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Game Over For Moody's On Einhorn Kiss Of Death? Stock Plunges After Greenlight Strategic Short Revealed

Tyler Durden's picture


Update: the Einhorn-Ackman dynamic duo does the groupthink tango, as Ackman joins Einhorn in bashing rating agencies. Tomorrow's MCO open will be a bloodbath

It's official: Moody's is the next Lehman. The ratings agency just received the kiss of death after David Einhorn announced he is short the name at the Ira Sohn conference (we are not sure how this is news...Einhorn has repeatedly noted his hatred of the rating agency). With numerous other adverse catalysts, such as the pending Wells Notice, as well as the fact that its business model is conflicted is obsolete, this was the straw that broke the camel's back. And since we are confident that uber honest capitalist Waren Buffett is by now completely out of the name, replaced presumably with the same idiot middle east sovereign wealth money that just gulped up the Treasury's Citi stake, there won't be too many tears wept at its funeral. RIP Moody's.


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Wed, 05/26/2010 - 18:21 | 375665 Cognitive Dissonance
Cognitive Dissonance's picture

I've been wondering if Uncle sorry......I mean Uncle Waren might not see this as an opportunity to swoop in and pick up Moody's for pennies and then lend his "good" name to rejuvenate it as a mean & clean rating machine. Then he can rate everything to the moon that he wants to dump first.

But seriously it might make him at least. Personally I would run to the hills but that's just me.

Wed, 05/26/2010 - 18:48 | 375716 Mitchman
Mitchman's picture

Doubtful from my point of view.  Too much event risk from the regulatory side.  At this point in time, no one except the little guys has lost any money. When the SHTF, the lawsuits will pile up and people will be looking for scalps.

Wed, 05/26/2010 - 20:34 | 375904 Buck Johnson
Buck Johnson's picture

You are correct, its to risky.  Because once everything starts to come apart everyone and their mother will be throwing lawsuits at them and each other to recoup money that is no longer there.  And with anything once the rules are thrown out it will be every man for themselves company speaking and they will be pointing the finger at each other.  But in particular MOODY and the other rating agencies will be the one to go after because they rated this junk and it was junk pure and simple.  I think the only reason why their hasn't been any lawsuits after some of the emails about rating a security if a cow did it, is because so far they have been able to keep everybody on board in the extend and pretend and the mark to magic (as one poster put it).  But that won't last for long and it will be a blood bath.

Thu, 05/27/2010 - 01:04 | 376293 MaximumPig
MaximumPig's picture

There's a big CALPERS suit against them:

Wed, 05/26/2010 - 21:03 | 375959 Cursive
Cursive's picture


LOL.  Do you know Michael de la Merced?

Cognitive dissonance: ackman speaking in falsetto voice of Mr. Bill in speaking re $ggp #irasohn2010 #longdayforeveryone

Thu, 05/27/2010 - 01:52 | 376328 MrTrader
MrTrader's picture

Moody's `They deserve it ! By the way : uncle Warren has sold a huge part of his holdings ;=)

Wed, 05/26/2010 - 18:23 | 375668 hound dog vigilante
hound dog vigilante's picture


death of ratings agencies = foregone conclusion.

that markets react this way tells you just how overvalued markets truly are right now... nothing negative is 'priced in' at all.

markets = Wiley Coyote off the edge of the cliff...

Wed, 05/26/2010 - 18:28 | 375683 cougar_w
cougar_w's picture

The news hasn't been priced into the market for 2 years because algos don't read the news.

Wed, 05/26/2010 - 19:02 | 375752 ThreeTrees
ThreeTrees's picture

Could it not be that it HAS been priced in and it's just that the low watermark has been raised by massive inflows of liquidity?

Wed, 05/26/2010 - 22:49 | 376117 hound dog vigilante
hound dog vigilante's picture

so... equities already reflect future inflation. and all equity investors are onboard b/c they are all buy & hold, ultra-long term investors.

so of course equities have been preemptively inflated!  what could possibly go wrong in the foreseeable future?  Nothing!  Our world is a padded-room, free of risk!


Wed, 05/26/2010 - 19:30 | 375796 Fraud-Esq
Fraud-Esq's picture

nor lawsuits

Thu, 05/27/2010 - 08:48 | 376497 Whizbang
Whizbang's picture


Wed, 05/26/2010 - 18:24 | 375672 chet
chet's picture

Why can't we just get the sheiks to buy all the remaining toxic crap and we can just move on?

Wed, 05/26/2010 - 18:28 | 375684 Mitchman
Mitchman's picture

They have their own toxic crap.  It's called Dubai.

