Posts Tagged ‘David Einhorn’

A Reporter’s Notepad: My Almost Book On The Blame-Shifters

A Reporter’s Notepad: My Almost Book On The Blame-Shifters

Courtesy of Roddy Boyd, THE FINANCIAL INVESTIGATOR

Shadow Of Woman Writing

Editor’s Note: There is perhaps nothing so silly and attention-seeking as the reporter who willingly inserts him- or herself into a story for some narrative purpose or other, but I am going to make a (big) and one-time exception to this rule by posting this.

The backstory: Prior to committing to a book on AIG and its collapse, I had begun to pitch a book called “Shifting The Blame.”

The idea was simplicity itself: I’d take about eight or nine companies–from Overstock to Lehman, from Arthrocare to MBIA–who had hit the skids and who had, at some point, blamed some combination of reporters and short-sellers for their woes. As opposed to, say, embellishing their financials, lying, losing money, hiding losses, incompetence…you take the point. My goal was to fuse investigative reporting and the naturally dramatic arc of their sleazy behavior and comeuppances to make for an eye-opening read. I’d raise a few eyebrows, get some laughs, maybe make a deeper point about free speech, investigative reporting and the real scandals in the market.

My agent, summoning me to a breakfast one Saturday, said she loved the idea but, well, there was another book coming out by a fellow named Rick Sauer and it was going to hit on a few of the same themes. I lamely tried to suggest that Sauer’s book was an “Inside-the-SEC guy-turned-shortseller” type thing, where as my work was a series of inter-connected investigative essays.

No matter. The market is the market and the market didn’t, apparently, want two of these books. So I scrapped it.

This was the preface to the book, telling a story about an earnest PR guy who had the unenviable job of spinning a discredited yarn into gold for his revenge-hungry clients. I found it in a musty corner of the hard-drive and showed it to a few pretty smart former colleagues of mine who said they liked it.

I sort of do too. It’s dated, but like a hiss on an old record album, it gives it some gravity. Maybe.

The origin of this book lies with a series of phone conversations between myself and Jeffrey Lloyd, a partner at the public relations firm of Sitrick and Company, in the early autumn of 2008.

Lloyd, a courteous…
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SEC Crazy Talk

SEC Crazy Talk

By Gary Weiss, Portfolio.com

Sam Antar is an unlikely whistleblower: a convicted felon who went to jail for his role in the Crazy Eddie stock scandal and now spends his time fighting securities fraud. He says the SEC has been giving him—and other whistleblowers—a hard time.

A couple of weeks ago, a man from New York by the name of Sam Antar forwarded a zip drive to the Securities and Exchange Commission containing 37,000 documents that regulators wanted to see—a quarter of a million pages in all. “Just to open each file,” he told me, “I calculated that at a rate of two files a minute, it would take an SEC investigator, working seven hours a day, eight weeks to get through them all.”

Antar spent weeks fighting the agency over this, but eventually he decided the legal expenses of fighting it in court would be too crushing. It’s hard to be too sympathetic with Antar at first blush. When the SEC wants documents, it should get them, right? After all, everyone wants a vigorous, crime-fighting SEC. But in this case, the commission wasn’t targeting adversaries, but allies.

And that’s just one of the reasons why this probe smacks of the SEC’s infamous persecution of David Einhorn—a short-seller who was targeted rather than a company that he believed was engaged in improper practices, which the SEC eventually sanctioned. This is the kind of thing that has gotten me to increasingly wonder: What in heaven’s name is the SEC thinking? Is it completely out to lunch?

[...]

What makes this all even worse than the Einhorn mess is that the SEC is probing the two men’s contacts with those two Dow Jones reporters. That can’t help but have a chilling effect on the ability of the financial press to do its job. The agency has rules strictly limiting subpoenas to the media. Similar rules are needed to keep it from engaging in fishing expeditions aimed at people talking to the press.

Full article here.>


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TALKING OURSELVES OFF THE EDGE OF THE CLIFF

TALKING OURSELVES OFF THE EDGE OF THE CLIFF

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Courtesy of The Pragmatic Capitalist 

Yesterday’s WSJ MarketBeat blog took David Einhorn to task for his op-ed in the NY Times titled “Easy Money, Hard Truths“.  They make the argument that Einhorn is simply pushing his massive gold position.  I fear Einhorn is doing something much worse – helping to scare us all into continued recession.

