Muffie Benson-Perella (muffie AT muffmarkets.com) was an Associate in the Investment Banking Division of a “Bulge Bracket” bank. She holds a B.A. in French and Art from Vassar College and an M.B.A. from Harvard Business School. She concentrated in Contemporary French Poetry at prep school where she was awarded the exclusive premiership of the school’s “French Club.” Today, Ms. Benson-Perella is the Founder and Managing Director of “Muffie on Markets” (http://www.muffmarkets.com), a deep dive into capital markets, finance and investment strategy. She is also the Founder and Managing Director of Muff Cap, LLC., an invitation only, private investment vehicle for non-existent, prestigious and accredited investors only, employing an actively managed, long-short strategy.
Certainly history will write its own lists of heroes and villains with respect to the credit crisis. It is a sort of mandatory, cleansing practice that collates the pages of the current time of troubles. And, while many of history’s verdicts may form less than a consensus, it seems clear that the verdict rendered for Benjamin N. Dover, III will be one of the rosier ones.
Mr. Dover’s sometimes controversial, but always insightful observations writ large by the disclosure requirements of the SEC and FDIC public comment process have set the cutting edge for debate on everything from short-selling to the PPIP programs for the last several weeks. Here is a passage of his work:
Truth #1: Stock Market Crashes Are Caused By Stock Sales.
It should be painfully obvious by now that the market’s decline since November 2007 was caused by stock selling. Not even pernicious speculators like George Soros would dispute this basic truth. Similarly, the market’s steep fall after several large bank failures and the deepening of the economic crisis in September 2008 also was the result of stock selling. We can safely conclude, therefore, that had stock sales been banned in 2007 the stock market crash of 2008-2009 never would have happened. Logically, it follows that banning stock sales would also prevent future market crashes.
Agree or disagree, you simply cannot ignore his common sense approach to markets, finance and economics. But who is Benjamin N. Dover, III? Very little biographical information is available on the maverick finance expert, but I decided to find out. Accordingly, to lift the curtain on this modern finance mind I sat down with Benjamin N. Dover III at the Peninsula for his first public interview:
Muffie Benson-Perella: Benjamin Dover, is that British? Perhaps Irish?
B. Dover: I’m an American original. (Not be confused, of course, with Native American.) And I appreciate your calling me by my given name. For some odd reason, many people seem to find it amusing to use its abbreviation.
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Muffie Benson-Perella (muffie AT muffmarkets.com) was an Associate in the Investment Banking Division of a “Bulge Bracket” bank. She holds a B.A. in French and Art from Vassar College and an M.B.A. from Harvard Business School. She concentrated in Contemporary French Poetry at prep school where she was awarded the exclusive premiership of the school’s “French Club.” Today, Ms. Benson-Perella is the Founder and Managing Director of “Muffie on Markets” (http://www.muffmarkets.com), a deep dive into capital markets, finance and investment strategy. She is also the Founder and Managing Director of Muff Cap, LLC., an invitation only, private investment vehicle for non-existent, prestigious and accredited investors only, employing an actively managed, long-short strategy.
Apparently it has become fashionable to bash higher education. And it seems to be even more fashionable to bash higher higher education and the graduate programs that compose it. It doesn’t take an in-depth understanding of non-linear systems in mathematics to draw a straight line right to the premise that bashing the highest institutions of higher higher education [(higher)3 if you will] has become the most fashionable. This little bit of social algebra is borne out by the number of no-nothing articles, petty blogs and opinionated op-ed pieces that have, of late, attacked no lesser a monument than the noble and proud edifice of the Harvard Business School.
A recent Bloomberg piece (written by a Columbia graduate, obviously) went so far as to suggest that a November task-force was formed at HBS as a reaction to scrutinize the ability of HBS to teach risk management and develop a case to facilitate that goal. Of course, this betrays a very poor understanding of the role of cases at HBS. Harvard cases are written to market to other institutions. Attempting to teach actual Harvard cases to Harvard students would result in a massive and near violent revolt of apathy and boredom. The width and breadth of world experience already under the skirt of the matriculating Harvard student makes any attempt to teach the trite and condescending prose that typifies the average Harvard case the height of effrontery. To the extent cases are discussed at all in HBS classes it is to critique them for their eventual redistribution to the Crimson-challenged. Clearly, the task-force discussed in the article is to distribute better risk management teaching expertise to the world and prevent the sort of melt-down that non-Harvard types seem to enjoy causing every 20 years or so. Despite all our efforts to place alumni at the top, and in key positions around the country, incompetent minions, listless staff and executives who cannot learn to take orders manage to scuttle our progress time after time.
