30JUN08:
Oil to be USD200 by 30OCT08
USA Inflation to be 7.5% by 30OCT08 23APR08:
Next Rights Issue:
HBOS...yes
All & Lec ... 17APR08: Oil to be USD127 by 30SEP08
...16MAY08 losing my touch 27FEB08:
2 Banks go bust by 30JUN08
BS down, Lehman (a bit late I know) 20NOV07: Northern Crock to be sold for 15p
Nationalized 01NOV07: Oil to be USD103 EOM
...peaked too soon The Big Crash: 17OCT07
...well it's here 08OCT07:
SEC to fine Goldman for pricing issues
...still waiting 15JUN07: ML to buy-out BS
JPM got there first
Buying a London house boat is a great investment opportunity. With rising sea levels, thanks to all those American built polluting SUV's, London will soon be under water. House prices will not only continue to fall; people will abandon them for the hills or boats. Go long house boats.
Today we have the most negative and gloomy headlines in history. But as a contrarian hedgie I see nothing but opportunity from the failure of others. And boy do we have a lot of failures to review.
Let us look at the opportunities available from the wrist slitting news with an overload of pictures to look at whilst you suck onto that helium gas or drive over the cliff at beachy head.
The City regulator has rushed to change its emergency rules on disclosure of short-selling during rights issues after discovering a loophole that would have enabled hedge funds avoid stating their holdings. The FSA reversed its position on how to take options into account when calculating the size of positions, according to Simmons & Simmons, legal adviser to many of London's biggest funds. The change of tack came just two days before the rules come into force demanding public disclosure of short positions of more than 0.25% during a rights issue. Critics claim the watchdog introduced the rules to help bank rights issues.
Fintag says Thanks to these people ...
...my recently completed FSA form, "Reporting my shorts", may need changing (again). There are so many loopholes the form should have been printed on a tea bag:
times says " Hedge fund lobby asks for more time to accommodate short-selling rules "
A hedge fund manager who made some of the biggest profits from the global credit crisis said on Wednesday there was worse to come as evidence mounted that banks are struggling to regain their earnings power and properly value their assets.
Morgan Stanley said second-quarter profits plunged 60 per cent to $1bn and would have fallen further without $1.4bn in one-time asset sales, while revealing that it had suspended a suspected rogue trader for allegedly mismarking positions by $120m.
Fintag says It maybe getting worse for the banks (do they really think the SWF's will help them out when they have lost USD10bn to date on investments in the like of Citi, UBS, MS and Bear Stearns? These people maybe aliens or foreigners but they are not stupid.) and this is their fault. Raising capital will be like making a loaf of bread without the yeast. [Editor: Uh?]
Of course the opportunity is to short banks and go long hedge funds.
Hedge Fund managers are the new banks. We hire bankers, we lend money, we issue lying newsletters. The only thing we cannot do is prime broke. Somehow us hedgies need to create a consortium and build our own PB business and deny Morgan Stanley and Goldman Sachs from their PB billions.
So the opportunity is to start off "Fintag Prime Brokerage Services". Anyone interested please email me on my facebook account.
Bloomberg reports today that Morgan Stanley London has suspended a credit trader and made a $120 million "negative adjustment"related to "erroneous values of his positions."
This comes, of course, after Merrill London identified a $20 million loss due to deliberate mismarking by a trader on the equity derivatives desk (see our earlier post.)
We shouldn't pick on Merill and Morgan, mind you: their misfortunes fall into insignificance compared to Credit Suisse's stunning $2.65 billion write down related to a trading group that mispriced CDO's (also, see our earlier post.) Lehman has also had some difficulties, let alone the Bank of Montreal which had a near $500 million loss due to two natural gas traders providing bogus prices to their head office.
We continue to believe that pay structures dominated by incentive compensation (be it a hedge fund's "20%" in 2 and 20, or the "eat what you kill" model of prop desk compensation) create an unavoidable conflict of interest (incidentally, hedge funds which have 2 and 20 and then pay their staff on individual P&L is probably the most toxic combination of all).
Fintag says Most hedgies were trained at Investment Banks. It is all we know. Marking our own books, hiring our own middle office people and generally making ourselves a nuisance to internal audit is what we do best.
