A Linked-In group to which I belong is discussing the not-very-burning question: what are you favorite hedge fund books?
Among those mentioned, in no particular order:
The Gathering Storm, ed.by Lee Robinson & Patrick Young (2010).
More Money than God, by Sebastian Mallaby (2011).
When Genius Failed, by Roger Lowenstein (2001).
Inventing Money, by Nicholas Dunbar (2000).
The Big Short, by Michael Lewis (2011).
Hedge Hunters by Katherine Burton (2007).
Julian Robertson: A Tiger in the land of Bulls and Bears by Daniel A. Strachman (2004).
Showing posts with label hedge funds. Show all posts
Showing posts with label hedge funds. Show all posts
13 August 2011
05 August 2011
Opalesque Roundtable
This week I received a press release assuring me that, on the authority of Opalesque and a "roundtable of UK based hedge fund experts" that they have convened, "London is still the dominant location for hedge funds in Europe, with the highest concentration of Europe's talent, assets, risk taking, service rpoviders and new launches."
Take THAT Zurich upstarts!
Click here for more, and here for the Roger Miller song it inevitably suggests.
Take THAT Zurich upstarts!
Click here for more, and here for the Roger Miller song it inevitably suggests.
25 September 2010
Bankruptcy and Transparency
A controversy about the rules of bankruptcy procedure, specifically rule 2019, has bubbled along for three years now and may be about to make a big change in the way corporate bankruptcies are handled in the U.S.
It all began in February 2007 with a "seemingly innocuous opinion" by Judge Gropper of the Manhattan bankruptcy court in the Northwest Airlines case.
Gropper held that under rule 2019, hedge funds that were a member of one of the ad hoc groups that form for the purposes of negotiating/arguing out the terms of a debtor company's reorganization have to turn over to their court information that hedge funds as such like to keep close to their vests -- information amount about interest held and the price at which that interest was purchased.
The funds tried to mitigate the harm to their traditional trading strategies that this threatened, by asking for permission to provide this information under seal. But Gropper, a few days later, shot that down, too.
Several other bankruptcy courts have considered the matter since then. No consensus has developed among them as to what 2019 means.
In August 2009, the Advisory Committee on the Federal Rules of Bankruptcy Procedure (Advisory Committee) proposed a significant revision of the rule In part, this came about because of the need for legal certainty. As important, though, it came about because many well-placed people think Gropper was right on policy grounds, and that it would be good to have a rule that is very clear about that.
The proposed rule revision would change the bankruptcy investing game in three principal ways: (1) it would widen the scope of who must disclose under Rule 2019; (2) it would widen the scope of what must be disclosed; and (3) it would give bankruptcy courts wider discretion to relieve or abridge disclosure obligations, especially disclosure regarding the prices of assets purchased in secondary market trading. This article discusses the proposed revision in depth, focusing on the potential consequences for hedge funds that invest in and around bankruptcies.
There is now a widespread expectation that there will be reform, that it will be in place by the end of 2011, and that the results will demand more transparency than anyone would have expected before Gropper put this ball in play.
For the possible significance of this, I refer you back to my explanation at the time of Gropper's stance.
It all began in February 2007 with a "seemingly innocuous opinion" by Judge Gropper of the Manhattan bankruptcy court in the Northwest Airlines case.
Gropper held that under rule 2019, hedge funds that were a member of one of the ad hoc groups that form for the purposes of negotiating/arguing out the terms of a debtor company's reorganization have to turn over to their court information that hedge funds as such like to keep close to their vests -- information amount about interest held and the price at which that interest was purchased.
The funds tried to mitigate the harm to their traditional trading strategies that this threatened, by asking for permission to provide this information under seal. But Gropper, a few days later, shot that down, too.
Several other bankruptcy courts have considered the matter since then. No consensus has developed among them as to what 2019 means.
In August 2009, the Advisory Committee on the Federal Rules of Bankruptcy Procedure (Advisory Committee) proposed a significant revision of the rule In part, this came about because of the need for legal certainty. As important, though, it came about because many well-placed people think Gropper was right on policy grounds, and that it would be good to have a rule that is very clear about that.
