Wharton Partners - A Decade Ahead in understanding the Sub-Prime Crisis




	Investment Research We specialize in Investment Research for large Clients such as Bankers, Brokerage firms, and government departments. Our intent is to identify the key problems pertaining to investment mechanisms in the country and develop solutions that could have countrywide impact thus affecting the national economy. We have done research that is regarded as breakthrough by bankers, brokerage firms, and government officials. The research was regarding the Sick Industries and Banking crisis plaguing the business environment in Pakistan. We were the first to identify a very serious structural problem with debt project financing in Pakistan. We identified that the primary reason for industrial failures was the use of medium duration amortizing loans in a severely credit crunched environment. This problem was further exacerbated due to quick economic liberalization policies, which resulted in shrinking profit margins. Thus an improper structuring of debt project financing is a primary cause of the present crisis. This research preceded the Asian crisis and we were able to predict a broader crisis based on this research. Our statement in 1996 was printed in the media and our research that in a credit crunched environment "Liberalized and taxed economies mixed with short duration amortizing loans are a recipe of an economic disaster" turned out to be prophetic a year before the Asia crisis. The research had very strong endorsements and acceptance among experts including prominent members of the business community, academia, senior bankers, foreign institutional investors, local corporate brokerage firms, and members of the stock exchanges of the country. A number of investors regarded the report as the single best analysis of the Pakistani business environment to date. The problem has widespread implications regarding Pakistan's economic growth. The report has been covered in the top national newspapers and magazines. A number of predictions made by Wharton Partners have been proven true. In addition to superior long-term opportunities, the research provided an opportunity to make a 30% gain by shorting certain banking stocks in the weeks following the report. A later research presented to the IMF representative in Pakistan prior to the Asian Crisis, identified this problem for emerging markets. This research was later copyrighted in Jan 1998. We identified the problem as being of access to capital when every one else was talking about crony capitalism and mismanagement alone. This research was printed as the cover story in Pakistan and Gulf Economist in March 1998. Other projects having major investment implications include a quantitative model for evaluating the impact of GST on the Pakistani industrial sector and an analytic framework for doing dollar equivalent analysis of investment opportunities -- one of the first extensive comparative analyses in dollar terms for multiple investment opportunities in Pakistan. These analysis prove the common wisdom regarding investing in Pakistan to be incorrect.

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