Return of the living dead, hedge fund edition

Return of the living dead, hedge fund edition

Dan McCrum

| Oct 03 10:51 | 10 comments | Share

We interrupt this blog to announce a zombie apocalypse has occurred. Please remain calm and do not adjust your allocations, many hedge funds remain open and fee structures are intact.

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There are a lot of smart hedge fund managers out there, as well as a lot that are mediocre, lucky, or winging it. But it turns out they are outnumbered by the ranks of the discontinued, the dead, and the disappeared by almost two to one. Those numbers come to us via the Imperial College Centre for Hedge Funds Research, specifically a paper from last year revisiting “stylised facts” about hedge funds. It came to our attention after we wrote about a difficult comparison with the US stock market that many hedge funds will face in the new year. The UK’s Alternative Investment Management Association responded to our post citing the industry’s 20 year track record: Figures from Imperial College’s Centre for Hedge Research show the industry has generated over 4 per cent per annum of “alpha” or performance above the market, after fees. Very impressive, if you think there is such a thing as a 20 year track record for hedge funds that is relevant to the $2trn industry as it stands today. We do not, for a variety of reasons starting with the zombie hordes above. The academics at Imperial College put together data from the five major hedge fund databases, in order to avoid biases in individual data sets and to account for the fact that 70 per cent of hedge funds only report to one data provider. We document that the number of hedge funds ranges across data vendors from 6,772 for Morningstar to 9,719 for BarclayHedge. EurekaHedge is the largest data vendor in terms of 4,452 active hedge funds. Importantly, the proportion of alive and defunct funds varies significantly across databases. BarclayHedge, HFR and TASS (EurekaHedge and Morningstar) contain relatively more (fewer) defunct funds than alive funds. Read more of this post

Betting on a U.S.-Debt Doomsday: Budget Showdown Has Traders Crowding Into Derivatives That Pay Off if the Federal Government Defaults

October 4, 2013, 7:10 p.m. ET

Betting on a U.S.-Debt Doomsday

Budget Showdown Has Traders Crowding Into Derivatives That Pay Off if the Federal Government Defaults

KATY BURNE

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Washington’s budget showdown has sent traders and analysts crowding into a cobwebbed corner of the financial world, the market for derivatives that pay off if the federal government defaults on its debt. The cost of insuring against a U.S. default via credit-default swaps has risen sharply over the past two weeks. Volume has ticked up as well, though trading remains sparse and the number of bets against the U.S. pales in comparison to other large nations and companies. Read more of this post

Debt Armageddon puts game theory to test

October 4, 2013 5:09 pm

Debt Armageddon puts game theory to test

By Ralph Atkins in London

During the Cold War, when the world feared nuclear annihiliation, scientists developed “game theories” to predict possible scenarios – and the chances of reason prevailing. This week investment strategists have applied similar thinking to the US fiscal crisis: the political deadlock in Washington over the federal budget and the debt ceiling that, at least in theory, could plunge the world into the Armageddon of a US debt default. Read more of this post

CHART OF THE DAY: 87 Years Of Crisis And Stock Market Volatility

CHART OF THE DAY: 87 Years Of Crisis And Stock Market Volatility

SAM RO OCT. 4, 2013, 3:43 PM 1,972 1

With the government shut down and the debt ceiling looming, one could argue that the U.S. economy may be on the edge of a crisis. But the stock market is not reflecting this. During periods of crisis and high stock market volatility, correlations among stocks increase.  In other words, stocks move up and down together. JP Morgan Funds’ David Kelly just published his quarterly market chartbook, which includes a useful chart tracking stock market volatility and correlations among stocks since the Great Depression.