First off, I have no problem when someone talks their book.  In fact, I almost prefer for people to talk their book.  There’s a certain trust in someone who is willing to “put their money where their mouth is”.  It’s the primary reason why I believe the hedge fund business is such a wonderful advancement beyond traditional mutual funds – the manager’s interests are generally aligned with those of the investor.  If you can find a manager who is not only intelligent, but has a sound moral compass you’ve wandered upon quite a gem.  From all accounts David Einhorn appears to fit the mold.  But I take very serious issue with his recent comments which I believe are filled with half-truths and propaganda that we continually hear from the inflationistas (all of whom have been terribly wrong thus far in terms of their macroeconomic outlook) who are driving the country towards the edge of the cliff.

Einhorn is a great investor and clearly a brilliant man, but for two years I have watched policymakers and fear mongerers misdiagnose the problems that we confront and this is, in my opinion, why we are still wrangling with these issues. In 2008 I wrote a letter to the Federal Reserve saying that this was a classic “balance sheet recession” with problems rooted in the private sector – specifically the consumer.  I told them that saving banks was not the solution and that monetary policy would prove as fruitless in the U.S. as it has in Japan.  I was shocked to receive a friendly response to my letter but not shocked to see Mr. Bernanke implement his Friedman-like monetarist campaign of “saving the world”.  Obviously it hasn’t worked (unless you’re a banker) as we sit here two years later still discussing this wretched credit crisis and the ranks of the unemployed continue to climb.  If we cannot properly diagnose the problems we cannot find a proper cure.  Thus far, we have failed.…
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But, You Sputtered, I’m Just A Hack….

But, You Sputtered, I’m Just A Hack….

Courtesy of Karl Denninger at The Market Ticker 

That is, with all my pesky math and charts like this:

Remember that I’ve been preaching for a while that we embedded a roughly $500-600 billion structural deficit into the economy post-2000?  And that now, in response to this recession (and in a refusal to admit that we have been playing credit drunk) we’ve now embedded a roughly 10% structural deficit – three times the former?

Before you consider me a chucklehead for having the temerity to look at the math you might take it up with the BIS - the Bank of International Settlements, or the "bankers’ bank" – which agrees with me:

According to the Bank for International Settlements, the United States’ structural deficit — the amount of our deficit adjusted for the economic cycle — has increased from 3.1 percent of gross domestic product in 2007 to 9.2 percent in 2010.

Gee, you mean they looked at the same chart I’ve been preaching from? 

This stuff isn’t hard folks!

Now Einhorn of Greenlight Capital, a rather-well-known hedge fund manager, is sounding off.  He said:

A good percentage of the structural increase in the deficit is because last year’s “stimulus” was not stimulus in the traditional sense. Rather than a one-time injection of spending to replace a cyclical reduction in private demand, the vast majority of the stimulus has been a permanent increase in the base level of government spending — including spending on federal jobs.

Yep.

This is exactly what I’ve been saying now since this mess began and the "response" became clear: Government didn’t "stimulate", it instead built in structural deficits – just as it did in 2003.

But you can read David’s missive any time you’d like, or the BIS’.

The key question is why would the government take such a step?

Some would claim that it was about trying to exert more control over the economy, as of there is some sort of grand conspiracy extant to take every piece of control you have over your life and transfer it to government.

I’m a bit more realistic in my assessment – and less conspiratorial.

Government did this because it was the only way to avoid having to admit that we have too much debt in the…
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THE ONE CHART THAT SCARES RICHARD RUSSELL

THE ONE CHART THAT SCARES RICHARD RUSSELL

Courtesy of The Pragmatic Capitalist

Nothing would derail the Fed’s great reflation/recovery experiment like higher interest rates.  Several notable investors including David Einhorn (see Einhorn’s thoughts here) and Julian Robertson (see Robertson’s thoughts here), have expressed their concerns over the potential for higher interest rates.  The great Richard Russell of the Dow Theory Letters has long feared a spike in interest rates.  In a recent note he explained that the end of quantitative easing has bond investors worried over the future of interest rates.  Russell believes higher rates are the next big move in the bond market:

“Older subscribers may remember that I said that the Fed could continue its “quantitative easing” (printing money) until the bond market says it can’t. Below is a daily chart of the 30-year Treasury bond. The bond market doesn’t like what it sees. I view the pattern on this chart as a huge, down-slanting head-and-shoulder top with the bond sitting right on support. The bond appears weak, and if support is violated, interest rates will be heading higher. And that’s the last thing the Fed wants at this time.” 

