Monthly Archives: June 2012

Emerging-Market Stocks Rise Most In 2012 On EU Meeting

Emerging-market stocks rose the most in eight months after European leaders agreed to ease repayment conditions for loans to Spanish banks, boosting demand for riskier assets.

The MSCI Emerging Markets Index (MXEF) jumped 3.4 percent to 937.35 by the close in New York, the steepest gain since Oct. 27. Energy companies rallied the most since October asOGX Petroleo e Gas Participacoes SA surged in Sao Paulo after naming a new chief executive officer. Brazil’s Bovespa rose 3.2 percent while Russia’s Micex Index (INDEXCF) added the most in four months. The Hang Seng China Enterprises Index (HSCEI) of Hong Kong-traded Chinese shares rose by 2.6 percent.

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Wahlberg, Wintour, Matt And Kim, Lasry, Pruzan: Scene

Billionaire Marc Lasry, Avenue Capital Chairman, co-founder and CEO, was the guest of Bloomberg TV’s Stephanie Ruhle on “Market Makers” today. Marc Lasry has $13 billion in assets under management.

Marc Lasry doesn’t think Europe will blow up. He sees several opportunities to invest in Europe. Click on the link to watch the video.

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Hedge Fund Manager James Chanos on His Big Short Position in China

“Shorting is not a criminal trial. It doesn’t have to be beyond a reasonable doubt. There just has to be a preponderance of evidence.” — James Chanos, February 2011 interview

“We certainly weren’t the first on this idea,” Chanos tells me at his offices in April of 2011 about the biggest short position of his life: The People’s Republic of China. Chanos first spoke publicly about his grand stake in China over a year and a half ago on CNBC’s Squawk Box in December 2009. “Right now, we’re as bearish on China as we’ve ever been,” he says. He followed that with a presentation at St. Hilda’s College, Oxford in January 2010, “The China Syndrome: Warning signs ahead for the global economy.

Chanos argued that China, fearing a sharp slowdown from the financial crisis, pumped credit into asset growth — mainly real estate but new roads and high-speed rail, too. There were “classic pockets of overheating, of overindulgence” he said in his presentation. Fixed asset investments as a percentage of China’s gross domestic product (GDP) were exceeding 50 percent — a “sh-a chén bào” (sandstorm) of money, he said. The stimulus was massive: $586 billion, or 14 percent of GDP (the U.S. package was $787 billion, or 6 percent of GDP). With state-owned enterprises controlling 50 percent of industrial assets, and not being driven by the need to make profits, and local party officials dictating the real estate development process, large-scale capital projects were growing “sillier by the day,” including rising industrial and manufacturing overcapacity. There were empty cities, such as Ordos, and lonely malls, such as the New South China Mall. News reports showed new buildings toppling from shoddy construction. It was the latest chapter in China’s history of credit-fueled booms and busts. China was “letting a thousand Dubais bloom,” he quipped. “Go to Dubai and see what happened. It was… what I call the ‘Edifice complex.'”

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Ackman Sends Wake-Up Call To Sleepy Canada Boardrooms

William Ackmans triumph at Canadian Pacific Railway Ltd. (CP) may echo across boardrooms far from the railroad’s Calgary headquarters.

In a Canadian corporate culture long resistant to activist shareholders, the U.S. hedge-fund manager sounded a rousing wake-up call by ousting a chairman, a chief executive officer and four directors, said Karl Moore, professor of business strategy at McGill University in Montreal.

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S&P 500 Caps Best June Since 1999 On European Agreement

The Standard & Poor’s 500 Index (SPX) capped the biggest June rally since 1999 after European leaders reached an agreement that alleviated concern banks will fail.

All 10 groups in the S&P 500 rose as industrial, technology and commodity shares had the biggest gains. Caterpillar Inc. (CAT), Apple Inc. and Bank of America Corp. (BAC) climbed at least 2.6 percent to pace rallies among the biggest companies.Exxon Mobil (XOM) Corp. jumped 3 percent as oil surged 9.4 percent, the most in more than three years as commodities surged. KB Home climbed 13 percent after the homebuilder reported a narrower loss.

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How Boaz Weinstein and Hedge Funds Outsmarted JPMorgan

 

It was last November, and Mr. Weinstein, a wunderkind of the New York hedge fund world, had spied something strange across the Atlantic. In an obscure corner of the financial markets, prices seemed out of whack. It didn’t make sense.

It might seem remarkable that someone like Mr. Weinstein, a man virtually unknown outside of financial circles, could deal such a stinging blow to one of the world’s largest, most respected banks. Jamie Dimon, the chairman and chief executive of JPMorgan and a face of the banking establishment, is struggling to contain the damage from what he has called a “terrible, egregious mistake.” The loss — JPMorgan put it at $2 billion, but it may turn out to be $3 billion or more — has renewed calls for stronger financial regulation.

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Daniel Loeb, Yahoo, And The Return Of The Corporate Raider

Daniel Loeb used to be a hedge fund firebrand. He once said the great-grandsons of a paper company founder were part of the “lucky sperm club.”

In practicing his brand of corporate raiding, Loeb berated his opponents as chief value destroyers and lazy socialites who “could potentially be tooling around in a luxurious business jet, possibly sipping Cristal Champagne cocktails at shareholder expense.”

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Hedge Fund Giant David Tepper Made a Killing with Airline Stocks

6/14/2012

According to Forbes’ Warren Buffett has an antipathy for airlines. He has said that “The net wealth creation in airlines since Orville Wright has been next to zero” and also called his investment in US Airways in the early 1990s one of his biggest mistakes, after losing the majority of it. David Tepper, master of distressed investing (he made billions during the financial crisis), typically enters a scenario when there is a bankruptcy involved and an opportunity to gain after other people have lost, which was the case with his two big airline purchases of the first quarter: US Airways (LCC) and Delta Airlines (DAL). His uncanny timing led to an average gain of 82 percent on them to date this year.

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RPT-INSIGHT-John Paulson’s returns falter again; investors fret

Thursday, June 28 2012

According to Reuters’ Svea Herbst-Bayliss, billionaire trader John Paulson has told his wealthy investors that he has learned from his mistakes of 2011, which produced enormous losses for his closely watched hedge fund.

The founder and manager of Paulson & Co, who made his fortune and fame by betting against the subprime mortgage market, went so far as to tell investors in January that last year’s big losses, including a 50 percent decline in his popular Advantage Plus fund, were an “aberration.”

But as the months tick on, many investors are still waiting to see the dramatic turnaround Paulson has vowed to deliver.

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RAY DALIO: Beware The Fat Tail Event In Europe

| Jun. 27, 2012, 6:20 AM

According to the Pragmatic Capitalism’s Cullen Roche, alliances are shifting in a logical manner. The German-French alliance is breaking down in favor of contributor (higher rated credit) countries aligning against recipient (lower rated credit) countries, said Ray Dalio.

Similarly, the terminology to describe who is reasonable and who is unreasonable reflects these parties’ respective interests.

Also, the talk of a fiscal union to resolve these problems has to be looked at in light of the question of whether it is in the interest of fiscally strong contributors to have a fiscal union with fiscally weak recipients in which the majority rules how the money is divided.

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