Posts Tagged ‘Dealbook’
John Paulson (Paulson and Co.) Q3 Letter to Investors
Thursday, November 19th, 2009
Courtesy of Dealbook
Tags: 3q, Amp, Dealbook, ETF, Investors, John Paulson, Q3
Posted in Markets | No Comments »
Paul Tudor Jones: Buying Gold and Curve Flatteners
Monday, November 2nd, 2009
Investing legend, Paul Tudor Jones’ has published his latest latest letter to investors.
Here are some excerpts:
Tudor Jones believes there is a better opportunity to buy equities in the year-end period, as he is expecting a pullback in the fall.
While 45% is nothing to ignore, one should take into account that the S&P through July 31 is still down more than 20% on a price basis year-over-year. The bottom line is that we are not inclined to aggressively chase the market here. Rather, we eye a better opportunity to be long equities into year-end on a potential autumnal pullback.
The economy will remain strong until Q2 2010 as a result of ongoing support from the government, easy monetary policy, a weak dollar, and continuing inventory de-stocking:
The forceful policy response to avert depression tail risks posed by the financial crisis has likely unleashed a wave of liquidity which is probably greater than that of 2001-2003. Our job is to identify the best performing assets of this “Great Liquidity Race.” At present, it appears those assets are gold, emerging market equities denominated in local currencies, and commodity related stocks.
Liquidity is making its way into bond purchases by banks, into equity markets, into capital flows to emerging markets and into international reserve accumulation and related diversification away from the dollar. This will be the trend over the next quarter—or two—even before discussing potential portfolio shifts within it.
He likes gold on the basis of easy money and inflationary outlook:
Dealbook says:
Winning the race, Mr. Jones posits, will be gold, emerging-market equities denominated in local currencies and commodity-related stocks. “I have never been a gold bug,” he says in the letter. “It is just an asset that, like everything else in life, has its time and place. And that time is now.” (A link to the entire letter is below.)
Tudor Jones says:
“precious metals exposure has been increasing and is currently the largest commodity exposure. As a result we have included, for this quarter, a separate discussion on gold as an appendix. I have never been a gold bug. It is just an asset that, like everything else in life, has its time and place. And now is that time.”
Tudor notes that curve flatteners provide ‘tail risk insurance’ against the trades of long gold, short the US dollar, and long equities. Tudor writes, “As deflation recedes to the background, market participants will start expecting a removal of policy accommodation. If the markets begin to price early, fast and large tightening before inflationary expectations are allowed to take hold, then curves could bear-flatten significantly from current historically high levels.”
Tudor Jones also likes the Aussie dollar, and equity selections in Brazil and Taiwan. You may read the whole letter here, below inside the Scribd window.
Tags: Accumulation, Commodities, Dealbook, Easy Money, Emerging Market, Emerging Markets, ETF, Financial Crisis, Gold, Gold Bug, International Diversification, liquidity, Monetary Policy, Ongoing Support, Paul Tudor Jones, Policy Response, precious metals, Price Basis, Pullback, Related Diversification, Time And Place, Weak Dollar, Winning The Race
Posted in Emerging Markets, Gold, Markets | No Comments »
Few Gain, Many Lose from Frannie Bailout
Monday, September 8th, 2008
UK bank shares are having a huge day (above are the 9:20 a.m. (Eastern Time) prices of UK bank stocks, September 8, 2008), following this weekends Frannie bailout announcement.
It appears that the short squeeze in bank stocks is in this morning’s trading.
Here are some excerpts from the saavy folks at DealBook.
Over the years, Fannie Mae and Freddie Mac showered riches on many winners: their executives, Wall Street bankers and Washington lobbyists. Now the foundering mortgage giants are leaving some losers in their wake, notably their shareholders, rank-and-file employees and, in the worst case, American taxpayers.
Golden Parachutes all around:
Daniel H. Mudd, the departing head of Fannie Mae, stands to collect $9.3 million in severance pay…
Richard F. Syron, the departing chief executive of Freddie Mac, could receive an exit package of at least $14.1 million
Its not clear that these former Frannie executives will actually get compensated.
But worst of all, long investors in either are getting killed:
The shareholders of Fannie Mae and Freddie Mac, including many employees, will not be so lucky. The companies’ share prices have plunged about 90 percent this year, wiping out about $70 billion of shareholder value. The shares are likely to be worth little or nothing under the government’s rescue plan.
As a result, Wall Street money managers and everyday investors alike stand to lose big. Bill Miller, the star mutual fund manager at Legg Mason, increased his bet on Freddie Mac even as the company’s shares plummeted this year. Last week, when Freddie Mac stock was trading at about $5, Legg Mason disclosed that it had bought an additional 30 million shares. Other value-oriented investors, including Rich Pzena, David Dreman and Martin Whitman, also placed big bets that the mortgage companies would recover. None of these money managers returned calls for comment.
