1440 Wall Street

Bill Miller Still In The Basement Over Trailing Twelve Months

2009-04-20T22:51:01Z

Miller is outperforming 68 percent of his peers with a 1.2 percent gain in 2009 after boosting his stake in Hopkinton, Massachusetts-based EMC Corp. in the fourth quarter. Shares of the world’s biggest maker of storage computers have added 22 percent in 2009.

Lange’s holdings of Corning Inc. contributed to Magellan’s 14 percent jump in March. Corning, New York-based Corning, the largest producer of glass for flat-panel televisions, is up 60 percent this year after saying in March that volumes will exceed its previous estimate. Bloomberg

Miller’s stake in financial’s has been obliterated, but he remains overweight last we knew. And perhaps he has rotated in technology, but before he should probably keep his head down and string together another quarter or two before taking a victory lap.

Legg Mason’s PR flacks ain’t talkin’ but his letter should be out within a week - perhaps the time to fade Bill has passed. But I have never seen an equity portfolio manager keep a job with the track record Bill has posted....working on Wall Street once was a privilege, not a right of birth.

Lets hope he has a few good jokes in the letter. We could all use a laughs, besides the occassional guffaw when we had checking Bill’s numbers at the end of the trading day.
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And are the market neutral hedgies really getting killed? Not all of them, although they are trailing many of the other strategies.
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Bill Miller Not Dead Yet as Value Funds Bury Quants
Bloomberg

Bill Miller’s Outperformance “Deferred”
1440 Wall Street
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The content contained in this blog represents the opinions of 1440 Wall Street. This commentary in no way constitutes a solicitation of business or investment advice. It is intended solely for the entertainment of the reader, and the author.

Is Car Czar Rattner Roadkill?

2009-04-17T01:29:01Z

Fees paid to intermediaries that raise money for investment managers often look shady until you drill down deeper, and for now Rattner is innocent until proven guilty. Of course the Great Lake State might not see it quite that way, and I would imagine they have seen enough of the sharpies from New York flying in to Detroit Metro and telling them how to run their businesses.

Sure, incompetent managers ran General Motors into the ground, but they were not exactly crooks. But the role of a low budget movie called “Chooch” muddies the waters in this thriller:

The SEC alleges in its complaint that a meeting was arranged between the senior Quadrangle executive and a brother of New York’s then-deputy comptroller to discuss acquiring the DVD distribution rights to the low-budget film, “Chooch.” The deputy comptroller, now under indictment, and his brothers produced the movie.

Quadrangle agreed to acquire the rights for $88,841, and three weeks later the senior Quadrangle executive was told that Quadrangle would get a $100 million investment from the pension fund, according to the complaint. Quadrangle then paid the $1.1 million finders fees to a company affiliated with the political consultant, according to the complaint.

This transaction does not pass the smell test...but is par for the course, given what we have already seen out of Obama’s economic team.

Of course, Washington could add insult to Detroit’s injury, and make them watch this “Chooch”.

And as an added bonus, we finally have a story that might bring Andrew Ross Sorkin and Pinch Sulzberger to tears, given their endearment for the ex New York Times Journalist Rattner. I can’t wait to see how the cover this story if it blows up into something bigger.
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Chooch Shot Glasses
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Authorities Investigate Payments by Rattner
WSJ

Chooch -The Movie
Homepage
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The content contained represent the opinions of 1440 Wall Street. This commentary in no way constitutes a solicitation of business or investment advice. It is intended solely for the entertainment of the reader, and the author.

Dominos Swats Mischief Makers

2009-04-16T03:57:00Z

A video featuring two Domino’s (DPZ-NYSE) employees, which showed them sneezing on food they were preparing (among other things) quickly turned into a YouTube sensation after being posted on Perez Hilton’s blog, among others.

Domino’s initially hoped it would all go away, but quickly rescinded that strategy and dealt with it head on, and the idiots are now charged with felonies.

Here Patrick Doyle, President of Domino’s USA, responds to the incident.

Go buy a pizza - this was the last thing Michigan based companies need right now!
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Domino’s workers fired for mischief with sandwich
AP

Goldman Infiltrates Yankee Stadium Food Concessionaire

2009-04-16T01:46:00Z

The new Yankee Stadium is ready for Primetime, and a revamped menu will greet fans small and LARGE.

