Monday, August 31, 2009

Cerberus...... Last Rights.

I am no clairvoyant with magical powers nor am I a deeply staffed (with deep pocketed parent re:GE) entity with inexhaustive resources. But what I do possess is a tad of common sense, coupled with a healthy dose of skepticism for the 'party line'. It is in this vain that the problems at Cerberus seem almost passe. I realize Cerberus and their attendant "liquidity" problems is news de jour on the pom pom network.


In a standard act of post mortem, 20/20 hindsight, "we saw it coming", "as we all know" investigative journalism that CNBC has become world renowned for, they are all over the story today!

One just might be inclined to ask the world leader in business the question; what took so long? I will offer 4 guesses as to why. Hint, the first 3 don't count.

1) David Faber too busy following the Ron Insana school of career counselling with a new book and hedge fund...oooops I got ahead of myself there.
2) Dennis Kneale too busy struggling with his own relevance, calling recession bottoms and fighting with "idiot bloggers".
3) Carl Qunitanilla too busy asking penetrating questions such as "What's it like being a billionaire", of disgraced ponzi scheme operators.
4) Petrified that any critical look at a Wall St. player or outfit will "shut down" Wall St. access and more importantly ad dollars.

Hey Bill Griffith, Cerberus' problems must be issues of liquidity and would have nothing to do with their Greenspan/Bernanke Fed sponsored "free money" influenced investment decision making now would it? Like a trained parrot, any and every problem is liquidity!

Given all the discussion, I thought I would take a peek back at my one, of my many posts on Cerberus, in particular the one back on July 2, 2007 Calling Bud Fox in which I stated the following;

"The more I read of the M&A activity of so and so buying this company and so and so buying that, I am reminded of the scene in the movie Wall Street when Gekko wants to buy BlueStar Airlines. Charlie Sheen, who plays Bud's dad, goes off on the deal and says sure "Buddy's qualified to run an airline, he worked as a baggage handler for 2 summers." I think about that line and wonder to myself if any of the marks who finance these leveraged buyouts, and believe you me they are marks, ever ask this question. For example, Cerberus starts its dog and pony show this week to raise over 7bill, yes bill with a B to buy Chrysler. Do you think any of these Ivy league sophisticates are gonna ask themselves the question, " if ze Germans could not turn this dog around how are these financial chemists gonna do it? Seems like a rational question to me.

Wasn't Cerberus the outfit that had reams of people going over the Rescap deal, like honeybees on a flower if memory serves me. But this is not about the quality of the steak, heck they don't care if there even is a steak. It's all about the sizzle and doing the deal. I read a study a while back that stated something like 90% of buying decisions are emotional. Ya think? oooops there is that bad word again. These institutional accounts and hedgies would sell their own mother(COD according to Larry Wildman) for 50 beeps in yield and we all know when you reach for yield you get your hand chopped off.
Knowing something is ridiculous (like lending money at peanuts over risk free rates with limited covenants, if any) and yet still doing it, well, the clinical psychologists may have a technical term for it, but my term for it is shit for brains!"

I bring this up, not because what I stated was ground breaking in any way, frankly I thought it was obvious at the time, rather I bring it up because CNBC purportedly claims to be a bastion of "fast, accurate, actionable, and unbiased" information.

I simply offer this as a counter argument to the claims made by the 'boobs and boobs in chairs at CNBC that the 'idiot bloggers', of which I am one, can write anything they want on a whim. For what it's worth Diana Olick, Rick Santelli, Mary Thompson, Phil Lebeau and Sue Herrera are hereby excluded from all above negative references to CNBC as they actually report instead of cheerlead.

Before I go I wanted to take an opportunity this morning to offer some congratulations. The Wall Street Cheat Sheet First Amendment Award for Outstanding Journalism are out and I want to offer congratulations to the winners.

Best Blog - Zero Hedge
Best Reporter - Matt Taibbi
Best Book - Bailout Nation by Barry Ritholz
Best News Anchor- Dylan Ratigan

In particular I want to offer congratulations to Dylan in particular as I was very aggressive in taking him to task early into the meltdown back when he was on CNBC. As the crisis evolved he started to show that he was and is one of the VERY FEW who not only see what is happening but is prepared to call "them" on it and ask the career threatening questions his "boobs and boobs in chairs" former colleagues back at CNBC are petrified to. Way to go Dylan!

Again well done to all the winners, my sincerest congratulations !

A reader, thx K.O. sent me a note which has been making the rounds on the net. Someone called it a CNBC stock market cheat sheet.

Cheat Sheet for Reacting to Market Data Releases:

weak data = Fed ease, stocks rally

consensus data = lower volatility, stocks rally

strong data = economy strengthening, stocks rally

bank loses $4bln = bad news out of the way, stocks rally

oil spikes = great for energy companies, stocks rally

oil drops = great for the consumer, stocks rally

dollar plunges = great for multinationals, stocks rally

dollar spikes = lowers inflation, stocks rally

inflation spikes = will inflate all assets, stocks rally

inflation drops = improves earnings quality, stocks rally


Absolutely spot on hilarious!

Good speculating and remind them to please don't ever forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 2 units Ultrashort FTSE/Xinhua 25 ticker FXP @ $10.58 stops @ $9.94/9.54
Long 1 unit Ultrashort Real Estate ticker SRS @ $11.93 stop @ $10.94
Short 1 unit JP Morgan ticker JPM @ $43.66 stop @ $44.71
Short 1 unit Abercrombie ticker ANF @ $33.23 stop @ $35.33
Short 1 unit Aeropostale ticker ARO @ $40.81 stop @ $42.36

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