The proposed rule revision would change the bankruptcy investing game in three principal ways: (1) it would widen the scope of who must disclose under Rule 2019; (2) it would widen the scope of what must be disclosed; and (3) it would give bankruptcy courts wider discretion to relieve or abridge disclosure obligations, especially disclosure regarding the prices of assets purchased in secondary market trading. This article discusses the proposed revision in depth, focusing on the potential consequences for hedge funds that invest in and around bankruptcies.
There is now a widespread expectation that there will be reform, that it will be in place by the end of 2011, and that the results will demand more transparency than anyone would have expected before Gropper put this ball in play.
For the possible significance of this, I refer you back to my explanation at the time of Gropper's stance.
09 April 2010
The confidentiality of a confession
The confidentiality of a confession requires that the confessing party keep his voice down. The priest won't rat you out, but anyone else passing by is free to do as they please with what they hear!
As a matter of history, even Jeremy Bentham believed the law ought to recognize priest-penitent privilege. He had no sympathy for the Catholic Church, and he was generally against privileges. Nonetheless: Bentham wrote, in "View of the Rationale of Evidence," that though the government of a rational society will be happy to see Catholicism fade away, it will not use coercion against it, and that the imprisonment of priests for refusing to share confessions would be precisely that.
He also said that the presence of a "spiritual guide and comforter" for persons who are so misguided as to go to a Roman Catholic priest to confess, is a good thing, tending to the prevention of future crimes, and to "the disposing of the penitent to make reparations for mischief done by misdeeds already perpetrated." This benefit would be lost were the evidentiary privilege not extended.
Bentham, interestingly, had no use for the institution of a lawyer-client privilege, which has no such positives in the utilitarian balance.
As a matter of history, even Jeremy Bentham believed the law ought to recognize priest-penitent privilege. He had no sympathy for the Catholic Church, and he was generally against privileges. Nonetheless: Bentham wrote, in "View of the Rationale of Evidence," that though the government of a rational society will be happy to see Catholicism fade away, it will not use coercion against it, and that the imprisonment of priests for refusing to share confessions would be precisely that.
He also said that the presence of a "spiritual guide and comforter" for persons who are so misguided as to go to a Roman Catholic priest to confess, is a good thing, tending to the prevention of future crimes, and to "the disposing of the penitent to make reparations for mischief done by misdeeds already perpetrated." This benefit would be lost were the evidentiary privilege not extended.
Bentham, interestingly, had no use for the institution of a lawyer-client privilege, which has no such positives in the utilitarian balance.
02 May 2009
Paradigm Global
I'm rather late to the fair with his story, but let me summarize the facts as the interested portion of the world now knows them, thanks to the estimable work of blogger John Hempton. Then I'll make a brief comment on a possible bit of political fall-out.
Paradigm Global, a fund of funds (i.e. a "feeder fund" for first-order hedge funds) is under the ownership and control of two members of the Vice President's family, his son and brother -- Hunter and James Biden.
Paradigm Global shares office space on Fifth Avenue with a hedge fund, Ponta Negra. They also used the same phone number and marketer.
This matters because on April 27, the SEC obtained a court order to freeze the assets of Ponta Negra, alleging that its founder, Franscesco Rusciano, has been misrepresenting his fund's monthly and yearly performance results.
Specifically, the SEC alleges that Rusciano claimed his fund earned total annual returns of 42.99 percent for 2007, 24.85 percent for 2008, and 6.14 percent for the first two months of 2009, whereas in fact the assets of the fund "suffered substantial trading losses in 2007, had modest profits in 2008, and again sustained losses in 2009."
Hempton, who was on the case before the SEC was (or at least before it told the rest of the world about it) has posted on his blog a marketing document for Porta Negra, that identified Citigroup as its prime broker. Hempton says, "I wrote to citigroup several times – and spoke to senior people in their government relations area and told Citigroup the entire story. I believe that Citigroup did not react appropriately to a fraud committed in their name."