Pricing is not easy. There are things call spreads and illiquidity to contend with. There is no ebay of derivatives that one can use to gauge a price. So we have to rely on excel and as we all know, excel is prone to formula errors.
Ambac Financial said on Wednesday that it has asked Fitch Ratings to withdraw its ratings as the bond insurer tries to survive a disastrous foray into guaranteeing risky mortgage-related securities. "Our decision to refocus and realign our business around our core expertise in the public finance and infrastructure sectors has led us to re-evaluate our ratings needs," Ambac said in a statement. "As part of this review, we have asked Fitch to remove its ratings on Ambac and all its subsidiaries effective immediately." Fitch said it is considering Ambac's request.
Fintag says The CRA's are a joke. The opportunity? Come up with an alternative.
rge says " Wizards of Odds: The Rise and Fall of Rating Agencies "
The UK faces its "most difficult economic challenge for two decades", the Bank of England governor has said.
Mervyn King was speaking at the Mansion House dinner and made it clear that inflation was set to rise, while growth and house prices were likely to fall.
Mr King also warned that real take-home pay would stagnate, making life difficult for some families.
His words came as Chancellor Alistair Darling said the Bank would have new powers over UK financial stability.
This would be in addition to its objective of setting interest rates, he told the annual dinner of business leaders.
It has also emerged that Sir John Gieve is to stand down early as Deputy Governor of the Bank of England.
Fintag says If he had put rates up 3 years ago, he wouldn't be saying this now.
This is all so pathetic. 1979 was a very unpleasant year. Notting Hill was full of squats with squatters like Boy George. 2008 is all Prada handbags and sushi. Get real. [Editor: You have lost it I am afraid. Looks like that FSA form filling has done your head in]
John Paulson, the hedge fund manager who made almost £2bn from correctly calling the implosion of US sub-prime mortgages last year, warned that the credit crisis is not over.
Mr Paulson predicted losses in the financial sector could reach about $1,300bn (£664bn), compared with the International Monetary Fund's estimate of $945bn.
Speaking at the GAIM International hedge fund conference in Monaco, Mr Paulson added that deterioration in consumer spending would probably drive the US economy into recession this year.
Fintag says So he is not going long ABS, CDOs or Banks then? Another opportunity to short the living daylights out of all that crap pumped up by the Credit Rating Agencies, Incompetent Banks and Jim Cramer.
WORLDWIDE HEDGE FUNDS POST FIRST BACK-TO-BACK GAINS THIS YEAR
Hedge funds worldwide had the first back-to-back advance this year in May, led by European managers, as equities and commodities, including oil and gas rose, according to Eurekahedge.
The Eurekahedge Hedge Fund Index, which tracks the performance of 2,259 funds that invest globally, rose 1.8 percent, based on preliminary figures from the Singapore-based hedge-fund research and publishing company. The index extended a 1.3 percent advance in April, bringing its year-to-date gain to 0.7 percent.
The MSCI World Index of 1,745 stocks jumped 1.1 percent in May, also rising for a second month. Crude oil prices climbed 12 percent after the Organization of Petroleum Exporting Countries said there would be no increase in production.
Fintag says Let us not forget that Goldman Sachs and JP Morgan are the world's largest hedge funds. They are doing well and so are most hedgies (except nobody wants to invest in them ...)
naked shorts says " MF Global blows another tire "
I have to give credit where credit is due. I certainly wasn't the first to highlight the serious mess that our nation's finances are in. Others have come before me, though one could argue that my timing was a bit better than theirs.
One individual in particular who I am referring to is former presidential candidate Ross Perot. In "Charting America's Ruin," the Washington Post's David Broder details the recent reappearance of the billionaire entreprenuer who has a penchant for charts that tell a pretty sad story.
Bloomberg reports that former Citi CEO Chuck Prince has been hideously forced to cut the asking price of his Greenwich, Connecticut house, which is now entering its sixth month on the market, to $5.85 million. The price tag is still about a million more than what Prince bought the Tudor for in 2003, but $300,000 less than he was hoping to score from some sucker in '08. This is maddening to all of us but stewing about the injustice isn't going to get us anywhere. We've got to think, god damn it, think.