Last we knew Centerplate struck out - not getting the renewal for the newly built Stadium, which crushed the stock of (at the time CVP-AMEX traded) Centerplate:

April 3, 2008
Centerplate, Inc. was informed today by the New York Yankees that it will not be the concessionaire for the new Yankee Stadium set to open in 2009. This does not affect Centerplate’s current contract covering the existing Yankee Stadium, which runs through December 31, 2008. Thus, this decision by the Yankees is not expected to affect the Company’s 2008 financial results. However, if Centerplate does not obtain new business to offset the impact of not having a contract to service the new Yankee Stadium in 2009, this loss will have a material adverse effect on the Company’s Adjusted EBITDA beginning in 2009.

But little did we know the new vendor would have ties to the shadowy organization known as Goldman Sachs (GS-NYSE):

Besides traditional ballpark fare, yes, Cracker Jacks included, concession stands will serve sushi, hot-pressed Cuban sandwiches and garlic fries among other treats.

Legends Hospitality, the company founded by CIC Partners, Goldman Sachs, the Yanks and the Dallas Cowboys, led a tour and sampling of the ballpark concessions Wednesday, April 15, 2009.

For Legends it’s all about serving a wide range of ball park fare fresh and hot. The company has spent four months training its staff of about 3,000 in cooking and customer service, according to Senior Vice President Mike Phillips.

Legends should have an opportunity to feast on fans’ appetite for its food. Centerplate, the Yankees’ former concessionaire, took home $70 million in 2007 from its deal with the Bombers. The new stadium features 444 point-of-sale stands, compared with 298 in the old ball park. Phillips declined to comment on projected financial performance but said that, per year, the company expects to sell enough hot dogs that if they were placed end-to-end, they’d stretch 300 miles. Stephen’s Posterus

Looking for a reason to go on a hunger strike? At the minimum you now have a reason to fast....eating a hot dog or cracker jack at the new Yankee Stadium means supporting Goldman.

Perhaps your time is better spent hitting on Jeter’s imports....that ought to throw him off his game

Looks like an opening to switch allegiances is at hand. Let’s Go Mets!!

And for those of you who hold essentially worthless shares of Centerplate....well, you know the drill. Pitchforks to assemble at 85 Broad.

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Private Equity Serves Sushi at New Yankee Stadium
Stephen’s Posterus

Previously
Yankees Curve Ball Strikes Out Centerplate
1440 Wall Street
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The content contained in this blog represents the opinions of underthecounter. This commentary in no way constitutes a solicitation of business or investment advice. It is intended solely for the entertainment of the reader, and the author.

Attn SellSide: Don’t Bro Me, Bro

2009-04-15T18:09:00Z

The Dopey Cowboy is back with tips for working on Wall Street - hilarious.

Let’s keep it old school … just give me a top tier allocation, get the concert tix (better be good seats, and I’m sitting with a friend who is taking your place), book the Pebble and Vegas trip, order the `97 Brunello with dinner, bring along some Peruvian flake, make sure the Limo isn’t late … and don’t give me this bullshit about the “new” way of doing things on Wall Street … I didn’t vote for Obama. Remember you’re in the service business … there’s a reason you’re not an analyst or pm .. so just shut the fuck up, get your gold card out, meet me at Scores and we’ll get along just fine.

Go read the entire post…

Hey Dude… Don’t Bro Me!
Dopey Cowboy
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The content contained represent the opinions of 1440 Wall Street. This commentary in no way constitutes a solicitation of business or investment advice. It is intended solely for the entertainment of the reader, and the author.

Ten Guidelines from Richard Bernstein on His Final Day at Merrill

2009-04-15T16:59:00Z

4. Bull markets are made of risk aversion and undervalued assets. They are not made of cheering and a rush to buy

5. Diversification doesn’t depend on the number of asset classes in a portfolio.Rather, it depends on the correlations between the asset classes in a portfolio.

6. Balance sheets are generally more important than are income or cash flow statements.

7. Investors should focus strongly on GAAP accounting, and should pay little attention to “pro forma” or “unaudited” financial statements.

