Greenlight Capital And Third Point September 30 Holdings Summary

With the star (and legend) of John Paulson long dead and buried, and his Disadvantage Minus fund an embarrassment, wrapped in a monkeyhammering, inside a humiliation, there are few "groupied" HF managers left. One of them is Dan Loeb, who still manages to generate positive Alpha regardless of how Beta does, another one used to be William Ackman (not so much anymore, especially not with the whole JCP fiasco), some others are David Tepper, Seth Klarman, and a few others, but nobody has quite the persistent clout and following of young master, and poker maestro, David Einhorn, and his fund Greenlight. Below we breakdown his latest just released 13F, which as a reminder shows, his holdings as of September 30. Key changes: Einhorn cut his holdings in Best Buy, Carefusion, Compuware, Expedia, Hess and UnitedHealth, and started new, small, positions in Yahoo, Babcock and Wilcox, Aecon and Knight Capital. More importantly, he cut his top position, Apple, by nearly 30% from 1.45 million to 1.09 million shares, cut modestly his second biggest position Seagate, added materially to GM, making it his third position, added to Cigna at #4 and added modestly to the GDX Gold Miners ETF. Sad to say, unless he has changed his portfolio dramatically since September 30, Einhorn is likely not doing too hot, especially in the last week or two.

Why The Troika's Forecasts Are A Total Joke In One Easy Chart

The remarkable forecasting skills of the Troika and the immense decisions being taken on the back of these 'sacrosanct' projections need to be put into context. We are more than happy to do that (as we did here - with hilarity ensuing), but the chart below shows even more clearly, so far so bad as the Troika has pretty much nailed it on the 'most optimistic mean-reverting model' ever. Not wanting to steal the jam from Europe's donut but the forecasts are - quite evidently - a complete and utter joke. Going forward though, we are sure it's different this time...

Deer Emerges As Stocks Slump Half Way To Reality

The crowded liquidity-fueled pump-fest of the last few months is beginning to unwind. Look around at where the damage occurred. Equities and Credit were smashed; the USD is practically unchanged; Treasuries very marginally bid; commodities sideways (aside from Oil's oscillations). The close did see some of the other asset classes start to catch down to equity and credit but based on our models, we see the S&P 500 having retraced about half its short-term mispricing relative to Treasuries. All the over-pumped sectors were the biggest laggards - Financials, Industrials, Materials, and Tech - but from the 11/25/11 beginning of the global coordinated central bank pump, there is still plenty of downside for stocks. Our greatest concern now is if high-yield bond ETFs are unwound (where so much liquidity is concentrated) and forces cash bond liquidations - there is simply no depth to soak up that move and the entire secondary market will reprice (and shut the primary market - which has lived on flows for so long).

Tilson Releases September 30 13-F: Top Positions Are AIG And AAPL

Just when we thought blowing up one fund in one year is enough for Whitney Tilson (recall from July: It's Official: T1 Is Not T2; Tilson Liquidates To Buy More Of The Same), we got a glimpse of his just released 13F and are rather confident the man, the myth, the stuff of Anti-Tilson ETFs will shock and awe us all one more time. The reason? As of September 30, Tilson's inaccurately named T2 Partners - it should be T1 now that Glenn Tongue is long gone - had a total of $175 million in AUM. That's not the punchline: as part of this $175 million, Tilson had $63 million in put/call stock equivalents. In other words the much vaunted "asset manager" who for some absolutely inexplicable reason continues to get CNBC airtime, managed a grand total of $110 million in real (mostly family and friends) money. That's not the punchline either. The punchline is that Tilson's top 3 positions were AIG and AAPL, with AIG in both stock and Call format. In fact, more than 10% of the firm's virtual AUM, or $18.6 million was in stock equivalent calls for AIG and AAPL, stocks which since September 30 have gone in a literally, not virtually, straight line lower, and have as a result likely wiped out the entire intrinsic call value. The only silver lining: Tilson owned $5.5 mm in NFLX calls and a grand total of $3.6 million in NFLX stock. We hope it carries him far, because once the Icahn grand jig is up, in which the raider is exposed as having absolutely no intentions of buying the company, or even putting it in play, but merely squeezing the shorts courtesy of a costless collar and a sternly worded 13D, that will be the final straw for Tilson's second coming, and most likely, his career.

Adding Insult To Rocket Attacks, Bank of Israel Now Underwater On Its Apple Position

It was all going so well, first name terms with Obama and AAPL up 30% from where you bought it... a mere two months later and the Bank of Israel is now underwater on their AAPL shares and about to print bullets. We noted in early March what a ridiculous ponzi this was all becoming when the Bank of Israel announced its purchase of US equity positions including AAPL. In retrospect it is so gratifying to gloat at the self-confirming bias that enabled their reserve managers to buy on the way up as the stock that can do no wrong lifted all boats. Actually, it is easy to gloat in any 'spect'. We can only assume that Bernanke's Bat-phone is ringing off the hook this afternoon to 'get back to work' and come to the aid of his Bank of Israel mentor.

