Breaking Stuff
by ilene - April 21st, 2010 11:16 pm
Breaking Stuff
Courtesy Adam Warner at Daily Options Review
Breaking news on CNBC! This, from Clusterstock.
According to CNBC’s Steve Liesman, the SEC has evidence that contradicts its own argument that ACA was mislead on the nature of John Paulson’s intent.
Specifically, in interviewing Paulson lieutenant Paolo Pellegrini, ACA was informed that Paulson intended to go short the CDO.
Not surprisingly, this was left out of the SEC complaint.
The SEC really needs to answer for this.
Remember always, this is a PR fight. Certainly at this juncture. And in any PR fight, you want to get your story out as if it’s not from you, but channeled through some independent "news" source. CNBC could not provide a better venue. They’re naturally sympathetic to your side to begin with, and they’ll funnel any "news" you want through their mouth’s. And Clusterstock….well, judge on your own, all I’ll say is they rarely meet an attack on Goldman that they don’t seek to diminish.
Look, this might be an accurate account, the SEC is certainly not above reproach, to say the least. But it just reads like a calculated PR offensive. Paulson’s lietenent saying ACA knew? Is he exactly unimpeachable? Doesn’t he have every incentive in the world to just say this? He can easily couch that as his understanding, that ACA was informed. Perhaps Fall Guy Fab forgot to tell ACA, we don’t know, neither does Paulo.
Here’s another way to look at it. The SEC has this info, it it becomes demonstrable fact that ACA knew Paulson was shorting it, it clearly destroys their case. Whatever SEC’s motivations are here, they’re not bringing a case out that will get shot down that simply. So I suspect the "ACA Knew" defense is a "he said, she said" thing. You can’t prove a negative, i.e., you can’t prove ACA didn’t know. But you can prove they did know if there’s some evidence that shows they were informed. Perhaps that evidence is out there, but I don’t believe "Paolo Says So" is that evidence.
*****
Adam’s follow-up…
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Goldman Sachs (GS) VP Email Jan 2007: “The whole building is about to collapse anytime now.”
by ilene - April 16th, 2010 12:15 pm
Goldman Sachs (GS) VP Email Jan 2007: "The whole building is about to collapse anytime now."
Courtesy of Trader Mark at Fund My Mutual Fund
I have no idea the implication but for those of you around a decade ago you know what this parallels… Eliot Spitzer made his career on almost the same exact thing a decade ago. Investment banks bringing product (IPOs) public, their analysts cheerleading the stocks to the public while writing internal emails about how the companies were complete trash.
Well this London based VP looks like the sacrificial lamb.
- The suit also named Fabrice Tourre, a vice president at Goldman who helped create and sell the investment
As usual the snake oil never really changes… but in the past the snake oil salesmen would be run out of town. Now they are protected by government, backstopepd by our Federal reserve, and glorified. We’ve really evolved as a society 
- According to the complaint, Goldman created Abacus 2007-AC1 in February 2007, at the request of John Paulson, a prominent hedge fund manager who earned an estimated $3.7 billion in 2007 by correctly wagering that the housing bubble would burst.
- Goldman let Mr. Paulson select mortgage bonds that he wanted to bet against — the ones he believed were most likely to lose value — and packaged those bonds into Abacus 2007-AC1, according to the S.E.C. complaint. Goldman then sold the Abacus deal to investors like foreign banks, pension funds, insurance companies and other hedge funds.
- But the deck was stacked against the Abacus investors, the complaint contends, because the investment was filled with bonds chosen by Mr. Paulson as likely to default. Goldman told investors in Abacus marketing materials reviewed by The Times that the bonds would be chosen by an independent manager.
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Fascinating to see John Paulson’s firm involved as well – I don’t see any wrong doing on his part but apparently one of his former lieutenants, Paolo Pellegrini was the ‘snitch’. [Oct 2, 2009: Paolo Pellegrini, Formely of John Paulson's Hedge Fund, on Bloomberg]
Full pdf file of SEC complaint here.
p.s. bought some SPY puts to get some hedging going on.
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GURU OUTLOOK: PAOLO PELLEGRINI
by ilene - March 2nd, 2010 6:33 pm
GURU OUTLOOK: PAOLO PELLEGRINI
Courtesy of The Pragmatic Capitalist
This week’s Guru Outlook brings you Paolo Pellegrini. Although he is not the most well known of investment gurus Pellegrini has built quite a name for himself in recent years. Before founding his own hedge fund PSQR (a play on PP Squared) Pellegrini was John Paulson’s right hand man at Paulson and Co (see Paulson’s guru outlook here & most recent strategy comments here). Of course, Paulson and Co. made waves during the sub-prime crisis when they made billions shorting the
So where does Pellegrini see the market going now? In a recent letter to shareholders he said:
“the structural problems that precipitated the Great Recession around the globe remain unresolved”
He says we are essentially papering over the problems with more debt. We are simply adding more debt to a debt-laden world while
Pellegrini’s favorite trades in 2010 are the following four:
- Short US fixed income
- Short US equities
- Short US dollar
- Long commodities
The short trade on fixed income is a reflection of the likelihood for higher yields as investors grow increasingly fearful of the U.S. as a steward of its debt. Pellegrini believes demand for treasuries will decrease in the coming years.
In terms of equities Pellegrini says valuations are becoming stretched as organic growth fails to match expectations. He also believes higher taxes could ultimately be a net negative for equities.
Pellegrini is short the dollar based on the expectation of more stimulus. He predicts that policymakers will come back to the taxpayer asking for another handout as they explain their first stimulus plan was not a failure, but simply too small. He says the dollar will “plunge” if this occurs.
The one sector of the market Pellegrini likes is commodities. He says they…
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ANEMIC REAL RETURNS ON STOCKS AHEAD
by ilene - October 2nd, 2009 11:03 pm
ANEMIC REAL RETURNS ON STOCKS AHEAD
Courtesy of The Pragmatic Capitalist
Excellent interview with Paolo Pellegrini here from Bloomberg:
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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...
Ilene is editor and affiliate program
coordinator for PSW. She manages the site