Shots Fired: Buffett Lays Waste to the Hedge Fund Industry

He is 100% right, not only in regards to the hedge fund industry, but the money management industry as a whole. The mantra at 99.9% of investment banks is to hit production quotas via commissions generated, else you’re out. Period, end of story. Having been audited numerous times, it was never a topic whether or not my investment decisions were helping clients or not. All they were interested in where legal risks and/or whether or not I was a worthwhile profit center.

The industry needs to be overhauled. In my estimation, the best way to do with is to empower people to self-direct their investments and to put hedge fund managers and advisors into coal mines, in order to help America become great again.

The stock brokers can help build the wall on the Mexican border, which will be paid for by the Mexican government.

Buffet on hedgies:

“There’s been far, far, far more money made by people in Wall Street through salesmanship abilities than through investment abilities,” Buffett said Saturday during Berkshire’s annual meeting in Omaha, Nebraska.

Hedge funds traditionally charge a management fee that’s 2 percent of assets, plus 20 percent on any profits. That’s “a compensation scheme that is unbelievable to me,” Buffett said. He added that some pension funds have disregarded his advice, and gone ahead and hired consultants.

“I hope you realize that for the population as a whole, American business has done wonderfully, and the net result of hiring professional management is a huge minus,” Buffett said.

“Supposedly sophisticated people, generally richer people, hire consultants. And no consultant in the world is going to tell you, ‘Just buy an S&P index fund and sit for the next 50 years,’” Buffett said. “You don’t get to be a consultant that way, and you certainly don’t get an annual fee that way.”

Truth be told, it never occurred to me that a Trump presidency might spell a renaissance in American energy production, hitting all areas of coal, natty and oil. Unlike Obama and Hillary, who want to put a fucking windmill on every household in America, Trump is a fervent believer in being energy independent. Additionally, and more importantly, he thinks the EPA are filled with a bunch of tree hugging assholes, more interested in the habitat of pigeons than the American economy.

Perhaps the recent respite in coal, up 47% over the past 3 months, is a reflection of the surge in Trump’s popularity, signaling a new era of American energy production–helped in large part by hard men drilling and mining, toiling away, using gender neutral restrooms during their lunch breaks.

As a kid, I hated this movie. Growing up in an Italian household, this movie ruined the lives of many moronic men. They’d watch this epic piece of cinema and then automatically enter the mafia…at least in their minds.

They’d start to dress like Don Corleone, talk like him, walk around like Al Pacino, and make people offers they could not refuse.

You youngsters out there have no idea how the Italian American community was derided and sterotyped because of this movie. Since 1972, it planted the seed in America’s mind that if you were of Italian ancestry, you were also in the mafia.

Italians took advantage of this fear. As a result, many faked mafia connections, dressing like wise guys, talking with thick Brooklyn accents, even though they were from Long Island.

This movie is great; but it also was an abomination for Italians.

Thank god everyone is gay now and men can enter the women’s bathroom and urinate standing up with the bathroom stall door open. These days, instead of men faking to be in the mafia, talking tough, and dressing Don Corleone sharp, they make believe they’re women and dress like tarts.

Watch a piece of Americana tonight and don’t forget to bring your fucking burner with you, while dressed to the nines.

In other words, they’re both ripping us off. Where have we heard this before?

Under the new law, Treasury officials developed three criteria to decide if countries are being unfair: an economy has a trade surplus with the U.S. above $20 billion; has a current-account surplus amounting to more than 3 percent of that economy’s gross-domestic product; and has repeatedly depreciated its currency by buying foreign assets equivalent to 2 percent of output over the year.

This is a softball approach to kindly asking China and Japan to stop robbing us. The last time the U.S. flagged a major trading partner as being a ‘manipulator’ was China in 1994. Since then, the U.S. has clammed up about currency manipulation, a precedent that was started under the Clinton regime and continued henceforth.

If elected President, the presumptive GOP nominee promises to declare both China and Japan as currency manipulators.

Whenever the VIX enters ‘The Retard Zone‘, it’s time to concern yourself with booking profits and getting the hell out of dodge.

This week’s pullback, although small and insignificant, was coupled with an uptick in the fear index, better known as the VIX.

As you can see with the 5 year chart below, the fear, for lack of a better word, may just being getting started.

Heading into May, all eyes are on trends and seasonality factors. People are morons and like to throw out phrases that rhyme to sound cool, such as “go away in May.” Since I’ve been away the whole damned time, it’s a natural recommendation for me to tell anyone “go away.”

The numbers aren’t all that wearisome, from an empirical standpoint.

We may very well be repeating 2012 or 2010, all entirely possible. But for the past three years, during the month of May, the SPY has gone higher.

Gold was an outstanding performer today, higher by 2.2%. Crude was flat and stocks underperformed. There is a palatable fear in the air. I can smell it and sense that it’s growing with each and every day. The summer months are nearing and people don’t want to get on the other side of this mountain, should trouble reemerge.