8. Investors should be providers of scarce capital. Return on capital is typically highest where capital is scarce.

9. Investors should research financial history as much as possible.

10. Leverage gives the illusion of wealth. Saving is wealth.

I don’t think consistently profitable daytraders will agree with Rich, but we wish him happy trails all the same.
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The content contained represent the opinions of 1440 Wall Street. This commentary in no way constitutes a solicitation of business or investment advice. It is intended solely for the entertainment of the reader, and the author.

Credit Suisse Unveils New “Fear Barometer”

2009-04-15T00:50:01Z

In recent weeks, the popular portrayal of the VIX as the market’s fear gauge has led many to question its veracity. One must bear in mind, however, that the VIX was not specifically designed to measure investor fear. It is only interpreted as such. It was designed to quantify the expectations for market volatility – a property that is associated with, but not always correlated to fear.

To illustrate, consider a hypothetical situation in which a massive bid for S&P call options were to suddenly materialize. Most would agree that such an event is meant to be interpreted as an increase in investor confidence rather than investor fear. Many would naturally expect the VIX to decline in response. All else being equal, however, such activity would cause (call side) implied volatilities and hence the VIX to increase – clearly not the reaction one would expect from a fear indicator.

We therefore propose the Credit Suisse Fear Barometer, an indicator that is specifically designed to measure investor fear. Unlike the VIX, which is prone to whipsaw from day to day as traders respond to transient market activities, our fear barometer taps the persistent fear levels expressed by the segment of investors that have long-term investment horizons. As a result, the CSFB is likely to provide a better tool for equity investors such as portfolio managers and asset allocators who have stricter turnover constraints.

More importantly, the index is designed to facilitate both ease of interpretation (the CSFB is expressed as a function of returns rather than volatility) and tradability. The number represented by the index prices a zero-premium collar to answer the question: “If one were willing to forgo all upside returns in excess of 10%, what is the deductible one must assume before an S&P portfolio can be fully insured?” Fear in our construct is therefore measured by the extent to which investors are willing to trade off excessive upside gains to receive downside protection at current market levels.

The CS Fear Barometer can be viewed on Bloomberg using the command “CSFB Index ”.

For more information, contact the CS Equity Derivatives desk

CS Trading Daily
April 14, 2009

Credit Suisse rolls out fear barometer
Reuters

A New Way to Quantify Fear
Barron’s
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The content contained represent the opinions of 1440 Wall Street. This commentary in no way constitutes a solicitation of business or investment advice. It is intended solely for the entertainment of the reader, and the author.

Thud: Goldman’s Deal Fizzles Right Out of the Gate

2009-04-14T22:12:00Z

Goldman Sachs got their deal done today, but it did not work out so well for anyone but Goldman. Yes, they priced the deal “in the hole” (down from yesterdays close) but apparently did not find enough strong hands to place the stock. And their secondary offering might just mark a top in this overbought market, which will now have to snake its way through earnings season.

The past few weeks have been notable ones for the history books and for Goldman in particular....and Matthew Goldstein - who has earned my respect over the past few years - is voicing a common refrain:

....if Blankfein really wants to help U.S. taxpayers out, he can go the extra mile and give back some of that AIG money the firm got, too. If the government had allowed AIG to file for bankruptcy, Goldman likely would have incurred an even bigger fourth-quarter loss than it reported. So Blankfein owes a bit of gratitude to Uncle Sam. And as my BusinessWeek colleague Roben Farzad pointed out on CNBC on Mar. 27, Blankfein can thank taxpayers by forking over its AIG largesse.

Now we know Goldman will object that the AIG bailout money is different from TARP. The firm will argue that the dollars that passed through AIG were nothing more than money it was owed on all those credit default swaps it had purchased to insure some of its portfolio of collateralized debt obligations, or CDOs. In Goldman’s world, all the government was doing was allowing AIG to live up to its contractual agreements. But, as we have seen in this financial crisis, some contracts can be broken.

It won’t happen of course. But if you don’t like Goldman you can make your presence felt - just don’t do business with them. It will hit them right where it hurts - in their pocketbook. And for those of you who got burned today taking down a slug, I am sure you salesman will make you whole on the next hot deal. That is how they roll at 85 Broad.

Goldman, Give It All Back
Business Week
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The content contained represent the opinions of 1440 Wall Street. This commentary in no way constitutes a solicitation of business or investment advice. It is intended solely for the entertainment of the reader, and the author.

