Brass-balled letters to investors from managers informing investors, unapologetically, that (circle one or more) (a) great news: you’re getting 3 cents back for every dollar you invested in our fund (b) requests for money to be returned have been DE-NIED (c) markets = stupid, me = smart are a dime a dozen. That much is obvious. Missives written under the tutelage of Blanche DuBois, are much more rare, and until very recently, came exclusively from our favorite she-males in Stamford. When Warren Lichtenstein got drunk and sat down to compose some thoughts on the matter of his firm’s decision to turn its flagship hedge fund into a publicly-listed vehicle, without telling anyone, after losing 43 percent of its assets in the first 11 months of 2008, he could’ve taken the easy way out, and just been a dick. But the pre-op transsexual in him said “No, Warren, NO. You can do better. Let’s show THOSE BITCHES what you’ve got.” I think we can all agree, he did just that.
Steel Partners Complaint [PDF]
Archive for January 2009
Apparently, U.S. Air is sending $5,000 to each passenger who landed in the Hudson River. Sounds small until you consider: when was the last time you got paid for a 15 minute trip from LaGuardia to the West Side Highway? When it’s Ken Lewis heading into the city, the flow of payments goes exactly the other way, after all.
U.S. Airways sends $5,000 to passengers in crash-landing [CNN]
Of course, we loved “Dear Shareholder” letters before Bernie Made-off was a twinkle in our pseudo-journalistic eyes, but he has certainly raised the bar. Consider the latest offerings from Gabriel Capital Group, overseeing the Merkin-managed Ariel Fund:
In light of the fraud’s devastating impact on our portfolio and, in particular, on our liquidity, we believe our only realistic option is to wind down Ariel Fund Limited and engage in an orderly disposition of its portfolio positions. The process will likely take several years to complete since many of the remaining assets are illiquid investments. We will distribute proceeds as the assets are realized, and in order to treat all shareholders fairly and equally, the Board of Directors has determined to suspend the determination of the net asset value of the shares and all redemption rights (including pending redemption requests).
Ariel Fund liquidation letter 12 19 08.pdf
Ariel Revised Financial Statements Dec 31 2007.pdf
This has got to hurt. The Times reports that save for the time he “invited a girl all the way from New York” to a formal at the University of Alabama, Bernie Madoff’s Sammy brothers don’t really recall jack about the Ponz. master. Martin Brill told writer Allen Salkin (‘s dad, who overlapped in the house with Berns for a year), “There isn’t much about Bernie that stands out in my mind. He was a low-key sort of guy who stayed out of trouble but also lacked any outstanding personality trait.” Malcom Lindy noted harshly, “He wasn’t an outstanding athlete or outstanding with girls. I just don’t remember anything outstanding about him.” Leonard E. Indianer said he “doesn’t recall [Madoff] at all.” There is hope, for the sake of Bernie-boy’s ego, however, in Nancy Daar’s categoric denial. Nancy, Arthur Daar’s widow, claimed vehemently that her husband “never, ever mentioned Bernard,” implying that the two didn’t even know each other. But Dealbreaker readers know better. The real subtext here is deeply repressed shame over Madoff beating out Daar for the title of fastest ookie-cookie finisher during hell week. Didn’t know him, my ass.
His once mega-successful hedge fund may be in the shitter but Steve Cohen is back on top where it matters most: the Greenwich plumbing community. Back the truck up to last May, my little Steves, when Russian billionaire Valery Kogan announced his grand plans to build a 27,000 square foot home in Greenwich, replete with 26 toilets. The record number would’ve thoroughly trounced SC’s 19, embarrassed him in his own domain and broken a law (Section 182, clause 17 of the Greenwich town code clearly states that “no home shall exceed the number of waste-removal stations as are found at Casa Cohen”). Cohen was beside himself, and we have it on good authority that the blow SAC took to its portfolios last winter and fall were a direct result of Papa Bear’s distress, and not the markets, or idiot traders.
Today, we are pleased to report that after digging deep and putting his back into it, Stevie-boy has turned things around. I don’t think I can say definitively that death threats were made without being sued for libel but obviously it was made clear to the Kogans that they were not to cross the big guy on this one. Valery’s wife Olga is set to appear before the P&Z Commission with a new proposal, under which the Ruskies’ home at 18 Simmons Lane would be outfitted with a mere fifteen toilets. A solid victory, yes, but this thing is FAR from over. We’re told by a member of the special toilet task force, which is comprised of star SAC employees, that SC won’t stop until he gets the Kogans down to 2.5. Then and only then, when order is restored, will he be able to focus on positive returns. I don’t think I have to tell you we’re rooting for him.
Nothing gets past the Dollar Dominatrix!
BAC expects most of its businesses will produce positive earnings in 2009, which implies that some will not.
Meredith Whitney On BAC 4Q08 Earnings [PDF]
C’s core problem is that it simply doesn’t make money in any of its businesses except Smith Barney, which it is in the processof selling.
