Boston Herald Business Columnist
The usual criticism of the Boston investment community is that it’s too staid and conservative.
Hub firm trades Iraqi money, goes all out for dinar
By
Boston Herald Business Columnist
Thursday, May 11, 2006 - Updated: 08:26 AM EST
The usual criticism of the Boston investment community is that it’s too staid and conservative.
But that’s not a charge anyone is likely to level at Brian Canavan or his firm Dartmouth Capital.
From offices downtown he trades just one asset.
Iraqi currency.
You could say business is . . . up and down.
“About a month ago, things seemed really, really bad,” he says. “There was a lot of violence over there, and business slowed down to a trickle. But it’s picked up recently.”
The 41-year-old former mobile telecoms entrepreneur started Dartmouth and his Web site, Safedinar.com, two years ago after meeting military personnel back from Iraq with fistfuls of currency.
His customers? Speculators who think the beleaguered country is going to recover and want to bet money on the outcome. Should that happen, logic would suggest the dinar would rise.
“In the beginning it was typically military people, contractors and (their) friends and family,” says Canavan. But, he argues, “it’s spread to the everyday person.”
He believes his two-man firm is the biggest U.S. dinar dealer. The typical purchase, he says, is a few thousand dollars’ worth.
“Right now it’s keeping us busy,” he says.
He buys the banknotes in advance, meaning he is personally invested in the currency and is at risk if it goes the wrong way.
Naturally, this isn’t for the faint-hearted.
“I never give investment advice,” says Canavan. “This thing could go either way and anything could happen.”
In other words, it’s much like any other investment product - without the bogus advice.
At today’s official rate, 1 million dinar should cost $678. But Canavan can’t order them by clicking a mouse.
Instead, he’s developed an elaborate network of agents to bring the banknotes back in briefcases.
So in total, you’ll end up paying closer to $800.
“I took many, many trips to Iraq to establish a network of security people who I could trust,” he says. He didn’t want to elaborate - understandably.
He isn’t the only one nervous. Hub fund management firm Standish Mellon has clammed up in alarm after recently admitting to the Wall Street Journal that John Peta, who runs its Emerging Markets Debt mutual fund downtown, had bought a few Iraqi government bonds.
If the currency isn’t going anywhere just yet, you should look at the Iraq Stock Market.
Yes, there is one. It’s been running for two years.
But it seems to have missed out on the equity euphoria sweeping Wall Street and everywhere else.
The market index - tracked by ISX Data Services in Palo Alto, Calif. - has fallen by about two-thirds since the autumn of 2004.
I spoke to the ISX chief executive, “Paul.” He asked me not to use his last name, in case it leads the enemy to his colleagues in Baghdad.
Among the market’s problems, he noted: foreigners can’t invest in it.
Although the U.S. provisional authority says they can, the regulatory body won’t allow it until a stable government gives them the OK.
The result: investment is limited to rich Iraqis. And their reluctance to commit says something.
As long as Iraq lacks security or a stable government, its lack of a credible financial infrastructure might seem pretty trivial.
But financial markets are a powerful barometer. And right now they aren’t pointing in the way we’d like.
Boston Herald Business Columnist
The usual criticism of the Boston investment community is that it’s too staid and conservative.