There were also a wife, kids, and dog on board. Continue reading »
Archive for December 2011
Fellow Country Club Members Throw Decorum To The Wind To Thank Leon Cooperman For Giving A Voice To The Oppressed
By Bess Levin
Capitalists “are not the scourge that they are too often made out to be” and the wealthy aren’t “a monolithic, selfish and unfeeling lot,” hedge fund manager Leon Cooperman wrote in a Nov. 28 open letter to the president. They make products that “fill store shelves at Christmas” and provide health care to millions. Cooperman, 68, said in an interview that he can’t walk through the dining room of St. Andrews Country Club in Boca Raton, Florida, without being thanked for speaking up. At least four people expressed their gratitude on Dec. 5 while he was eating an egg-white omelet, he said. “You’ll get more out of me,” the billionaire said, “if you treat me with respect.” [Bloomberg, earlier]
Noah ‘Judas’ Freeman Required Little Convincing That A Week In Puerto Rico > A Lifelong Friend
By Bess Levin
Remember Noah Freeman? To recap, he’s the former SAC trader who, in addition to taking part in an insider trading scheme, committed an arguably worse** crime (within a crime) when he stabbed his best friend, Donald Longueuil in the back. Despite splitting the work of obtaining and trading on material non-public information from a lobster-loving tyrant 50/50, Judas Freeman decided that Don, the guy who served as best man at his wedding and who prior to that happy day, helped him “get out of bed in the morning” following a bout of depression on account of being dumped by his previous fiancée, should be the one to take the brunt of the punishment. That’s why he agreed to wear a wire and coax Longueuil into incriminating himself on tape on four separate occasions, which finally paid off when Don gave Judas a riveting blow by blow account of exactly how he destroyed evidence of the insider trading they both took part in.
In exchange for selling his friend down the river, Freeman was given permission to go on vacation with his wife (first to Puerto Rico, then the U.S. Virgin Islands, which he’d been looking forward to for months). Now, at first glance, this seems fairly ice cold. Colder than the ice Judas and Don once glided down, hand in hand, even. One might even get the impression that Judas believed friends who will not only share your interest in ice skating but who will nurse you back to health following an emotional breakdown and give a bang-up speech at your wedding grow on trees. But maybe it didn’t go down like that? Maybe Judas tried desperately to avoid betraying the one person who was always there for him? Maybe he told the Feds they could go to hell and he didn’t jump at the chance to save himself on the back of Donald? Unfortunately, the evidence suggests otherwise. Continue reading »
$$$ AT&T Drops T-Mobile USA Deal [WSJ]
$$$ The Fed will adopt Basel III [WSJ]
$$$ “Contagion of euro area sovereign debt strains remains the most pressing risk for financial stability in the euro area, the European Union and even across the globe.” [FT]
$$$ Morgan Ricks: “Any serious program for Wall Street reform should start with two words: ‘term out.’” [TNR]
$$$ Are your interns on the collegiate men’s or women’s lacrosse all-name team? [Inside Lacrosse via Deadspin]
$$$ Rick Perry referred to Kim Jong-Il as “Kim Jong The Second.” Yes. Continue reading »
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Hedge Funds
You Too Can Invest Like A Kindly Grandfather And/Or Comic-Book Quant Superhero
By Matt Levine
There are those who think that Warren Buffett’s days of being an awesome value investor are behind him. Those people are crowing a little today after his recent darling Bank of America crossed $5 in the wrong direction, which I guess is a big deal. Here, however, is probably a thing not to think about that:
Yes, Bank of America’s stock swoon is dragging down America’s wisest investor, Warren Buffett, who now is about $1.5 billion underwater on his BofA common-stock warrants.
Disagree! I happen to have a model for that right here (earlier/caveats), and I have him very roughly breaking even (you’ll care about H24, which shows him up $52mm on his $5bn investment). This uses a 45% vol (vs. 62% mid on Jan-14 $7 calls, 77%ish for their A warrants struck north of $13, 58% 1-year realized) and 8.75% discount rate on the pref (around where I eyeball the Is and Js); you can dispute those assumptions and get a different smallish positive or negative number* but the important point is: Warren Buffett didn’t lose $1.5bn on his $5bn investment. If you’d invested $5bn in BAC common stock at around $7, when Buffett did, you’d have lost $1.5bn in round numbers. But you’re not Warren Buffett. (He is!)
Some people think that this is pretty crap – along the lines of “I’d be a great investor too if I could just get every financial firm to give me a sweetheart deal for lending them my Cherry Coke-encrusted halo” – but, of course, you can. A share of BRK/B is, like, 74 bucks. All that warranty goodness accrues to Berkshire Hathaway, not (just) Buffett.
