By: FABRICE TAYLOR

When Jim Chanos poormouths a stock, investors around the world listen. Mr. Chanos runs a hedge fund but made his fame, and a good part of his fortune presumably, by short selling Enron into the ground. So when Mr. Chanos tells investors Macquarie Group Ltd. looks like a house of cards, markets and financial journalists, rightly or wrongly, get excited.

Australia-based Macquarie isn't a well-known name here, although it runs a couple of Canadian income funds. But given Brookfield Asset Management's plan to transform itself into something that looks like Macquarie, we thought it might be interesting to highlight Mr. Chanos's criticisms, and Macquarie's response (such as it is).

They call Macquarie the millionaire factory because of the money it pays its executives. Macquarie is an investment bank but a big part of its business is setting up and managing infrastructure funds. The bank raises money from institutions and creates pools that buy stable, cash-flow-producing assets like toll roads, power plants and so on. These funds pay dividends with this cash flow. There is huge demand among pension funds for this kind of investment because a big bulge of workers are nearing retirement and there aren't enough quality bonds to go around.

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Posted by dcjaya at November 16, 2007 12:57 AM