From Thursday night cocktail chatter with a Bank of America employee, on the fate of the traders who sold the subprime mortgages which brought down the banks:
“Of course, the traders made millions in commissions. They all did fine. Now they’re getting fired. But it doesn’t matter. They starting up hedge funds. They’re buying up distressed debt, the same mortgages they sold which crashed and which are now bargains. They’re going to make even more!”
PerTrac Financial Solutions has released a study indicating that emerging hedge funds outperform established funds.
“Our original study, released early last year, asserted that smaller, younger hedge funds outperform larger, older hedge funds, based on research spanning January 1996 to July 2006,” said Meredith Jones, managing director of PerTrac. “The new study, which includes data through December 2007, confirms the original results.” Data was compiled and analyzed using the PerTrac Analytical Platform software application.
So much for experience.
Sometimes despotic monarchies do work better than democracies. If Saudi Arabia was a functioning democracy, rather than an old-fashioned monarchy, the oil would likely be pumping much faster, and President Bush and other leaders of oil-addicted nations wouldn’t have to go begging to the King for more oil, a request the King is politely denying. Wisely, in fact, as he is looking out for the long-term revenue stream of himself, his family, and possibly even the people who live in his country.
In a democratic Saudi Arabia, self-interested citizens would vote to open the taps and get the cash now. The world, and the United States in particular, would have a short term cushion, and serious decisions about efficiency and use could be staved off. When the oil did run out, however, it would run out more precipitously. Better a steady diet than a feast and a famine. Thanks, oh, glorious King.
Above, Bush is pictured, hoping the meeting is going well. It didn’t. link
The U.S. Senate Committee on Homeland Security and Governmental Affairs is looking into the effects of speculators — or, as we will call them from now on, “the devils in their gambling hells” — on the prices of commodities.
With oil approaching $130 a barrel and a global food crisis looming, the panel heard testimony from experts about how speculative investment by institutional investors and hedge funds may be contributing to food and energy price inflation.
One angry American reports:
“The gambling in food products utterly destroys anything that could be called a market. What business has a man (or a devil) selling or pretending to sell, a food product which he does not possess? These men who ‘operate’ on the boards of trade (more appropriately called gambling hells) have no more right to the consideration of honest men than the devil has to a seat in heaven.”
That last American was speaking in 1892, and is quoted in Ann Fabian’s Card Sharps and Bucket Shops: Gambling in the Nineteenth Century. Her chapter on the rampant speculation in commodities at the end of the nineteenth century is remarkably current, with a little more devil talk than we get these days.
Here we have Greenlight Capital’s founder David Einhorn, playing a bit of poker…. at the final table of the 37th annual World Series of Poker. The shirt includes handprints from his wife and children. It’s an old picture, but we love it.
But we post it because of a new book. Einhorn is also the author of Fooling Some of the People All of the Time, about his frustrating efforts to short Allied Capital.
David Rockefeller’s $100 million gift to Harvard has increased the size of the University’s endowment by about .3125 percent, moving them up from about $32 billion to about $32 billion and $100 million.
The next largest endowment is Yale’s. It is roughly half the size.
Meanwhile, the S&P 500 lost .34% yesterday. If Harvard’s endowment responded in kind, Mr. Rockefeller’s donation has vanished.
Mr. Rockefeller’s donation is/was meant to help students go abroad and learn about the world, and also to support “participation” in the arts. Rockefeller graduated from Harvard in 1936, and says his trips abroad really “opened his mind.”
Perhaps students can go to Haiti, to find out if they are still eating mud there, and how a Haitian might have invested $100 million, and return with a picture of what they have learned.
Responding to Mr. Rockefeller’s donation, the angry people at the Huffington Post get still more angry.
The scene: A lifelike, full-scale reproduction of the living room of billionaire Blackstone Group founder Stephen Schwarzman, very similar to the one built for the man’s fabled $3 million 60th birthday party. It is a perfect rendition, because it is his living room, at 740 Park Avenue, also known as “the fortress of plentitude,” as it’s where all the other captains of paperwork live with their quilted jackets, little loafers, special tiny dogs, etc.
Paul LeClerc, CEO of the New York Public Library: Sir, your gift staggers!
Schwarzman: ‘Tis nothing!
LeClerc: $100 million. It is unprecedented.
Schwarzman: You embarrass me!
LeClerc: With this money we will be able to open that cafe in the lobby, and crush Barnes & Noble at last! No one will go there!
Schwarzman: It is of no moment to me how it is used. It is for the people.
LeClerc: Sir, we wish to make a memory of your gift.
Schwarzman: Please, do not.
LeClerc: I beg of you, it will be Just a handful of tiny reminders, that the people may remember and strive toward your example. We were thinking of five separate plaques, at eye level, spread all around the entrances.
Schwarzman: Hmmmm…. Do the people desire it?
LeClerc: They do! Yes!
Schwarzman: (Blushing, fanning his face.) Well… then, you may, if you must.
LeClerc: It is right, and just, and noble, and befitting.
Schwarzman: It shames me, but…. Let it be done! Now, go, do not humiliate me further.
LeClerc: My liege.
(Exit LeClerc, walking out backwards.)
A better take on the pastor, the stripper, and the missing millions from the folks at News10 in Sacramento:
A former Sacramento stripper who gained notoriety when a Christian school threatened to remove her daughter from school in 2002 may now lose her home as part of a federal fraud investigation.
On Thursday, the U.S. attorney filed papers to seize the home owned by Christina Silvas.
Silvas is named in federal documents alleging her now-husband, Stephen K. Wilson, is suspected of fraud and money laundering in a Folsom investment firm called Christians In Crisis Investment Fund.
