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Scottish Widows Have Not Had Enough Pain, Double Down On BP Exposure
As we reported previously, the Scottish Widows Investment Fund, which is a top holder of BP stock, has lost about $70 million in its BP holdings over the past month. One would think that faced with such a drubbing the portfolio manager would decide it is time for risk off and either take the position off or diversify. One would be wrong. As seems to be the default case these days, when in doubt, and when losing tons of money, double down. After all the US government itself has now gone all in on in the Ponzi's last days, why should anyone else do the prudent thing? Reuters reports that among the bond managers gulping up BP bonds in chase of bargains, is Roger Webb, investment direct of SWIP (Scottish Widows Investment Partnership). "We think the dollar bonds in particular look quite cheap -- ultimately we are happy to get to an overweight position." And what heartless president would ever say "die" to a company in which an entire nation's widow population is invested and likely to lose their retirement funds, even if it means that no actual saltwater is left in the Oil Blob formerly known as the Gulf of Mexico.
More from Reuters:
U.S. and European investors offloaded BP debt earlier this week, spooked by the political rhetoric coming out of the States and the endless negative newsflow. "But this is not a company that looks close to bankruptcy," [Roger Webb of SWIP] said.
BP shares touched a 13-year low on Thursday, after U.S. politicians called for it to suspend its dividend payments. U.S. scientists have also doubled their estimate of how much oil has been gushing from the crippled Gulf of Mexico well.
But some fixed-income managers have stuck to their guns. "We are concerned about the incident, but it is starting to be priced in now," said Theo Stamos, head of credit at Investec Asset Management. "The bonds are trading at high-yield levels, which is overdone."
On Thursday the 5-year credit default swap (CDS) spread for BP blew out intra-day by about 200 basis points to 590 basis points -- essentially junk levels -- despite BP being an investment grade credit.
However, this is being seen as a knee-jerk reaction driven by equity sentiment and negative newsflow.
"Since then people have been consistent in their support -- there seems to be good real money interest," said one bond manager who did not wish to be named. His firm has been adding, taking the view that BP will come through the crisis intact.
It is not too late for the Cute Puppy Fund and Stray Kitty Long Short Asset Management to invest all their money in BP. At that point BP will officially cross into Too Big To Let The Cute Animals Down (TBTLTCAD) territory.
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+1 HAHAHAHAAAA!
Looks like this will be quite the showdown between British Pensioners (love the "Widows and Orphans" aspect) and Team Obama.
PETA will be torned by this development.
The principles of Evolution apply to finances as well. The Stupid, it burns!
golly gee, first to post again.
what a curious name of this investment fund, using the word Widows.
guess appropriate now, with death of their investment in BP coming to fruition.
Just part of Lloyds banking group.
Its the UK Government's /Tax payers' problem. :eek:
These are very old businesses. Scottish Widows was originally named as such because it catered for the widows of dead soldiers from the Napoleonic wars at the beginning of the 19th century.
There are still quite a few quaintly named businesses from the old days in the UK such as Legal and General, Clerical Medical, etc.
that's cool.
just caught my eye, cause i am been a widow all my life.
like the status, evokes empathy/sympathy, works.
So, there aren't any real widows in peril there, nowadays, that anyone should care about - is that it?
Buy the dip....sell the crash
I once heard Alistaire Cook quote someone else as saying that the Scots were put on this Earth to suffer. If that is true, this should just be another bite out of life's shit sandwich for them.
Best regards,
RF
why don't the widows just sell their stock? just sayin'
It's a pension. You don't have that control over investment decisions.
All pensions everywhere should be abolished. (Unquantified liabilities, massive room for fraud.)
How is this not some sort of criminally negligent act on the part of Mr. Webb? BP is gonna be crucified when this is all said & done!
So, this guy's loading up on a company that's walking the green mile? Great strategy Mr. Webb, tell me, did you even bother shaking your Magic 8 Ball for advice on this decision?
Agree with you. These fuckers should be fully culpable for such decisions as this.
Perhaps he's going the "the US government will not let bondholders fail, or lose a cent, ever" route? He's wrong on this one, BP will be crucified, as Obama will at the next election.
I love the imagery of a bunch of Scottish widows, watching the realtime feeds of BP stock, CDS, etc., and deciding "that's it, double down girls'. Seriously, I wonder how they'd feel about doubling up their bet on the company that will eventually become infamous for being the first to COMPLETELY destroy a major body of water.
Maybe he's going to turn it into the Scottish Widows Hedge Fund and buy up all the CDS too, that way he can control the bond vote, sink the company, earn a gagillion dollars charging 2&20, and sail off into the sunset (to somewhere other than the Gulf, of course).
Or maybe, just maybe, he's looking past the political diversion shit storm this thing has become and is evaluating BP for what it is...a big ass, highly profitable, asset rich, well diversified global integrated oil company that will come out the other side of all this largely intact.
The market's there. If you disagree with his position, take the other side of the trade.
Yes, new risk management technique, when you're totally f*cked and clueless, double down on BP. That's what Canadian pension funds did with Nortel, err Whoretel!!! (I know BP isn't Nortel, but this is pure gambling right now).
You are right, BP is not Nortel. Nortel didn't evaporate in three months.
Obummer got a little out of hand with the rhetoric earlier in the week, spooking the market with bankruptcy/nationalization fears. I think everyone involved is realizing BP is worth more alive than dead. Hence the bounce, last few days. Still wouldn't touch it here though. Philip Morris tanked 70% when tobacco lawsuits were happening. For same move in BP to happen shares would bottom at $18.