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Banks’ Urge To Merge (NYP)
Union Bank of Wachovia? UBS and WB are in talks to possibly merge their wealth-management units, a la Morgan Barney.
UBS Talked With Morgan Stanley On US Brokerage (Reuters)
It looks like the more tax-evadey Swiss bank in town and Morgan Stanley *were* in talks wherein the latter would consume the formers brokerage unit – no reason is given for either member walking away from the table.
“Last month Morgan Stanley agreed to combine its brokerage with Citigroup (C.N) Inc’s Smith Barney unit, paying Citi $2.7 billion and initially taking a 51 percent stake.
Talks for a sale of the brokerage unit by the Swiss bank are not unexpected. Last summer, sources told Reuters that the bank was considering a sale of its U.S. wealth management business, formerly known as PaineWebber, as part of a review of its business.”
In quasi-related news, the Times has a piece on the IRS expanding its probe into UBS and the bank’s graceful attempt to defraud the US Tax System on a mind numbing scale.
“The Internal Revenue Service, which is participating in a broad federal investigation into UBS and its offshore private banking services, is widening its scrutiny to include ordinary accounts owned by Americans who work overseas, according to a person briefed on the issue.”
Citigroup Leads Tumble in Hybrid Bonds on Nationalization Bets (Bloomberg)
“The hybrids, which typically count as regulatory capital to cushion against losses, fell 11 percent last month in the U.S., more than they did in all of 2008, according to Merrill Lynch & Co. index data. Citigroup and Bank of America bonds lost as much as 34 percent of their value.
“The danger is the government’s going to take over everything and not pay anything,” said Gregory Habeeb, who manages $7.5 billion in fixed-income securities at Calvert Asset Management Co. in Bethesda, Maryland. “It could happen.”"
Citi’s been having a rough go at it lately (to put it lightly) – what with having to return their new plane and take on three hundred billion plus in capital from the government. Sadly but not that surprisingly, they’re looking at backing out of the marketing deal with the Mets, and while I’m sure they could use the money (the Mets) there has to be some kind of collected wiping of the sweat off the brow – you’d almost need a public relations team to handle the marketing nightmare.
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Nadel Denied Bail, Plays With Soap-On-A-Rope In Shower (FINAlternatives)
The problem is the scope of the alleged crime: it was too reasonable. If you’re going to commit an act of fraud (and get caught) the idea is to go so big that when people learn of the duplicitous act they’re forced to sit down and put their heads between their knees. You have to go for the “I literally shit myself when I heard about that” fraud. See: Madoff.
Lehman’s The Place To Be (WSJ)
Need a job? Try Lehman! New “CEO” Bryan Marsal has kept (slash brought back) about 320 of the original Lehman crew to help through the winding down of the company, and they’re looking for real-estate and derivatives people still yet. The dismantling is expected to take 18 to 24 months – I could see it going to 32 – which provides a rare form of job security in today’s market. There’s also this unsettling, albeit true quote: “Given the state of the world we’re in, the things I’m learning working on the largest bankruptcy in history are a set of skills that could be marketable for the foreseeable future.”
In related, news the Financial Times has it that Lehman creditors could receive stock in lieu of cash:
“The plan would allow Lehman to cordon off difficult-to-sell assets and wait for the markets to improve, preventing a fire sale of its holdings, said Marsal, co-head of Alvarez and Marsal, which is managing Lehman’s liquidation. It is now in its preliminary stages but, if it is adopted, the two standalone companies could be publicly listed within two years.”
Steelers Win Sixth Super Bowl (WSJ)
Thoughts? Favorite Commercials?
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Muffie Benson-Perella (muffie AT muffmarkets.com) was an Associate in the Investment Banking Division of a “Bulge Bracket” bank. She holds a B.A. in French and Art from Vassar College and an M.B.A. from Harvard Business School. She concentrated in Contemporary French Poetry at prep school where she was awarded the exclusive premiership of the school’s “French Club.” Today, Ms. Benson-Perella is the Founder and Managing Director of “Muffie on Markets” (http://www.muffmarkets.com), a deep dive into capital markets, finance and investment strategy. She is also the Founder and Managing Director of Muff Cap, LLC., an invitation only, private investment vehicle for non-existent, prestigious and accredited investors only, employing an actively managed, long-short strategy.
