Wall Street Folly

Greg Calvino, a 45 year old trader formerly with RBC (and now with Thomas Weisel) is fighting with his ex-girlfriend, Elisa Kwon, in court over a $100,000 check he wrote to her early in their relationship that she cashed because she says he broke a no drugs, strippers and hookers promise that he made to her. She says that he agreed that she could cash the check if he misbehaved.  He filed suit in July alleging extortion, looking to get  his money back along with interest and damages.  He claims to have written the large check to protect his career and reputation, and that she cashed it for no reason. But according to Kwon there are instant messages where Calvino admitted to going to Flashdancers and he failed a drugstore drug test showing that he partook of the white stuff:

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Tags: Culture, Drugs, Hookers, investment banking, Lawsuit

Perenially bullish economists at Goldman Sachs have turned bearish;  Their just released gloom and doom report warns of the likelihood of a Japanese recession and increasing risks that the U.S. real estate slump could spread internationally.:

In a new report, "The Global Economy
Hits a Crunch", the US investment bank said it was no longer sure that Asia
and Europe would be able to pick up the growth baton as America stumbled. It
fears that turmoil is spreading beyond the debt markets to the factory floor.

"Much has changed since mid-July, when
we wrote that ‘the global economy continues to enjoy one of the strongest
sustained expansion in modern history’. The mood in financial markets is clearly
darker, and the economic data in the developed world is showing signs of
wear," it said.   

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Tags: Economy, Goldman Sachs

It’s getting hotter at Northern Rock.  They’ve taken down another £5bn
from the BOE now with close to £8bn of debt.  Meanwhile, Northern Rock
debt holders are none too pleased with the proceedings and have called in the
lawyers and financial restructuring specialist Houlihan Lokey to prepare for the
inevitable big fight over assets.  To make matters worse, ordinary
shareholders who were already pissed off enough over the catastrophic plunge in
the price of their shares and the cancellation of their stock dividend are now
up in arms over the disclosure that the preference shareholders were paid their
dividend last Friday.  And the books were thrown open to the folks at JC
Flowers (who must have time on their hands right now while they’re awaiting more Sallie Mae
negotiations after they said they wouldn’t close the deal on its original
terms).

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Tags: Credit Crunch, Distressed

• The bottom line games banks play showing profits on the falling value of
      their own debt
• Bear returns to the public debt market, selling $2.5 billion in notes
• The last remaning Basis Capital fund  is on the brink, down 50% and
      has halted redemptions
• M&A deals fall 42% in the quarter
• Intel Chairman warns that US healthcare system is imperiling jobs here in
      favor of low-cost countries
• Senate looking at Google Doubleclick deal
• 3Com finally attracts a buyer; Bain and Huawei said to be acquiring them for $5.30/SH
  
• Another suitor emerges for Ford’s Jaguar:  Terra Firma enters the
      fray joining Cerberus, TPG, Apollo and others

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Some hair raising comments from "Mad Money"’s Jim Cramer at a party thrown in his honor by Gotham Magazine. When asked if he’d ever wear a hair piece he said:

"I would rather blow my head off . . . Never, ever, ever . . . They are phony. They are horrible. Same with hair transplants. I like cornrows when they are in an Iowa field . . . I would never even dye my hair. The only thing I have is my authenticity. No, no, no!"

Hopefully he feels the same about the dreaded comb over.

We suspect that Cramer was talking about the neat but telltale rows of hair shrubs when he referred to cornrows.  But we got to wondering what Jimbo would look like with real cornrows.  So here he is, compliments of Photoshop and David Beckham.

Too Much Gin – NY Post Page Six

Tags: CNBC, Jim Cramer

All of those hours spent shriveling up like a prune in the bathtub where he’s said to have penned most of his new tome seem to have paid off: Alan Greenspan’s  "The Age of Turbulence: Adventures in a New World.", is flying off of bookshelves. 

The book sold 129,000 copies in its first
week on bookstore shelves, according to Nielsen BookScan, which tracks an
estimated 75% of retail book sales in the U.S. While that is far short of
first-week sales of the memoir of another high-profile Washington figure, former
President Bill Clinton — whose "My Life" sold 606,000 copies in its
first week in June 2004, according to BookScan — it is still strong enough to
put the book on top of best-seller lists for both Amazon.com and Barnes &
Noble’s hardcover nonfiction.

Greenspan’s Memoir Racks Up Sales – Wall Street Journal

Tags: Alan Greenspan, Books, Fed

Did banks and other debt issuers pressure rating agencies to give sub-prime  bonds higher ratings than they deserved?  The SEC aims to find out:

The SEC, led by chairman Christopher Cox,
revealed it is looking in to whether agencies such as Moody’s and Standard &
Poor’s were "unduly influenced" by banks who paid for credit ratings.