Now, if there’s one investing strategy that I understand even less than “give my money to Bank of America to do what they will with it, what could possibly go wrong,” it’s “momentum investing,” where you buy stocks that have been going up because past results are a guarantee of future performance.** So I found this Fortune article about Cliff Asness’s new momentum-based retail mutual funds utterly baffling, and not only because a close reading suggests that these new funds were launched in 2009. Continue reading »
Bank of America Corp., the second- biggest U.S. lender, fell below $5 in New York trading for the first time since March 2009 amid concern that Europe’s debt crisis will be a drag on the world’s financial system…With most companies that have dropped to those levels, “it is usually some fundamental problem with the business model and it may go to zero, but I think Bank of America is very different from your typical small failing company,” Angel said. [Bloomberg]
LightSquared is a wireless venture that seeks to create “convenient connectivity for all.” But, as the part-time Phil Falcone biographers among us know full well, it stands to do much more. In short, it will make or break backer Harbinger Capital. Success will mean billions for Falcone and his investors, who are more or less being held hostage until this whole thing pans out. Failure will mean Wilbur Falcone looking for a new benefactor on the 5:54 Metro North to Greenwich.
As one can expect when one is doing ground-breaking, visionary-esque work, LightSquared has encountered some opposition. The yachting community worries the interference will cause them to get lost at sea. The National Oceanic and Atmospheric Administration says it “may degrade precision services that track hurricanes, guide farmers and help build flood defenses.” Mars is similarly pissed. Last week brought news that LightSquared caused “interference to 75 percent of global-positioning system receivers examined in a U.S. government test,” though that won’t matter much if this thing runs out of cash, which it just might. Continue reading »
Like many of you, probably, I read Barbarians at the Gate at an impressionable age, and was fascinated by the idea of M&A as a dramatic clash of swashbuckling personalities. Among the highlights of my brief time in the M&A business was the time we kept two competing bidders on different floors, unbeknownst to each other, and ran back and forth between them to negotiate a deal. I was all “hey this is like that book!”
Occasionally you can watch a deal from afar that tickles some of the same fancies. The Vulcan / Martin Marietta fight, though it’s early yet, is pretty fun. You’ve got the long negotiation process that seems to have bogged down over who got to be the boss, and ended in tears and recriminations after the Vulcan CEO never called back his Martin Marietta counterpart. You’ve got the pretty fake “hostile” exchange offer – if it’s contingent on the target board approving, it’s not really hostile – alongside the real hostility of two court cases, a brewing proxy fight, and a public war of words.
Now there’s Vulcan’s reply to one of those lawsuits, which is predictably feisty and paranoid, as well as the WSJ Deal Journal’s claim that “Vulcan may be even more unhappy that Martin Marietta launched its hostile bid in December. (Some lawyer’s holiday trip was ruined, perhaps?)” Which I thought was kind of BS; having worked for Vulcan’s law firm here, I can tell you that they pretty much plan their holiday trips around having them ruined and are bitterly disappointed if they have to spend Christmas break skiing or whatever rather than dictating 425s from Chamonix. But then I read the filing: Continue reading »
Publish A Photo Of The Original Bain Capital Team Celebrating Closing A New Fund By Reenacting Weekend At Bernie’s With A Dead Hooker For All He Cares, Just Keep The Shot Of Him Sipping Coffee During A Late Night At The Office Away From The Tabernacle
By Bess Levin
Mitt Romney says he knows a photo in which he appears with other executives at Bain Capital LLC posing with cash in their hands, pockets and mouths will be used against him if he wins the Republican presidential nomination. The 1980s image — called the “Gordon Gekko” photo by some Democrats, a reference to the Michael Douglas character in the movie “Wall Street” — offers an easy attack line at a time of high unemployment and sharp rhetoric against the nation’s top money managers, investors and bankers. “We posed for a picture, just celebrating the fact that we had raised a lot of money and then we hoped to be able to return it with a good return,” Romney said on “Fox News Sunday.” [Bloomberg, earlier]
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For those of you who’ve been missing the CNBC anchor since she parted ways with the network last March, a Christmas miracle: she’ll be joining Bloomberg TV January 9 co-hosting “Street Smart” from 3-5PM, pitting her against former colleague Maria Bartiromo and the “Closing Bell” time slot. In related news, the whereabouts of departed CNBC personality Dennis Kneale are still unaccounted for.
