Ever wonder who may have been buying up every share of BP stock earlier this week, especially when it plunged to 14 year lows on June 9 amid media frenzy based on a Fortune story in which Simmons & Co.'s CEO Matt Simmons was quoted as saying that BP "has about a month before they declare Chapter 11." Why, Simmons & Co. itself, of course. In a note released to clients on Friday, Simmons & Co, upgraded BP from Neutral to Overweight, in which Mr. Simmons amusingly notes, "the kitchen sink of headlines have been thrown at BP shares over the past 2 weeks, thereby partially desensitizing the shares to the news." With his dire warnings of an imminent bankruptcy just two days prior to the upgrade, Mr. Simmons surely did his fair share to contribute to kitchen sink. It is only fair that after creating a near-panic in the name, that the firm would now suddenly be stuck in a Schrodinger's Cat world, in which BP is seen as both bankrupt, and having a $52 price target at the same time.
While we don't know if Simmons & Co. trades on a prop basis, and actually accumulates its own trading positions, the firm does disclose it has a Sales and Trading operation, which likely means that it does dabble in stocks for its own account. Reading the report does not help: the only relevant disclosure in Robert Kessler research piece is that "Simmons & Company International may seek compensation for investment banking services from BP p.l.c. and other companies for which research coverage is provided." While we wish the firm lots of luck in being picked as an advisor ever again by BP in this particular universe, we do wonder, and assuming the investment bank does not transact on its own account, just what other Simmons clients may have been axed in the stock, and had an interest in seeing a plunge in the stock, only to see the firm responsible for the 14 year low turn around 48 hour laters and issue a $52 price target on a company that according to the big boss himself, was supposed to be declaring Chapter 11 by mid-July. As we noted on Wednesday, "all this media rumormongering should certainly be taken with a blob of oil." Little did we know how bad it really was. Next up: we expect a consortium of banks led by Goldman to LBO all the offshore oil drillers imminently.
Report can be found at dealbreaker.