Wed, 05/26/2010 - 18:56 | 375740 Cheeky Bastard
Cheeky Bastard's picture

Not anymore.

Restructuring was announced over a month ago.


Wed, 05/26/2010 - 19:19 | 375775 geminiRX
geminiRX's picture

Shit like that is unlikely to be restructured successfully in this environment (both economically and environmentally). The desert will likely reclaim Dubai making it the largest ghost city in the world some day. The place was devoid of tourists when I went last year. My 5star suite that was worth >1000 per night fetched $200

Wed, 05/26/2010 - 19:37 | 375814 Cheeky Bastard
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It was more for the reason of preventing the surge in CDS and counterparty risk than anything else. I think ADSWF bought all CDS outstanding for a premium.

Wed, 05/26/2010 - 20:39 | 375912 Mitchman
Mitchman's picture

You are correct, of course.  However, it is hard to believe that they will hold up during this next crunch.  Your thoughts will be appreciated.

Wed, 05/26/2010 - 20:52 | 375935 Cheeky Bastard
Cheeky Bastard's picture

there is a shitload of synthetic stuff floating out there which has Dubai stamp over it. ADSWF only bought CDS outstanding on normal bonds, not on synthetic stuff which is still floating out there. But Dubai has nothing to worry about anymore, since it has pulled all of its bonds out of the market. Synthetics are now the sellers risk as are the collateral calls which have surely came pouring in when the announcement was issued.

Wed, 05/26/2010 - 22:55 | 376132 Mitchman
Mitchman's picture

Excellent point and thank you for the clarification.  I will impugn a more deserving target the next opportunity.  :-)

Thu, 05/27/2010 - 04:25 | 376168 velobabe
velobabe's picture

done, tired

Wed, 05/26/2010 - 18:24 | 375675 cougar_w
cougar_w's picture

We won't have to eat the rich, we can just wait and watch while they eat each other.

Though the last rich guy standing is going to be one mean mo'fo.

Wed, 05/26/2010 - 18:51 | 375726 wawawiwaa
wawawiwaa's picture



Historically that guy has been called by several names including King, Ceasar, Kahn, etc... and yes... they kicked a#$%^& and took names.



Thu, 05/27/2010 - 00:36 | 376268 OldTrooper
OldTrooper's picture

Ahhhh! Yesterday was a good day.  Consumed the last of my rich rivals.  Now, where's my breakfast!

Wed, 05/26/2010 - 18:30 | 375687 MsCreant
MsCreant's picture

Look at all these posts from TD and Marla. The financial system will collapse because everything is going to be frozen in a gridlock of court cases. Folks will need to make margin calls. There will need to be a holiday as momentum picks up.

The Shit is Hitting the Fan. Get ready for the spray.

This is called smelling it before it hits you. Kinda like the gulf spill.

Wed, 05/26/2010 - 18:57 | 375742 Mr Lennon Hendrix
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The vampire skunk!  I guess Octopi spray too, but skunks are funny.

Wed, 05/26/2010 - 18:47 | 375713 Edna R. Rider
Edna R. Rider's picture

And only 15 minutes after Einhorn's announcement, Buffett announces he's going to testify on MCO in front of congress.  My o My, how the rich are different than you and me.

Wed, 05/26/2010 - 18:57 | 375741 knukles
knukles's picture

Let's define the Power Elite.  Those that shall never feel the steel of handcuffs nor the humiliation of the perp walk, whatever their crime.
Implies (an understatement) an economic shared interest between the politicals and thier economic providers.

So, Warren gets to go in front of his political counterparts to explain Moody's case.  As if he'd been running it hands on, maybe?

Poor fellow just cannot seem to get a break with Wall Street investments; Salomon, GS, Moody's to recollect a few.  But Warren is not alone in that experience either, remembering the GE connection to Kidder.  (And CNBC)  Sorta like outsiders investing in Hollywood;  about as successful as Chamberlin's Peace in Our Time.

"As a dog returns to his vomit, so to a fool to his folly."-Proverbs, 26:11

Wed, 05/26/2010 - 20:27 | 375893 Apostate
Apostate's picture

Few on Wall Street like Warren. Much less so his healthcare bill.

I mean, it was one thing, when you could just make money trading derivatives that are based on nothing, because American companies are all pieces of shit anyway that have barely produced an iota of technological advancement since the late '90s.

Though, hell, if the regulations had supported it, we might've had an internet in the '70s or '80s. Technological and social advancement is actively and openly suppressed by politics and the crazy university system.

Now, it's becoming apparent that all the paper is going to be worthless. So we may have to just go back to creating real companies that change the world before 1 billion Chinese eat us alive.