A lawyer for Paradigm, Marc LoPresti, has tried to play down any connection between Paradigm (and the Bidens) on the one hand and Ponta Negra on the other, saying simply "they were subtenants." As to the common marketer, Jeff Schneider, he "did some marketing for Paradigm over the last couple of years [and] introduced us to Ponte Negra, and we had some available office space. That's 100% the extent of the relationship."
Felix Salmon was initially rather skeptical about the significance of any Ponta Negra/Biden link, calling the subtenancy a "rather tenuous" connection. But as you can see here, Salmon is no longer so skeptical, and says he is "looking into" it.
Fall-out?
A Biden family connection with a crooked hedge fund could, at the least, complicate this administration's efforts to make scape goats out of the supposedly unscrupulous hedge funds who refused to keep Chrysler out of bankruptcy by swallowing its losses as their own. That bit of scapegoating is an absurd policy anyway, and it richly deserves to be complicated.
Paradigm Global, a fund of funds (i.e. a "feeder fund" for first-order hedge funds) is under the ownership and control of two members of the Vice President's family, his son and brother -- Hunter and James Biden.
Paradigm Global shares office space on Fifth Avenue with a hedge fund, Ponta Negra. They also used the same phone number and marketer.
This matters because on April 27, the SEC obtained a court order to freeze the assets of Ponta Negra, alleging that its founder, Franscesco Rusciano, has been misrepresenting his fund's monthly and yearly performance results.
Specifically, the SEC alleges that Rusciano claimed his fund earned total annual returns of 42.99 percent for 2007, 24.85 percent for 2008, and 6.14 percent for the first two months of 2009, whereas in fact the assets of the fund "suffered substantial trading losses in 2007, had modest profits in 2008, and again sustained losses in 2009."
Hempton, who was on the case before the SEC was (or at least before it told the rest of the world about it) has posted on his blog a marketing document for Porta Negra, that identified Citigroup as its prime broker. Hempton says, "I wrote to citigroup several times – and spoke to senior people in their government relations area and told Citigroup the entire story. I believe that Citigroup did not react appropriately to a fraud committed in their name."
A lawyer for Paradigm, Marc LoPresti, has tried to play down any connection between Paradigm (and the Bidens) on the one hand and Ponta Negra on the other, saying simply "they were subtenants." As to the common marketer, Jeff Schneider, he "did some marketing for Paradigm over the last couple of years [and] introduced us to Ponte Negra, and we had some available office space. That's 100% the extent of the relationship."
Felix Salmon was initially rather skeptical about the significance of any Ponta Negra/Biden link, calling the subtenancy a "rather tenuous" connection. But as you can see here, Salmon is no longer so skeptical, and says he is "looking into" it.
Fall-out?
A Biden family connection with a crooked hedge fund could, at the least, complicate this administration's efforts to make scape goats out of the supposedly unscrupulous hedge funds who refused to keep Chrysler out of bankruptcy by swallowing its losses as their own. That bit of scapegoating is an absurd policy anyway, and it richly deserves to be complicated.
23 April 2009
Ben Stein Watch: Missing the Point
The inaugural edition of the Chris Faille incarnation of BSW will take a look at this.
As you can see via that link, Ben told his reader in late March that Jim Cramer "appeared earlier this month on 'The Daily Show,' where Mr. Stewart yelled and cursed at him, saying he did not let Americans know just how serious the problems were on Wall Street."
Sorry, Ben, I don't know that. I do know that Cramer appeared on The Daily Show, but it am quite certain that to say that the host, Jon Stewart, "yelled and cursed at him," is an inept summary of the proceedings.
There was one lapse into profanity on Stewart's part, when he said "I understand that you are trying to make finance entertaining, but this is not a f***ing game."
The bleeped adjective there was used not to curse at Cramer, but to modify "game," as in "Wall Street fun and games," or to conjure up an image of Nero fiddling while Rome burns, and to express exasperation. My recall is that Stewart was rather affable, although in a somewhat gnomic fashion. Gee, how could we settle this difference in recall? With clips, perhaps?
