Here at Dealbreaker we love short sale bans. Nothing inspires confidence in an asset so much as a government telling you that you can’t sell it, especially when the government in question is taking time out from a busy schedule of bunga bunga parties to give a firm but loving hand to the equity markets.
So we were excited to see that, as the Italian equity and government bond markets melt down, politicians and regulators are sharpening their knives to come after the evil speculators who must be behind the drop. Italy is now requiring anyone who is net short more than 0.2% of the shares of an Italian listed company to disclose their position to regulators, with an updating requirement for changes of 0.1% or more, from now until September 9. More excitingly, there is already talk of banning naked shorts, regular shorts, sovereign CDS, etc. followed. Barry Ritholtz succinctly explains the reasoning:
In a classic act of misdirection, Italy is ordering short sellers to disclose their positions, because after all, the entire European credit crisis was caused by analysts who identified over valued stocks.
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That’s the title of the presentation David Einhorn is giving at the Value Investing Congress, where he’s argued Florida real estate developer St. Joe will have to take impairment charges, and that the company’s Rivertown development “is a moonscape and it doesn’t appear anyone is living there.” [Bloomberg] Continue reading »
Last Friday, Bloomberg printed a hilarious story about a girl named Carrianne Howard, who’s fallen on hard time. Currently, Howard works at a topless bar called Lido Cabaret in Cocoa Beach, Florida. But, wait, that’s not the funny part. What made the story a laugh riot was that the reporter/editor made the hugely tenuous (at best!) link that Howard’s travails– her parents had spent $70,000 for her to earn a bachelor’s degree in game and art design from the Art Institute of Fort Lauderdale, which helped her score an entry level job in her industry of choice after graduating in December 2007, from which she was later laid off and had to turn to showing her tits for money– were the fault of Goldman Sachs, as the bank owns 38 percent of the Art Institute’s parent, Education Management Corp. Over the weekend, Carrianne took to YouTube to respond, clarifying the facts. Continue reading »
Remember that story a few months back in the Wall Street Journal, about the hedge fund “idea dinner” that insinuated a bunch of managers got together to break bread while plotting to take down the Euro? David Einhorn and the Greenlight team do! They’ve been discussing it amongst themselves for a while, and today it made their latest quarterly letter. What’d they think of the piece? Well, reporting the actual facts instead of pulling them out of the reporter’s ass would’ve improved things slightly. Apparently the Journal got a whole bunch of stuff wrong and now the responsible parties are going to pay. Sorry, kids. Sometimes the nicest hedge fund manager in the world just has to cut a bitch. Sayeth DE and Co:
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If you haven’t already invested your $1,000 with Bernett Diversified Global Fund and are looking to get in the game, take two to consider Dubai Shariah Asset Management‘s Kauthar Commodity Fund, which is opening its doors for the first time since launching last year. Here are the relevant deets: Continue reading »
Most of you will probably agree that when you want to get a serious message out the (financial services) masses, the best medium through which to send it is a place where your news is served with a dash of Kneale and a pinch of MMC’s tits. That’s why on September 17 of last year, John Mack called up Lloyd Blankfein and asked him to appear, hand in hand, on CNBC. The two men (believed) they were under attack by the shorts, and needed to go on the offensive. Unfortunately, such a broadcast never came to pass, due to the indirect influence of a certain Italian-American investigative journalist (more on that later), and they had to settle for a letter to the paradoxically named Chris Cox. But let’s backtrack for a sec, and examine the mental state the Knife was in when he came up with the idea to give it to the shorts live. Obviously he was under a lot of stress during those fateful days in September, and while he probably wasn’t ready to laugh at it at the time, will likely now join us as we review some of the sound bites that came out of his and his lieutenants mouth re: getting the Dick Fuld end of the stick.
Where is that little shit, David Einhorn, huh? When I find that pipqueak I’m gonna rip his urethra out through his throat. They can’t do this to us!
While Mack was beginning to believe that the hedge funds were conspiring against the firm–”This is what they did to Dick [Fuld, of Lehman Brothers]!” he roared, referring to the Monday implosion of Lehman–there was fresh evidence that some of them actually did need the cash. Funds that had accounts at Lehman’s London office couldn’t get at them and came begging to Morgan Stanley and Goldman.
Can’t we make citizen’s arrest or something?!?
“It’s outrageous what’s going on here,” Mack almost shouted, arguing that the raid on Morgan Stanley’s stock was “immoral if not illegal.”
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We tend to ignore highly volatile biotech stocks that bound off the walls and ceilings like a Happy Fun Ball on acid-laced meth, but Dendreon Corporation (DNDN) is a special case because it is such an obnoxious assassins tool for the elimination of careless shorts. (And we keep getting email tips). Short interest in Dendreon was upwards of 14 million shares on about 100 million outstanding. A very hard stock to borrow, as it happened, and susceptible to recall. But that was nothing compared to the announcement that it had fantastic results with:
…its pivotal Phase 3 IMPACT study of Provenge (suspiciously close to “revenge”) in men with advanced prostate cancer data. While the data is incomplete or non-statistical, Dendreon said that the IMPACT study met its primary endpoint of improving overall survival compared to a placebo control. Dendreon intends to file an amendment to its existing Biologic License Application (BLA) in the fourth quarter of this year to gain licensure of PROVENGE.
Being caught short was deadly for your position.
The market had been expecting an announcement within the year, and a competitor had (with the short squeeze fueling the surge). Also, a potential Provenge competitor was pulled from development late last year. Good news would be sticky.
Ouch.
Dendreon Plunge Baffles CEO as Cancer Drug Said to Prolong Life [Bloomberg]