So NOW people get off their ass to do something about the situation.

Fuckin' Omaha.

Thu, 05/27/2010 - 06:39 | 376409 Mercury
Mercury's picture

Officially Buffett is answerable to BRK shareholders not Wall St. and most of them do like him.

A certain level of computing firepower (ultimately developed by private enterprises like Intel) had to have been in place for the Internet to become the Internet. Pamela Anderson is more effective in a medium with fast loading graphics than one with just green ASC II text.

For years in the 80's France had a (government run) WWW-like system called MiniTel which was great at the time (and mostly limited to green text) but it never really developed beyond a certain point when the WWW itself started becoming big.

Wed, 05/26/2010 - 20:29 | 375896 QQQBall
QQQBall's picture

Salomon Bros worked... He did well, no? GS is still paying, but I have no idea if he made dough on MCO or not.

Wed, 05/26/2010 - 20:50 | 375931 Apostate
Apostate's picture

That was then, this is now.

Wed, 05/26/2010 - 18:48 | 375719 wawawiwaa
wawawiwaa's picture

Must be nice to be able to make a stock tank at will by saying something completely obvious and being yourself. 

Wed, 05/26/2010 - 20:34 | 375901 Mercury
Mercury's picture

It' helps to be known as the smartest guy(s) in the room, for doing the homework, putting lots of money where your mouth is and being right again and again.

I knew Einhorn and Ackman would deliver at this thing.

Wed, 05/26/2010 - 18:51 | 375727 Turd Ferguson
Turd Ferguson's picture

I've got 121.60 on the euro

Wed, 05/26/2010 - 19:00 | 375750 Christobevii3
Christobevii3's picture

Bought january $10 puts a couple of weeks ago and already up 50%, hell yeah! 

Wed, 05/26/2010 - 19:02 | 375753 Popo
Popo's picture

It couldn't happen to a nicer bunch of insider criminals.

Wed, 05/26/2010 - 19:22 | 375783 williambanzai7
williambanzai7's picture


Wed, 05/26/2010 - 19:27 | 375791 Me XMan
Me XMan's picture

How much Buffet own this Moody's?

Wed, 05/26/2010 - 19:30 | 375799 MiguelitoRaton
MiguelitoRaton's picture

Slammed in after hours. And I thought failure was rewarded in this Farcist system.

Wed, 05/26/2010 - 19:34 | 375804 bigdad06
bigdad06's picture

It's about damn time! Good riddance to the bastards!

Wed, 05/26/2010 - 19:38 | 375817 Nikki
Nikki's picture

A RICO case should have been the downfall of this POS company, not a bear raid. Kind uncle Warren is more like uncle Ernie in Tommy.

Wed, 05/26/2010 - 19:58 | 375818 holdinmyown
holdinmyown's picture

Ackman's bought up 150m shares of $c in recent weeks. No time for elaboration #irasohn2010

Wed, 05/26/2010 - 19:40 | 375824 Leo Kolivakis
Leo Kolivakis's picture

Not news to me, and I agree with Einhorn, this puppy is a dead sucker.

Wed, 05/26/2010 - 19:44 | 375830 geminiRX
geminiRX's picture

I nominate Zerohedge to replace Moody's as a ratings agency:)

Wed, 05/26/2010 - 19:52 | 375842 johngaltfla
johngaltfla's picture

Is it possible to kill a vampire without actually driving the stake through its heart? Then burning it with napalm. Then maybe pouring acid on the remains? Hell, we all thought Citi was finally killed and that piece of crap rose from the ashes.

Wed, 05/26/2010 - 19:59 | 375854 AccreditedEYE
AccreditedEYE's picture

Chris Whalen used to call it the zombie love party. You wanna see something REALLY frightening, check out the government agencies exposure to the mortgage market and how... well... that is going. LOL

Thu, 05/27/2010 - 08:44 | 376490 johngaltfla
johngaltfla's picture

Chris Whalen is a must read whenever the banksters are discussed. And his opinions on the rating agencies are classic. Sadly, nobody wants to listen to what he's been warning about until it becomes a full blown crisis. Between the GSE circus and banksters lying about their books he's going to remain a very, very busy man.

Wed, 05/26/2010 - 20:22 | 375883 LeBalance
LeBalance's picture

It is much more exquisite to withhold food. :)

Wed, 05/26/2010 - 19:53 | 375844 lynnybee
lynnybee's picture

i love this website !   being a "newbie", i'm learning so much !  thanks, ZEROHEDGE !

