Starwood Accepts Anbang’s $78 Offer; Bidding War Expected to Ensue

No one knows who Anbang is, other than a large Chinese insurance company that wants to be Berkshire Hathaway. That’s not stopping Starwood from accepting their $78 cash offer for their company. This, of course, goes over poorly with the blokes over at Marriot, who had a competing offer.

I don’t think Marriot will sit idle as the Chinese Warren Buffett snatches up HOT. Seeing the stock above the agreed upon $78 offer, I am not the only one who believes this.

If I was being honest with myself, the title would read ‘fuck oil’– because that’s exactly how I feel. You know how some of you like H. Clinton because she dresses like Dr. Evil from the 90s comedy movie? Transplant that fervor, that unchecked foam mouthed rage to crude. That’s how I (fucking) feel. As a worldly person of your intellect and status, I demand that you respect my human rights for lower crude prices, solely based on the premise of profiteering from the dissolution of the entire industry.

I will not rest until the Bakken shale is filled with fucking dust balls, locusts attacking people in broad daylight at street lights, and McDonald employees raising up, saying ‘enough is enough of this shit’, infuriated by their $25 per hr wages and laying waste of Williston, ND because of it.

I want carnage of the first magnitude. Instead of buying into joy, I endeavor, inexorably, to buy into sheer, unmitigated, disaster.

GOOD NIGHT.

I am short oil, via XLE. The dollar swooned lower and stocks, drunk from the ambrosia provided by a bedraggled Federal Reserve, went appreciably higher. Yet, at the same time, treasuries traded higher.

Listen to me: this makes no sense.

This rally is fadeable and shortable.

There is nothing, or very few things, that can stop me from achieving my destiny, atop a mountain of bones, menacing subjugated persons of a lower cloth, whilst harrowing losses permeate and defrock everyone from the field of battle.

But today isn’t a day to make exclamatory statements, ’tis we’re all Irish and there are rivers of ale to consume, alongside corned beef, cabbage and the plainest potatoes you’ve ever seen or eaten in your entire life.

“The Fly” reigns supreme and it’s now time for me to depart to inebriate myself, singing the songs of Ireland, hoping for severe punishment to befall the Empire of Great Britain.

Are you people fucking crazy? How is “I AM GOING TO DOUBLE THE FEDERAL FUNDS RATE WITHIN 8 MONTH HENCE” dovish? Just because the Fed has backed off the psychotic Esther George approach to economics doesn’t mean they’re dovish.

Why fight a room filled with lunatics throwing shit at one another?

I tip my hat to you and bid you a good day.

“This is a strong rally and the main catalyst is the return of easy money,” said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy. “The Fed announcement yesterday was the latest sign that central banks are going to continue with stimulus. This is putting downward pressure on the dollar, which favors commodities.”

“In the very short term, risk currencies — Asia, commodity currencies — will do well as other risk assets including stocks and oil benefit from the Fed’s dovish stance,” said Mansoor Mohi-uddin, senior markets strategist in Singapore at Royal Bank of Scotland Group Plc. The more interesting trend will be how other central banks respond in the next few weeks, he said.

The consequences of the destruction of your fiat have instilled new life into the limp bodies of hard commodities, some soft too, sending them soaring. From oil to gold to coffee to coal, commodities are measurably higher. A short squeeze has occurred and the inmates and the primates are running the insane asylum.

An anti-climatic misery is just around the bend.

Everyone knows the analysts at S&P are the C students of the class, persons interested in using the S&P platform to springboard to a better higher paying gig. Inexorably, if you’re working at S&P, you’re a loser.

Speaking of which, they just placed Pershing on ‘Credit Watch Negative’.

The fuck out of here with this shit.

“We placed the ratings on CreditWatch negative to reflect the substantial drop in PSH’s NAV over the past five months as a result of very weak investment performance,” said Standard & Poor’s credit analyst Trevor Martin. NAV was $5.3 billion at the end of October 2015 and $3.8 billion on March 15, 2016, primarily because of the steep drop in Valeant Pharmaceuticals’ stock price. The Valeant stock price fell about 50% on March 15. As a result of the weakness in the portfolio since October, PSH’s debt to total assets has increased from about 15% to above 20%.

Thirsty media whore scoundrels. Leave William Albert Ackman alone already!

Are his investors fucking morons? Nothing says ‘redemption’ like a -50% loss over two years. Not including today’s -10% nosedive in VRX, equating up to a $60 million loss for his fund, Ackman is reporting his year to date losses to be -26%, or -47% over two years.

Yesterday he reported a block sale of MDLZ, freeing up $800 million in cash. Immediately, rumors spread that the sale was made to meet redemptions. In an email exchange with CNBC today, Ackman said those rumors were fucking horseshit (I am paraphrasing a bit here).

Other investors speculated that Ackman might be preparing for a wave of redemptions prompted by his portfolio’s recent declines, which he said was not the case. Ackman said just 2 percent of Pershing Square’s assets, which total more than $11 billion — was redeemed on Feb. 15, the most recent opportunity to do so.

The next redemption opportunity for Pershing investors won’t come around until mid-May, Ackman noted, but he says he’s optimistic his investors will stay in the fund, going into detail about why the firm’s financial position is solid.

