Opening Bell: 10.20.14 - Dealbreaker

Opening Bell: 10.20.14

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Billionaires and Mathematicians Crack Jokes at the Geekiest Event of the Season (WSJ)
Last week, at a glittering private hall in Manhattan steps from the East River, billionaires and socialites gathered for what one attendee called the “geekiest” event of the season: the Chaos Ball, the fundraiser for the National Museum of Mathematics. But it was also a night in which the nerds celebrated their revenge, as many in the crowd were among a coterie of the most secretive—and successful—money managers on Wall Street. So-called quantitative hedge funds are the squares of the investing world, numbers-obsessed firms that rely more on high-powered algorithms than old-school assessments of companies and their future prospects. These firms, known as “the quants,” are also notoriously tight-lipped about their strategies and their earnings—even among one another...The museum, or MoMath, is one of the few things that brings the quants together. James Simons, the Renaissance founder and 76-year-old former code breaker, was among the early backers of the museum, as was John Overdeck and David Siegel, the co-founders of the multibillion-dollar hedge fund Two Sigma Investments LLC. Other quants in attendance represented firms such as the D.E. Shaw Group and MQS Management LLC...To keep their big brains busy, there were numerous math-themed activities and decorations in keeping with the museum, which sports a door handle in the shape of the Greek letter Pi and a square-wheeled tricycle that rides smoothly over a specially designed curved pathway. Attendees took part in the creation of a fractal—a phenomenon where smaller copies of a pattern are nested within each other, similar to a fern plant—made up of lights attached to a black board and sat on benches that could be unfolded from squares into triangles as the guests mingled during the cocktail hour.

Marc Andreessen quits eBay board ahead of PayPal spinoff (Reuters)
The Silicon Valley pioneer has been involved in a public war of words with activist investor Carl Icahn, one of eBay's largest shareholders, who convinced the company to spin off PayPal after a long campaign. "After 6 years of service + completed decision to split, I've decided now is a good time to step off the eBay board of directors," Andreessen tweeted on Monday...Andreessen, in an interview to CNBC this month, likened Icahn to an "evil Captain Kirk" and said that the activist investor cared little for the companies in which he became involved. Icahn, in an interview to CNBC a day after, said "Andreessen has screwed more people than Casanova." He also said the eBay board member had a "high squeaky voice that only a dog can hear."

Did Bank Rules Kill Liquidity? Volcker, Frank Respond (Bloomberg)
“When I hear complaints about less liquidity, remember there is such a thing as too much liquidity,” Paul Volcker, the former Federal Reserve chairman whose calls to limit the ability of deposit-taking banks to bet with their own money inspired the rule that bears his name, said in an e-mail. “Traders’ and investors’ sense of an ability to sell anything instantaneously contributed to the excessive leveraging and risk-taking that led up to the crisis.” [...] “It’s a very good thing we don’t have AIGs that are willing to provide lots of liquidity and are buying this stuff now, so we won’t have to bail them out one day,” said Barney Frank, the former Massachusetts congressman who was a co-author of the Dodd-Frank Act. “People felt comfortable with banks taking the risk pre-crisis because they were government-backed. Now they’re not comfortable selling to other players that aren’t government backed.”

SEC sniffing out pot companies for fraud (NYP)
The Securities and Exchange Commission is investigating fresh allegations that a coterie of financiers has been minting millions as they pump the shares of money-losing pot companies, The Post has learned. Weed-related firms that face the SEC’s sniff test include GrowBlox Sciences, a supplier to pot farmers, and DigiPath, a consulting outfit that trains people how to market marijuana, sources said. Also under scrutiny are Vape Holdings, which makes pot-vaporization gear; and GrowBlox Sciences, which peddles climate-controlled light chambers designed to grow green, glistening dope buds fit for medical use, according to a person briefed on the situation.

Cook's 'Sexy' Shirtless Photos At Chili's Get Him Fired (HP)
A Chili's cook in Florida was fired after he popped his top and posed for several Facebook photos in the restaurant's kitchen, The Denver Channel reports. The shirtless man, who calls himself Justin J Speekz online, labeled the photos "Sexy Cooks Of Chili's" and even tagged his employer in the post. Two of the photos, taken at a Chili's location in Valrico, show him lying on a table where food is prepared. Concerned customers quickly discovered the bizarre post. The Department of Business and Professional Regulation, which oversees restaurant operations in Florida, reported that there were no official violations in the photos because no food was being prepared at the time. But a Chili's Bar and Grill spokesperson told ABC Action News that "Speekz" was spoken to: "Chili's clearly does not encourage this type of behavior in our restaurants. We maintain very high standards of food quality, safety and cleanliness and took immediate steps to ensure the restaurant continues to follow these requirements. Additionally, we ended this team member's employment after learning of his conduct."

Russia Rating Cut by Moody’s on Sluggish Economic Growth (Bloomberg)
Moody’s downgraded the sovereign one level to Baa2 from Baa1 and kept a negative outlook on the rating on Oct. 17. It is in line with Fitch Ratings Ltd.’s credit grade and one step above Standard & Poor’s, which lowered Russia to BBB- in April. The yield on the nation’s March 2030 Eurobond rose six basis points to 4.88 percent. The ruble weakened 0.7 percent to 41.0500 versus the dollar as of 4:31 p.m. in Moscow.

Hedge Funds Cut Bullish Bets on Crude as Prices Tumble (Bloomberg)
Plunging oil prices spurred hedge funds to cut bullish wagers by the most in six weeks, losing confidence in the willingness of producers to constrict supply. Money managers cut net-long positions in West Texas Intermediate by 8.1 percent in the week ended Oct. 14. Short positions jumped to the highest level in 22 months, U.S. Commodity Futures Trading Commission data show.

Hedge fund mogul Eric Mindich escaped AbbVie deal (NYP)
Eric Mindich, one of a handful of hedgies who cut their trading teeth on Goldman Sachs’ risk arb desk, told investors that his Eton Park Capital hedge fund decided to take its profits in Shire in September because of the risks associated with the deal. Shire is based in Ireland, and AbbVie hoped to take advantage of the country’s lower tax rate in a tax-inversion deal. But the Obama administration has been railing against the loss of revenue, and Treasury Secretary Jack Lew, on Sept 8, promised to crack down on inversions “in the very near future.” AbbVie decided to walk away from the deal on Wednesday, and Shire shares tumbled 30 percent.

Sculpture Resembling 'Butt Plug' Removed After Vandals Strike (AP)
A controversial green art installation on Paris' tony Place Vendome has been taken down after being vandalized overnight. The inflatable sculpture called "Tree" vaguely resembled a Christmas tree but evoked for others, including its creator, the artist Paul McCarthy, a giant anal sex toy. Guide wires holding the sculpture in place were severed by vandals sometime overnight, according to French media reports. The sculpture was deflated and folded up on Saturday. Culture Minister Fleur Pellerin blasted the vandalism, calling it "a serious attack on the principle of artistic freedom."

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