Fintag says Good job I got out when I did:
AIRLINES FLYING INTO FAR WORSE TURBULENCE THAN PREDICTED, ANALYSTS WARN
The airline industry will be hit by a downturn far worse than even the most tumultuous periods in recent memory - the post- 9/11 years and the early Nineties recession - new research predicts.
Morgan Stanley slashed its earnings forecasts yesterday for several major European carriers, including British Airways and easyJet, in the latest of a flurry of gloomy assessments of the industry. Penelope Butcher, the analyst who authored the report, warned that although the record oil price has already led to two dozen bankruptcies worldwide in the first half of this year, the worst is yet to come.
"The unprecedented move in crude and jet fuel prices over the last 12 months means that fundamental valuation methods are no longer valid for the airline sector," she said. "Industry returns are likely to be the lowest we have seen in recent history (including the last global recession and even September 11) and carriers could well break previous lows on [valuation] multiples". Several carriers will be plunged into loss, she added.
Fintag says Opportunity? Short countries that rely on tourism.
THERE WILL BE STRONG GROWTH IN FUNDS OF HEDGE FUNDS IN EUROPE OVER THE NEXT YEAR, WITH LESS DEMAND FOR SINGLE HEDGE FUNDS ACCORDING TO 65% OF ASSET MANAGERS
This report presents views on the market for hedge fund investment based on a survey of 100 leading asset managers across Europe. The report, which covers mass market, high net worth and institutional customer groups, forms part of a series looking at the market for alternative investments in Europe.
Scope
Sizes the onshore hedge fund market in France, Germany, Italy, Spain and the UK and provides forecasts to 2012; Analyses legislative developments and their implications for growth in the European hedge fund market; Identifies the primary client segments and appropriate marketing and distribution strategies for individual countries.
Fintag says But Fund of Hedge Funds invest in single managers ...?
HEDGE FUNDS HIRE FROM WALL STREET AS JOBS DISAPPEAR, PAY FALLS
Citadel Investment Group LLC, Tudor Investment Corp. and at least 20 rival hedge funds are taking advantage of job cuts and pay reductions on Wall Street to recruit top performers and expand into new businesses.
More than 45 traders, bankers, analysts and other executives have left the major investment banks this year to join hedge funds and private-equity firms, according to company releases compiled by Bloomberg. The count doesn't include people who departed to start their own companies.
Fintag says Long Hedge Funds. Short Incompetent Banks. It makes sense.
Morgan Stanley, the second-biggest US securities firm, said profit dropped by more than 50pc on declines in trading, asset management and investment banking.
Earnings from continuing operations fell to $1.03bn in the second quarter from $2.36bn, the Wall Street firm said. The news from Morgan Stanley came as John Paulson, founder of hedge fund Paulson & Co and one of the world's richest financiers, warned that global writedowns and losses from the credit crisis may reach $1.3 trillion.
"We're only about a third of the way through the writedowns," 52-year old Paulson told the GAIM International hedge fund conference in Monaco today. "There are a lot of problems out there and it will continue to be felt through the year. We don't see any signs of stabilizing."
Fintag says GAIM - full of junior people on a jolly. Opportunity to network? No, but a time to get a sun tan.
Morgan Stanley - held up by its Prime Brokerage business. Opportunity? Break its monopoly.
times says " Rogue London trader loses $120 million "
LAST NIGHT'S MANSION HOUSE FEAST WAS A BANQUET OF FOOLS
When our monetary and fiscal authorities are supposed to be delivering stability, it was one of the more unbelievable moments in City history to be sitting a few yards from Chancellor Alistair Darling and Mervyn King, Governor of the Bank of England, at last night's Mansion House banquet.
As Darling was announcing his new Financial Stability Committee, Sir John Gieve, the man at the Bank in charge of financial stability, was busy resigning - even though he was sitting a few yards from Darling himself. As Darling droned on, a piece of paper was passed to King who looked up and smiled and nodded at a friend.
Fintag says An excuse to put up this picture:
22 comments
anonymous said ...
