Having said that, T2 Partners will be "monitoring" the situation. The op ed in today’s New York Times by retiring Goldman Sachs Executive Director Greg Smith is the talk of Wall Street. We think we know Goldman well, as the company has been our prime broker for the past seven years and Goldman (both stock and call options) is one of our largest positions, so we wanted to add our comments. Our direct experience as a client of Goldman has been universally positive. The many people we have dealt with there have all been exceptionally talented and high-grade, and never once have we had a negative experience in which we felt that they took advantage of us or didn’t do what they said they would do. That said, we are not naïve. In all of our dealings with Wall Street firms, we assume that they are looking out for their own bottom lines, not ours. And we are certainly aware that the old, gentlemanly culture in which integrity and a customer-first attitude generally prevailed is long gone – not just at Goldman, but across all of Wall Street – and, in fact, across the entire financial industry (the reasons for this and what should be done about it are the subject for another day). When we think about investing in any company – especially a financial one, which is heavily regulated, leveraged, and particularly difficult for an outsider to analyze – we factor into our investment equation our assessment of the company’s culture and values, and, if we have any concerns, what the potential associated risks are, such as unexpected losses and regulatory action. In light of our view of the moral decay across the U.S. financial sector, we aggressively haircut our estimates of intrinsic value in the sector – some companies more so than others. But at some price, of course, any stock is a buy, and last August and September we felt that the negativity surrounding the financial sector was way overdone and hence made a big – and, so far, very profitable – bet on Goldman and a number of other U.S. financial firms. With the run-up in Goldman’s stock – after falling below $90 as recently as December, it’s now over $120, just above tangible book value of $119.72 as of 12/31/11 – we’ve been debating whether to trim or exit our position, so today’s op ed is timely. But is it relevant to our investment thesis? We think probably not, for two reasons: 1) The argument that Goldman has become increasingly profit driven, sometimes at the expense of clients’ best interests, and that some employees use vulgar and disrespectful language is hardly news. What’s the next “shocking” headline: “Prostitution in Vegas!”? 2) We highly doubt that Goldman is as truly corrupt as Smith makes it out to be. Goldman has more than 30,000 employees (including nearly 12,000 vice presidents, of which Mr. Smith is one) and has gone through wrenching changes in the past year, including savage cuts to bonuses and extensive layoffs, so it doesn’t surprise us that there are many disgruntled employees, especially those who are leaving. Is Smith one of them? It’s hard to tell, but here’s an email sent to me this morning by a former partner at Goldman (who generally agrees that the firm’s culture is not what it once was): There are a couple of things out of place. 1) This guy has been at firm for 12 years and is only a VP…a piss ant of sorts. He should have been an MD-light by now, so clearly he has been running in place for some time. 2) He was in U.S. equity derivatives in London…sort of like equities in Dallas…more confirmation he is a lightweight. Somewhere along the line he has had sand kicked in his face…and is not as good as he thinks he is. That happens to a lot of high achievers there. In summary, we think it’s likely that Goldman does the right thing for its clients the vast majority of the time – but not as certainly as it used to in the old days. Times have changed and the trend is unfortunate, but it is not unique to Goldman. In fact, we believe that Goldman still has a better culture and is more ethical than most of its competitors – though this is a very low bar to be sure. Our investment thesis on Goldman is simple: when all the dust settles, it will remain the premier investment banking franchise in the world – and, if so, will be worth a substantial premium to tangible book value. Smith’s column is a warning flag that we’ll be monitoring closely, but we believe our investment thesis remains intact and the stock is still cheap, so we’re not selling.

What would posses a person to do an as-told-to article about the fact that after "failing miserably" at trying to pick up women in bars while working late for a "big name investment bank in New York," he turned to a "sugar daddy dating site" to bang hookers on his nights away from the wife and kids only to fall for one who ultimately broke his heart, because she was a prostitute and didn't actually care about him? The answer, quite, obviously, is love. Love, and a hope that a certain someone will see your story and upon reading that you're completely and totally over her and beating off call girls with a stick, COME RUNNING BACK. I met a girl who said she was a senior at Columbia University. She was so hot. Long brown hair, light eyes, perfect little body. We started an affair and I would give her a $4,000 "allowance" each month to meet once a week for dinner, or just to sleep together if I had a deal or a really late night in the office. Sometimes it was an hour of "small talk and sex," which, really, isn't a bad deal for her. $1,000 for an hour to spend time with me. I felt like a stud, there's no denying that, and I knew that she didn't want anything from me but money. She would come and go away when I made the signal I was tired. Soon though, I started liking her more than I wanted to. She was smart and kind of had a sarcastic sense of humor I found funny. I asked to see her more and she asked for more money. I said I couldn't do any more than that, and she said she couldn't give more time. It was the first time I felt a little hurt, like: "This person just wants my money and probably thinks I'm some gross horny old dude." The next month, I gave her the envelope of $4,000 upfront instead of $1,000 each time. We had sex, chatted, drank some wine and she left. I never saw her again. She wouldn't pick up her phone, then her phone was disconnected, my emails to her went unanswered, and her profile on the site was gone. It was such a blow. Though, really, what the hell did I expect? I guess some warning. Yes, some warning would have been nice but whatever. It's not like you're still upset about it. It's not like there isn't a moment of the day when she's not on your mind. It's not like you lie in bed at night thinking about her holding you. No, no sweat off your sack, which you use to bang hookers six at a time now that whatshername is out of the picture. Working girls line the street to get paid to have sex with you! You don't even have time to respond to all their propositions! The Jiltee has become the jilter! You can't even remember [theloveofyourlife]'s name you're so busy plowing prosties. After that, I decided I was going to go for quantity and not quality. I want hot girls, but a lot of them and substance isn't a huge deal. I have been with dozens of girls, and I give them money each time I meet them. The funny thing is often these girls are chasing me to sleep with them again, because it's easy money, but I just scroll through and delete or ignore the messages most of the time. Men want to be with a lot of women; it is just the truth...Maybe that first girl was a wake-up call. I'm already married. I don't need a steady mistress. But I have one or two I always go back to if I can't find someone I like, which happens a lot....I'm not hurting anyone by doing this. I'm always safe and upfront if I meet someone and know it won't happen. I just pay for the drink and let them know and leave, like "No deal, sorry." It is just like any deal. You have to know how to close it and have to know when you're not interested in putting in the effort to see it through. Why This Married Wall Street Banker Pays For Sex [Buzzfeed]

Harbinger Global Corp is coming to an exchange near you. Phil Falcone, the embattled billionaire hedge fund manager, has put together an unorthodox IPO that will see his hedge fund firm contribute assets valued at $350 million to a blank check company that will trade publicly. In the deal, a special purpose acquisition company that is expected to trade on Nasdaq and be known as Harbinger Global Corp., will acquire a majority interest in an MGM-branded hotel and casino development in Vietnam and a minority interest in an iron ore producer working in Brazil. Funds run by Falcone’s Harbinger Capital Management that are contributing the assets will get an ownership stake that could be as high as 96% in Harbinger Global and Falcone is slated to become executive chairman of the company. Falcone’s move to become closely involved in a publicly-traded company is audacious given that he is currently facing securities fraud charges from the Securities & Exchange Commission. Yeah, well, people also thought it was audacious for him to invite a burlesque dancing pig he barely knew to come and live with him and she turned out to be the best thing that ever happened to him, so.