0 THE ONE CHART THAT SCARES RICHARD RUSSELL

Source: Dow Theory Letters 


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GURU OUTLOOK: DAVID EINHORN IS VERY WORRIED ABOUT THE DEBTS

GURU OUTLOOK: DAVID EINHORN IS VERY WORRIED ABOUT THE DEBTS

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Courtesy of The Pragmatic Capitalist

David Einhorn became a household name last year when he attacked Lehman Brothers (among other companies) for their poor financial condition.  He very publicly shorted the stock ahead of the firm’s implosion.  This didn’t help Einhorn from losing money for the first time in his career, however.  His firm’s flagship fund finished the year down 22.7% in 2008.  It looks bad at first glance, but this was just half of the losses the S&P 500 experienced last year.  He has since recouped all of the losses this year.  Einhorn is famous for his 2006 18th place finish in the World Series of Poker and has proven over the last 13 years to be one of the best risk managers on Wall Street.  So what does Einhorn like now?  Let’s take a look.

Einhorn is increasingly concerned about the debts in the financial system.  Einhorn had some very interesting comments earlier this year regarding gold, which has become one of Greenlight’s favorite positions.  He isn’t a goldbug, but Einhorn is growing increasingly concerned about the future of fiat currencies due to irresponsible monetary and fiscal policies.  Einhorn has very little faith in the Fed to print us back to prosperity.  The following is an excerpt from his 2008 year-end letter:

We never thought we would ever buy gold or gold stocks.   David’s grandfather Benjamin was a goldbug.   From the time David was ten, Grandpa Ben took every opportunity to tell David  about  the  problems  with  fiat  currencies  and  the  coming  inflation  and  advised  that the only sensible thing to do was to buy gold and gold stocks.  And, for the last thirty years of his life, that is what Grandpa Ben did.   And it was a lousy investment.   Being a patient investor is one thing.  Being “wrong” for three decades is quite another. To everyone’s dismay, we believe that some of Grandpa Ben’s predictions are playing out. Our  current  chairman  of  the  Federal  Reserve,  Ben  Bernanke,  is  an  “inflationist.”   When times  were  good,  he  supported  an  easy  money  policy.   Even  when  the  Fed  raised  rates, Bernanke  took  great  pains  to  give  the  markets  many  warnings  to  insure  that  the  higher rates  wouldn’t  break  up 


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Did The Markit Group, A Black-Box Company Partially Owned By Goldman Sachs and JP Morgan, Devastate Markets?

The Markit Group: A Black-Box Company that Devastated Markets

markitCourtesy of Mark Mitchell at Deep Capture

Although much attention has been directed at the contribution made by credit default swaps  to the financial crisis, most discussion has focused on the companies, such as American International Group (AIG), that posted big losses because they sold these instruments without sufficient due diligence.

Another line of inquiry has not been pursued, however, though it is of equal, and perhaps greater, significance. That line of inquiry concerns the way in which the prices of credit default swaps effect the perceived value of all forms of debt — corporate bonds, commercial mortgages, home mortgages, and collateralized debt obligations — and as a result, the ability of hedge funds manipulators to use credit default swaps in bear raids on public companies.

If short sellers can manipulate the price of credit default swaps, they can disrupt those companies whose debt is insured by the credit default swaps whose prices are manipulated.  The game plan runs as follows: find a company that relies on a layer of debt that is both permanent, and which rolls over frequently (most financial firms fit this description). Short sell that company’s stock. Then manipulate the price of the CDS upwards, preferably into a spike, as you spread the news of the skyrocketing CDS price (perhaps with the cooperation of compliant journalists at, say, CNBC).

Frightened Woman

Because the CDS is, in essence, an insurance policy on the debt of the company, the spiking CDS pricing will cause the company’s lenders to panic and cut off access to credit. As this happens, the company’s stock will nosedive, thereby cutting off access to equity capital. Thus suddenly deprived of credit and equity, the firm collapses, and the hedge fund collects on its short bets.

Moreover, credit default swap prices are the primary inputs for important indices (such as the CMBX and the ABX) measuring the movement of the overall market for commercial and home mortgages.  In the months leading up to the financial crisis of 2008, short sellers pointed to these indices in order to argue  that investment banks – most notably Bear Stearns and Lehman Brothers – had overvalued the mortgage debt and property on their books. Meanwhile, several hedge funds made billions in profits betting that those indexes would drop.

It should therefore be a…
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Einhorn: Break up too big to fail financial institutions

Einhorn: Break up too big to fail financial institutions

Courtesy of Edward Harrison at Credit Writedowns

David Einhorn delivered a speech at the 2009 Value Investing Conference that is creating a lot of buzz in the blogosphere. He said a lot of interesting things about the investing and political climate.  A surprising amount of it comes out of the playbook here at Credit Writedowns.

Below are the quotes I want to highlight for you. At the bottom is an embedded copy of his speech.

Enjoy.

On short-termism in politics and government

Winston Churchill said that, “Democracy is the worst form of government except for
all the others that have been tried from time to time.”