Many organizations found their real focus when forced underground, you know.
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Muffie Benson-Perella (muffie AT muffmarkets.com) was an Associate in the Investment Banking Division of a “Bulge Bracket” bank. She holds a B.A. in French and Art from Vassar College and an M.B.A. from Harvard Business School. She concentrated in Contemporary French Poetry at prep school where she was awarded the exclusive premiership of the school’s “French Club.” Today, Ms. Benson-Perella is the Founder and Managing Director of “Muffie on Markets” (http://www.muffmarkets.com), a deep dive into capital markets, finance and investment strategy. She is also the Founder and Managing Director of Muff Cap, LLC., an invitation only, private investment vehicle for non-existent, prestigious and accredited investors only, employing an actively managed, long-short strategy.
I am sick and tired of all the doom-sayers going around and trashing the economy. Someone please explain to me how the economy can be “tanking” when an automaker is the largest market cap stock in the world, eclipsing an oil company? Does that sound like recession to you? When a middle-class yuppie car with so-so gas mileage is putting the black gold people to shame? I don’t think so.
Then there is the hint that says all that needs saying: certain highly prestigious investment banks are back into the triple digits where they belong. Yahoo and AOL are in talks that will permit Yahoo to finally overpay for AOL. Casinos are back in vogue. Don’t give me that “dead cat bounce” thing either. That is so, so tired.
Look, it is beyond depressing when Cramer is the only person who agrees with me. Let’s get on the stick ok?
As you may or may not be aware, my birthday is this week. I’m expecting big things from the ‘rents this year. As such, you people need to get on it and start buying some shares. Get off the sidelines. The nation is looking to us for leadership. My birthday presents are looking to you for leadership. We have to set the pace. Sprint for the first few miles. Then we can relax, let the pack follow along, and lag back until a taxi comes along to take us to the finish. You know what I mean. I’m talking about consumer confidence. I’m talking about spending. I’m talking about boosting the debt loads again. I’m talking about patriotism.
I realize that it looks a little like we have to behave ourselves and be good while Waxman is watching, but its just temporary. This is no time to cancel plans for Lech. This is not the time to postpone the engagement. This is absolutely not the time to cancel the sailing trip.
As for your fear-factor rhetoric, I don’t want to hear it. Get your ass in gear and start buying baubles for your loved one. That is what is needed today. Purchase courage.
Ok, you people, you are not listening. Just since I’ve been typing this you bombed the entire market. We were up to 970 on the SAP for god sake. You killed 40 points in 4 minutes. That is not cooperation. That is not the kind of leadership I am talking about. Is there a man among you? Even one? Am I going to have to find a date from Citibank for the Christmas party this year?
I’m done for the day. I am going to borrow Aunty’s oxygen tank for a few minutes and then I am going for a well deserved spa day.
I feel totally nauseous. You people make me sick.
Muffie Benson-Perella (muffie AT muffmarkets.com) was an Associate in the Investment Banking Division of a “Bulge Bracket” bank. She holds a B.A. in French and Art from Vassar College and an M.B.A. from Harvard Business School. She concentrated in Contemporary French Poetry at prep school where she was awarded the exclusive premiership of the school’s “French Club.” Today, Ms. Benson-Perella is the Founder and Managing Director of “Muffie on Markets” (http://www.muffmarkets.com), a deep dive into capital markets, finance and investment strategy. She is also the Founder and Managing Director of Muff Cap, LLC., an invitation only, private investment vehicle for non-existent, prestigious and accredited investors only, employing an actively managed, long-short strategy.
I’m sure that a certain subset of my public understands the occasional difficulties implicit in the “work hard, play hard” lifestyle. You know who you are, my lovelies.
Sometimes you just have to go with the flow a little on Wednesday after work. The blackberry starts buzzing around 6:30 or 7:00, with friends planning and plotting the evening’s entertainment. While most of my inner circle aren’t prone to childish bickering, they can try the patience with the back and forth over the “perfect environment for after work cocktails” debate. (Personally, I grow tired of ‘Netti since that tart Lauren is always there. I really don’t know who she thinks she is. Someone cares, I’m certain, that her boyfriend is from California, but I don’t know precisely who that someone is).
And you get there, a little tired because you were trying to work a little less hard than usual and avoid that bastard of a Senior Vice President who keeps looking at your boobs and still hasn’t figured out that you can totally tell and your sponsor Managing Director is out of town and I am pretty sure that he is seeing someone else and I don’t mean his wife and that would totally make him a liar and I just don’t have time for liars at this stage in my life, so you probably have that first cosmo a little faster than you mean to and the second one is sort of in your hand before you know it.
