Archive - May 2009

Another fund manager whose investment decisions we respect, absent his occasional entanglements in groupthink short squeezes.

Greenlight_Capital_-_Q1_2009 - Free Legal Forms

Hat tip KGB 666

Goldman Sachs has hit a new trading profit record: in the past quarter the company generated over $100 million trading profit on an absolute record of 34 trading days, according to its 10-Q filed today. Not only that, but GS was profitable on 56 days in the quarter and lost money on only 8, meaning it was profitable 87.5% of the time trading in the last quarter (and this isn't even a weighted number).

Jerry Moyes, who in late 2006 LBO'ed troubled transportation company Swift Transportation which has been on daily bankruptcy watch for as long as one can remember, just got a swift kick in the groin as his other business venture, the Phoenix Coyotes ended up filing for bankruptcy late last night.

Dear Morgan Stanley,

We like you. Well, not in that way, but we are taxpayers. If we didn't like you, why would we give you billions of our money to insure your survival? So we kind of have to like you, same way we like our deviant, foster kids.

• Rick Americans default on luxury homes like subprime victims (Bloomberg)
• Fed seeks end to wall street lock over OTC derivatives market (Bloomberg)
• ADP provides some pre-market futures nudge (Reuters)
• Street deserves Chrysler medicine (

First we somehow managed to get on Goldman Sachs' nerves, now Morgan Stanley has gotten us in their crosshairs. In an internal e-mail distributed across virtually all of the investment bank, Zero Hedge is getting not only some serious free publicity, but some pretty amusing validation that in our "drivel" and "inanity" we may have very well hit some right notes... You know what they say about denial.

After a marathon session in bankruptcy court today, where many wide eyed female legal interns wearing fishnets and mini skirts to impress senior partners initially, are now merely bleary eyed, Judge Gonzalez decided to follow in Peck's footsteps, and to approve a procedure which would require a competing bid to the existing Fiat bid to emerge in about a week.

Either Hale-Bopp has made a U-turn and is headed straight back for earth or somehow people are shocked that BofA is about to sack Ken Lewis for class action lawsuit inducing misrepresentation of facts and GM is about to dilute shareholders by a factor of infinity to zero. All noise - the limit buys are about to hit the nitrous.

Either Hale-Bopp has made a U-turn and is headed straight back for earth or somehow people are shocked that BofA is about to sack Ken Lewis for class action lawsuit inducing misrepresentation of facts and GM is about to dilute shareholders by a factor of infinity to zero. All noise - the limit buys are about to hit the nitrous.

• Just out: Bank Of America needs $34 billion in capital per latest leak (Reuters)
• Banks that want to exit TARP must be able to raise debt without FDIC (Bloomberg)
• BlackRock equities chief investment officer expects 11% S&P drop led by bank
  

If anyone actually cares about the market at this point, and is naive enough to trade, here are some observations.

HSKAX abd HFRXEMN are both about to take the bottom out of their respective charts. One can only imagine what is going on behind closed doors in East Setauket as small, more agile quants with price-only based short term momentum strategies are devouring their larger, more sophisticated brethren.

Let's recall what the magical bonus number was that caused Barney Frank to almost get a lynch mob armed and ready to march on Wall Street: $165 million in retention bonuses.

In a filing today with the SEC, GM announced that it would issue 60 billion new shares, in order to "pay off" debts to the government, its bondholders and the UAW. And since the government would end up being the majority owner, only the approval of the US Treasury would be needed (talk about a gating factor).

Spreads were mixed in the US with IG tighter, HVOL wider (seemed like significant index arb at play), ExHVOL better, XO stronger, and HY selling off (as we felt modest HY-IG decompression pressure). Indices typically underperformed single-names with skews mostly narrower as IG underperformed but narrowed the skew, HVOL underperformed but narrowed the skew, ExHVOL outperformed pushing the skew wider, XO underperformed but compressed the skew, and HY's skew widened as it underperformed.