As I see it, there are two basic problems in how we have designed our government.
The first is that officials favor policies with short-term impact over those in our long-term
interest because they need to be popular while they are in office and they want to be reelected. In recent times, opinion tracking polls, the immediate reactions of focus groups, the 24/7 news cycle, the constant campaign, and the moment-to-moment obsession with the Dow Jones Industrial Average have magnified the political pressures to favor short-term solutions. Earlier this year, the political topic du jour was to debate whether the stimulus was working, before it had even been spent.

On crony capitalism and regulatory capture

The second weakness in our government is “concentrated benefit versus diffuse harm” also known as the problem of special interests. Decision makers help small groups who care about narrow issues and whose “special interests” invest substantial resources to be better heard through lobbying, public relations and campaign support. The special interests benefit while the associated costs and consequences are spread broadly through the rest of the population. With individuals bearing a comparatively small extra burden, they are less motivated or able to fight in Washington.

In the context of the recent economic crisis, a highly motivated and organized banking lobby has demonstrated enormous influence. Bankers advance ideas like, “without banks, we would have no economy.” Of course, there was a public interest in protecting the guts of the system, but the ATMs could have continued working, even with forced debt-to-equity conversions that would not have required any public funds. Instead, our leaders responded by handing over hundreds of billions


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David Einhorn: Short McGraw Hill (MHP) & Moody’s (MCO) – The Curse of the Triple A

David Einhorn: Short McGraw Hill (MHP) & Moody’s (MCO) – The Curse of the Triple A

Courtesy of Market Folly

While David Einhorn’s short position in Moody’s (MCO) is by no means new information, we did recently learn that his hedge fund Greenlight Capital is now also short McGraw Hill (MHP), the parent company of fellow ratings agency Standard & Poor’s. He initiated the position after a U.S. judge refused to dismiss a case against the ratings agencies. Those agencies were seeking refuge from such litigation under the notion that their opinions on ratings are protected by free-speech rights. This U.S. District Judge’s refusal to throw out the case could be a landmark ruling, Einhorn says. While this could potentially be a chink in the armor, it is also prudent to point out that 10 of the 11 claims were dismissed; a fact that Moody’s representatives have been quick to point out.

Einhorn presented his short position in Moody’s back at the Ira Sohn Conference where numerous hedge fund managers shared investment ideas. While we can’t track their short positions via SEC filings, we have covered Greenlight’s long portfolio here. Greenlight was up 16.3% for the second quarter and year to date for 2009 is up 21.5%. For more of Einhorn’s tirades shorting companies, we highly recommend reading his book Fooling Some of the People All of the Time: A Long Short Story. In it, you’ll learn how Greenlight constructs and researches investment theses. Not to mention, it’s just an interesting read and story in general.

Instead of summarizing Einhorn’s thoughts regarding why he is short the ratings agencies, we figured we’d just let him tell you himself. Embedded below is his presentation from the Ira Sohn investment conference entitled ‘The Curse of the Triple A.’ You can download the .pdf here or read on below:
 

David Einhorn’s Ira Sohn Presentation

So, while he presented that argument back in late May of this year, he appeared on television a few days ago to further elaborate on his argument. Below is the video where he presents his case to CNBC anchors:
 


And lastly, for posterity’s sake, we would also like to highlight Einhorn’s thoughts…
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Gulf of Oman attacks: how merchant ships can keep safe in dangerous waters

 

Picture via Pixabay

Gulf of Oman attacks: how merchant ships can keep safe in dangerous waters

Courtesy of Robert McCabe, Coventry University

The latest attacks on two oil tankers in the Gulf of Oman have once again highlighted the vulnerability of merchant ships crossing high risk areas. Both the Front Altair and the Kokuka Courageous sustained significant damage to their hulls in attacks on June 13 that led the the evacuation of the crew. This latest attack mirrors an incident from May, where four vessels, including two Saudi oil tanker...



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Kimble Charting Solutions

Consumer Staple and Yields about to send key message to stocks?

Courtesy of Chris Kimble.

Could the Staples sector and the yield on the 10-year note be on the verge of sending an important message to the stock and bond markets? It sure looks that way.

Staples ETF (XLP) is currently attempting to break above the January 2018 highs at (1). If it does, it would be a breakout of the trading range that has been in play for the past 18-months, as it looks to have created a double bottom last year.

The yield on the 10-year note (TNX)  has declined nearly 35%, since pea...



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Insider Scoop

30 Stocks Moving In Tuesday's Pre-Market Session

Courtesy of Benzinga.

