Opening Bell: 10.24.12

Hedge Funds Belt Few Home Runs (WSJ)
They are the few. The proud. The hedge-fund managers making a killing this year. David Tepper’s firm was up about 25% through Friday, partly from a bet Europe will avoid a meltdown. Steve Mandel’s firm gained nearly as much from soaring consumer and technology stocks. Pine River Capital Management rose 30% thanks in part to subprime mortgages, as did Josh Birnbaum’s Tilden Park. And the Barnegat Fund has climbed over 39% with a debt strategy that the manager concedes isn’t for the faint of heart. The big gains, as reported by fund investors and people familiar with the firms, come as most hedge funds struggle for the fourth year a row, the longest period of underperformance since 1995 to 1998. Hedge funds on average gained 4.7% through September, according to industry tracker HFR, while stock-trading funds were up on average 5.5%. By comparison, the Standard & Poor’s 500 index scored gains of 14%, including dividends, through Friday.

Bond Investors Put Faith In A More Stable Africa (WSJ)
Last month, Zambia raised $750 million with a 10-year global bond in an auction that drew offers worth more than 15 times that amount. Nigeria in September sold 30 million naira ($192,000) in five-year bonds, to demand twice as high. Spurred by the heavy interest, Rwanda wants to issue a global bond by June and Kenya is planning one as early as next year. Investors’ willingness to step up to buy African bonds is another sign of their thirst for yield. Efforts by the Federal Reserve and other major central banks to push down interest rates and buy developed-market bonds have driven investors further and further afield. Africa, a continent of more than 50 countries, is considered one of the last investing frontiers—many of its nations have been isolated from international markets, in part due to a history of default by some countries.

Sir Mervyn King: no recovery until banks recapitalise (Telegraph)
Raising the prospect of rights issues or even another taxpayer bail-out for the state-backed lenders Royal Bank of Scotland and Lloyds Banking Group, Sir Mervyn King said UK banks have “insufficient capital” to protect against undeclared losses on their books.

FDIC Gets Windfall In Bank-Failure Settlement (WSJ)
International Paper Co has agreed to pay the FDIC to settle a year-old lawsuit stemming from the 2009 collapse of Guaranty Financial Group, an Austin, Texas, company that ranks as the fifth-biggest U.S. bank failure. As part of the agreement, the failed bank’s creditors will get an added $38 million, bringing the total settlement to $80 million. Although International Paper, Memphis, Tenn., didn’t have any direct connection until this year to the banking industry or to the failed Texas bank, its involvement in the case demonstrates the long tentacles of the financial crisis. International Paper was pulled into the case in February when it bought packaging firm Temple-Inland Inc., which had owned Guaranty for nearly two decades before spinning it off into an independent company in 2007. Guaranty failed less than two years later, weighed down by toxic securities that were backed by adjustable-rate mortgages. It had 162 branches and $13.5 billion in assets. The bank’s deteriorating securities portfolio was the subject of a page-one article in The Wall Street Journal just before it failed. The failure cost the FDIC’s deposit-insurance fund $1.29 billion, according to an estimate published on the agency’s website.

RBS Settles Over Loans In Nevada (NYT)
The Royal Bank of Scotland agreed to pay $42.5 million late Tuesday in a settlement with the Nevada attorney general that ends an 18-month investigation into the deep ties between the bank and two mortgage lenders during the housing boom. Most of the money paid by R.B.S. — $36 million — will be used to help distressed borrowers throughout Nevada. In addition, R.B.S. agreed to finance or purchase subprime loans in the future only if they comply with state laws and are not deceptive. The settlement between the bank and Catherine Cortez Masto, Nevada’s attorney general, relates to conduct at Greenwich Capital, the R.B.S. unit that bundled mortgages into securities and sold them to investors. Nevada found that R.B.S. worked closely with Countrywide Financial and Option One, two of the most aggressive lenders during the boom.

