The Ticker
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David Einhorn Has A Sense Of Humor
Continue reading… 6 CommentsJust a quick bit from this WSJ story on Greenlight Capital's David Einhorn. If you'll remember, Einhorn is the poker-playing, short-selling hedge funder who famously called the demise of Lehman Bros. Looks like he got burned along with lots of other shorts in the now-infamous Volkswagen short squeeze late last year. But at least Greenlight gets credit for some dry wit.
From the WSJ:
Hedge-fund manager David Einhorn (left), of New York’s Greenlight Capital, in a recent investor letter listed in a table the internal rate of return of 14 positions he closed in the first quarter. A bearish bet on jewelry retailer Zale generated a return of 92% and another on U.S. Bancorp returned 78%, Greenlight said in the May 1 letter. Then there were investments in companies such as Dr Pepper Snapple Group and Aldar Properties that generated losses of 46% and 91%, respectively, it continued.
But for the by now infamous Volkswagen trade, which dealt a punishing blow to hedge-fund managers around the world last year, Greenlight didn’t list a figure. It simply said, “bad.”
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SNL On Banking 'Stress Test'
Continue reading… 1 CommentWe went with a pass-pass system!
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Jeremy Grantham Predicts A Tough Road
Continue reading… 3 CommentsToday's must-read is Jeremy Grantham's quarterly letter (you can download it from his site here). The title sums it up: "The Last Hurrah and Seven Lean Years."
First, the good news. Grantham says we could be in for a big equity rally thanks to massive government stimulus plans designed to keep the global economy on track, with a good chance the S&P could hit 1000-1100 before year's end. It's a bit of rare bullishness from Grantham (don't worry, it gets worse later). From the letter:
If the stock market is many times more sensitive to financial stimulus in the short term than the economy is, then we could easily get a prodigious response to the greatest monetary and fiscal stimulus by far in U.S. history. Second, if you don’t think there is a special, one-off, super colossal dose of moral hazard out there today, you are sadly uninformed. The moral hazard in play today is of a massively larger order than any we have ever seen.
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Madoff's Secretary Spills
Continue reading… 4 CommentsVanity Fair goes for broke with a 9,000-word story co-written by Bernie Madoff's long-time secretary Eleanor Squillari. According to juicy bits teased by VF, Bernie was sorta sleazy. The lowlights:
On his personality:
The way Madoff handled stress was “by saying something nasty: You look terrible. You’re gaining weight. You’re stupid. I never took anything he said to me personally, because I knew it wasn’t about me, it was about him.”
On his seamy side:
“Bernie was irresistible to women” and “had a roving eye.” Squillari once caught him perusing the escort ads in the back of a magazine, and he frequently visited massage parlors. “Once, I looked in his address book and found, under M, about a dozen phone numbers for his masseuses. ‘If you ever lose your address book and somebody finds it, they’re going to think you’re a pervert,’ I said.”
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Elizabeth Warren On Wall Street In Denial
Continue reading… 4 CommentsElizabeth Warren, chair of the Congressional Oversight Panel overseeing the bailouts and a Harvard Law professor, tells Tech Ticker today that bankers still don't get it. Bottom line: They're taking taxpayer money, and there will be consequences. Her ire is refreshing.
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Shadows Over Green Shoots
Continue reading… 2 CommentsStocks are rallying, the economy looks like it's (possibly) bottoming, and Ben Bernanke says growth could resume this year. So what's not to like? One word: Credit.
In a lengthy post, ContraryInvestor.com (re-posted in full at Zero Hedge) outlines why a sustained recovery in the credit market remains the province of wishful thinking. Without the Federal Reserve's help, sickly markets for mortgage- and asset-backed securities and even commercial paper might still be threatening to swamp the entire financial system just as they did during the worst of the crisis late last year. Scarily, stocks might simply be ignoring that fact. From the post:
The equity market has certainly caught the attention of the investment community as of late. Time to take a much needed and very important detour in this discussion. Right to the point, let’s review the character of the credit market. Certainly a general sense of optimism has risen as the equity market has levitated as of late. And that sense of optimism engenders the thinking that the economy and general financial market conditions MUST be getting better because rising equities are simply foreshadowing such an outcome. In other words, history has taught us that equities lead and so if equities are rising, the implication is better days lie ahead. But in the current cycle, we all know that credit market issues have been the locus of distress and the exact cause for a dramatic loss of wealth in financial assets really globally. So although it’s certainly fun to watch the equity markets romp higher, it’s the credit markets that deserve a really big piece of our attention. Better days lie ahead as a generic comment when both the equity and credit markets are healing in simultaneous fashion.
This should give bullish investors real pause. We've slowly been creeping back into picking stocks, touting fundamentals, eyeing breakout sectors, and all the rest of the usual analysis that gets done when the threat of systemic market disruption is absent. It isn't, and we should take care not to pretend otherwise.
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Selling At The Bottom
Continue reading… 1 CommentToday the WSJ looks at the safe(er) spots in the market including money market funds, stable-value funds, short-term bonds where investors are stashing cash in an effort to protect their shrunken nest egg. None of them look great. Then there's this:
The concerns are cropping up at a time when many retirement-plan participants, facing devastating losses in their stock portfolios, want to preserve what is left of their nest egg rather than betting on a market rebound. In March, 90% of the money transferred in a large group of 401(k) plans tracked by consulting firm Hewitt Associates LLC went into stable-value funds.
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Weekend Reading: Warren Buffett Edition
Continue reading… 0 CommentsIt's Berkshire-palooza time again, when some 35,000 souls make their way to Omaha for Cherry Cokes, discount jewelry at Borsheim's and Warren Buffett's latest batch of investing wisdom. Here's a few folks who'll be attending (and blogging) plus some of the accompanying Buffett-related news:
Andrew Ross Sorkin is Twittering. (You can send him questions for Buffett).
WSJ says Charlie Munger doesn't get enough credit.
Is the Omaha lovefest overblown?
The Guardian predicts some themes including the usual (Buffett's succession) and the obvious (Berkshire's derivatives exposure, and its sinking share price).