New In-N-Out Burger Book Debunks Myths

2009-04-14T15:56:00Z

In-N-Out Burger is only in fours states, and not well known to East Coast folks, but many people in California and Arizona have had the pleasure of dining there.

A recently released book In-N-Out Burger: A Behind-the-Counter Look at the Fast-Food Chain That Breaks All the Rules by Stacy Perman details the company’s success, and should be snapped up faster than a double.

And for those of you looking for a job, well, you could do worse than work there:

From its start, In-N-Out paid employees more than the going rate. (Associates always made at least $2 to $3 above minimum wage.) As of February 2008, In-N-Out was paying new part-time associates $10 an hour—just 51 cents less than full-time workers at Wal-Mart (WMT), whose $375 billion in annual sales is about 1,000 times greater than In-N-Out’s. Store managers at In-N-Out make at least $100,000 a year and are eligible for monthly bonuses tied to store sales.

Rich also established an expansive set of benefits, including 401(k) plans, paid vacation for part-timers, and health, dental, and vision plans for full-time workers. Each year, he put on companywide picnics and a gala dinner. Managers who met their goals were sent on trips with their spouses, often to Europe in first-class seats. For a Christmas outing to a performance of The Nutcracker, Rich insisted that his managers wear tuxedos. He thought they stood shoulder to shoulder with any blue-chip manager and wanted them to feel that way, too.

The upshot of treating its employees with special care is that In-N-Out boasts one of the lowest turnover rates in the business. Industrywide, only about half of all fast-food workers stay beyond a year. And the numbers plummet to just 25% at two years and 12% at three. In In-N-Out’s case, managers’ typical tenure is 14 years, while part-time associates remain, on average, for two. Business Week

Perman gets to the bottom of the company’s born-again Christian roots, which took on the aura of an urban legend.

But putting that aside, it is a temple of Hamburger - and uniquely American.

Check out the video from the author, where she details the company’s mysterious culture.

In-N-Out Burger: Professionalizing Fast-Food
Business Week
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The content contained represent the opinions of 1440 Wall Street. This commentary in no way constitutes a solicitation of business or investment advice. It is intended solely for the entertainment of the reader, and the author.

Hedge Fund Performance Update

2009-04-14T03:39:00Z

Is equity long/short back? The stategy is back in the game after a tough back nine in 2008 -with October being the stuff of nightmares.

In any case, hold your head up, Hedgistan. Bad decisions can be overcome, and at least (for the most part) you don’t lie cheat and steal, like those fuckers on the SellSide

Yeah, I am talking about you, Lucas.

Ken Heinz from HFR runs down the periodic table of hedge fund returns.

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The content contained represent the opinions of 1440 Wall Street. This commentary in no way constitutes a solicitation of business or investment advice. It is intended solely for the entertainment of the reader, and the author.

FAS 160: The Special Sauce for Investors in Financials

2009-04-13T19:40:00Z

Of course, bulls don’t seem to care. We are at the point where it appears the capital raising will come at us in a pell mell fashion, and few investors seem to be distinguishing between offensive and defensive raises, as Goldman describes it.

This is leaving some analysts muttering to themselves, and if you need further answers, don’t bother calling the CFO or the investor relations department. As the Housing Wire notes, Omerta is the order of the day:

Wells Fargo representatives said they will not answer specific questions centered on the accounting moves, according to another bank analyst.

Analysts, including FBR’s Miller, say they are finding answers tough to come by. “We encourage investors to demand better disclosures going forward, and it is our sincere hope that WFC will revisit its long held practice of not holding live quarterly public conference calls,” he said.

Wells Fargo set the table heading into Goldman’s earnings release, despite the fact that some analysts think Wells Fargo needs to raise $25 to $50 billion in the months ahead, and Goldman will be doing a deal of their own.

Shorts are invited to attend Goldman’s conference call, but might want to sit with their back to the wall. It is not a threat, but it might be an offer you can’t refuse.

Reading between the lines it appears Goldman CEO Lloyd Blankfein will leave the gun, but take the cannoli.
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Josh Rosner on Bloomberg today....