“I am just shocked how they missed this, and why, when it became completely clear that the problem was snowballing, guys like Bill Miller doubled down,” Douglas A. Kass, head of Seabreeze Partners and an outspoken short-seller, told The Times.
And the few investors that gain:
Among the most vocal short-sellers betting against the companies is William A. Ackman, who runs a hedge fund called Pershing Square Capital. Mr. Ackman was among the earliest to warn of the credit crisis, and he is believed to have landed a windfall after shorting both companies, according to The Times, which cited a person with direct knowledge of a recent investment letter.
In the end, American taxpayers have been handed the bill, helping the rest of us around the world sleep a little better at night, now that a great deal of credit risk has been been mitigated.
Thank you Secretary Paulson.
Tags: American Taxpayers, Bailout, Bank stocks, Banks, Blog, Credit, Credit Crisis, Credit Risk, David Dreman, Dealbook, Everyday Investors, Excerpts, Fannie Mae, Fannie Mae And Freddie Mac, Financials, Freddie Mac, Freddie Mac Stock, Gold, Golden Parachutes, GSE, Hedge Fund, Legg Mason, Money Managers, Mortgage, Mortgage Companies, Paulson, Pershing Square, Pzena, risk, S Trading, saa, Severance Pay, Shareholder Value, Shareholders, Short squeeze, Street Money, Syron, Trading, UK, Value, Wall Street, Washington Lobbyists
Posted in Gold, Markets | No Comments »
The Bonfire of the Vanities, the Sequel
Thursday, June 26th, 2008
June 26, 2008 - Andrew Ross Sorkin, of the New York Times, writes about how prophetic Tom Wolfe’s declaration was on the day of the Blackstone debut: “We may be witnessing the end of capitalism as we know it.”
When you get to the end of an era, marking the timeline with watershed events is always therapeutic. Here are some excerpts from Sorkin’s NYTimes article:
… Mr. Wolfe must be in attendance — was that the Blackstone Group, the big private equity firm, was minutes away from going public, the largest initial public offering in the United States since 2002. (At the time, he told The New York Observer that a friend was giving him a tour.)
Just then, a CNBC reporter pulled Mr. Wolfe aside to ask him what he made of all the hubbub. Mr. Wolfe paused for a moment to contemplate his answer.
And then, with a wry smile, he delivered a prophetic declaration: “We may be witnessing the end of capitalism as we know it.”
One year later …
Blackstone’s stock has gone nowhere but down since it went public, dropping nearly 50 percent from its high the day it started trading. But that’s the least of it.
The once mighty Wall Street investment banks have been brought to their knees, sending out pink slips to more than 83,000 employees worldwide, racking up billions of dollars in losses as a results of their foolish forays into subprime mortgages. Bear Stearns all but went out of business before being “saved.” Some hedge funds have gone belly up.
Those lords of private equity, many of which were preparing to follow Blackstone into the public markets, have been put on semipermanent hiatus. (Kohlberg Kravis Roberts & Company refuses to withdraw its I.P.O filing, almost a year after submitting it, with no immediate hope in sight.) Their deal-making has all but stopped.
As Mr. Wolfe nicely put it, “It sounds like even the firms that aren’t in trouble are in trouble.”
And, what of credit …
And yet, there has been a perverse, and misguided, optimism that somehow the situation will improve in the second half of 2008. How? Sure, the big banks may take fewer write-downs — but there is no way of knowing that. The news a few days ago that the big bond insurers were being downgraded will create new havoc — and losses — for holders of toxic subprime debt. Indeed, the bigger issue is what kind of business is going to generate any return for its investors. When you can’t lend or trade — and you can’t invest with the leverage that juiced returns to support seven- and eight-figure bonuses — how exactly are you going to make money?
“It has always interested me that the word ‘credit’ comes from the word ‘credere,’ which means ‘to believe,’ ” Mr. Wolfe said. “It only works if people believe in it.” He’s right, of course: one reason the credit markets have tanked is that people don’t believe anymore.
Complete Article:
A “Bonfire” Returns as Heartburn, Andrew Ross Sorkin, NYTimes, June 24, 2008
Tags: Andrew Ross Sorkin, Banks, Bear Stearns, Blackstone, capitalism, Credit, Credit Market, Credit Markets, Dealbook, Dollar, Excerpts, Financials, Hedge Fund, Hedge Funds, Investment Banks, Markets, Mortgage, New York Times, REW, risk, SMI, Tom Wolfe, Trading, Wall Street, Water
Posted in Bonds, Credit Markets, Markets | No Comments »