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Muffie Benson-Perella (muffie AT muffmarkets.com) was an Associate in the Investment Banking Division of a “Bulge Bracket” bank. She holds a B.A. in French and Art from Vassar College and an M.B.A. from Harvard Business School. She concentrated in Contemporary French Poetry at prep school where she was awarded the exclusive premiership of the school’s “French Club.” Today, Ms. Benson-Perella is the Founder and Managing Director of “Muffie on Markets” (http://www.muffmarkets.com), a deep dive into capital markets, finance and investment strategy. She is also the Founder and Managing Director of Muff Cap, LLC., an invitation only, private investment vehicle for non-existent, prestigious and accredited investors only, employing an actively managed, long-short strategy.
All month people were crying and whining about how awfully-ouchie-devastating the market was. And then, last week, it was positively depressing the lack of enthusiasm and spirit some market players, who really should have known better, showed. Shame on you. Frankly, I am tempted to wonder after the patriotism of anyone who was doom-and-glooming last week.
People forget awfully quickly that a few hundred points on the Dow is something like several trillion dollars. So, really, owning stock in Dow is really a big responsibility. It’s not for everyone. Just for the record, Dow was up 6.93% today, closing at $26.09.
The broader market showed amazing spunk! The S&P 500 was up 104.13 (11.58%) to 1003.35.
Also, people have totally ignored that prices for the average consumer have been dropping for weeks. Platts puts the weekly price of Jet A at $2.73 cents. That’s like a 15.0% drop in the last month! The operations of senior managers and the few prestigious investment banks still left standing because of their exceptional investment acumen are going to be much cheaper as a result of lowered fuel costs. Not to mention the impact this has on the recreational sector, just in time for the winter holiday travel season.
The rest of the Muff Round-Up after the jump.
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Some See Oil At $150 a Barrel This Year (WSJ)
Lots of chatter lately about the next leg of the supersurge in oil. A Goldman guy came out with a call for $200, which would mean a mere doubling from here. Others see $150 comfortably in sights, though that would hardly be a move at all at this point. Nobody subscribes to it really, but we’re still kind of partial to the idea that the higher the price of oil the better for the economy. Sure it’s rough, but man, when oil goes back down to $35, we are going to be humming.
2008 Democratic Presidential Nominee (Intrade)
You know the media expectations game. There were actually some polls that had Barack Obama winning Indiana. But, he so consistently collapsed on primary day that small poll leads for him usually translated into significant, 10-point losses. SO when that didn’t happen, and instead lost by just 2 percent, in a race that went deep into the night, the media called him the victor. Russert called him the nominee and he ticked up about 8 points on Intrade to around $.88 on the dollar.
Sprint and Clearwire to Combine WiMAX Businesses, Creating a New Mobile Broadband Company
Word of this report had leaked last night, and now it’s official ailing Sprint and ailing Clearwire (started by ex-AT&Ter Craig McCaw) will merge their wireless broadband businesses (that offer internet over WiMAX) in hopes that a combined company will alleve both of their collective misery? Beyond that, it’s got a number of big cable company investors — a fresh $3.2 billion — so yeah, seems like a gigantic industry conglomerate. Perfect.
Countrywide Admits Errors at Senate Hearing (NYT)
Steve Bailey of Countrywide admitted to a Senate panel that certain loan officers at Countrywide have made errors. Yes, it would seem that way wouldn’t it.
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UBS To Sell Mortgage Assets, Cut Jobs As First-Quarter Loss Nearly $11 Billion (WSJ)
More of the same at UBS: Another $11 billion lost. Another $2600 raised. And also a big sale of $15 billion worth of subprime assets, which had a nominal value of $22 billion. Nominal being the operative word there. Though it seems that if every asset that nominally priced at $22 could be sold for $15, it’s not the worst gap there is. Or maybe it is the worst.
Las Vegas used to be a recession-proof oasis. Not anymore. (Newsweek)
Well, it may finally be time to put an end to that notion. The chips are down across the board in vegas, probably for a combo of reasons. A big one: Vegas is less of a gambling town than it used to be. By putting such an emphasis on food and shows — neither of which are as addictive as roulette — the casinos have diversified away from their bread and butter. Beyond that, there’s gambling everywhere. Online is down, but so many states have legalized it in some form. And the popularity of low-margin poker can’t help, since people lose most of their money to other players, rather than the house.