Aurora Bird Hoarder: ‘I Was Obsessed’ (CBS)
Outside of his west suburban Aurora townhome Monday, Dave Skeberdis admitted right away: “I am a hoarder.” “I did let the birds multiply. I admit, I was obsessed,” he said. “But I’m a regular person.” Skeberdis, 57, estimated that there are 200 birds of varying species inside his townhome in the 200 block of Shadybrook Lane. He returned to the home Monday to feed the birds. “It’s condemned, but they can’t stop me from going into the house,” he said. “I don’t really want to lose them, but this is too many birds.” On Monday, Skeberdis, who is employed in the information technology field, said he can now understand that his bird collecting is out of control. He said he is from a family of hoarders. “I think it’s time for a change in my life,” Skeberdis said…Skeberdis, who is not married, acquired his first bird seven years ago, he said, on April 15, 2005. While working in computer support at United Airlines, he “rescued” a parakeet, and later named the bird “Doc.” “I saved his life, and he saved mine,” Skeberdis said. Over time, he bought and adopted more birds. Those birds include a Chinese Quail named “Demon,” blind bird “Longstreet” and scalped bird “Liz Cojack,” and a white baby parakeet he hand-fed and once carried to work with him in a briefcase.

Appeal In Insider Trading Case Centers On Wiretaps (Dealbook)
In March 2008, the Justice Department made an extraordinary request: It asked a judge for permission to record secretly the phone conversations of Raj Rajaratnam, a billionaire hedge fund manager. The request, which was granted, was the first time the government had asked for a wiretap to investigate insider trading. Federal agents eavesdropped on Mr. Rajaratnam for nine months, leading to his indictment — along with charges against 22 others — and the biggest insider trading case in a generation. On Thursday, lawyers for Mr. Rajaratnam, who is serving an 11-year prison term after being found guilty at trial, will ask a federal appeals court to reverse his conviction. They contend that the government improperly obtained a wiretap in violation of Mr. Rajaratnam’s constitutional privacy rights and federal laws governing electronic surveillance…Such a ruling is considered a long shot, but a reversal would have broad implications. Not only would it upend Mr. Rajaratnam’s conviction but also affect the prosecution of Rajat K. Gupta, the former Goldman Sachs director who was convicted of leaking boardroom secrets to Mr. Rajaratnam…A decision curbing the use of wiretaps would also affect the government’s ability to police Wall Street trading floors, as insider trading cases and other securities fraud crimes are notoriously difficult to build without direct evidence like incriminating telephone conversations.

Ex-Goldman Director Gupta Awaits Sentence In Insider Trading Case (Reuters)
Gupta’s lawyers have requested that he be spared prison, citing his work with groups such as the Bill & Melinda Gates Foundation on fighting disease in developing countries. Bill Gates, Microsoft Corp’s co-founder, and former United Nations Secretary-General Kofi Annan are among the luminaries who have urged Rakoff to be lenient. As one alternative to prison, the defense proposed “a less orthodox” plan in which Gupta would live and work with Rwandan government officials to help fight HIV/AIDS and malaria in rural districts, court papers said. Federal prosecutors, however, argue that Gupta should serve eight to 10 years in prison.

Companies Are Sitting On More Cash Than Ever Before (CNBC)
Amid a lackluster earning season that has featured many companies missing sales expectations, cash balances have swelled 14 percent and are on track toward $1.5 trillion for the Standard & Poor’s 500, according to JPMorgan. Both levels would be historic highs.

Denny’s heads to Middle-earth with ‘Hobbit’-inspired menu (LA Times)
It’s Bilbo Baggins time down at Denny’s, which is rolling out a menu and marketing campaign based on the upcoming film “The Hobbit: An Unexpected Journey.” The 11 new menu items are enough to satisfy the diminutive creatures’ six-meal-a-day habit, with options such as Shire Sausage, Bilbo’s Berry Smoothies, Build Your Own Hobbit Slam and Radagast’s Red Velvet Pancake Puppies. The film, based on the novel by “Lord of the Rings” author J.R.R. Tolkien, opens Dec. 14. The limited Denny’s offer will run from Nov. 6 through January, according to the chain.

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Comments (66)

  1. Posted by Bandersnatch | October 24, 2012 at 7:12 AM

    FKApmco
    As requested, here's my cliff notes version of Why I Left Goldman Sachs

    Chapter 1 (pt 1) – Obligatory into regarding Greg’s early life and how he got hired:
    June 2000. 21 year old summer intern. One of 75. Open meeting held twice per week, a training class for interns. Grilled like The Paper Chase. Tough. Need to excel, not be a dick, find a rabbi. All are superacievers. From South Africa, went to Stanford. Greg is eager. A girl cries. GS doesn't want bullshitters. Greg likes the rigorous culture. He grew up in South Africa in an unexceptional Jewish family. Did well in HS, got scholarship to Stanford. Did well, interned at Paine Webber. Interviews at GS, he does well. Goes to NYC which he learns is expensive and can be hot in the summer.