Meredith Whitney On Citi’s 4Q08 Earnings [PDF]
Compensation breakdown for JPMorgan IB is out. In a note sent late last Friday, co-heads Bill Winters and Steve Black apparently informed employees that the cash portion of bonuses will be capped at $1 million. Anyone making over 100k will get at least 20 percent in stock, with a lower cash to stock ratio as salary increases.
Fund Fugitive’s ’05 Finagling (NYP)
Arthur Nadel, now being dubbed, by some, as “Mini Madoff,” was probably working on his own Ponzi scheme as early as 2005. And although federal agents are on his tail, he seems to be in good spirits, hangin’ in a small town just north of New Orleans.
Hedge Funds Help Fund Obama Inauguration (FINAlternatives)
“The bill for Obama’s swearing-in may hit $150 million–more than $100 million of which is for security costs. And among those giving the maximum $50,000 per individual are Soros Fund Management’s George Soros and D.E. Shaw Group’s David Shaw, leading a large number of hedge fund industry professionals to pay for the inauguration.
The Presidential Inauguration Committee has raised more than $27 million, of which $7.1 million came from those involved in finance, according to the Centre for Responsive Politics. The Soros family alone gave $200,000. Other hedgies (or former hedgies) giving the max include Grosvenor Capital Management’s Stephen Malkin and Michael Sacks (and Sacks’ wife, Cari), Paloma Partners CEO Donald Sussman and Oaktree Capital Management Chairman Howard Marks.”
AIG’s Neuger Stepping Down (WSJ)
“Mr. Neuger said in an email that he isn’t taking a narrower role but that the sale of the asset-management business necessitates all investment personnel moving to one side of the business or the other. He said he was the founding CEO of that business and it would no longer be possible for one person to fill both roles once it is sold.”
Irish Bank Set To Be Nationalized (BBC)
The Irish are some of the most phenomenal people I’ve ever had the opportunity to live with; their capacity for not giving a shit isn’t only commendable but worthy of study. The small island-nation has decided that nationalization is in the better interest of the people than is a bailout: I would be quick to point out that the former is also the best route to full out socialism, whereas the latter merely provides for loss of money.
Money, as it turns out, is so often easier earned back than freedom.
The Bernie Madoff Letter (PacificGatePost)
A dutiful reader emailed this to us this morning, and while we’re (mostly) sure it’s absolute fraud– we still need you to weigh in. GTFO or…?
Programming Note: We’re off ’til tomorrow. Enjoy the holiday, and see you Tuesday morning! Also, solicitation: if anyone is free on Friday and interested in covering Wharton’s annual Private Equity & Venture Capital conference (which was taken over by protesters last year), get in touch!
Citi Passes Torch To RBS (Bloomberg)
RBS is looking at a loss of as much $41B on top of which they could write down as much as £20B in past acquisitions, which makes them king of the mountain. There’s a certain amount of respect owed to those that can dethrone the once mighty Citi from atop a vast heap of brutal carnage; the idea that Pandit might be Jr. to some more nefarious individual is almost, well, shocking. I’m sure the Citi boys will be quick to point out that the RBS’ers have a long history of wearing skirts, such that it’s not entirely surprising that they found themselves bent over the copying machine – but I warn thee, Citi, don’t make that mistake: it could very well be your last.
UBS Buys AIG Commodities Index (DJNewswire)
UBS has acted with all the grace of a bi-polar prostitute in days of recent past; this move doesn’t exactly clarify their positioning in the market. The pick-up is going down for $15MM on the front end with $135MM negotiated over the next 18 months depending on performance. You’ll remember AIG wanted the government (who currently has a kung-fu deathgrip on the firm’s balls) to allow them to accept stock in lieu of cash while unwinding – the UBS rent-to-own plan appears to be a reasonable alternative.
Blackstone To Launch S. Korean Unit (Reuters)
The unit will launch with $6MM with the intent of targeting around $2B in acquisitions over the coming years. This move almost appears to be government sponsored: it wouldn’t be out of line for the small(ish) government to have called in PE firms to do a bailout of a mid/small’s that are suffering from liquidity issues.
Russia/Ukraine Saga To Come To A Temporary Close (WSJ)
The phenomenon that is the former Soviet Bloc isn’t ever to be underestimated: their capacity for instability is unheard of in Western circles. The Ukrainian government has effectively (and without apology) held Russian gas from Europe as part of their annual price negation process, which is apparently coming to an end:
“Russian Prime Minister Vladimir Putin said Ukraine will pay 20% less than the European price for this year. This means a substantial increase for Ukraine in the first quarter but the price could fall significantly later in the year as gas prices are expected to drop.
Ukraine’s Prime Minister Yulia Tymoshenko said natural gas supplies would resume once the two countries’ gas companies sign a contract. It wasn’t clear how soon this would happen. Russia’s Gazprom and Ukraine’s Naftogaz, both state controlled, were told to prepare the documents.”
Though the whole Morgan Stanley getting Smith Barney for $1 or so thing would in turn look like a scam, very supposedly, Vikram Pandit is headed for employment at MS.
