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Dr. Fly

18 years in Wall Street, left after finding out it was all horseshit. Founder/ Master and Commander: iBankCoin, finance news and commentary from the future.

Brent-WTI Spread Now North of $20

Refinery stocks are strong because of the WTI-Brent spread.

Related: Crack spreads are still north of $28. Meaning the recent decline in crude has done nothing to hinder the margins of refiners.

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IT’S A TRAP! S&P Futures Spike 5

Asian trading is rather moot, allowing the zealots of bid up futures. However, we all know how this ends, don’t we?

S&P +5
Dow +38

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Josh Brown: Notes From the Ira Sohn Conference

DAVID EINHORN is president of Greenlight Capital, Inc., which he co-founded in 1996. Greenlight Capital is a value-oriented investment advisor whose goal is to achieve high absolute rates of return while minimizing the risk of capital loss.

Martin Marietta ($MLM): A strange stock, cyclical business. At a 35 PE, market is wrong to pay up. The company is trying to buy Vulcan, it’s not going well. CEO is a megalomaniac, losing his mind.

France is a mess, huge exposure to Italy and Spain. CDS and bonds are mispricing how risky France is. “A return to the Franc is not out of the question.

Inexplicably, Einhorn just pulled out a magic wand and chanted something Norwegian like a spell.

Norway looks rock solid.

Cairn (based in Scotland)- trading at a discount to its global holdings. Drilling in Greenland, potential could be huge. 20% discount right now.

China: Culture gap and knowledge gap. Greenlight visited China. China views western investors as marks. Chinese infrastructure overbuilt based on overly bullish projections, the roads are empty, the houses are unsold.

There is not enough money coming into the Chinese banks, they are becoming illiquid and money is moving out. “I’m not missing out by not investing in China.”

Japan is now a D-List Country, adult diapers outsold baby diapers this year for the first time ever. The Yen could be in big trouble.

Japanese retail investors own 9% of US REITS, they are desperate for yield. He sees a big problem brewing for US REITs as Japanese money stops coming in, they are expensive.

Facebook gets panned on valuation.

Then an offhanded dig at Green Mountain’s unsold inventory levels.

On Amazon: Operating profits haven’t grown at all, they’ve taken $30 billion in profitless revenues away from other retailers.

Dick’s sporting goods is in big trouble with Amazon’s new push into the category.

On US Steel: Lost money in 9 of the last 13 quarters. Slowing Chinese economy and iron ore supply growth means big trouble for $X

On Apple: Hedge funds own less than 5% of Apple’s shares. THEY ARE UNDERWEIGHT. There is no reason why AAPL can’t become a trillion dollar market cap. There is no prohibition.

Apple is a software company, not a hardware company. They capture customers, making them worth a higher multiple than traditional hardware stocks. Still penetrating the market, gaining share, most cellphones are not yet smartphones. How could this stock have a below market multiple?

He wants $AAPL to launch a preferred class to pay high income. It’s a very new idea the way he’d structure it.

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Whitney Tilson Has Nearly 30% of His Fund in Fucking Call Options!

For all the totally inexplicable facetime T2’s Whitney Tilson gets on prime time financial comedy air, one would imagine that the man runs billions and billions. Instead, as per the just released 13F, Tilson’s fund has a grand total of $345MM in long AUM as of March 31. So far so good, however that does not explain why the manager has a Sharpe ratio of roughly 0.00 in the past 3 years. Well, now we know: of the $345 MM total, a ridiculous $104 Million is in call options! In other words, not only is Tilson nothing but a bullish bet that copycats various other select hedge fund portfolios, it is a mega-levered one at that, with what appears ridiculously high theta! It get’s worse: as it turns out, another $24MM or so is… in Warrants. Yup: all levered products without actually owning the underlying, leading to massive monthly swings in actual P&L. In other words, real assets held by Tilson amount to $217 Million. And one wonders why the fund can be up 20% one month and down 30% the next… or how Tilson can spend hours a day on TV.

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UPDATE: It’s been pointed out to me that Tilson most likely doesn’t have 30% of his fund in calls. The source might have gotten confused about how options are reported to the SEC. 10,000 apologies to Lord Tilson.

UPDATE II: ZH is insisting he is correct. I don’t give a shit at this point. Take it for what it’s worth. Tilson is a God damned idiot.

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Merkel, and that New French Fuck, Hollande, Have An Offer For Greece They Cannot Refuse

German Chancellor Angela Merkel and French President Francois Hollande said they would consider measures to spur economic growth in Greece as long as voters there committed to the austerity demanded to stay in the euro.

Requests for measures to bolster growth will be “considered” and the European Union may also “approach Greece with proposals,” Merkel said today at a joint press conference with Hollande during his first official visit to Berlin. “Greece can stay in the euro area,” and “Greek citizens will be voting on exactly that.”

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