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@15,@19,@24 Actually only have raised 20 mio at 1/2 fees from a bucket shop in Geneva. But they go around telling everyone they've raised $50 to appear to have some momentum. This is an early version of the presentation that Peress had to alter after coming under legal threat from Fortress for the false returns included in this version. This track record is absolute fiction and he went out to the investment world and said that the $200-300 mio he lost trading last year wasn't his fault or portfolio. Absolute fraudulent marketing. More later.
Its been a couple of years since I logged on here. And I love the banter, as fresh and fast as it was in the summer of 2007 when this thing started. @20, you made my day. @25, right on. Its the industry's way of saying, you don't want granny to go hungry do you? Still, the libs are out of control on this and the Cramdowns. Lets see if they get away with it.
When K2 bought his stake in GM, they wrote a huge article about his dealings with Ace Greenberg and Bear Stearns handling his order. Junior banker advising KK how to get the order done. Ace putting junior banker down, "You don't tell Babe Ruth how to swing his bat." Great story at the time. Ironic? now?
The IPO was at 18.50. It traded much higher.... but should they be judged by the insane mania for listed private equity-hedge funds, or by their results? Start to look into what drives the firm's earnings, and writedowns of partner compensation and the castle investments, and your focus on Wes is really foolish. That is not where the cheddar is made, nor why its bouncing.
For the Goldmanites properly valuing their time: http://www.stadiumpal.com/
Fortress is in fine shape. Cramer ranted against them this week knowing almost nothing about their business. The only viable critique is that people who bought their equity on the opening day, at the post ipo highs, have been fcked hard. Their listed equities, Newcastle, Gagfah etc have suffered as leveraged real estate trusts that dabble in credit. But these vehicles makeup less than 10% of their earnings and the other businesses are all doing fine. Largest earner right now is their hedge fund business which is growing and up on the year by 3-5%. They fired a few PMs in the equities business, but that was house cleaning. Not desperation. Earnings released later today. Conf call should be worth listening to....
Spilker is a muppet. Lloyd's coffee boy. Unbelievable that a guy of this caliber makes it onto the management committee. Sell Goldman. Its not the franchise it once was and anybody worth their salt has left to start their own fund. Most successfully, a few of Spilker's old colleagues, not. Like Beller and Grant.
Speaking with Citi recently about emerging market debt....and they said they would take care of my needs there, but asked if I would be interested in an appetizer of Leveraged Loans by any chance? Seriously.
Reactions To The Rate Cut
Since Ben took office: Dollar down 12% Gold up 27% Silver up 33% Stocks up 19% He's no fan of the downside. 5 years from now....double today's inflation, much lower dollar, and then soaring rates led by the market and the next Fed Chair....
Ski Vacation? My wife was working on the "fall" break today, 1 day after returning from the Hamptons for a month. Christ!
Actually DM is 45 or so. Good guy. Has a fun rap about energy, but never really has made any "real" money in the markets, without giving it back in the reversals. I don't know Newton, but assume he's the same age. They are a great example together of how much money has come into the space pursuing average managers. See also Mother Rock, Amaranth, and in the near future Red Kite. If the regulators don't catch up with them before their risky and quasi-legal antics do, add Amajaro and Touradji to that list.
Yes! That is exactly the right question and a plausible answer. And the stock trades higher on the day.....nuts.
Citi's Michael Rosborough, PIMCO and Moore Capital graduate, has a 10 page piece out today explaining why, from a capital flow perspective, we are very much back to 1987 type instability. Ask your Citi sales rep for the piece.