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Freak Grape-Razing Hail Crushes Burgundy Winemakers’ Dreams; Several years of losses may also force consolidation in a wine region known for its patchwork of 1,247 named plots dating back centuries

Freak Grape-Razing Hail Crushes Burgundy Winemakers’ Dreams

Hail the size of ping-pong balls brought William Rouxel’s future as a Burgundy winemaker crashing down along with his grapes. With a season’s work destroyed by the summer hailstorm that trashed a 10-kilometer (6.2-mile) swath of Burgundy vineyards producing some of France’s most-prized wine, the 35-year-old says he can’t risk another year like it. He’s calling it quits. “At this point I need to win the lottery, and I’m not a gambler,” said Rouxel, smoking a cigarette at a round metal table in the stone courtyard of his house in Beaune, in the center of Burgundy’s Cote d’Or, or Golden Slope. “I’m tired.” As grape harvests get under way this week, the damage caused by a single hailstorm that pummeled the area around 4 p.m. on July 23 has ruined the likes of Rouxel and hit sections of France’s 8 billion-euro ($10.9 billion) wine industry hard. Some choice wines from Pommard and Volnay will be in short supply starting next year in a region that already can’t produce enough to meet global demand. Multiple smaller hailstorms last year cut the volume of Burgundy’s 2012 vintage to 1.26 million hectoliters, equivalent to 168 million bottles, from 1.51 million hectoliters in 2011, according to the region’s wine board. It estimates this year’s production at between 1.35 million and 1.4 million hectoliters. Burgundy’s wine properties shipped 1.43 million hectoliters in the 2012-13 season, meaning they’re depleting stocks, which the board estimates are down as much as 15 percent. Read more of this post

Failure maketh man; What does your failure resume look like?

Updated: Saturday October 5, 2013 MYT 7:33:31 AM

Failure maketh man

BY ROSHAN THIRAN

What does your failure resume look like?

STANFORD professor Tina Seelig requires all her students to write a failure résumé “a résumé that summarises all their biggest screw-ups – personal, professional, and academic.” She insists that for every failure on the resume, the student must also describe what he or she learned from that experience. Reading her requirement for her students, I saw the power in such an exercise and starting scribbling my personal failure resume. As I jotted down all of my professional failures, I looked back to see if I gleaned any useful lessons which I later applied in life. Much to my surprise, one of my biggest failure (messing up at a business integration exercise early in my career in the United States), led to an amazing truimph on a bigger integration role in Europe. A huge part of the success was drawn from lessons learnt from my first failure. I also failed miserably in a business entrepreneurial venture while at university. The key part of that failure being poor at inventory management. In my first operational role running a business unit, I applied much of the lessons learnt from my inventory management mistakes and was extremely successful turning around a business. Humiliation, disappointment, discomfiture, shame, hurt are all characteristics of failure. Failure feels bad and it never sat well with me. Yet, we all know that failure is a necessary part of growth. Many people today talk about failure and its importance but most people don’t realise it is only when you mine lessons from your failures that you really learn. It is not about failing but about learning. An anonymous saying goes that “failure is only the opportunity to begin again, this time more wisely.” Read more of this post

How Stella Saved the Farm: A tale about making innovation happen

Updated: Saturday October 5, 2013 MYT 7:55:19 AM

Management lessons from animals

How Stella Saved the Farm: A tale about making innovation happen

Author: Vijay Govindarajan and Chris Trimble

Publisher: Macmillan

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HOW Stella Saved the Farm belongs to a genre like the classic Animal Farm, the more modern Who Moved My Cheese? and Our Iceberg is Melting. All three of them use animals to tell a story about management and leadership. Using parables does simplify things and sets the tone for a relaxed read. Animal Farm is a tale about apathy and ignorance while Who Moved My Cheese? is a story about the human spirit overcoming change and transition. Ultimately, the one who is able to accept change thrives. Like its predecessors, How Stella Saved The Farmis a parable about a group of animals that live on a farm which once belonged to humans but is now operated and managed by the animals that live and work there. It is both a business-related as well as a self-help book as it revolves around the various characters and their dealings with one another. The story’s main theme is the need for the farm to innovate and find new products to keep the setup profitable and to prevent it from being overtaken by humans, who run the neighbouring farm. Read more of this post

Up Close and Personal with Ba U Shan-Ting, president of master franchise holder for Domino’s Pizza in Malaysia and Singapore; Moving from one store to 104 stores in 15 years

Updated: Saturday October 5, 2013 MYT 8:17:53 AM

Up Close and Personal with Ba U Shan-Ting, Dommal Food Services Sdn Bhd president

