said at a lunch in Sydney.

Macquarie has delivered a decade and a half of record annual profit by acquiring assets and bundling them into funds it manages for a fee.
Moss, 57, was responding to comments from Jim Chanos, the fund manager who predicted the collapse of Enron Corp. and last week said Macquarie has ``an inherently unstable platform.''

Chanos said the bank's shares will fall. The stock, which has gained 36 percent in past 12 months, has declined 4.2 percent since the fund manager's comments.

Macquarie's shares rose A$1.52, or 1.7 percent, to A$89.20 at 3:08 p.m. in Sydney.

The bank ``doesn't care what it pays for assets and flips those assets to entities funded by other investors,'' Chanos said last week.

Moss said that Macquarie, which scours the globe for assets with steady cash flows, pays sustainable prices when it makes acquisitions.