ptg The Esoteric Investor ptg This page intentionally left blank ptg The Esoteric Investor Alternative Investments for Global Macro Investors ptg Vishaal B. Bhuyan Vice President, Publisher: Tim Moore Associate Publisher and Director of Marketing: Amy Neidlinger Executive Editor: Jim Boyd Editorial Assistant: Pamela Boland Operations Manager: Gina Kanouse Senior Marketing Manager: Julie Phifer Assistant Marketing Manager: Megan Colvin Cover Designer: Alan Clements Managing Editor: Kristy Hart Project Editor: Lori Lyons Copy Editor: Gayle Johnson Proofreader: Water Crest Publishing, Inc. Indexer: Larry Sweazy Compositor: Nonie Ratcliff Manufacturing Buyer: Dan Uhrig © 2011 by Pearson Education, Inc. Publishing as FT Press Upper Saddle River, New Jersey 07458 This book is sold with the understanding that neither the author nor the publisher is engaged in rendering legal, accounting, or other professional services or advice by publishing this book. Each individual situation is unique. Thus, if legal or financial advice or other expert assistance is required in a specific situation, the services of a competent professional should be sought to ensure that the situation has been evalu- ated carefully and appropriately. The author and the publisher disclaim any liability, loss, or risk resulting directly or indirectly, from the use or application of any of the contents of this book. FT Press offers excellent discounts on this book when ordered in quantity for bulk purchases or special sales. For more information, please contact U.S. Corporate and Government Sales, 1-800-382-3419, [email protected]. For sales outside the U.S., please contact ptg International Sales at [email protected]. Company and product names mentioned herein are the trademarks or registered trademarks of their respective owners. All rights reserved. No part of this book may be reproduced, in any form or by any means, without permission in writing from the publisher. Printed in the United States of America First Printing June 2011 ISBN-10: 0-13-248507-9 ISBN-13: 978-0-13-248507-4 Pearson Education LTD. Pearson Education Australia PTY, Limited. Pearson Education Singapore, Pte. Ltd. Pearson Education Asia, Ltd. Pearson Education Canada, Ltd. Pearson Educatión de Mexico, S.A. de C.V. Pearson Education—Japan Pearson Education Malaysia, Pte. Ltd. Library of Congress Cataloging-in-Publication Data The esoteric investor : alternative investments for global macro investors / Vishaal B. Bhuyan. p. cm. ISBN-13: 978-0-13-248507-4 (hardback : alk. paper) ISBN-10: 0-13-248507-9 1. Life insurance. 2. Viatical settlements. 3. Longevity. 4. Fisheries—Finance. 5. Water supply—Finance. 6. Portfolio management. I. Title. HG8771.B46 2011 332.63—dc22 2011013399 This book is dedicated to all my cousins, especially Shivam Shah. ptg This page intentionally left blank ptg Contents Introduction . . . . . . . . . . . . . . . . . . . . . . . . . 1 Part I: Investing in Demographics Chapter 1 Building the Demographic Framework . . . 7 Chapter 2 Longevity and Mortality Risk Markets . . . 27 Chapter 3 Reverse Equity Transactions . . . . . . . . . . . 55 Part II: The Tuna Trade Chapter 4 The Bluefin Tuna . . . . . . . . . . . . . . . . . . . . 85 Chapter 5 Tsukiji Fish Market . . . . . . . . . . . . . . . . . 133 ptg Chapter 6 Fishing for Maguro . . . . . . . . . . . . . . . . . . 167 Part III: Blue Gold Chapter 7 Water: Who Has It, and Who Doesn’t . . . 181 Chapter 8 Mimicking the Water Cycle: Making Water Potable . . . . . . . . . . . . . . . . . . . . . . 193 Chapter 9 The Politics and Geopolitics of Water . . . 209 Chapter 10 Investment Implications and Opportunities . . . . . . . . . . . . . . . . . . . . . . 225 Bibliography . . . . . . . . . . . . . . . . . . . . . . . 241 Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 283 Acknowledgments I would like to acknowledge Joseph L. Shaefer, Richard Ellis, and Frank X. Diebold for their assistance in putting together this book. ptg About the Author Vishaal B. Bhuyan is Founder and Chief Investment Officer of Nariman Point, LLC, a New York-based investment management firm focusing on demographic-driven instruments, with expertise in insurance and longevity/mortality instruments. Prior to launching Nariman Point in early 2011, Bhuyan was an independent consultant providing family offices, private equity funds, and hedge funds with market insight and quantitative analysis on the life linked asset class. During that time he published “The Wave Report,” a monthly news- letter to clients providing a firsthand market perspective on the life markets. Bhuyan is the author and editor of Life Markets: Trading Mortal- ity and Longevity Risk with Life Settlements and Linked Securities and Reverse Mortgages and Linked Securities: The Complete Guide to Risk, Pricing, and Regulation. He has spoken at various hedge fund ptg and insurance conferences in Tokyo, Vienna, New York, Orlando, London, Nice, Monaco, and Hong Kong. His book Life Markets was referenced in the U.S. Securities and Exchange Commission report on life settlements. Bhuyan graduated from the University of Pennsylvania in 2005 with a degree in History and Sociology of Science, where he was vice president of the Phi Delta Theta fraternity.