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Wells Fargo Q1 Profits Packed with Accounting Gain
Housing Wire

Wells Fargo May Need $50 Billion in Capital, KBW Says
Bloomberg

UPDATE -GS Reports Early, Deal Prices Tomorrow

Goldman Sachs to Raise $5 Billion in Stock Sale, Posts Profit
Bloomberg

Goldman Posts Profit and Will Raise $5 Billion
NYT

Free Money Good for Bank Earnings, says Faber

2009-04-13T15:32:00Z

Rock On: No Haircut for Cody

2009-04-13T04:00:00Z

Cody Willard has a cool dog. A cool TV show. And cool gay friend from High School. And he grew up in the Wild, Wild West.

Throw in a knock-off Prada wardrobe....and you have a Breaking Bad version of a Renaissance Man.

Oops - check that. He is more Cocktail than Showtime’s Breaking Bad:

First job in the Big City: A barista at a Starbucks. “I was a darn good one,” he brags, recalling how he would emulate Tom Cruise’s juggling bartender from the 1988 movie “Cocktail,” sending flavored syrups airborne. “I would toss those, catch ‘em around my back. I was very entertaining.”

Of course, the best thing about Cody is that he is flaky and eccentric, just like me. But he’s got me beat on the guitar and hair. Although I might have stiffed him on a tip when he worked at Starbucks years ago.

BTW, What’s up with those tip jars, Cody?

A finance talk-show host with rock-star looks
LA Times
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The content contained represent the opinions of 1440 Wall Street. This commentary in no way constitutes a solicitation of business or investment advice. It is intended solely for the entertainment of the reader, and the author.

Wells Fargo Romps as Bulls and Bears Square Off

2009-04-10T22:49:00Z

Wells Fargo’s numbers seemed to be a bit optimistic, based on comments made by one of their most ardent fans......

In particular, Wells Fargo reported that they will absorb just $3.3 billion in charge-offs on bad loans for the quarter, and just $4.6 billion in loss provision expense; both numbers are well below most analyst estimates, and are the primary reason Wells will report earnings trumping earlier Street estimates.

“The shocker was that they only had only $3.3 billion [in] charge offs,” said Whitney Tilson of hedge fund manager T2 Partners, in a CNBC interview Wednesday afternoon. “It’s weird, because in Q4 Wachovia and Wells Fargo together had $6.1 billion in charge-offs, and then in a quarter in which things were terrible, those charge offs fell by 50 percent … They’re going to have a lot of losses over the next couple of years, [and] anyone baselining at $3.3 billion in charge offs per quarter is crazy.” Housing Wire

Swing by the Housing Wire to read all the gory details, but it almost smacks of sleight of hand to raise the stocks of financials and lower their cost of capital heading into further capital raises. Presto, here comes Goldman, first in line as usual.

Yes, recapitalizing the banks, brokers and REITs will finally mean they are good to go on the upside, but I never imagined accounting shenanigans would end up the primary driver to accomplish the task.

And while we are at it, congrats to Whitney Tilson who surged in to positive territory YTD on Friday. I have been a bit critical of him and Mssrs Einhorn and Ackman, but Tilson’s numbers, at least against his peers, are coming around.

Can he keep it up?
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A Game of Credit Cost Smoke and Mirrors at Wells Fargo?
Housing Wire

Goldman Sachs Stock Sale, TARP Repayment, Might Pressure Rivals
Bloomberg

How to avoid a short squeeze
MarketWatch
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The content contained represent the opinions of 1440 Wall Street. This commentary in no way constitutes a solicitation of business or investment advice. It is intended solely for the entertainment of the reader, and the author.

Did Obama Throw Michigan Under the Bus?

2009-04-08T21:05:00Z

None of that will help Michigan, but the good people of the state are trying to move forward. Michigan Congressman Thadeus McCotter is waiting for Wall Street CEO’s to resign, but I hope he is not holding his breath.

And I will keep my eye on Obama’s approval rating in the Great Lake State.But as Aaron Task says, there seems to be a double standard. And a GM bankruptcy filing will seem rather anti-climatic after all we have been through.

But one thing is guaranteed - Michigan’s unemployment rate is sure to lead the country for quite some time. And procrastination in Detroit is finally catching up with them as the shit hits the fan after years of mismanagement and little, in no, cooperation between the various stakeholders.

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Interesting reads below

The Rogue Treasury
newgeography

Detroit Real Estate Datapoint
Reuters
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The content contained represent the opinions of 1440 Wall Street. This commentary in no way constitutes a solicitation of business or investment advice. It is intended solely for the entertainment of the reader, and the author.