Equity Private

Posts by Equity Private

  • 05 Aug 2009 at 1:10 PM

He Was Wearing My Harvard Tie. Can You Believe It?

Poor, poverty-stricken Harvard. Gazing at 30% losses for their latest fiscal year and the tatters of a management team for the endowment, it is unsurprising that they would start trying to fill the ranks. You have to like their chances. It would be pretty hard to look all that bad given the endowment’s recent performance, though we have confidence that the new recruits will give it their full effort.

Harvard Management Co., manager of the nation’s largest college endowment, said it hired a new equity portfolio manager from New York-based hedge-fund firm Caxton Associates.
Emil Dabora, who specialized in event-driven investments at Caxton, is the second recent hire by Harvard Management.

Why are we suddenly reminded of Where Eagles Dare?
Harvard Hires New Equity Portfolio Manager [The Wall Street Journal]

  • 05 Aug 2009 at 12:05 PM

Let’s Do The Time Warp Again

lenny-dykstra2.jpgThis time with Lenny Dykstra and Ron Insana as our hosts.
LongShortTrader has a piece on the investment masterminds taking credit in their “The Street” newsletters for calls made before they had “The Street” newsletters. Says LongShortTrader:

It’s not the most accurate title in the world, but Lenny Dykstra’s former and Ron Insana’s current newsletters for TheStreet.com (TSCM) have something in common — taking credit for investment recommendations made before the newsletters even launched.

Our attempts to summon outrage have, thusfar, met with abject failure. What’s the problem here, really?
Many years ago, before starting my investment newsletter, I told my friend’s younger sister that her lemonade stand was “a really crappy idea.” That venture’s total collapse not days later would have given the short-seller absolute returns of ~90%+ (assuming reasonable securities borrowing costs). I won’t bother to compute the annual return. How is that not relevant to the awesomeness of my investment newsletter?
Lenny Dykstra & Ron Insana: Two Peas in a Pod? [LongShortTrader.com]

  • 05 Aug 2009 at 10:22 AM

Goldman Wishes You’d Please Turn Off That Damn Light.

harry.jpgIf Goldman reminds you just now of that exhibit at the zoo with all the dark red lights, like the school darkroom but with signs that read “No Flash Photography – Nocturnal Exhibit,” you aren’t alone. For a firm that desperately wants to slide back into the warm cape of the dim, Goldman is getting a lot of attention (even with respect to Goldman memos about how Goldman is getting too much attention). And now, this:

In its latest quarterly filing with the Securities and Exchange Commission, the firm offered lots of additional details about its hugely profitable second quarter. But deep into the filing, the investment bank also disclosed two government inquiries that weren’t mentioned in previous filings — one regarding its pay practices, and the other involving credit derivatives.
Goldman has been facing heavy scrutiny lately, especially after it reported billions of dollars in income in the second quarter and set aside more than $11 billion for employee compensation, all during a quarter when it paid back aid it received from the federal government.
The scrutiny appears to be growing.

You noticed, eh?
The reality is that it will be a long time before Goldman can comfortably slip back into the shadows- if ever. In the meantime, a dark pair of shades is probably called for. Just sit back and bask in the sunshine for a bit. It’s going to be a long day.
Goldman Faces Inquiries on Pay and Derivatives [Dealbook]

  • 04 Aug 2009 at 4:42 PM

Sergey Aleynikov Holds All The Cards (No, Really).

Serg.jpgI mean, seriously. For a guy who spilled everything and talked for four straight hours to the FBI before even saying the word “lawyer” in passing, for that kind of nightmare client, Sergey’s lawyer is doing pretty well.
Of course, when you factor in the seriousness of any public relations mess created by a Sergey spill during any trial, it doesn’t really matter much to Goldman what the guy did or did not say to the FBI, or even if he spends a minute longer behind bars.

Today was the day for prosecutors to indict Aleynikov, who was arrested on July 3 on the theft charges. But in a court filing, prosecutors told the presiding magistrate judge that they need another 14 days to continue discussions with Aleynikov’s lawyer about a “possible disposition.”

After receiving his conditional discharge/probation, what, exactly, will Sergey be paid not to write a tell-all book about Goldman?
Will Sergey Cut a Deal? [Reuters Blogs]

Because we know you for the free market lovers that we are, we are certain you share our concern about any increase in power for the Federal Reserve. The news that the present administration plans to significantly broaden the Fed’s reach will have, likewise, filled you with a creeping dread. Fortunately, we have discovered that there is nothing at all to fear: The Fed will be hiring really, really smart people from now on. (Oh, and there will be more stress tests).

The Federal Reserve plans to strengthen its examinations of banks’ lending practices and financial health with new teams composed of experts in everything from law to economics and markets.
Fed Governor Daniel Tarullo outlined the step in testimony to a Senate Banking Committee hearing in Washington today. The overhaul, which would make reviews more uniform across the banking system, builds on the stress tests the central bank completed on the biggest 19 banks in May, he said.

Definitely, absolutely smarter than the people over at Treasury.
Fed to Strengthen Bank Examinations With Expert Teams [Bloomberg]

  • 04 Aug 2009 at 2:19 PM

Coincidence? We Think Not.

GE Pays $50 Million to Resolve SEC Accounting Probe [Bloomberg]
Former GE Chief Jack Welch Expects Full Recovery From Discitis [Bloomberg]
We’re rooting for Jobs now based on this connection.

  • 04 Aug 2009 at 12:35 PM

Three Million Students

One of the terms of the unwritten deal consummated between China and her citizens after several of them were shot, crushed by tanks, detained, executed or imprisoned in 1989, was that the party would remain in power, but the trappings of western life (internet porn and the appearance of prosperity in particular) would be permitted. Like any campaign (or post-massacre) promise, one expects real consequences only in the most dire of circumstances. Having said this, the downside for Chinese leadership isn’t losing an election or being kicked out in a no-confidence vote. It is getting shot in the back of the head and having their organs sold for transplants before the by-products are ground up for poultry feed. Given this, it shouldn’t surprise anyone that China is a bit concerned about the mounting problem of the jobless.

Read more »

  • 04 Aug 2009 at 11:40 AM

Performance Based Compensation Win At UBS

In the first real data point since the performance based compensation revamp at UBS, the bank today discussed quarterly earnings. While the exact components of the new formula remain a closely guarded secret, Dealbreaker’s analyst desk has crunched the numbers to shed some light on the Swiss giant’s compensation methodology and has concluded that there are strong correlations between performance and compensation at UBS.
Dealbreaker ran multiple regressions for quarterly compensation data (n=2) against quarterly performance data and now announces results for the following independent variables:
STAFFn = -45.833 (Each increase in headcount of -45.833 staff results in compensation expense increase of 1.00%)
PROFITb = -.0754 (Each CHF -.0754 billion of profit results in compensation expense increase of 1.00%)
CapGainDebt = -0.051 (Each CHF -0.051 billion of capital gains on debt results in compensation expense increase of 1.00%)
Given the planned headcount reductions of 1200, our consensus for compensation expense for Q3 is +26.182%.
UBS Performance Pay Rises Despite Sfr1.8bn Loss [Wealth Bulletin]