The ark floats.

I really can’t call these people liberals. I know liberals. I grew up a democrat, amongst liberals who fought for the middle class. So I don’t want to insult any liberal out there by lumping you in with these uneducated, barbarous, anarchists.

It is the right of all Americans to express their opinions. It is the right of all Americans to vote.

Shockingly, both of these traditions and rights are being attacked by these miscreants. These mindless drones, disgracing themselves by parroting the former fascist regimes of South America and Europe, would have their heads cut off by the very people they seek to align themselves with. They are idiots of the first magnitude and it’s sickening to see free speech being denied by the same people, funded by the same sources, and the media not mentioning how awful these people are.

It looks like the American healthcare system is at a tipping point, both exhausted and fed up with extraneous costs associated with financing large r&d projects for big Pharma, which is geographically exclusive to a nation paying upwards of $1,700 per mo for family healthcare insurance.

Others might argue that America has the best healthcare in the world. While debatable, that doesn’t mean the standards at NYU Langone are the same at Brookdale in Brooklyn. There is a vast ocean in quality standards associated with socio economic backdrops in this country, with the elite getting consieur, cash only, services, while the middle class gets stuck with the ham and egger script writers.

Rant over.

GILD is feeling the bern. Pricing pressures are hitting them on every front.

Gilead’s total product sales rose 4 percent to $7.7 billion. Sales of hepatitis C drugs Sovaldi and Harvoni, the company’s second generation hepatitis treatment, totaled $4.29 billion, which was short of the $4.63 billion average Wall Street estimate, as compiled by ISI Evercore.

“The hep C numbers are a little light in the USA and that could be due to higher rebating and more competition,” said RBC Capital Markets analyst Michael Yee.

Gilead Chief Financial Officer Robin Washington said on a conference call that U.S. Harvoni sales declined due to an “increase in discounts required to open up access to patients with lower (liver) fibrosis scores,” as well as a modest shift in sales to deeply-discounted government payers, including the Department of Veterans Affairs.

As such, the stock is getting clown punched today.

We’re seeing this across the board in Pharma, from GILD to VRX to BMRN to VRTX to CELG. Gone are the days when ENDP or MNK can buy a drug and mark it up 500%.

Responding to recent data, the NY Fed lowered their GDP forecast for Q2 to 0.8% from 1.2%. My best guess, they’re responding to corporate earnings out of AAPL and MSFT and realizing what fools they been all along.

Almost simultaneously, Fed’s Kaplan is out saying he’d support a June or July rate hike. Serious question, what do you think is going on here?

Obama will be the only President to finish a term without enjoying at least a 3% GDP growth rate. At the same time, markets have soared.

But you’re looking at it all wrong.

Obama did great for the globalists, the oligarchs with slave factories in China and Vietnam. But he did almost nothing for the real America economy, measured by wages and cost of living crosses.

Markets have gone up with the profits realized by multinationals overseas.

Say what you want about China bottoming, oil bottoming, Europe picking up steam and the U.S. red fucking hot, so hot, we need to hike rates and fast. The world’s largest company, the crown jewel of capitalism and slave labor, Apple, is ripping through the floor boards, inexorably lower, forcing Tim ‘Gay as a $3 bill’ Cook to halt his ‘experience’ on Grindr.

Forget about rate hikes. The decline in market cap for AAPL alone is a form of capital constraint or economic tightening. Over the past few month’s, hundreds of billions in market cap has disappeared. In the past two days, $50 billion in market cap has evaporated, along with it the legacy of a certain T. Cook.

There are two types of CEOs in this world–autocrats who manage/operate and innovators who create/take risk.

Apple is no longer run by an innovator, which is currently being priced into the stock for the very first time since Steve Jobs died.

It goes lower.

I’m actually a big fan of FCX. Many of my old clients still own the stock because of me, long from as low as $7. Had I been managing money when the stock collapsed to the $3’s, I probably would’ve bought it.

The price of copper is ripping higher again, to 6 month highs, as the whole commodity space lifts…because inflation (duh).

But remember this statement from the recent conference call on April the 26th, 2016.

FCX says recent improvement in stocks and bonds could mean it considers other types of capital raises.
Expects to meet Spring collateral test at the end of Q2; is extremely confident in meeting that goal;
If leverage is greater than 6x, lenders would get 100% of proceeds; says will have ability to repay term loans and other debt; Debt levels have improved which opens up opportunities; focused on absolute leverage reduction. Comfortable with current maturity schedule.
Says was extremely frustrated to see were stock and debt was trading at and not having the money to buy them.

There are two things to note from that.

1. The company is going to file a secondary offering to raise capital. I’d bet my fucking life on it.
2. The company is pissed the fuck off about selling core assets to deleverage and are equally pissed off that they could not buy stock or bonds when they collapsed back in February.

While a secondary offering might be the best thing for the company, long term, as they get to keep some valuable assets, it’s a risk to the share price in the interim.

Buyers beware.