Anyway, Ben goes on in the above column to explain that Stewart was angry at Cramer for getting predictions long. Stewart was naive about this because, Ben patiently explains, there is nobody who knows how to make reliable predictions.
There, too, Ben misses the point. By a mile. Actually, Stewart was making two good points and neither of them was simply that Cramer got some calls wrong.
Stewart's points were:
1) "Isn't there a problem selling snake oil as if its vitamin tonic?"
2) There's a difference between predicting how markets will come out -- accurately or not -- on the one hand and manipulating them on the other.
He played clips of a video Cramer made for a website called TheStreet.com, in which Cramer seemed to be bragging about having successfully manipulated prices back when he was running a hedge fund.
That's in the second of the three segments in the site to which I've linked you above.
The bottom line, though, for this edition of BSW: did Ben even watch the same show everyone else was watching?
As you can see via that link, Ben told his reader in late March that Jim Cramer "appeared earlier this month on 'The Daily Show,' where Mr. Stewart yelled and cursed at him, saying he did not let Americans know just how serious the problems were on Wall Street."
Sorry, Ben, I don't know that. I do know that Cramer appeared on The Daily Show, but it am quite certain that to say that the host, Jon Stewart, "yelled and cursed at him," is an inept summary of the proceedings.
There was one lapse into profanity on Stewart's part, when he said "I understand that you are trying to make finance entertaining, but this is not a f***ing game."
The bleeped adjective there was used not to curse at Cramer, but to modify "game," as in "Wall Street fun and games," or to conjure up an image of Nero fiddling while Rome burns, and to express exasperation. My recall is that Stewart was rather affable, although in a somewhat gnomic fashion. Gee, how could we settle this difference in recall? With clips, perhaps?
Anyway, Ben goes on in the above column to explain that Stewart was angry at Cramer for getting predictions long. Stewart was naive about this because, Ben patiently explains, there is nobody who knows how to make reliable predictions.
There, too, Ben misses the point. By a mile. Actually, Stewart was making two good points and neither of them was simply that Cramer got some calls wrong.
Stewart's points were:
1) "Isn't there a problem selling snake oil as if its vitamin tonic?"
2) There's a difference between predicting how markets will come out -- accurately or not -- on the one hand and manipulating them on the other.
He played clips of a video Cramer made for a website called TheStreet.com, in which Cramer seemed to be bragging about having successfully manipulated prices back when he was running a hedge fund.
That's in the second of the three segments in the site to which I've linked you above.
The bottom line, though, for this edition of BSW: did Ben even watch the same show everyone else was watching?
25 October 2008
I don't break the rules (I'm sneaky that way).
Another dispatch from the lipstick wars, WR battlefront.
I've written of wikipedia and its conflicts over "sock puppetry" here often enough. I'll try not to repeat myself unduly.
I don't think I've ever mentioned Wikipedia Review (WR), which is a website designed by and for those with a wikipedia-related grievance, something of a "shadow site," if you will.
I've only recently discovered that I've become a subject of some discussion at Wikipedia Review. This seems to have been set off by a piece I wrote in the HedgeWorld blog, back when HW was still a semi-autonomous newsgathering organization within the Reuters family and when they still employed the likes of me.
I wrote in that piece about certain wikipedia articles that had a direct or indirect connection with the "naked short selling" debate, and about the contention -- in that context especially hot -- about who was a sock puppet of whom.
I also was explicit in this piece that I have edited wikipedia myself. I gave the name I use in that context, Christofurio. So, just to be clear: the identity of Christopher Faille and Christofurio isn't something that anybody else had to do any detective work to discover. I have been very clear about it.
Another point: within wikipedia, I am always and only "Christofurio," -- so nobody ever has to wonder whether I am using two or more names strategically. There's only the one.
This is all simple enough, and unremarkable, one would think. Yet I find myself mentioned in the Wikipedia Review as if I were being especially sneaky.
Here's a direct quote from someone who writes there with the name Piperdown.