Wells Fargo Gorges on Mark-to-Make-Believe Gains: Jonathan Weil 2007-08-22 00:02 (New York) Commentary by Jonathan Weil Aug. 22 (Bloomberg) -- There's the kind of earnings investors can take to the bank. And then there's the kind the bank can show to investors. Word to Wells Fargo & Co. investors: Beware the second kind. Last quarter Wells Fargo reported record net income of $2.28 billion, up 9 percent from a year earlier. Read the footnotes to its latest quarterly report, though, and you will see a new term in accounting lingo called ``Level 3'' gains. Without these, the financial-services company's earnings would have declined. So what are Level 3 gains? Pretty much whatever companies want them to be. You can thank the Financial Accounting Standards Board for this. The board last September approved a new, three-level hierarchy for measuring ``fair values'' of assets and liabilities, under a pronouncement called FASB Statement No. 157, which Wells Fargo adopted in January. Level 1 means the values come from quoted prices in active markets. The balance-sheet changes then pass through the income statement each quarter as gains or losses. Call this mark-to- market. Level 2 values are measured using ``observable inputs,'' such as recent transaction prices for similar items, where market quotes aren't available. Call this mark-to-model. Then there's Level 3. Under Statement 157, this means fair value is measured using ``unobservable inputs.'' While companies can't actually see the changes in the fair values of their assets and liabilities, they're allowed to book them through earnings anyway, based on their own subjective assumptions. Call this mark-to-make-believe. Antennae Up ``If you see a big chunk of earnings coming from revaluations involving Level 3 inputs, your antennae should go up,'' says Jack Ciesielski, publisher of the Analyst's Accounting Observer research service in Baltimore. ``It's akin to voodoo.'' For San Francisco-based Wells Fargo, whose stock is up 5 percent this year at $37.37, last quarter was a veritable mark- to-make-believe feast. About $1.21 billion, or 35 percent, of its $3.44 billion in pretax income came from Level 3 net gains on the $18.73 billion portfolio of residential mortgage-servicing rights that Wells Fargo marks at fair value. These assets, known as MSRs, consist of rights to collect fees from third parties in exchange for keeping mortgages current, by doing things like collecting and forwarding monthly payments. Wells Fargo's July 17 earnings release didn't mention Level 3 items. This isn't how the second-largest U.S. home lender wants investors to parse its earnings either. Hurting Earnings Instead it stresses a metric called ``market-related valuation changes to MSRs, net of hedge results,'' which was minus $225 million last quarter. Spun this way, it looks like changes in the servicing rights' values actually hurt earnings. To get that figure, the company first broke the $1.21 billion of net gains on MSRs into two parts. Part one was $2.01 billion of gains ``due to changes in valuation model inputs or assumptions.'' Part two was $808 million of fair-value declines from changes related to the servicing rights' expected cash flows over time. (All figures are rounded.) Next, Wells Fargo took the first part -- the $2.01 billion in gains -- and netted it against $2.24 billion in fair-value losses on certain ``free-standing derivatives.'' The company says it uses these derivatives as ``economic hedges'' against changes in MSR values, although they don't qualify for hedge accounting under the accounting board's rules. The Rub Here's the rub: The footnotes show the vast majority of the $2.24 billion in derivative losses were Level 1 or Level 2, while the $2.01 billion in MSR gains were all Level 3. In other words, it's a safe bet the losses were real, while the gains had all the substance of a prayer. Indeed, Wells Fargo said in its Aug. 6 quarterly report that ``the valuation of MSRs can be highly subjective and involve complex judgments by management about matters that are inherently unpredictable.'' Moreover, to get to minus $225 million for ``market-related valuation changes to MSRs, net of hedge results,'' Wells Fargo excluded the other $808 million in MSR losses, meaning these fair-value changes weren't hedged at all. In an e-mail, Wells Fargo spokeswoman Janis Smith Appleton said ``it would be inaccurate to characterize one component of our servicing revenue for the quarter in relation to our total results.'' She said that's ``because it would ignore the effect'' rising interest rates had ``on both the increase in fair value of our residential MSRs as well as the corresponding net derivative losses associated with the economic hedges of our MSRs.'' Real Stretch Inaccurate? No. The real stretch is calling these derivatives hedges. Nobody forced Wells Fargo to start running quarterly fair- value changes for MSRs through its income statement. The accounting standard that let it do so, called Statement 156, gave it a choice. SunTrust Banks Inc., by comparison, elected not to. Why? ``In my mind there is no effective hedging strategy out there that captures all those risks that would move in offsetting directions to MSR,'' says Tom Panther, SunTrust's chief accounting officer. So, SunTrust waits until the servicing rights are sold before recognizing any pent-up gains. MSR values normally rise when interest rates do, because fewer customers refinance and prepay their mortgages. At some point if rates rise too high, though, delinquencies on adjustable-rate mortgages could soar, as customers' rates reset, pushing MSR values down. With mortgage markets now crashing, SunTrust looks like it made the more prudent choice. Yet in the lunch buffet of generally accepted accounting principles, both companies' approaches are permitted. Someday, Wells Fargo investors may regret this. (Jonathan Weil is a Bloomberg News columnist. The opinions expressed are his own. Click on {LETT } to comment on this column and write a letter to the editor.)