One of the most successful con jobs in the history of the world has been the concept of unbacked paper currency… or fiat money. Over the last 100-years or so, governments have been able to convince people that their pieces of paper, backed by nothing but promises, actually have ‘value’. This seems truly bizarre when you think about it. Governments tend to be untrusted, serial failures. Yet people readily accept their guarantees the world over. As such, it’s high time for creative, thinking people to consider their options and start trading their pieces of paper for something of value.
Much noise has been made about David Einhorn's presentation of "more than a hundred" pages on St. Joe at the Value Investor Conference from earlier this week. What few however seem to know, is that this is merely round two in what is at least a three year ongoing vendetta between the Greenlighter and the Florida real estate company. On May 23, 2007 Einhorn gave what is essentially an identical presentation to the Ira Sohn conference held at the Lincoln Center. In other words, to say that this is a new idea for the hedge fund manager is certainly a stretch. Below are the full notes that Einhorn presented back then. Contrast these to today (you can read the full presentation at Market Folly). In essence the only thing that has changed is the price target: in 2007 Einhorn saw a fair value of JOE of $15, when the stock was $53. This time, when the stock was $25, he values it anywhere between $0 and $10. Could he eventually be proven right? Who knows: after all that's why he gets paid the big bucks, and has had some great calls in the past. However, his long matched calls at the 2007 Ira Sohn conference are certainly not among them. At the time, Einhorn was a fan of Helix Energy Solutions (HLX), back when the stock was $40, and now is $10, and Natixis (KN.FP) which was €13 and now is €4, both underperforming his short call materially in the past 3.5 years. A long HLX (or KN.fp)/short JOE pair trade has certainly cost anyone who put it on a pretty penny. So, as always, buyer beware. Just because a star hedge fund manager likes or does not like something, does not make it a slam dunk.
The key indices punched up to new highs in a last hour low volume breakout. The move was partly inspired by currency moves once again. But another aspect was the self-fulfilling nature of a breakout to new highs. The key flaw was that, once again, the up-move came on light volume. To the bulls’ credit the “rally” continued right to the bell despite the “market on close” orders being heavily weighted to the sell side. The morning saw somewhat confused trading. After churning sideways for thirty minutes, stocks jumped up after the 10:00 release of existing home re-sales. Though the sales were down, the initial reaction seemed to be – “That’s not so bad”. That feeling lasted about an hour. Then it morphed into its opposite – “That’s not so good either”. It was kind of like the two guys in the balcony on the Muppets. At any rate, the big move came only in the final hour, as previously noted. Part currency. Part technical. No volume. - Art Cashin
Garrison Satch walked through the lobby of the old 23 Building on Wall Street and winked at the receptionist. Fannie was wearing red that day and was quick to return a faux-demure smile. However, his thoughts quickly turned to VeRA–not a woman, but a secret initiative launched by the owners of the Building and the New York Stock Exchange. VeRA had her own underground facility that was accessible from both the 23 Building and the NYSE at 11 Broad Street. She also had a street entrance, but...
After providing several hundred billion in second liens and other subordinated tranches to some of the worst companies in existence over the past 5 years, a result of a complete lack of investing discipline which nearly brought parent General Electic down, GE Capital Corp. is back in the game, and this time it plans to win it.