Gainers
  • Moneygram International Inc (NASDAQ: MGI) rose 128.3% to $3.31 in pre-market trading after the company reported a strategic partnership with Ripple. Blockchain payments firm Ripple has made an investment in MoneyGram and will also allow the group to use its XRP cryptocurrency as part of the cross-border payments process. Ripple made an initial investment of $30 million in the money transfer company, made up of common stock and a warrant to purchase common stock. Ripple purchased newly-issued common stock including the shares underlying the warrant from MoneyGram at $4.10 per share.
  • Blue Apron Holdings, Inc....


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Zero Hedge

The Road To Perdition - 10 Cautionary Tenets About US Air Power

Courtesy of ZeroHedge. View original post here.

Authored by William Astore via TomDispatch.com,

The American Cult of Bombing and Endless War

From Syria to Yemen in the Middle East, Libya to Somalia in Africa, Afghanistan to Pakistan in South Asia, an American aerial curtain has descended across a huge swath of the planet.

Its stated purpose: combatting terrorism.

Its primary method: constant surveillance and bombing -- and yet more bombing.

...

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Biotech

Consumer genetic testing customers stretch their DNA data further with third-party interpretation websites

Reminder: Pharmboy is available to chat with Members, comments are found below each post.

 

Consumer genetic testing customers stretch their DNA data further with third-party interpretation websites

If you’ve got the raw data, why not mine it for more info? Sergey Nivens/Shutterstock.com

Courtesy of Sarah Catherine Nelson, University of Washington

Back in 2016, Helen (a pseudonym) took three different direct-to-consumer (DTC) genetic tests: AncestryDNA, 23andMe and FamilyTreeDNA. She saw genetic testing as a way...



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Chart School

Silver Review

Courtesy of Read the Ticker.

The folks in the federal reserve will debase the US dollar currency to an extreme degree silver will finally lift off the floor.. 

Note: Readers should re watch the silver back screen news video, here.

The following video looks at price action and Wyckoff logic.

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If gold moves, silver wi...

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Digital Currencies

Cryptos Are Crashing As Asia Opens, Bitcoin Back Below $8k

Courtesy of ZeroHedge. View original post here.

Having survived the day's bloodbath in US tech stocks, cryptos are crashing in the early Asian session, apparently playing catch-down to the day's de-risking.

While no catalyst is immediately evident, there are some reports noting 13 large global banks are preparing to launch digital versions of major global currencies next year, though we suspect this drop was more algorithmic that fundamental-driven.

...



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ValueWalk

More Examples Of "Typical Tesla "wise-guy scamminess"

By Jacob Wolinsky. Originally published at ValueWalk.

Stanphyl Capital’s letter to investors for the month of March 2019.

rawpixel / Pixabay

Friends and Fellow Investors:

For March 2019 the fund was up approximately 5.5% net of all fees and expenses. By way of comparison, the S&P 500 was up approximately 1.9% while the Russell 2000 was down approximately 2.1%. Year-to-date 2019 the fund is up approximately 12.8% while the S&P 500 is up approximately 13.6% and the ...



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Members' Corner

Despacito - How to Make Money the Old-Fashioned Way - SLOWLY!

Are you ready to retire?  

For most people, the purpose of investing is to build up enough wealth to allow you to retire.  In general, that's usually enough money to reliably generate a year's worth of your average income, each year into your retirement so that that, plus you Social Security, should be enough to pay your bills without having to draw down on your principle.

Unfortunately, as the last decade has shown us, we can't count on bonds to pay us more than 3% and the average return from the stock market over the past 20 years has been erratic - to say the least - with 4 negative years (2000, 2001, 2002 and 2008) and 14 positives, though mostly in the 10% range on the positives.  A string of losses like we had from 2000-02 could easily wipe out a decades worth of gains.

Still, the stock market has been better over the last 10 (7%) an...



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Mapping The Market

It's Not Capitalism, it's Crony Capitalism

A good start from :

It's Not Capitalism, it's Crony Capitalism

Excerpt:

The threat to America is this: we have abandoned our core philosophy. Our first principle of this nation as a meritocracy, a free-market economy, where competition drives economic decision-making. In its place, we have allowed a malignancy to fester, a virulent pus-filled bastardized form of economics so corrosive in nature, so dangerously pestilent, that it presents an extinction-level threat to America – both the actual nation and the “idea” of America.

This all-encompassing mutant corruption saps men’s souls, crushes opportunities, and destroys economic mobility. Its a Smash & Grab system of ill-gotten re...



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OpTrader

Swing trading portfolio - week of September 11th, 2017

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:

 

·       How 2017 Will Affect Oil, the US Dollar and the European Union

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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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