BY WONG WEI-SHEN

IT is ironic to think that Ba U Shan-Ting, who initially was meant to become a dentist, is still an oral specialist but of a different precision – he is now selling pizzas to satisfy his customers’ culinary cravings. “My parents wanted me to be a dentist, so I went ahead and submitted all my applications. But thank God I didn’t get through the first round! I missed out by one mark,” the now president of Dommal Food Services Sdn Bhd says. Dommal Food is the master franchise holder for Domino’s Pizza in Malaysia and Singapore. Never one for staring into people’s mouths, and often deterred by smelly breath, Ba told his mother that he wanted to study a double degree in law and commerce instead. “If I had gone down that road, I would be a very unhappy dentist somewhere because I didn’t have the passion nor talent for that,” he tells StarBizWeek. Read more of this post

Aung San Suu Kyi has stunned Singaporeans with her answers and fresh perspective during her recent trip to the republic

Updated: Saturday October 5, 2013 MYT 8:01:16 AM

Learning from Myanmar

BY INSIGHT DOWN SOUTHBY SEAH CHIANG NEE

Aung San Suu Kyi has stunned Singaporeans with her answers and fresh perspective  during her recent trip to the republic.

IN my long working years I have gotten used to our reporters asking departing dignitaries what they thought of Singapore, expecting some lavish praises. Generally, they would not be disappointed since most guests – however unimpressed they are – would not want to appear impolite towards their hosts. Their kind comments, whether deserved or not, made great headlines in a compliant press. In her first ever visit here, Myanmar’s opposition leader Aung San Suu Kyi was a refreshing exception and by doing so, taught Singapore’s leaders a valuable lesson. Although she carefully observed diplomatic niceties, the revered Nobel Peace laureate was frank about what she liked and disliked about Singapore. During her final press conference, she was asked the familiar question of what she saw in Singapore that she might like to recreate in Myanmar. She replied, “I don’t think ‘recreate’ is the word, ‘learn’ yes.” If the host had hoped that she would cite Singapore as a role model, they were disappointed. Her country, she said, would not want copy the city’s materialistic and high pressure living that had come with its affluence. Read more of this post

S’pore becomes a destination for junk bonds

S’pore becomes a destination for junk bonds

SINGAPORE — Companies in South-east Asia are looking at Singapore as a viable alternative for high-yield bond issues in amounts that would be too small for US dollar investors, according to IFR, a Thomson Reuters publication.

3 HOURS 46 MIN AGO

SINGAPORE — Companies in South-east Asia are looking at Singapore as a viable alternative for high-yield bond issues in amounts that would be too small for US dollar investors, according to IFR, a Thomson Reuters publication. The push comes as so-called junk bonds became a predominant theme this year in the Singapore market, with a record number of small-cap and sub-investment grade companies selling debt in the city, attracting investor interest by offering juicy coupons. Read more of this post

Is corporate Singapore being too naive on fraud?

Is corporate Singapore being too naive on fraud?

CNBC.com | Wednesday, 2 Oct 2013 | 5:23 AM ET

Singaporean corporations are more naive in their approach to anti-fraud and corruption practices in comparison to the Asia-Pacific average, a survey from global accountancy firm Ernst & Young has found. According to the “Building a more ethical business environment survey,” only 17 percent of Singaporean respondents acknowledged that planned investments in new markets will expose the company to new risks, compared to an average of around 35 percent for the Asia-Pacific region. Read more of this post

Too much retail space in Malaysia’s Klang Valley? Klang Valley, which includes Selangor and Putrajaya, has a total of 59 million sq ft of mall space; Singapore has 56 million sq ft of retail space, of which 25 million sq ft (or 44%) are shopping floor space in the city state of 5.3 million people

Updated: Saturday October 5, 2013 MYT 7:40:05 AM

Too much retail space?

BY THEAN LEE CHENG

Klang Valley has 59 million sq ft but some small towns have only a single mall.