As Good As It Gets

While the impact of the Fiscal Cliff remains front-and-center in everyone's mind, SocGen's Albert Edwards has another, more prescient, insight into why stocks are reverting. In his words, "commentators are worrying about an impending fiscal cliff, we have actually already stepped off the profits cliff." As we noted last week, the divergence between markets and macro suggest a rather ghastly echo of 2008; as the market is falling in line with the dismal outlook for profits (rather than the more upbeat macro economic data). As far as the latter, we are getting close to a cyclical peak - so macro surprises are 'as good as it gets' - and for the former (earnings outlooks), Edwards shows an unprecedented level of optimism about EPS going forward. As we proceed into the new year, Edwards expects "the combination of poor profits and poor economic data to prove toxic."

Diamonds: Not A Girl's Best Friend

On the day when the 76.02-carat 'Archduke Joseph Diamond' sells for a record $21.5 million, we thought it intriguing how even these incredible high-end status symbols are seeing prices collapsing at the low-end...of the high-end. It seems the 'wealthy' just can't afford 1-carat diamonds anymore as the price has plunged by over 25% in the last 15 months. Perhaps it is only the 1% of the 1% that can now afford their baubles as like everywhere, there is a growing divide between the 'haves' and the 'have-mores' (in this case). Coincidentally, heading into the stock market slide of 2008, we saw Diamond prices plunge and Gold prices rise - but we are sure it's different this time...

Ron Paul's Farewell To Congress - Live Webcast

Representative Ron Paul gets his opportunity to say farewell - providing a compendium of reality and liberty for all that choose to listen.. He begins: "My goals in 1976 were the same as they are today: to promote peace and prosperity by a strict adherence to the principles of individual liberty" and goes on..."economic ignorance is common place, as the failed policies of Keynesianism are continually promoted"... "psychopathic totalitarians endorse government initiatives to change our world" - live webcast (and full speech)...

FOMC Minutes Show Fed Members Expect More Unsterilized Monetization After Twist Ends, As Expected

In what should be news to precisely nobody (especially our readers, for whom we laid out the next Easing steps very clearly on the day QEternity was announced, including the continuation of Twist after December 31, 2012 at which point the Fed would merely monetize long-dated paper without selling short-end, i.e. unsterilized), the just released FOMC minutes indicated that "a number" of FOMC members favored more (infiniter) QE after the end of Twist. In other words, the Fed will have to continue monetizing the long-end of the Treasury issuance in lieu of other willing buyers. Recall that the Fed is currently buying up all the 10 Year+ gross issuance. To assume that this can change in some way is ludicrous. It also means that going forward, anything less than $85 billion in monthly flow from the Fed will be seen as tightening. Apparently, this update was big news to the algos (and the BIS FX traders) in charge of daytrading the EURUSD, which ramped by 30 pips on the news. Stocks, however, are oddly enough, the rational instrument today, and have barely budged on this news, once again indicating (as shown during yesterday's Yellen comments), that the Fed has priced itself and its future decisions out of the market, also exactly as we predicted would happen minutes after QEternity was announced.

Compromiser-In-Chief On The Economy And Fiscal Cliff - Live Webcast

After a busy morning of phone calls from Israel and chatting with his base 'influential' CEOs, we are sure the Compromiser-in-Chief will reach across the aisle this time... right? Will the market follow the recent trend and drop on his every word? Live webcast below...

Meet Goldman's New Partners

It may be one of the smallest partner "classes" in recent Goldman history but for the 70 names below, today is one of the best days of their lives: it marks their induction into the real Master of the Galaxy club (sadly, not even Goldman is Master of the Universe any more). This is what Lloyd had to say: “We congratulate all those selected on this important achievement and look forward to their leadership in the years ahead." Spoiler alert: neither Greg Smith, nor Shashank Tripathi, are on the list.

Israel Releases Video Of Air Strike Taking Out Hamas' Military Wing Head

No, this is not a clip from the latest Call of Duty showing what happens when one gets a 9+ killstreak. It is the IAF taking out the head of the Hamas military wing, which has set the region ablaze (even if the central bank manipulated VIX and EURUSD refuse to budge in response).

Complication: US Ally Egypt Gets Involved, Says Will No Longer Tolerate Israel's Gaza Attacks

it was only a matter of time before today's Israeli offensive ran into a snag. The complication: Egypt, which has long been treading the fence being both a pro-US regional power (someone has to provide those joint guarantees on Egyptian bonds, and to supply the local tear gas canisters in exchange for a friendly Suez Canal administrator), as well as a pro-Muslim presence. Today, the government was taken to task by the ruling Islamist Muslim Brotherhood which felt the need to be true to its name and express disgust at the Israeli action in Gaza. From AFP: "Egypt’s Islamist Freedom and Justice Party, formerly headed by President Mohammed Mursi, said on Wednesday Egypt would no longer stand by as Israel attacked Palestinians after air strikes killed a Hamas leader. The FJP, the political arm of the powerful Muslim Brotherhood movement, said Israeli air strikes that killed top militant Ahmed al-Jaabari in Gaza earlier on Wednesday required “swift Arab and international action to stop the massacres.” The party, which fielded Mursi in a June election to replace toppled president Hosni Mubarak, said Israel “must take into account the changes in the Arab region and especially Egypt.” Egypt “will not allow the Palestinians to be subjected to Israeli aggression, as in the past,” the party statement said."