Wed, 05/26/2010 - 20:02 | 375858 LoneStarHog
LoneStarHog's picture

The best contemporary ratings for stocks, bonds, etc. is simple.  If it is listed on the NYSE, AMEX, NASDAQ, et. al. and if it is touted by any Whore Street firm and it is not physical gold/silver, IT IS TRASH!  It no longer means anything if a company is good/bad. Until Whore Street is destroyed and rebuilt, everything is TRASH!

Wed, 05/26/2010 - 20:23 | 375886 LeBalance
LeBalance's picture


Wed, 05/26/2010 - 20:21 | 375881 Monkey Craig
Monkey Craig's picture

I'm sure that an extinction event in the Gulf would make gold pretty valuable...and ammo too!

Wed, 05/26/2010 - 20:31 | 375899 DoomsDay
DoomsDay's picture

...and goldman rapes their clients again!

Thu, 05/27/2010 - 07:19 | 376429 johan404
johan404's picture

And they didn't even lube up. Ouch.

Wed, 05/26/2010 - 21:52 | 376036 JW n FL
JW n FL's picture

Moody's Down Grades United States on Debt Concerns...




***** "On March 18, 2010, MIS received a “Wells Notice” from the Staff of the SEC stating that the Staff is considering recommending that the Commission institute administrative and cease-and-desist proceedings against MIS in connection with MIS’s initial June 2007 application on SEC Form NRSRO to register as a nationally recognized statistical rating organization…

The Staff has informed Moody’s that the recommendation it is considering is based on the theory that MIS’s description of its procedures and principles were rendered false and misleading as of the time the application was filed with the SEC in light of the Company’s finding that a rating committee policy had been violated." *****


No Magic... don't fuck with the Magic Carpet Ride that the FED has us all on... Or you will be crushed! Questions?

Wed, 05/26/2010 - 22:43 | 376094 bob_dabolina
bob_dabolina's picture

I never thought a hedgefund manager that has been talking shit on a company for 2 years would be short the stock.

I don't get it. I thought everyone knew Einhorn was short Moodys.

Was this some kind of surprise? He has been talking about this company like it was his ex-wife...

Someone...anyone....explain why this is so exciting

Wed, 05/26/2010 - 22:59 | 376136 Privatus
Privatus's picture

Standardless Whores, all of 'em.

Wed, 05/26/2010 - 23:29 | 376190 Madhouse
Madhouse's picture
Parting fungoola by Moodys will be a U.S. downgrade ?  Naw, that couldn't be on anyone's mind ...  In fact, it is the topping of the Madhouse Cake is it not ? Also, worth repeating... by Madhouse
on Wed, 05/05/2010 - 00:39


The final contortions of the 10 year price chart will be as ugly as when the Titanic's stern rose high into the air first, not the final horror of the night mind you, and then the ship split in two and sunk....

Thu, 05/27/2010 - 00:09 | 376244 BlackBeard
BlackBeard's picture

Einhorn announced he was short MCO sometime last year.  This is good news, I piggy backed his trade.

Thu, 05/27/2010 - 00:33 | 376266 Daniel Plainview
Daniel Plainview's picture

Come on now, this is news? Einhorn from his perch on the board of BKed New Century, was well aware of the rigged ratings game and how moody's ratings serve as the last line of defense against a possible plaintiffs bar shark fest. So, yea he has had puts on MCO and short since the beginning (of the end). BTW Warren Buffett is on record stating that he doesn't believe in using ratings. Interested to see how that works into his "Moody's credibility testimony" @ FCIC. 

Thu, 05/27/2010 - 00:38 | 376270 cocoablini
cocoablini's picture

Nice how Warren got the word to get out the day before the lawsuit. RIGGED

Thu, 05/27/2010 - 00:59 | 376289 Daniel Plainview
Daniel Plainview's picture

So, who's lugging all the sold MCO shares in inventory since the Wells Notice? Goldsacks? LMAO Ha Ha there my friends is the short ;)

Thu, 05/27/2010 - 04:26 | 376364 No Hedge
No Hedge's picture

this news made my day...whoooohoooo

Thu, 05/27/2010 - 05:02 | 376376 Moonrajah
Moonrajah's picture

I think Moody's will be just liquidated and bought up by the FED since they are in dire need of fresh spin doctors.

Thu, 05/27/2010 - 05:12 | 376382 velobabe
velobabe's picture

ok, enter me from behind†

Thu, 05/27/2010 - 06:23 | 376403 FischerBlack
FischerBlack's picture

MCO's business depends on there not being big, public short sellers slamming the company's reputation for accurate credit analysis. Einhorn is on his reflexivity kick again. It's hard to say whether he's right, or his jugular-seeking publicity tour makes him right.

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