$18 a share seems rather high when you consider that they've effectively killed one of the world's greatest natural resources. BK for BP. There is no other way to save the executive bonuses.
Maybe the following research can explain widows behavior:
Taking risks with money lights up the same parts of the brain as sexual arousal, a "neuroeconomics" study has found. Men shown sexy pictures gambled more daringly than those shown scary pictures—spiders and snakes—or neutral pictures, reports the AP. The study of 15 heterosexual Stanford students focused on the nucleus accumbens, which sits near the base of the brain and plays a central role in the experience of pleasure.
that caught my eye as well, tonyV. you got a V in your name, too.
Neuroeconomic, never knew about that. but i think the message is true has been with me, mostly. widows behavior, i am a widow and love it. became one at 28yrs old.
now i know why i am so terribly sexual. take risks and lose my money turns me on i guess. i had to google a lot of those words you wrote, think i understand.
oh well, don't tell anyone, O K†
Astounding.
BP bitches!!!
As cleanup costs mount, the threat of a $4,300 per barrel fine rises, and litigation risk explodes, it is time to wonder who's got BP's back when it comes to insurance? Who will step in to fill the breach should BP go belly up? What's the provision for paying for all this? Turns out, it's BP themselves:
Placing an opaque insurer in an off-shore tax haven is the cherry on top. This level of head-inserted-in-ass circular solipsism is amazing.
If fines exceed 200 billion starts making sense for BP to walk away.
It shouldn't be surprising, but not that it matters anyway. These costs are too large for any insurance company. The only possible "insurer(s)" are sovereigns.
This is the problem with insurance... just like many social programs... if everyone pulls out more than they put in, insurance company go boom. Plus, the risk metrics aren't designed to withstand an avalanche... if everyone trickles claims, then we don't have a problem... if everyone files a claim at the same time or for an unforseen reason, we got problems.
London was the great re-insurance market in the 80's.
Don't be surprised at the end of the day if all BP's liabilities are insured by American Widows.
You can take our HUSBANDS. But you can NOT TAKE our vaseline!!!
BP = Bitches Pension (evaporated)
Help me here - I have heard a few posters suggest that our government "forced" BP to drill in deeper waters, and therefore, is complicit. I don't doubt what is being claimed, but have not seen the same information. Does anyone have a link to something?
I haven't seen it anywhere that they were 'forced' to drill in deep waters. The argument is generally that NIMBYitis left them little choice.
Thanks.
The line of argument goes that since most/all shallow water drilling along the US coastline and in Alaska has been put off limits for environmental reasons, the drilling rigs were forced out of sight and into the deep water in the gulf.
Maybe the guy bought the CDS at the same time.
I sure hope they hedged this position!
Rule 1 of Investment Club: don't add to a losing position
Rule 2 of Investment Club: see Rule 1
These folks clearly set stop levels differently than I do. You would have thought that 2008 would have taught a lot of folks it is better to bail and wait for signs of recovery (or look for opportunities elsewhere), than to stay with a sinking ship and hope that the water pump is big enough, and/or doesn't fail. Then factor in the reputations of Louisiana and Mississippi local and state courts and politicians. The fun is just starting.
HAYWARD'S SECRET WEAPON:
http://williambanzai7.blogspot.com/2010/06/bp-solution.html
Per a very old SNL skit, "Rubber break." http://snltranscripts.jt.org/79/79fupdate.phtml
I think the scottish widows in question lived in the 18th or 19th Century, when their menfolk had mostly gone off to sea. There can only be a few of them left (botox & nip/tuck were never popular in the highlands) mind you porrige is a great life-preserver, an a wee dram too ye ken cannae do any harrrrm.
Duplicat.
Whats the difference between Save & Preview? Seems to post them both.
NO, different.
i know an answer to a question.
EDIT is the best through, don't you think!
you probably didn't refresh.
This whole mess has just gotten started, BP has lied about everything. Day 54 will turn into Day 73 which will turn into Day 111 ect...ect...So far we have felt about 15% of the total impact this spill will have on the Gulf. BP used millions of gallons of toxic dispearsments to cover the truth and now were finding out that the flow is twice that was originally estimated. If these assholes want to try and prop up the stock to protect their investments they will just lose more money. When the real truth of this disaster is finally revealed, it will be obvious to everyone that the company can't cover their claims. BP did this to themselves, they deserve their destiny and I'll back the people in the Gulf before i'll even think about some " poor" flippin investment fund in Scotland.
Isaiah 10:1-3
1 Woe to those who make unjust laws,
to those who issue oppressive decrees,
2 to deprive the poor of their rights
and withhold justice from the oppressed of my people,
making widows their prey
and robbing the fatherless.
3 What will you do on the day of reckoning,
when disaster comes from afar?
To whom will you run for help?
Where will you leave your riches?
...just sayin..
I know how to fund the cleanup.
Tax any financial news report 5 cents per read per use of the word, "unexpected".
7 cents for the adverb.
You'll have the funds in three days ...
Large multinational corporations having massive accidents in other people's back yards is not new or unique. So I find myself wanting to get perspective by taking a longer, broader view.
The Bhopal disaster in 1984 involved an American company called Union Carbide. How do folks here think the two compare? The BP CEO is crap at PR but leaving that aside: is BP actually faster or slower at addressing the functional, environmental and social problems resulting [than Union Carbide]? Is BP being held to a similar level of account judicially?