Late-Day Equity Ramp But European Bonds Ain't Buying It

Between the escalation in the Middle East and Olli Rehn pouring cold-water on the hopes and prayers of an imminent Spanish rescue-request, sovereign bond risk rose notably today. A late-day rampapalooza in EURUSD (another round of end-of-day repatriation?) signaled risk-on in the correlated monkeys and sure enough (in the US and Europe) stocks rose into the European close. The USD is remarkably unchanged on the week - despite the volatility in risk assets in general (zee stabilitee at the 1.27 peg seems the new normal) - as the Fed/ECB 'agreement' appears to have crushed the life out of yet another market-based signal - as EURUSD implied vol crashes to five-year lows.

Charting The Secular Decline (To Come) In Advanced Economy House Prices

It would appear that Americans are in general an optimistic bunch. The slightest green shoot of economic growth, or market trend-reversal, or Tigers' home run in the World Series and it is instantly extrapolated into "what could be". The US housing market (among others around the world) is just such a glimmer of hope (and homebuilder stock prices surely provide all the proof you need... just like JCP's 12% jump on 9/19? followed by its 46% decline since...). The trouble is, no matter how much you want something to happen; sometimes, there really is no way it's ever gonna happen. To wit, the young/old dependency ratios in the following six major economies of the world suggest whatever 'Eastman Kodak' bounce some housing markets are experiencing will inevitably be short-lived (no matter how much foreign cash is driven back into these advanced economies).

Hamas Announces It Is Now In "Open War" With Israel

As expected, the escalation out of Gaza has been fast and furious with Al Arabiya reporting that the Hamas response to the operation that Israel has code named "Operation Pillar Of Cloud", which an IDF spokesperson has clarified Israel is ready to escalate into a ground operation into Gaza if needed, is that "Hamas is now in open war" with Israel. Moments later the organization Islamic Jihad has unsurprisingly, chimed in: "Israel has declared war on Gaza and they will bear the responsibility for the consequences." Stay tuned folks cause this may get very messy quickly. Now if only the US military wasn't currently the functional equivalent of a grotesque reality gong show.

Israel Third Front Escalation Sends Risk Lower

"War (escalation) is good" appears to have been the idiot algos immediate knee-jerk reaction to the post-Israel news jump in oil prices - as correlations rule the world. But once the reality of Gaza being 'the start' of an apparent escalation, and opened up the third Israeli front after Iran and Syria, risk was decidedly off and US equities reverted to their lows of yesterday...and back to early August levels (pre-Draghi).

Israel Assassinates Hamas Army's "Chief Of Staff" In Precision Airstrike, Hamas Vows "Infernal" Response

Update: Israel CDS 145/155, +6 bps

In a move that is certain to aggravate the already frayed relations between Israel and the Palestine, not to mention send Brent spiking, moments ago the IAF, in a precision airstrike, assassinated Ahmed Jaabari, the head of Hamas' armed wing - a position that is equivalent to Chief of Staff - together with his son, who were travelling in a car at the moment of the strike. And, as expected, the furious Hamas response has already been logged and promises much more death and escalation in the near term.

Chart Of The Day: The Fiscal Cliff For The Rest Of Us

We have discussed the fiscal cliff from many angles: timeline, the potential impact, the scenarios, whether its impact is priced in, why a bounce on success is unlikely, the endgame 'solution', and the long-term fiscal probity of the USA. As it appears everyone is becoming more aware of this pending reality, we note USA Today's great one-stop-shop infographic which simplifies the fiscal cliff impact for the rest of us: A raft of tax and spending changes scheduled to take effect in January will sharply reduce the federal budget deficit, but will also send the economy back into recession if they all happen at once.

Profits - Take Some!

As we head into the last of this year and we confront various cliffs; fiscal and European, the threat of rising taxes for individuals and perhaps corporations should not be minimized. My best advice of today is to stop and look at your portfolios and take some profits and re-invest the proceeds or take profits and keep cash to be re-invested after the first of the year when we have either bumbled our way out of our predicament or behaved badly and find ourselves in a morass with all of the markets rolling about on their backside. It makes no difference as to your viewpoint and it takes no socially charged adjectives to reach a correct opinion; our President wants more and increased social programs and he wants those with the money to pay for them. Now you have one and one-half months to make preparations.