Enron

The greatest short bets of all time

Jim Kim — Mon, 11 Aug 2008 10:06:29 -0400

When John Paulson, of Paulson & Co., bet against mortgage-backed collateralized debt obligations, he didn't hold back. His funds shorted the ABX and longed various credit default swaps--and it paid off. His $15 billion profit in 2007 is the stuff of legends. According to Business Week Online, it ranks up there with the greatest short bets of all time. George Soros is mentioned for his now legendary bet against the British pound just before it dropped out of a fixed exchange rate system. His $1 billion gain in 1992 gave him the title of "The Man Who Broke the Bank of England." Then there's Jim Chanos, the famous short, who bet correctly that Enron would collapse. Bill Ackman is noted for his big winning bet that MBIA' stock would tank.

For more:
- here's the package

Banks bet on stadium sponsorships

Jim Kim — Fri, 25 Jul 2008 08:00:45 -0400

Does Citi Field have the same ring as Shea Stadium? Well, it likely depends on who you are. Mets loyalists may grumble. But for the bank, it's a nice, albeit expensive, marketing move. Business Week notes some think that Citigroup could use the $20 million a year the sponsorship cost in other areas right now. But such deals are currently popular among commercial banks. Citi seems to have paid a premium. Bank of America bought the rights to the Carolina Panthers' stadium in Charlotte for $7 million a year. Other banks paid even less. M&T, PNC and Comerica have also bought stadium naming rights. For banks, such deals amount to a low-cost way to burnish their brands with the public and associate with a professional team. I'd like to see how the ROI is actually measured. There's risk on both sides. Recall the Houston Astros got stuck with Enron.

For more:
- here's the Business Week article

Is fair-value accounting just?

Jim Kim — Thu, 26 Jun 2008 14:35:52 -0400

In the wake of the Enron crisis, "fair-value accounting" seemed like a good idea. It was designed to create reporting uniformity and make it harder to play games. But it's turning out poorly for Wall Street in the on-going credit crunch. "Rather than making things clearer, the fair-value accounting rules only point to the futility of pricing assets every day in highly volatile markets when the credit markets are frozen solid," Forbes reports. All the while, the problem of risky assets continues to mount. Wall Street still has not fully dealt with Level 3 assets. But you have to ask: What is the alternative? Can we afford to go back in time? The SEC will convene at a conference on this vexing issue July 9. For now, the pain--and possibly more writedowns--will continue.

For more:
- here's the Forbes article

Putting Bear Stearns to rest is tricky

Thu, 08 May 2008 06:59:55 -0400

TheStreet.com reports that some analysts are "furious" over a recent decision that characterizes them as "non-administrative" personnel. At first blush, one would think that is an accurate assessment. Then again, the company deemed them revenue generating, which also is a bit hard to believe. I don't see stock analysts as administrative in any way. I doubt they see themselves that way. Analysts may not be a real revenue center any more, but administrative? When you consider that administrative employees qualify for a better severance payout, it all becomes clear. Everyone else in research was deemed administrative.

For more:
- here's the article from TheStreet.com

ALSO NOTED: John Thain says he's not heading into politics; SEC may require banks to hold more cash as cushion; and much more..

Fri, 25 Apr 2008 06:59:50 -0400

Company News:

> Court approves Citigroup settlement over Enron. Article
> Thain says he's not heading into politics. Article
> Barclays lowers Q1 earnings guidance. Article
> Franklin Resources misses estimates. Article
> TradeStation's earnings rise. Article
> KBW posts a loss. Article

Regulatory News:
> SEC may require banks to hold more cash as cushion. Article

And Finally... Will the Net destroy the nation's writing ability? Article

How a bear raid might work

Tue, 22 Apr 2008 06:59:56 -0400

There has been a lot of talk--and probably a government investigation--about whether short sellers powered Bear Stearns out of existence, barraging it with rumors and innuendo that took on a life of their own. It's unclear what the answer is. The extent to which bear raids take place is unclear. There are many who believe that short selling hedge funds work to gang up on a company, especially if it has negative information. The Biovail incidents come to mind. Two academics have weighed in suggesting a way that bear raids might occur and actually harm a company. We'll see what the government turns up. It may be that some traders spread rumors. They likely want a quick pop, not the destruction of the company.

For more:
- here's the article from TheStreet.com

Search the web for: Bear Stearns | Biovail

Inside the near-fiasco at Lehman Brothers

Fri, 04 Apr 2008 07:59:58 -0400

Lehman Brothers deserves plaudits for its ability to pick its way through the recent rumor-laden minefield. It is not the next Bear Stearns, a reflection of good luck and good planning. Fortune offers an insightful look at how the bank prepared for a potential crisis. Starting a year ago, the firm worked "to reduce a technical but crucial funding measurement: its net repo liability. This is a measurement of the firm's liability in its book of overnight and short-term loans, or repurchase agreements." Lehman Brothers had a little less than $19.1 billion in net exposure, down from $24.5 billion a year earlier, the magazine notes. Bear Stearns' net rose to $74.5 billion from $31 billion.

For more:
- here's the article

Poll Question: Which company appears to be, in all likelihood, the next Bear Stearns? Vote Here

Related Articles:
Still unfolding: The scam that hit Lehman Brothers. Article
Lehman doubters' short-sightedness backfires. Article
Sign of times: New CFO at Lehman Brothers. Article
Similarities between Bear Stearns and Enron? Article
Bear Stearns: A timeline of decline. View timeline

ALSO NOTED: Meredith Whitney continues to pare bank estimates; Another bid for Bear Stearns to emerge?; and much more...

Thu, 27 Mar 2008 07:59:50 -0400

Company News:
> Another bid for Bear Stearns to emerge? Article
> Citigroup settles Enron suit for $1.6 billion. Article
> JP Morgan Chase acquires ClimateCare. Article
> Most volatile stock? E*trade. Article
> Goldman Sachs analysts cuts Bank of America estimates. Article
> Deutsche Bank may miss earnings target. Article
> Moody's downgrades MoneyGram. Article
> Meredith Whitney continues to pare bank estimates. Article
> More on Whitney and Citigroup. Article

Industry News:
> Bearishness on credit card companies. Article
> Home equity loans: The next crisis? Article

Regulatory News:
> Senate wants more info on Fed's role in Bear Stearns deal. Article

And Finally... Four worth-it career risks. Article