Whoo-Hoo. Buy a few banks tomorrow now, or we’ll kill you. Asshole.
Hank Paulson, U.S. Banking Brothel, Goldman Sachs
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Joined Nov 10, 2007
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Added his side kick Dick Bove:
“Punk Ziegel analyst Dick Bove said that investors should think about bank earnings in three parts: how much are they writing off related to securities revaluations; how much they are setting aside for loan provisions; and how the actual core business is doing.
Bove told MarketWatch on
“A large portion of that is going to building up reserves and only a very small portion is actual writeoffs,” Bove said, adding that this should add up to better and better balance sheets in the future”
Arrrr!!!! See that blowhole that just surfaced? That be Bovey Dick! Fetch me harpoon!!
market data gone again
oops there it is
It’s true, Dick Cow wants you to buy State Street, STT. How many shares do friends and family hold?
Meanwhile, the gambling complex is showing weakness off the MGM layoffs yesterday. LVS had a 7% turd burger while MGM and Wynn had more moderate portions. So did Boyd. So did IGT.
Looks like Minute Maid is driving the futures higher in the overnight.
The New York Times
April 16, 2008
Wall Street Winners Get Billion-Dollar Paydays
By JENNY ANDERSON
Hedge fund managers, those masters of a secretive, sometimes volatile financial universe, are making money on a scale that once seemed unimaginable, even in Wall Street’s rarefied realms.
One manager, John Paulson, made $3.7 billion last year. He reaped that bounty, probably the richest in Wall Street history, by betting against certain mortgages and complex financial products that held them.
Mr. Paulson, the founder of Paulson & Company, was not the only big winner. The hedge fund managers James H. Simons and George Soros each earned almost $3 billion last year, according to an annual ranking of top hedge fund earners by Institutional Investor’s Alpha magazine, which comes out Wednesday.
Hedge fund managers have redefined notions of wealth in recent years. And the richest among them are redefining those notions once again.
Their unprecedented and growing affluence underscores the gaping inequality between the millions of Americans facing stagnating wages and rising home foreclosures and an agile financial elite that seems to thrive in good times and bad. Such profits may also prompt more calls for regulation of the industry.
Even on Wall Street, where money is the ultimate measure of success, the size of the winnings makes some uneasy. “There is nothing wrong with it — it’s not illegal,†said William H. Gross, the chief investment officer of the bond fund Pimco. “But it’s ugly.â€
The richest hedge fund managers keep getting richer — fast. To make it into the top 25 of Alpha’s list, the industry standard for hedge fund pay, a manager needed to earn at least $360 million last year, more than 18 times the amount in 2002. The median American family, by contrast, earned $60,500 last year.
Combined, the top 50 hedge fund managers last year earned $29 billion. That figure represents the managers’ own pay and excludes the compensation of their employees. Five of the top 10, including Mr. Simons and Mr. Soros, were also at the top of the list for 2006. To compile its ranking, Alpha examined the funds’ returns and the fees that they charge investors, and then calculated the managers’ pay.
Top hedge fund managers made money in many ways last year, from investing in overseas stock markets to betting that prices of commodities like oil, wheat and copper would rise. Some, like Mr. Paulson, profited handsomely from the turmoil in the mortgage market ripping through the economy.
As early as 2005, Mr. Paulson began betting that complex mortgage investments known as collateralized debt obligations would decline in value, much as Wall Street traders bet that shares will drop in price. In that case, known as shorting, they borrow shares and sell them, wait for the price to fall, buy the shares back at a lower price and return them, pocketing the profit.
Then, over the next two years, Mr. Paulson established two funds to focus on the credit markets. One of those funds returned 590 percent last year, and the other handed back 353 percent, according to Alpha. By the end of 2007, Mr. Paulson sat atop $28 billion in assets, up from $6 billion 12 months earlier.
Mr. Soros, one of the world’s most successful speculators and richest men, leapt out of retirement last summer as the market turmoil spread — and he won big. He made $2.9 billion for the year, when his flagship Quantum fund returned almost 32 percent, according to Alpha. Mr. Simon, a mathematician and former Defense Department code breaker who uses complex computer models to trade, earned $2.8 billion. His flagship Medallion fund returned 73 percent.
