Someone hit F9 on the random number generator that decides how much capital European banks need and now it’s $115 billion, which I guess is more than it used to be, so that’s a thing. As you might imagine this is a problem because who in their right mind would buy equity of a European bank? Or, in diplomatic terms:
One analyst questioned [Commerzbank’s] ability to make up the deficit through shrinkage or other means. “It certainly seems hard for them to come back with another equity raise from the market, so if all else fails it looks like the government is the answer.”
But the bank insisted this was not part of its plan. Eric Strutz, finance director, said: “We stand by our intention not to make use of additional public funds.”
So that’s nice. But if you’d rather look at it in world-historical-demographic terms, it turns out you can. Because this little consulting outfit called McKinsey occasionally sends out musings to its friends and supporters, and today they’ve got a mammoth, slightly odd financial markets study, which the Journal has written about, concluding that nobody will buy stock anymore, especially from Commerzbank (though I may have just made that part up).
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As you may have heard, yesterday morning, former McKinsey managing director Rajat Gupta was charged with insider trading. Is he worried he might be headed to jail in the not too distant future? Not in the slightest. Because 1) As previously mentioned, that time he took part in a fall 2008 conference call with GS management and fellow board members and after hanging up, made himself wait exactly twenty three seconds before getting Raj Rajaratnam on the horn with the details? Wasn’t with the intent for the Galleon manager to actually trade on the material non-public information Rajat was sharing. And 2) Even if a court of law should interpret the evidence otherwise, someone’s got his back. Continue reading »
Markets got you down? Can’t seem to keep up with your benchmark this year? Not sure you’ll ever figure out this whole buy-low, sell-high thing that you keep hearing rumors about? Cheer up, you’ve got good company. Company anyway. Specifically, corporate America, whose overall market timing ability is much worse than that of a chimp who watches Art Cashin.
That’s what McKinsey coldly concluded, noting that from 2004 to 2010, “Only 31 percent of the [S&P 500] companies earned a positive return from buying back shares—less than you would expect from a random throw of the dice.” And not only did two out of three companies underperform putting cash under a pillow; three out of four underperformed dollar cost averaging:
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The most common refrain when insider trading or other such fraud occurs on Wall Street is the question of why? Why did he/she do it? Money is often times too simple an explanation (especially when there are mommy issues to be explored) but other times it’s not. Like in the example of former McKinsey partner Rajat Gupta, i.e. the guy who called Raj with information about Goldman Sachs 23 seconds after getting off the phone with Lloyd and the rest of the board. In Gupta’s case, he just 1) seriously wanted that cash and 2) he wanted is ASAP. Continue reading »
In addition to Galleon Group, one firm whose name has popped up a whole bunch as it relates to the Feds’ Insider Trading Fest(ivus) is McKinsey. Until they resigned, the consulting firm employed two partners, Rajat Gupta and Anil Kumar, who have both been accused to sharing material non-public information about various companies with their buddy Raj Rajaratnam (Kumar pleaded guilty last year and has been cooperating with the government, while Gupta, who was called out by the SEC in February, has vowed to fight thing thing to the death). Know who doesn’t have any senior executives on staff who may or may not have traded hot tips for money? Bain Chairwoman Orit Gadiesh can think of one. Continue reading »
People helping people is all this is about. Continue reading »
The former McKinsey director pleaded guilty to one count of securities fraud and one count of conspiracy to commit securities fraud in Federal District Court in Manhattan.
Mr. Kumar told the court that he had leaked to Mr. Rajaratnam that Advanced Micro Devices was planning to acquire ATI Techonologies. The leak occurred in March 2006 before news reports about the deal had surfaced. He said that Mr. Rajaratnam told him, “Anil, you are a hero.”
Kumar, visibly crying, also apologized to his colleagues “for the shame they have suffered,” but did not specify if he was talking about shame as it related to insider trading, or for the rap AK wrote and recorded while at the firm.
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Survey says: yes. Obviously you’ve got Raj’s right here (“when the rally’s on, put your money on Galleon), and below, the track laid down by the McKinsey Knowledge Center, a division launched by none other than McK “rising star” and Rajaratnam buddy-boy Anil Kumar. If you’ve been escorted out of your company’s office in cuffs at some point in the last week, or think you might be soon, and have no theme song to speak of, we suggest you get in the recording studio ASAP.
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