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THERE are a few issues facing shopping mall space in the Klang Valley today. The first is the amount of space, the second is retail spending which has a direct effect on rental and yield. The Klang Valley, which includes Selangor and Putrajaya, has a total of 59 million sq ft of mall space, according to statistics from the National Property Information Centre (Napic). That is equivalent to 51 Suria KLCC malls, which has 1.14 million sq ft of net lettable area. Napic includes arcades and older buildings in the outskirts as shopping mall space. If one were to consider non-government statistics, property consultancy CBRE says Greater Kuala Lumpur has a total retail space of 48 million sq ft, equivalent to 41 Suria KLCCs malls. This excludes arcades and retail space in older buildings in the Klang Valley outskirts. Greater KL has a population of 7.2 million, according to Economists Intelligence Unit. Neighbouring Singapore in December 2012 has 56 million sq ft of retail space, of which 25 million sq ft (or 44%) are shopping floor space in the city state of 5.3 million people, according to CapitaMall Trust website. A local property consultant considers 25 million sq ft as rather low as Singapore thrives on shopping and tourism. Read more of this post

Electronic Road Pricing to Hit Jakarta Streets in 2014; Call for Moratorium on New Roads, Car Sales as Traffic Worsens

Electronic Road Pricing to Hit Jakarta Streets in 2014

By Lenny Tristia Tambun on 10:50 am October 4, 2013.

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Traffic around the Block A and B Tanah Abang market in Central Jakarta. (JG Photo/Yudhi Sukma Wijaya)

The Jakarta transportation agency plans to implement an electronic road pricing scheme that will automatically charge toll fees on cars using roads in the city during certain hours. The scheme, announced on Monday, will require drivers to place transponder in their car that automatically deducts money from a prepaid card. The system is expected to ease traffic congestion by making it prohibitively expensive for people to drive in downtown Jakarta. Police said last week they expect the transponders to be able to track any car moving through Jakarta at any time or speed. The electronic road pricing scheme replaces earlier plans to apply odd-and-even plate number restrictions. Read more of this post

Camel Meat Leaps From Bedouin Tents to Top Gulf Eateries

Camel Meat Leaps From Bedouin Tents to Top Gulf Eateries

By Wissam Keyrouz on 3:27 pm October 2, 2013.

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A chef at a luxurious hotel in Abu Dhabi prepares raw camel meat in the form of burgers on September 16, 2013. From camel carpaccio to camel bourguignon and gold-leaf burger, the meat offered traditionally at big festivities of bedouins has become a fancy ingredient in the Gulf’s prestigious restaurants. (AFP Photo)

Abu Dhabi. From camel carpaccio to camel bourguignon and gold-leaf burger, the meat offered traditionally at big festivities of bedouins has become a fancy ingredient in the Gulf’s prestigious restaurants. Under the golden dome of Abu Dhabi’s Emirates Palace, which bills itself as a seven-star hotel, French chef Sandro Gamba proudly presents his latest: a camel burger bedded in gold-leaf bread, served with onion jam and smoked halloumi cheese. On the side, the traditional french fries have been replaced by fried hummus fingers. This dish, priced at around $50 (37 euros), has become “one of our best sellers,” boasts Gamba, the hotel’s master chef who oversees its 15 restaurants. Read more of this post

With plenty of money and time, family offices eye risky markets

With plenty of money and time, family offices eye risky markets

12:59pm BST

By Carolyn Cohn

LONDON (Reuters) – With deep pockets and long time horizons, and perhaps even a desire to do good, some of the world’s wealthiest families are investing in risky African and other frontier markets. Family offices, which manage assets on behalf of wealthy families in more developed markets, are generally tight-lipped and seen as conservative in their approach to investing. Read more of this post

Tarkett is the world’s third-largest maker of flooring products for residential and commercial markets after Mohawk and Berkshire’s Shaw Industries

Tarkett Files for IPO as KKR Exits French Floor Maker

Tarkett SA took the first regulatory step toward selling shares in an initial public offering as 50 percent-owner KKR & Co. (KKR) seeks to exit the French floor maker amid rising valuations of building product companies. Tarkett, which is also owned by the Deconinck family, registered the IPO documents with France’s AMF market regulator yesterday to sell shares on the NYSE Euronext (NYX) exchange in Paris, the company said in a statement today. Based on valuations of competitors, an IPO may value Tarkett at between $2.5 billion and $3.8 billion, a person familiar with the plan said earlier this year. Read more of this post