FSA = Financial Screwup Agency
19 Jun 08 - 09:21 gmt
Moron said ...
don't worry just short asml:)))
19 Jun 08 - 11:08 gmt
anonymous said ...
long inter UK holiday companies
19 Jun 08 - 11:20 gmt
Moron said ...
the beauty of hedge funds is that you can make money in a bear market....for all intents and purposes equities in the western world have been in a bear market since 2000....housing and credit created a mini bubble...but that's over now....the west is in terminal decline....what a beautiful opportunity
19 Jun 08 - 11:27 gmt
MsR said ...
Goodness Fintag, when you said we'd have to go to cheaper hotels I hope you didn't mean the one in the picture. The houseboat's bad enough.
Better put up my Agent Prov pic to cheer this lot up..
19 Jun 08 - 11:52 gmt
anonymous said ...
any thouths on a base rate rise on the 10th?
19 Jun 08 - 11:56 gmt
Moron said ...
yeah Ms R ...we are all very cheerless at the moment:))) so remarkably despondent:))
19 Jun 08 - 12:12 gmt
MsR said ...
Well Moron he has the pics. But he felt that this was a serious week. I too am a little despondent: Fintag is travelling and I am having to impress all sorts of awful men to get them to give me their marketing. Soon I will have to wear shorter skirts.
19 Jun 08 - 12:25 gmt
Moron said ...
You'll be fine Ms R...be strong...don't do anything you don't want to do...its not worth it
19 Jun 08 - 12:44 gmt
MsR said ...
Fret not Moron: Haven't ever had to go beyond the flirting bit and never will. I have survived ad agency types remember..that prepares you for anything.
19 Jun 08 - 13:03 gmt
Moron said ...
yep...the world is full of all sorts of wierdos.....just remember...the wierdos are miserable themselves...they deserve sympathy
19 Jun 08 - 13:16 gmt
Obsessive Compulsive said ...
As a very odd person who cannot stand seeing the same word spelt incorrectly time and time again, may I please ask you Moron, if you could try and remember that the spelling is "weirdo" (e before i in this case). Many thanks.
19 Jun 08 - 13:43 gmt
Moron said ...
thanks ..its quite wierd that i misspelt weird again:))
19 Jun 08 - 13:46 gmt
anonymous said ...
Starting to hear this song now and it is getting colder ....
Near, far, wherever you are I believe that the heart does go on Once more you open the door And you're here in my heart And my heart will go on and on
19 Jun 08 - 14:09 gmt
Moron said ...
cheer up anon....this is such a juicy market....there are shorts galore everywhere.....the rally so far this year was such a classic deadcat...and look how far it went....this is the time to be merry.....and make money....:))))
19 Jun 08 - 14:41 gmt
anonymous said ...
and after just the ice the cold and the lifeboats - and the band playing nearer thy god to thee - as the RBS report said the worst market crash for a 100 years - jeesh this is real history in the making stuff. If you can fill your boots on the way to the lifeboats then good luck to ya !
19 Jun 08 - 15:10 gmt
Moron said ...
ha ha.... there is no greater joy than making a killing during the week and cruising the seas during the weekend....this is the way to live:))))))))))))
19 Jun 08 - 15:32 gmt
Top Cat said ...
Yep - it's great being a mermaid isn't it?
19 Jun 08 - 15:44 gmt
Moron said ...
good one TC.....that was genuinely funny:)
19 Jun 08 - 15:57 gmt
anonymous said ...
Anon - I think a base rate on 10th is going to happen. I think King was laying the foundations for this when he spoke recently with much doom and gloom
19 Jun 08 - 20:18 gmt
Top Cat said ...
Can we have the first episode of Curzon Street tomorrow please?
19 Jun 08 - 20:20 gmt
pete said ...
London underwater? I thought the smarter UK folks didn't believe global warming is a crisis. Are you just trying to stay popular with the girls?
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The City regulator has rushed to change its emergency rules on disclosure of short-selling during rights issues after discovering a loophole that would have enabled hedge funds avoid stating their holdings. The FSA reversed its position on how to take options into account when calculating the size of positions, according to Simmons & Simmons, legal adviser to many of London's biggest funds. The change of tack came just two days before the rules come into force demanding public disclosure of short positions of more than 0.25% during a rights issue. Critics claim the watchdog introduced the rules to help bank rights issues.