The revelation by Mr Cox during testimony before the Senate Banking Committee is
the clearest indication to date that regulators believe sub-prime mortgage bonds
were unduly inflated in return for payment.

The news will send shivers among both the
banking and ratings fraternity, as the SEC is all-powerful in the world of
securities regulation, and will come down hard on any institutions found to have
broken the rules.

SEC to investigate ratings agencies – Daily Telegraph

Tags: Banks, bonds, Credit Crunch, Ratings

Yale’s endowment had another amazing year.  Led by Dave Swensen, the fund was up 28%, making it again the best performer of the endowments.  Over the last 20 years the fund has racked up an enviable 15.6% pa return…. 

After factoring in the university’s
  annual distributions and new donations to the school, the endowment’s size
  increased to $22.5 billion from $18 billion during the previous fiscal year.
  It is the second largest in the nation behind Harvard University’s $34.9
  billion endowment.
 
  Yale’s 28% return easily exceeded the 17.5% average for foundations and
  endowments over the period and beat all other endowments with at least $1
  billion in assets that have reported year-end results so far, according to the
  Wilshire Trust Universe Comparison Service.
 
  University officials declined to specify which assets it held or which ones
  performed the best. But industry observers said that the endowment, under its
  longtime chief investment officer, David Swensen, is a proponent of
  commodities and alternative investments, such as private-equity and hedge
  funds.

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Tags: Endowments

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A news story published earlier today  by the New York Times claimed that Warren Buffett and several others wiere in "serious talks" with Bear Stearns (BSC) over the possibility of taking an up to 20% stake in the company.  That not only had the Bear’s stock rocking and rolling, but many of the other brokers went along for the ride. There was ample skepticism that The Oracle would bite, given his past experiences with Salomon Brothers. Although Warren does of course share a love of bridge with Bear CEO Jimmy Cayne.

Did we happen to mention before how we LOVE volatility?

Here’s what the chart action looked like:

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Tags: Bear Stearns, Credit Crunch, Jim Cayne

Did we happen to mention before that we LOVE volatility?  Well today we got it in spades, with Bear Stearns, where the talk that Warren Buffett and others  might take a stake in that besieged stock caused it to skyrocket, and Sallie Mae, where many bailed prematurely on the stock and left it for road kill after they read a statement from SLM that they interpreted as a definitive one that the deal wouldn’t close.  Here’s what the statement said:

SLM Corporation, commonly known as Sallie Mae, announced today that it has been informed by a representative of the buyer group led by J. C. Flowers, Bank of America and JPMorgan Chase that the buyer group does not expect to consummate the acquisition of Sallie Mae under the terms of the merger agreement. Sallie Mae firmly believes that the buyer group has no contractual basis to repudiate its obligations under the merger agreement and intends to pursue all remedies available to it to the fullest extent permitted by law.

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Tags: Bank of America, Charts, Credit Crunch, LBO / MBO, Legal, Risk arbitrage

Vikram Pandit, who sold his hedge fund Old Lane to Citigroup for $800 million last April,  and then became their alt investments group CEO, has a swanky new address in the Beresford.  He bought the late Tony Randall’s 10 room unit from his widow for $17.9 million.  He’ll be in good company with others from the hedge fund world, including Pershing Square’s Bill Ackman and Elliott Associates’ Paul Singer.  He’ll also have Jerry Seinfeld and John McEnroe as neighbors.

The co-operative in the Beresford building
at 81st Street is a full floor, overlooks Central Park to the east and has its
own elevator, a listing by the Corcoran Group real estate brokerage said when
the apartment was offered. The New York Finance Department’s Web site recorded
the sale today.

“This extraordinary 10-room residence offers outstanding entertainment rooms of
grand proportions with magnificent detail,” the Corcoran listing said. “The
residence enjoys superb light and impressive park views through 20 windows
spanning two exposures.”

His new apartment has herringbone wood floors, a fireplace, coffered
ceilings, a butler’s pantry and wine storage. “A truly superb
residence,” according to the sales listing.

Citigroup’s Pandit Buys Tony Randall Co-Op for $17.9 Million – Bloomberg

Tags: Citigroup, Hedge funds, Real Estate

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Tags: Banks, Credit Crunch, Distressed, Northern Rock

Vonage got socked in the gut again yesterday, losing its second patent infringement lawsuit, this one filed by Sprint Nextel.  It has to pay $69.5 million in damages for past infringements and a 5% royalty rate going forward.  Naturally, they’ll be appealing the decision.  The stock, which traded as high as $1.99 yesterday, closed at $1.30.  And it’s marching ever closer to nothingness this morning, so far trading as low as $0.91.