Buffett Says Debt-Ceiling Politics Should Be Banned Like A-Bomb

Buffett Says Debt-Ceiling Politics Should Be Banned Like A-Bomb

Billionaire investor Warren Buffett said politicians should stop using the nation’s borrowing authority as a bargaining chip in policy debates, comparing the practice with the threat of dropping a nuclear bomb. “It ought to be banned as a weapon,” Buffett, 83, said in an interview with Fortune magazine posted online today. “It should be like nuclear bombs, basically too horrible to use.” Read more of this post

Twitter Look-Alike Ticker Triggers 685% Advance in Penny Stock

Twitter Look-Alike Ticker Triggers 685% Advance in Penny Stock

Oct. 4 (Bloomberg) — Tweeter Home Entertainment Group Inc., the once-bankrupt home-entertainment retailer, surged 685 percent before trading was halted as traders confused the company with the microblogging service Twitter Inc. The Canton, Massachusetts-based company trades over the counter under the ticker TWTRQ. Twitter, which filed for an initial share sale yesterday, will list under the ticker TWTR. Trading of Tweeter was halted at 12:42 p.m. New York time by the Financial Industry Regulatory Authority Inc. The stock rallied to as much as 15 cents, before trimming its gain to 5 cents. More than 14.3 million Tweeter shares changed hands today, the most since 2007 and an amount representing less than $1 million of trading, according to data compiled by Bloomberg. Read more of this post

Twitter Advertisers Say Service Needs More Users; Buyers Say Service Should Be More Mainstream Before It Gets More From Mass-Market Clients

October 4, 2013, 7:03 p.m. ET

Twitter Advertisers Say Service Needs More Users

Buyers Say Service Should Be More Mainstream Before It Gets More From Mass-Market Clients

YOREE KOH And SUZANNE VRANICA

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SAN FRANCISCO—For some advertisers, 218 million people isn’t a big enough audience. That’s their message to Twitter Inc., which Thursday detailed plans for an initial public offering. Ad buyers say that the short-message service will need significantly more users, and a bigger sales force, to win more spending from their mass-market clients. “Scale still matters,” says Adam Shlachter, senior vice president of media at DigitasLBi, a digital-ad firm owned by Publicis Groupe PUB.FR +0.38% SA. “How consumers embrace [Twitter] and tap into it or tune in or out is going to be critical.” Read more of this post

Hershey Plans $250 Million Plant in Malaysia; The plant in the southern state of Johor marks the single-largest investment in Asia since Hershey set foot in Asia 18 years ago

October 4, 2013, 1:19 p.m. ET

Hershey Plans $250 Million Plant in Malaysia

JASON NG

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At the announcement of Hershey manufacturing plant in Johor, from left: Hershey senior vice-president and chief supply chain officer Terence O’Day, MIDA chief executive officer Datuk Noharuddin Nordin, Hershey senior vice-president Asia, Europe, Middle East & Africa Peter F. Smit and M.E.I Project Engineers Sdn Bhd managing director Datuk Lim Kok Khong.

KUALA LUMPUR—American candy maker Hershey Co. said Friday it will build a $250 million confectionary plant in Malaysia, boosting its presence in Asia to meet growing demand for its products. The plant in the southern state of Johor marks the single-largest investment in Asia since the Hershey, Pa.-based company set foot in the region 18 years ago. Like other global food firms, Hershey is seeking to tap into surging demand for discretionary food items in developing nations in Asia. Hershey expects the plant to be ready in early 2015. The company currently has nine plants in the U.S. as well as facilities in Canada, Mexico, India, Brazil and China. “Our new Malaysia plant will complement production at our existing joint-venture plant in China,” Terence O’Day, Hershey’s senior vice president and chief supply chain officer, said in a statement. Production capacity details weren’t mentioned but the statement said the plant will produce four of Hershey’s five global brands, including “millions of Hershey’s Kisses” each day. Hershey is expanding in Asia as part of an ambitious global goal to achieve $10 billion in annual revenue by 2017. International sales is expected to reach about $1 billion by end of 2014, the company said. Read more of this post

Cough Drops Get Sleep Aids With Smith Brothers Overhaul

Cough Drops Get Sleep Aids With Smith Brothers Overhaul

Can’t sleep? Dehydrated? There’s a cough drop for that.