  2. Posted by Bandersnatch | October 24, 2012 at 7:13 AM

    Chapter 1 (pt 2) – Obligatory into regarding Greg’s early life and how he got hired:

    Trading floor is big, full of energy. Interns don't add much value, get assigned internish tasks. Detail oriented, they don't want interns who fuck simple things up, e.g. Cheddar cheese salad. Lots of work, had to work late and weekends frequently. Would do non-work stuff when not working. Greg did well, it's not just about IQ. Guy from Harvard shows bad judgement in a rap song. Another guy got caught taking a nap in an out of the way room. Need to find someone who will want to hire you full time. Sometimes GS took the interns to Yankee games or other fun stuff. Sales and trading will be his thing. Rudy in Emerging Markets will be his rabbi. Rudy is a decent guy. Went to Scores – didn't have money to pay for the lap dances he received.

  3. Posted by Bandersnatch | October 24, 2012 at 7:14 AM

    Chapter 2 – Young and enthusiastic; starting to learn

    He's been hired. Reminisces about having fun in college and about graduation. Trouble finding a place in NYC, stays on a blow up mattress at a Bangladeshi friend's place for a while. Gets a place with two roommates. Must pass series 7. Lots of studying, listened to Sinatra. Lots of betting on the results by GS employees. He's nervous on test day. It's a long exam and is interrupted by 9/11. His recollection of his feelings. GS is impressively proactive and helpful. Hard to refocus on retaking the test. He starts to learn at GS and passes the Series 7. He works with clients and travels. He is young, enthusiastic and happy. Does his first trade and Rudy commemorates the occasion by cutting off a button because he didn't have a tie. What people wear. Rudy is a tough but fair boss. He calls Greg Springbok which Greg likes.

  4. Posted by Bandersnatch | October 24, 2012 at 7:15 AM

    Chapter 3. The learning continues

    Early 2002, layoffs going down. He ponders GS and other firms' role in the Internet pbubble and their conflicts of interest. Prakash, a college friend, is an important client in Boston. Discusses ping pong and the Maccabiah Games. He won bronze. Throws the championship match at a ping pong tournament to keep a client happy. That summer, Rudy moves to US equities. Cuts are coming but he feels optimistic as he's top quartile. Applies for a Rhodes Scholarship in case things don't work out at GS. Interviews for the futures group with Corey. It goes well and then he has to meet Corey's boss.

  5. Posted by Bandersnatch | October 24, 2012 at 7:16 AM

    Chapter 4. Futures – Greg begins to master his trade

    Corey's boss is Michael, an Aussie, who is very smart and charismatic. Talks about michael's clients, the big global macro funds. He gets the job in futures. Doesn't get the Rhodes Scholarship, blames anti-American views of South African panel. Futures is faster paced and the desks are packed closely together. New nickname is Gregor MacGregor. Talks about the MERC, bids and offers. He starts to learn. Makes a trading error which turns out to be minor, vows not to repeat the error. Attention to detail is important. He learns more. His boss takes a vacation – things are hectic but Greg handles it all. The Northeast blackout occurs – Greg and Michael are the only two who don't evacuate. Greg did a good job.

  6. Posted by Bandersnatch | October 24, 2012 at 7:20 AM

    FKApmco
    I'll probably give you the rest in the next few days. However, I'm a third of the way through the book and it's extremely dry and has little to interest anyone with a passing knowledge of the finance world so I may find better things to do.

  7. Posted by Guest | October 24, 2012 at 7:49 AM

    "But I'm a regular person"

    Let's agree to disagree.

    - Actual Regular People Everywhere

  8. Posted by I'm here all week | October 24, 2012 at 7:52 AM

    Can we watch you give FKApmco the rest?

  9. Posted by Gollum | October 24, 2012 at 8:20 AM

    Whoa! No Smeagol's Raw Fish Guts?

  10. Posted by Long'n | October 24, 2012 at 8:26 AM

    Smaug's Golden Shower?

  11. Posted by Just saying | October 24, 2012 at 8:32 AM

    "Shire Sausage, Bilbo’s Berry Smoothies, Build Your Own Hobbit Slam and Radagast’s Red Velvet Pancake Puppies"

    Sounds like titles for Hobbit porn.

  12. Posted by Motiv Cocktail | October 24, 2012 at 8:46 AM

    This will definitely quell the arguments that Denny's does not like serving the brothers…
    Guess the Harry Potter themed menu wasn't white enough.

  13. Posted by Jeff G. | October 24, 2012 at 8:48 AM

    I can confirm this.