“Poor Vonage, they can’t get a break,”
TeleGeography Inc. analyst Stephan Beckert said. “I don’t think it’s any secret
that they’re not a well company.”

The jury finding today in Kansas City,
Kansas, is the second such loss for Vonage this year. After the Holmdel, New
Jersey- based company lost a $66 million patent case to Verizon Communications
Inc., it said it might be forced into bankruptcy if it lost the use of the
technology disputed in that suit.

Vonage said it is developing technological
workarounds to the disputed patents. The company has also been working on
alternatives to New York-based Verizon’s patents to avoid paying royalty fees
while that ruling is being appealed.

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Tags: Lawsuit, Legal

Credit Suisse is the latest Wall Street firm to hand out pink slips, giving bad news to around 150 employees.  According to the NY Post:

The job cuts are in Credit Suisse’s
securitized product group, which has suffered a sharp decline in revenue in the
wake of the collapse of the mortgage-backed security trading and origination
market over the past two months.

The layoffs fell upon Credit Suisse’s
residential mortgage group, with employees involved in originating and
processing the mortgages bearing the brunt.

However, "a small group" of New
York-based mortgage bond traders and sales staff were also let go, according to
a Credit Suisse executive.

A spokesman told The Post, "In line with the current environment and
outlook, we have made targeted reductions, pri- marily in the
residential MBS [mortgage-backed securities] group."

Credit Suisse’s A Bond Victim – New York Post

Tags: Credit Crunch, Credit Suisse, Revolving Door

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Tags: bonds, Credit Crunch, Distressed, Fortress, Hedge funds

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Tags: Banks, Credit Crunch, Distressed, Northern Rock

Florian Homm, who bailed on Absolute Capital Management — the fund he co-founded –  last week via a nasty press release to its board of directors has sold most of his stock to another board member at 35.2p per share, below yesterday’s 55p close.  He’s down £36.5m on the sale….

The shares were bought by Andreas Rialas,
an AbCap director, who sold his Argo hedge funds to the company in January.

Mr Rialas paid 35.2p a share, down from the
400p at which they were trading before Mr Homm resigned and issued a vitriolic
public letter – in which he pledged to fight for shareholder value.

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Tags: Charts, Credit Crunch, Hedge funds

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New York City based NetParty, which sets up Jewish singles, found itself in a not-so-kosher pickle with Google.  Seems that they were trying to trademark the term ‘JewTube’ which showed videos of NetParty’s Matzoh Ball bash beginning last December on their LetMyPeopleGo.com website.  Google laid laid down the law and  a case of Jewish guilt on them since the name is a bit too close to YouTube, and blocked their bid.

Jeff Strank of NetParty told the blog
jewlicious.com that the trademark would have been for a "very limited
purpose" and that organizers had no intention "of creating a broader
Jewish-oriented video-sharing site."

‘JewTube’ Bid Bites The Dust – New York Post

Already with minority stakes in Lansdowne Partners, Frontpoint and Avenue Capital, Morgan Stanley is contemplating taking a minority stake in another hedge fund — this one, the $1.5 billion Traxis, is run by its former chief strategist, Barton Biggs.

Morgan Stanley’s stake in Traxis, a global macro fund, is expected to be less than 20 per cent. Unlike some funds that suffered badly during the market turmoil in August, Traxis was down just 2.54 per cent for the month and is up about 9 per cent so far this year. Mr Biggs founded the fund after leaving Morgan Stanley in 2003.

Mr Biggs, who spent 30 years at Morgan Stanley, became well known for his strong views on global market developments. In addition to founding his own fund, Mr Biggs recently published Hedgehogging, an insider’s look at the hedge fund world based on his personal diaries.

Morgan in talks over Traxis stake
- Financial Times

Tags: Hedge funds, Morgan Stanley

Pink slips are on the way for 750 employees of HSBC’s Decision One mortgage unit as the bank announced on Friday that it would close it down and take a $945 in charges / writedowns….

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Tags: Credit Crunch, HSBC, Revolving Door

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Shareholders of Northern Rock — like RAB Capital who bought a 6% stake in Northern Rock last week after shares of the besieged bank plummeted — could be pretty pissed off if a Daily Telegraph report is correct.   Christopher Flowers, Cerberus and Citadel are said to be teaming up to pick off the company’s mortgage portfolio, leaving equity holders with bupkus….

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Tags: Cerberus, Citadel, Credit Crunch, Distressed