Smith Brothers Co., known for 1800s-era black-and-white bags featuring its bearded founders, is reinventing the medicated lozenge. Bought out of bankruptcy in 2010 by York Capital Management LP, the 166-year-old company is trying to inject fresh thinking into a $7.23 billion U.S. cold-remedy market dominated by Halls and Procter & Gamble Co. (PG)’s Vicks. The new products include Night Time drops with melatonin and chamomile to aid sleep as well as electrolyte-laced Restore lozenges to help people recover from the flu or a marathon. Read more of this post

U.S. TV networks tout video on-demand for catch-up viewing

U.S. TV networks tout video on-demand for catch-up viewing

5:03pm EDT

By Lisa Richwine

LOS ANGELES (Reuters) – The morning after a new episode of the drama “Sleepy Hollow” airs on the Fox broadcast network, a message on the show’s Facebook page encourages viewers to catch up with the show by clicking on their cable operator’s video on demand service. Fox and other networks are firing up marketing efforts to steer audiences who miss live episodes to free on-demand viewing. As the new television season gets underway, they are putting promotional spots for video on demand, or VOD, in prime time, on their web pages, and on social media. Read more of this post

Investment consultants now control roughly $830 billion of the $2.5 trillion invested in hedge funds

Consultants control $830 billion of hedge fund AuM, according to Barclays study

28 Aug, 2013

Investment consultants now control roughly $830 billion of the $2.5 trillion invested in hedge funds, according to a study by Barclays Prime Finance. The Barclays study said the average investment consultants’ Assets under Administration (AuA) had grown by 30% since 2010. Albourne Partners, with $288 billion in AuA, was the largest consultant by a significant margin. Read more of this post

Managing Merger Risk During the Post-Selection Phase

Managing Merger Risk During the Post-Selection Phase

Robert Heller Georgia State University

Pamela Ellen Georgia State University

September 20, 2013
Third Annual International Conference on Engaged Management Scholarship, Atlanta, Georgia. September 19-22, 2013. Paper 9.1

Abstract: 

Mergers and acquisitions are an important part of many companies’ strategic plans, yet they often fail to meet expectations. This may be due in part to a lack of understanding of the risks and the failure to apply a practical framework for managing them. Risk management techniques or frameworks have been developed for use in projects involving mergers and acquisitions (M&A), and many other company projects. Here we identify risks present and the risk resolutions available at this stage of the M&A process via a review of the literature and interviews with experienced managers of mergers and acquisitions. We develop a practical framework for managing post-selection phase risks in M&A. We analyzed published case studies to evaluate the framework. This research contributes to the literature by identifying and classifying the risks and risk resolutions in the post-selection phase of the M&A process and providing a practical framework for managing risks.

Mexican Sun Lures Cash to Solar as Panel Prices Plunge

Mexican Sun Lures Cash to Solar as Panel Prices Plunge

Mexico, poised to allow foreign oil extraction for the first time in 75 years, is finding its abundant natural resources also appeal to investors in a much cleaner energy: sunshine. First Solar Inc. (FSLR) of the U.S. has bought its first projects in Mexico, while more than a dozen other developers including Germany’s Saferay GmbH and Spain’s Grupotec Tecnologia Solar SL own licenses there. Local investor Gauss Energia opened Latin America’s largest photovoltaic plant in the country last month. Read more of this post

Real’s Turnaround Seen Fleeting as Brazil Bewilders; The real has tumbled 25 percent since Rousseff took office in January 2011

Real’s Turnaround Seen Fleeting as Brazil Bewilders: Currencies

For the world’s biggest foreign-exchange trader, the Brazilian real’s 11 percent rally from a 4 1/2-year low is just another reason to sell one of the “bad apples” of emerging-market currencies. Deutsche Bank AG says a possible credit-rating downgrade and Brazil’s biggest current-account deficit in 11 years will cause the real to reverse recent gains. Speculators agree, with bearish bets on the currency doubling in a month on Latin America’s main stock exchange to a record $20 billion this week. Read more of this post

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