  14. Posted by Guest | October 24, 2012 at 8:54 AM

    I'm only a third of the way through the cliff notes version and I've already lost interest.

  15. Posted by Denny's Cook | October 24, 2012 at 8:54 AM

    "YOU!….. SHALL NOT!….. PASS!….. this delicious, constipation inducing breakfast sausage!"

  16. Posted by Guest | October 24, 2012 at 8:57 AM

    bro..

  17. Posted by gUEST | October 24, 2012 at 9:12 AM

    "Build Your Own Hobbit Slam"

    Sounds like a Laxbro weekend project.

  18. Posted by Guest | October 24, 2012 at 9:39 AM

    Constipation? QUITE the opposite.

    - Denny's Bathroom Custodian

  19. Posted by PermaGuestII | October 24, 2012 at 9:41 AM

    Republic of Zambia 5 3/8 Sep 22 issued @ +383/10yr, 15x oversubscribed.

    This is going to end well.

  20. Posted by UK | October 24, 2012 at 9:48 AM

    Highlanders don't look like this freak.

  21. Posted by Afrikaners | October 24, 2012 at 10:09 AM

    too close to home

  22. Posted by Guest | October 24, 2012 at 10:11 AM

    Only if they give me their car title as collateral.

  23. Posted by Guest | October 24, 2012 at 10:13 AM

    The brothers already have Red Lobster and IHOP.

  24. Posted by guest | October 24, 2012 at 10:17 AM

    "The Hobbit: An Unexpected Journey"

    When Laxbro uses SkyMiles to fly a hideous UMich hipster chick to New York.

  25. Posted by Laxbro | October 24, 2012 at 10:20 AM

    "Went to Scores – didn't have money to pay for the lap dances he received."

    Typical…..

    - Mel Gibson

  26. Posted by All Dat MONEY$ | October 24, 2012 at 10:21 AM

    Insert: All Buffets

  27. Posted by Penn Fapper | October 24, 2012 at 10:21 AM

    Anyone buying into Clearwire?

  28. Posted by Guest | October 24, 2012 at 10:24 AM

    We goin Sizzler..we goin Sizzler

  29. Posted by Guest | October 24, 2012 at 10:28 AM

    What's the ticker?

  30. Posted by Penn Fapper | October 24, 2012 at 10:29 AM

    CLWR. I see S as the better buy, but keep getting told to move on it.

  31. Posted by Good Times Man | October 24, 2012 at 10:31 AM

    Nothing beats seeing a little brotha after a baptist church service in his three piece white suit at the Old Country Buffet.

  32. Posted by guest | October 24, 2012 at 10:33 AM

    "Doesn't get the Rhodes Scholarship, blames anti-American views of South African panel."

    Greg, we pegged you as a slimy soulless geek looking for a marketable exit strategy from the crumbling financial sector. Looks like we were WAY off the mark.

    - South African panel

  33. Posted by Lowly Assistant | October 24, 2012 at 10:34 AM

    Liz Cojack is a friend of mine.

    -Charlie "Jack Link's" Gasparino

  34. Posted by Flo | October 24, 2012 at 10:49 AM

    They serve corn chowder on Tuesday's. I hate Tuesday's.

    - Denny's Bathroom Custodian

  35. Posted by PermaGuestII | October 24, 2012 at 10:49 AM

    I thought it was Cracker Barrel that had issues of that kind.

    -guy who doesn't know where to find any of the above mentioned restaurants.

  36. Posted by Flo | October 24, 2012 at 10:50 AM

    THAT'S WHAT SHE SAID

  37. Posted by Alt_EST | October 24, 2012 at 10:50 AM

    Examine your credit risk management motives

  38. Posted by Logicbro | October 24, 2012 at 10:52 AM

    That's great, but one has to wonder what are YOU doing at the Old Country Buffet?

    - David Hume

  39. Posted by Guest | October 24, 2012 at 10:55 AM

    When your Opening Bell gets posted at 10:30 every day, but appears on the site as being posted at 9:30, that's logistics.

  40. Posted by Guest | October 24, 2012 at 10:59 AM

    That $194,000 number sounded so outrageously and comically low that I had to fact check. It appears that Nigeria actually placed N30 billion of 5 years and N30 billion of 7 years. And neither was even close to oversubscribed x2. http://www.dmo.gov.ng/oci/auction/docs/SUMMARY%20

  41. Posted by Guest | October 24, 2012 at 11:10 AM

    Part of his UBS bonus was in OCB coupons.