The couple’s Folsom house and Wilson’s office were raided February 15 by federal agents. The search warrant affidavit claims Wilson ran the fund as a “Ponzi scheme,” where money from new investors is used to pay profits promised to earlier investors.
In addition, the affidavit claims Wilson and his wife, Christina Silvas Wilson, used money from the investors to make down payments on their house, exotic cars and a yacht.
“(Stephen) Wilson withdrew at least $1.1 million for personal expenses … treated the Washington Mutual CIC (Christians In Crisis) account as if it were a personal bank account,” states the affidavit by IRS investigator Don Daley.
Silvas gained national attention in May 2002 when Capital Christian Center wanted her to quit her job as an exotic dancer, saying if she didn’t, they would remove her daughter from school. The attention gained her network news interviews, as well as a photo shoot and interview by Playboy magazine….
We thought the last post was so depressing that we decided to bring a little Christmas early, in the form of this Wall Street Journal video about the lovely light show put on by billionaire Paul Tudor Jones III, which rocks Greenwich every year.
Bloomberg reports that London-based hedge fund Clive Capital, founded by former Moore Capital Management trader Chris Levett, is up 17.6 percent 1Q 2008. That would be a $297 million gain on a $1.3 billion fund, if Bloomberg has their numbers right, which would mean a $60 million take for the fund’s managers, if they helped themselves to the usual 20 percent.
Fantastic call! (High fives, new jet, etc….)
Meanwhile, In Haiti, as the price of corn, wheat, rice, and the other things humans need to eat goes through the roof, they’re eating mud pies. Bummer.
Since much of the price rise enjoyed by Clive and others is due to a speculative frenzy being conducted by well-fed managers in air-conditioned offices, and goosed by wanna-be writers, is there a moral obligation to pass a little of the profit down the food chain? Seems like there might be.
There is no more money left. James “Jim” Simons, manager of the Renaissance Technologies Medallion fund, earned the last of it, with an astonishing $2.8 billion total compensation for 2007, according to Alpha’s latest roundup of top hedge fund earners. It marks the end of the 69-year-old’s lifelong quest to “win it all.”
When contacted, Simons shouted, “You get nothing! You lose! Good day, sir!” and hung up.
Later, in a separate call, he relented, allowing that much of it will go to charity, so that it will trickle down into the economy and he can earn it back again. “What’s the fun, otherwise?” he asked.
Wall Street: We’re totally democrats! Always have been!
Strangely, almost in spite of itself, this remix of a Kingdon Capital meeting borders on amusing.
Pastor Douglas Scott, of the River of Life Church in Colorado Springs, Colorado, was sentenced to hard labor yesterday: Well, actually, the judge told him to get a job and do 200 hours of community service, although it’s not clear whether or not the two could be satisfied by working as a pastor.
In any event, Scott’s hedge fund, The Vision Fund, managed by XL Capital Partners, lost about half of as much as $24 million under management.
The judge, proving once again that all judges think they are recurring guests on Rowan & Martin’s Laugh-In, told Scott he should be fishing for souls, not wallets.
“George Fox” is Client No. 9, who is Eliot Spitzer, except that “George Fox” is also George Fox, alleged friend of the governor, and the President and Founder of Titan Capital Advisors, LLC, a fund of funds whose web site is currently and probably rather recently “undergoing maintenance,” although the Google cache of the site tells us:
George Fox leads Titan Advisors as its President, actively engaging in the firm’s portfolio management process as a member of the Investment Committee and leading Titan’s business development and marketing efforts. He entered the New York financial markets in 1984 as a floor trader at the Coffee, Sugar and Cocoa Exchange and the Commodity Exchange Inc., where he traded for his own account for seven years. In 1992, Mr. Fox created G. Fox & Co., a hedge fund advisory firm. He graduated with a B.A. degree from Tulane University in 1981 and earned a law degree from the University of Richmond (VA) in 1984.
If the real George Fox, who is truly the victim of this “victimless crime,” has any plans for revenge on the fake “George Fox,” we suggest doing something embarrassing under the pseudonym “Eliot Spitzer.”
Court papers here.
Update: Site “maintenance” is done, and George Fox is gone. Or is he?
Things are fine! We’re optimistic! Yes, we have your money. It’s in this safe here. Of course you can have it, but right now the door is closed, for safety, of course. That’s why they call it a “safe.” We couldn’t just leave the door open. A key, yes, we have a key. Where is that key? It’s in our office, of course, right here, somewhere. We shouldn’t say where. Can you come back this afternoon? We should have the key then. We have to open the desk drawer first. Of course, I could open it now, but if you come back after lunch, it will be easier. It’s not a problem. Everything’s fine, it’s just a matter of timing. You can come back and get your money after lunch! It’s fine in the safe for now, though. It’s all cozy and it likes it there!
Business Week: Hedge Funds Frozen Shut
Folsom, California resident and former youth minister Stefan Andre Wilson was denied bail in the mounting and increasingly weird FBI case against him, which alleges that his “Christians in Crisis Investment Fund” provided nothing more than an avenue for him to lose more than $5 million in investor funds on an Ameritrade account, to put a down payment on a million-dollar home, and to buy his wife a Gallardo Lamborghini and then a Porsche Cayman. His wife, the former Christina Silvas, is a one-time stripper who ended her career so her daughter could continue in her Christian day school, although the school was disappointed to hear that she later posed for Playboy’s web site.
One investor told the Folsom Telegraph that Wilson’s outfit’s headquarters looked “impressive” with 34 monitors on the wall.