Indonesia considers quitting OPEC (AP)
Interesting, though not surprising. Indonesia hasn’t really been an oil exporter for a while, so its presence in OPEC seemed mainly out of tradition, rather than logic. Said President Susilo Bambang Yudhoyono in what is sure to be grist for the peak oil mill: “Our wells are drying.” They haven’t made a final decision yet, but the basic idea is that because they’re not an exporter, it doesn’t make sense to be part of an exporters’ cartel. Makes sense.
Who will reap the benefits of a gas tax holiday? (Megan McArdle)
As an exercise in contrianism, we’ve been trying to think of a good argument against all the haters, taking shots at Hillary Clinton for her support of a summer gas tax holiday. But so far we haven’t tried to hard. In the meantime, here’s Megan McArdle taking shots at the summer gas tax holiday. And quite well at that.
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Yahoo CEO facing possible rebellion after spurning Microsoft (AP)
So Microsoft really walked and now the big question is what will Yahoo fall to when it opens. Most people seem to think that it won’t fall all the way back to its pre-bid sub-$20 price, though some do. Ultimately, Yang believed Yahoo was worth more than $47.5 billion… maybe it was the lingering post-bubble mentality, and he still had hopes that one day Yahoo would get back to its pre-glory days. Or maybe he really wants to merge with AOL. Anyway, place your guesses on Yahoo’s closing stock price in the comments. Pre-market they’re off about 23 percent so far.
Investors eye Yahoo’s alternatives to Microsoft (Reuters)
Nobody else is going to pay $33 per share for Yahoo (in all likelihood), but the company will be under considerable pressure to start dealing fast. There’s been persistent talk of an AOL deal, and now there’s nothing standing in the way of that. Then there’s the Google ad partnership, which could provide a revenue lift. And maybe private equity could be interested, but at higher than $33 per share? Probably unthinkable.
A Yahoo Shareholder on What Might Have Been (NYT)
You know the cooler at the casino. The guy who comes to the blackjack table and brings everyone bad luck. Hate to say it, but that’s Bill Miller of Legg Mason right now. The once-prolific S&P beater has been struggling for some time and the collapse of the Yahoo deal seems to say it all. Add that to Bear, some financials and the homebuilders, and it’s been a bad time to touch what he’s been touching. Also, read this typically sharp post from Felix Salmon.
Bulls’ Optimism May Be Premature (WSJ)
No doubt this ongoing earnings season has something of a split personality disorder. On the one hand, you’ve got companies promising that they see no major impact from the economy. Others say it’s the worst economy they’ve seen: ever. So perfectly good for a glass-half-full-half-empty debate. Overall, currency effects have probably made this quarter look a lot better than it was, though how can you ever try to strip just one thing out and hold the rest steady? And to some extent, the weak companies seeing such a punk economy already had problems of their own.
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Viacom Reports First Quarter 2008 Results
Two words: Rock band. That’s why Viacom’s Philippe Dauman is so loved by his chairman, compared to his counterpart at CBS. But how long can you have a multinational media glom based on one monster title? Not sure.
Microsoft Leans Toward a Hostile Bid (WSJ)
We still ain’t seen nothing yet. No raise, no walk, no announcement or nothing. But the latest smoke signals out of Redmond is that they’re ready to go hostile. Full-on war. Nominate a slate and see what happens. We hope so, as it would be great fun. Of course, that could change by the minute. And something was supposed to have hapenned pre-market, which continues to tick away.
As Gas Costs Soar, Buyers Are Flocking to Small Cars (NYT)
This article could be summarized in two words: economics works! Apparently, one-in-five cars is some sort of fuel efficient sub-compact or compact or something, up from one-in-eight a decade ago, when SUV love was still in full throttle. Still actually doesn’t seem like that much, but you gotta start somewhere.
Labor Department reports U.S. nonfarm payrolls decreased by 20,000 in April. (WSJ)
No offense, but seeing as farmers are making so much more money than the rest of us these days, shouldn’t they be picking up the slack. Like, fine nonfarm payrolls are down. Maybe that’s not good, but really, who would work in the non-farm sector, when there might be some corn you can pick. Seriously.
Celebrity foreclosure: Jose Canseco loses Encino home (LA Times)
Apparently sales of books about steroid use aren’t enough for Jose Conseco, who had his house foreclosed upon. So will he be forced to live in that tent city outside of LA. Not that they really need the attention. They probably get more media coverage than him