  42. Posted by PermaGuestII | October 24, 2012 at 11:12 AM

    What, a 15 y/o Toyota Hilux with bench seats in the bed and a corrugated iron roof isn't good security?

  43. Posted by dollarized | October 24, 2012 at 11:12 AM

    so N 30 = ??? $

  44. Posted by Page Six | October 24, 2012 at 11:20 AM

    In other news, James Franco, 34, is slaying Ashley Benson, 22. Living the dream.

  45. Posted by Guest | October 24, 2012 at 11:22 AM

    The article used the right rate as of September, it was just off by a factor of 1,000 on the size of the placement. N 30 is .194 USD as of September. Currently, N30 is .191 USD.

  46. Posted by dollarized | October 24, 2012 at 11:28 AM

    thanks

  47. Posted by EIEIO | October 24, 2012 at 11:41 AM

    JFGI.

    HTH, HAND.

  48. Posted by Amazon Reviews | October 24, 2012 at 11:46 AM

    Chapter 5. Speed Dating – Nobody loves me

    Greg signs up for speed dating based on Michael the Aussie advice. Show up to dating venue, all girls claim to be on period and leave. Word gets out on the trading floor. File lawsuit against speed dating company for anti- Maccabiah Games views.

  49. Posted by Good Times Man | October 24, 2012 at 11:48 AM

    You know what the worst part about it was? The OCB coupons expired in 2009.

  50. Posted by fittin in | October 24, 2012 at 11:48 AM

    "Would do non-work stuff when not working". thanks for the succint insides. you should publish these..

  51. Posted by Doug Hutchison | October 24, 2012 at 12:02 PM

    I suppose then I am living the dream's dream

  52. Posted by FKApmco | October 24, 2012 at 12:05 PM

    Good man, Bander. Feel free to find something better to do. I'll pay you pro rata for the chapters covered.

    PS are you familiar with credit risk?

  53. Posted by PermaGuestII | October 24, 2012 at 12:08 PM

    Does he change people's names, I wonder, or is Rudy in Emerging Markets now going to have to live with people knowing he thought this guy was a good hire?

  54. Posted by Guest | October 24, 2012 at 12:18 PM

    Courtney Stodden > Ashley Benson.

  55. Posted by Slow Learner | October 24, 2012 at 12:21 PM

    After losing money by lending to people who couldn't pay it back to buy things they couldn't afford, our solution is to lend to Africa.

    It's good to see people learning from their mistakes.

  56. Posted by Bored Guest | October 24, 2012 at 12:27 PM

    4710.

  57. Posted by Motiv Cocktail | October 24, 2012 at 12:27 PM

    Essaktlee!!! Jue tell dem.

    - Argentina

  58. Posted by Bandersnatch | October 24, 2012 at 12:37 PM

    Wouldn't be the first time I did something for a good looking girl and didn't get the payment I thought I deserved

  59. Posted by UBS MD | October 24, 2012 at 1:08 PM

    UBS laid off more analysts today! Rumored to be 10% of the bank. This is just to reaffirm it "reputation". UBS is a Titanic, except much smaller and not as luxurious and noone is going to care when it finally goes down/sold to someone for cents on a dollar.

    -UBS MD looking for exit opps at Mcdonalds

  60. Posted by PermaGuestII | October 24, 2012 at 1:31 PM

    Countries don't go bust.

    -Walter Wriston

  61. Posted by VonSloneker | October 24, 2012 at 2:14 PM

    +1

    - Balrog

  62. Posted by Mike Ho. | October 24, 2012 at 3:48 PM

    <img src="http://www.newautoquote.us/ikeas/loo.jpg"/>What? I can't believe share of facebook just shoot up this morning. <img src="http://www.newautoquote.us/xboz/jj.jpg"/&gt;

  63. Posted by Guest | October 24, 2012 at 5:16 PM

    In their defense, this is probably the first time that information about an investment opportunity in Nigeria wasn't exactly as represented.

    - MF Global EMEA Sovereign Risk Quant

  64. Posted by Christopher | October 24, 2012 at 7:52 PM

    He said he is from a family of hoarders. “I think it’s time for a change in my life,” Skeberdis said…Skeberdis, who is not married….

    ————————-

    Okay, when I read that last bit you coulda knocked me over with a feather from any of those birds. No young lady has snapped this guy up yet?

  65. Posted by MaPaWa | October 24, 2012 at 9:10 PM

    this deserved more than one thumbs up. the perils of posting 12+ hours after desks open…

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