Ackman said Pershing Square has large cash balances in every one of its funds — averaging 14 to 15 percent throughout the portfolio.

He also pointed to three sources of so-called “permanent capital,” or money that can’t be redeemed — $4 billion dollars from his publicly traded vehicle, Pershing Square Holdings, which is traded in Amsterdam; $1 billion dollars from a recent bond offering; and just more than a billion or so in what Ackman described as “employee capital.” He called other money “long-term lock-up capital” where investors remain highly restricted in how they can redeem their money. As is common in many hedge funds – it could take Ackman’s investors up to two-years to get all of their cash back.

When asked about Valeant, he said “Valeant is a problem, but we know what to do.”

What sort of fuckery is this? The fund is down -26% and he ‘knows what to do?’ Perhaps he should seek outside counsel.

Does he know what to do with HLF too?

Because his 20 million share short position is deteriorating in the merits of its thesis rapidly.

This is the stupidest business in the world. Just a few weeks ago, investors were dousing their burlap frocks with gasoline and throwing themselves into light fireplaces. Today, we all rejoice in the splendor of unchecked and unwarranted hedonism. It’s a hard task to bet again central banks and live to tell the tale.

Markets, led by commodity shares, have spiraled higher, in 2013 fashion.

I am fading it and have taken out my first short sale in ages, betting against XLE for a 10 day hold.

This is your day, Arthur. He’s giving a dead serious faced interview about the ongoing currency wars, while donning a fucking leprechaun hat. Need I say more?

God bless the chief marinator. May his ice cubes enjoy long soakings inside of his whiskey glass tonight.

Happy St. Paddy’s Day.

This is getting ridiculous. The cancer that is VRX is spreading far and wide into the bowels of the pharma industry, applying ruinous losses to a wide array of companies. This is reminiscent of Enron and how its demise had an odious effect on other utilities, even though none of them were fraudulent. This, without question, is going to result in splendid buying opportunities, whenever people come to grips with the fact that not all biotech follow the business model of Valeant.

Like I’ve said on numerous occasion, the shareholder bases for the majority of these stocks are fast money traders, totally ignorant to the fundamentals of their investments. Therefore, selling hits a fevered frenzy at the first sign of trouble. This process has repeated itself, consistently, since the beginning of time.

Here are the notable losers, exing out the small cap offal.

ANAC -7.5%

HZNP -6.2%

AMAG -7.5%

ENDP -7.6%

REGN -5%

MDVN -5%

INCY -4.4%

BMRN -4.3%

LLY -4%

ALNY -4%

ALXN -4%

MNK -6.5%

MYL -4.5%

The fact that the sell off is extending into the major pharma names makes this story all the more notable.

Separately,  markets are rallying again, completely ignoring and isolating the sell off to just the drugs.

This is very quickly devolving into madness. The reason why this is occurring is because of a delay in their 10-k. Pricewaterhouse, their auditor, knows its history and how Enron completely destroyed Arthur Anderson. I remember it vividly, having had several senior partners as long term clients who were without occupation shortly after the Enron scandal forced the SEC to shut down the legendary accounting firm.

Whatever is printed on that annual report will be etched in granite. Both accounting firm and management at Valeant will be responsible for its contents and its merits. If fraud is being undertaken and PWC signs off on the final 10k before Valeant’s demise, they will be Enron’d too.

Hence, people are nervous about the delay. Subsequently, the shares are plunging again, down 8%, as this delay is giving creditors the ability to twist Valeant’s arm and potentially impose harsh conditions.

Via Reuters:

The risk of default has offered creditors an opportunity to attempt to renegotiate core elements of their agreements with Valeant, potentially saddling the company with higher costs of debt and more restrictions on how it deploys capital, according to people familiar with the matter.

The sources could not speak on the record because they were not authorized to talk to the media.

“This very quickly dematerializes from a growth story into a company that’s really standing still, just looking to right its capital structure,” said Jim Sanford, portfolio manager for Sag Harbor Advisors, which does not hold Valeant shares. “There’s not a lot of equity and market cap to go to, to issue equities and convertible bonds against.”

Under its loan agreements, Valeant has until March 30 to file audited financial reports. If it fails to do so, it then has 30 days before lenders can demand accelerated repayment.

Valeant said it would meet with banks next week and ask them for an extension on the deadline. On Tuesday, Chief Executive Michael Pearson said that his best estimate for filing the annual report was April, but that he could not guarantee it.

In anticipation of those meetings, owners of Valeant’s senior bank loans are reaching out to investment banks, including Barclays, who will help mediate the negotiations, the sources said. Barclays did not immediately respond for comment.

The informal discussions are in early stages and the demands could change, the sources said. The lenders’ demands include higher interest payments and a pledge to pay a larger amount of the bank loans from the proceeds of any Valeant asset sales, the sources said. They would not provide names of specific lenders.

Under Valeant’s covenants, the company can sell up to 4 percent of its total assets per fiscal year and use the proceeds to pay down bank debt, Justin Forlenza, an analyst at Covenant Review in New York, said in an interview. The company can also carry unused capacity over from one year to the next to increase the potential amount of assets sold to 8 percent, he said.