Like Mr. Paulson, Philip Falcone, who founded Harbinger Partners with $25 million in June 2001, cast a winning bet against the mortgage market. He pulled in returns of 117 percent after fees in 2007 and made $1.7 billion. The trade thrust him from relative obscurity to hedge fund heavyweight: he now manages $18 billion. Harbinger recently won agreement from The New York Times Company to add two members to its board.
Hedge fund managers share their success with their investors, which include wealthy individuals, pension funds and university endowments. They typically charge annual fees equal to 2 percent of their assets under management, and take a 20 percent cut of any profits.
With a combined $2 trillion under management, the hedge fund industry is coming off its richest year ever — a feat all the more remarkable given the billions of dollars of losses suffered by major Wall Street banks.
In recent months, however, scores of hedge funds have quietly died or spectacularly imploded, wracked by bad investments, excess borrowing or leverage, and client redemptions — or a combination of those events.
“To some degree it’s a very gigantic version of Las Vegas,†said Gary Burtless, an economist at the Brookings Institution.
As Alpha’s list shows, managers who reap big gains one year can lose the next.
Edward Lampert, the founder of ESL Investments and a member of the 2007 Alpha list, was absent this year. His fund fell 27 percent last year, according to Alpha. About 60 percent of ESL’s equity portfolio is invested in Sears, whose shares plunged 40 percent last year. ESL is also a major holder of Citigroup, whose abysmal performance matched that of Sears.
A manager who ranked high in the 2007 list and fell off in 2008 was James Pallotta of the Tudor Investment Corporation, who was 17th last year and earned $300 million. Mr. Pallotta’s $5.7 billion Raptor Global Fund fell almost 8 percent last year, according to Alpha.
A few who did not make the cut still made buckets of money. Bruce Kovner of Caxton Associates and Barry Rosenstein at Jana Partners didn’t make the top 50. But Mr. Kovner earned $100 million, and Mr. Rothstein earned $170 million, according to Alpha. Spokesmen for the hedge fund managers either declined to comment on Tuesday or could not be reached.
Since 1913, the United States witnessed only one other year of such unequal wealth distribution — 1928, the year before the stock market crashed, according to Jared Bernstein, a senior fellow at the Economic Policy Institute in Washington. Such inequality is likely to impede an economic recovery, he said.
“For a recovery to be robust and sustainable you can’t just have consumer demand at Nordstrom,†he said. “You need it at the little shop on the corner, too.â€
Despite the explosive growth of the industry — about 10,000 hedge funds operate worldwide — it is relatively lightly regulated. On Tuesday, two panels appointed by Treasury Secretary Henry M. Paulson Jr. advised hedge funds to adopt guidelines to increase disclosure and risk management.
And Mr. Gross, the fund manager, warned that the widening divide among the richest and everyone else is cause for worry.
“Like at the end of the Gilded Age and the Roaring Twenties, we are going the other way,†Mr. Gross said. “We are clearly in a period of excess, and we have to swing back to the middle or the center cannot hold.”
Here comes communism…
Here comes communism…
Right down Karl Marx Lane…
________
(If we’re seeing stuff like that in the WSJ, what the heck can we expect from the New York Times?? )
Hank Paulson is a birder… true story. He, at least appreciates the song of the Robin.
Catchy tune, Jake!
-DT
When do you cut the cord on SMN?
This stock sucks and will touch 28 soon.
S= suck
M= my
N= nuts
http://biz.yahoo.com/ts/080415/10412066.html?.v=1
Down with MON
As my Centrino Duo wines like a fucking baby…it makes me want to short INTC.
Fuck the brokers:
Libor lies? There are serious concerns banks may be lowballing their Libor pegs — which should depict the average three-month rate at which banks lend to each other (currently 2.716%) — in an effort to hide the high rates they’re paying in desperation for cash. Banks lend to customers at a spread above Libor to ensure they make money. If banks are indeed understating, it may signal they’re in more trouble than they’re willing to admit. And their problems could be further compounded by lending to clients at artificially low rates. “The long-term psychological and economic impacts this could have on the financial market are incalculable,” Citigroup’s Scott Peng wrote in a recent research note.
Lurk — if the Fed is lending to them at effectively, zero, then why not peg a lower LIBOR? Heck, they’re probably taking orders from Bernake himself on this…
Crude oil inventories at 10:30 will be a big factor in todays market.
Ha…glad I shorted INTC before the open.