He's pursuing returns he thinks will exceed U.S. markets by at least 15 percentage points but also hoping to spread the message that the free flow of private equity and venture capital to bright entrepreneurial firms in Africa can be a superior alternative to the traditional development funds funneled through the likes of the World Bank.

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The positions taken were within the normal business flow of a large global equity trading house as part of a properly hedged portfolio.

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Most of these actions were necessitated by sudden and substantial declines in free cash flow resulting from recession-induced contractions in property cash flows and per-share cash flow dilution caused by the issuances of additional equity.

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The biggest risk in many of the current batch of deals is that the private-equity firms discover the cash-flow models to be less predictable than they thought, says Colin Blaydon of Tuck Business School's Centre for the Study of Private Equity and Entrepreneurship.

ECONOMIST: Media firms and private equity

Although the company has grown its oil and gas production and operating cash flow, it has taken a lot of new debt and common equity raising to accomplish these growth objectives.

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An increasing amount of analysis based on cash flow is now carried out among institutional equity investors to calculate the real cash return on assets.

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Doing so delivers a level of predictable income, rather than relying on what the market does, for investors that typically have about two-thirds of their portfolio in bonds and are looking for cash flow from their equity slice, Genter says.

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Free cash flow analytics are already at the heart of the corporate capital budgeting process and private equity capital allocations.

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For long picks, the Ward Ferry team puts a lot of emphasis on such classic numbers as return on equity, free cash flow, dividend yields and price-to-book ratios.

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