I think the reason Christofurio hasn't been publically curbed on editing Byrne/NSS/Weiss/etc is that he's been very careful to not actually do any editing that could be blatantly cited as breaking any WP rules.
Um ... right. The reason I haven't been disciplined for breaking any rules is that I haven't broken any rules.
Likewise, the reason I've never been imprisoned for burglary is that I've never burgled. Pretty crafty, eh?
I don't know what axe exactly Piperdown is grinding here (actually I think I do, but I'll let it pass) but it does seem that he is oddly perplexed by the spectacle of someone who joins a collective editing enterprise, uses one and only one name, edits as he thinks best, sticks to the spirit as well as the letter of the collective enterprise, gives his reasons for his edits in the Talk pages, and generally comports himself according to Hoyle.
If any of that makes me remarkable, I'll see if I can keep it up.
I've written of wikipedia and its conflicts over "sock puppetry" here often enough. I'll try not to repeat myself unduly.
I don't think I've ever mentioned Wikipedia Review (WR), which is a website designed by and for those with a wikipedia-related grievance, something of a "shadow site," if you will.
I've only recently discovered that I've become a subject of some discussion at Wikipedia Review. This seems to have been set off by a piece I wrote in the HedgeWorld blog, back when HW was still a semi-autonomous newsgathering organization within the Reuters family and when they still employed the likes of me.
I wrote in that piece about certain wikipedia articles that had a direct or indirect connection with the "naked short selling" debate, and about the contention -- in that context especially hot -- about who was a sock puppet of whom.
I also was explicit in this piece that I have edited wikipedia myself. I gave the name I use in that context, Christofurio. So, just to be clear: the identity of Christopher Faille and Christofurio isn't something that anybody else had to do any detective work to discover. I have been very clear about it.
Another point: within wikipedia, I am always and only "Christofurio," -- so nobody ever has to wonder whether I am using two or more names strategically. There's only the one.
This is all simple enough, and unremarkable, one would think. Yet I find myself mentioned in the Wikipedia Review as if I were being especially sneaky.
Here's a direct quote from someone who writes there with the name Piperdown.
I think the reason Christofurio hasn't been publically curbed on editing Byrne/NSS/Weiss/etc is that he's been very careful to not actually do any editing that could be blatantly cited as breaking any WP rules.
Um ... right. The reason I haven't been disciplined for breaking any rules is that I haven't broken any rules.
Likewise, the reason I've never been imprisoned for burglary is that I've never burgled. Pretty crafty, eh?
I don't know what axe exactly Piperdown is grinding here (actually I think I do, but I'll let it pass) but it does seem that he is oddly perplexed by the spectacle of someone who joins a collective editing enterprise, uses one and only one name, edits as he thinks best, sticks to the spirit as well as the letter of the collective enterprise, gives his reasons for his edits in the Talk pages, and generally comports himself according to Hoyle.
If any of that makes me remarkable, I'll see if I can keep it up.
13 March 2008
Thinking about Thailand
A week ago now I said something here about Thaksin Shinawatra, the prime minister of Thailand ousted in a coup in 2006 who has recently returned to face corruption charges.
Today I'll just briefly record the new developments there. Thaksin has pleaded "not guilty." Also, his request for a month-long trip to the UK has been granted.
Instead of covering the same ground I did last week about Thaksin's career, let's try to put it into a bit of context. In my day job at HedgeWorld we ran a story recently of a survey, released in November, by the consulting firm Oliver Wyman.
Wyman's study said that among hedge funds in Asia's debt markets, China and India are the two most popular destinations for their cash, despite the infamous illiquidity they can encounter in either place.
It found that Thailand was waaay down the list of desirable locales for such investors.
In fact, the list is this (name of country followed by the percentage of surveyed funds putting their money there).
China: 78
India: 76
Japan: 71
Taiwan: 59
South Korea: 45
Philippines: 44
Australia: 39
Thailand: 33
Indonesia: 30
Hong Kong: 29.
The significance of the list is perhaps not immediately apparent.
My take on it is this: such hedge funds make a profit only on inefficiencies. If a debt market is too well developed already, they'll turn away. Because in such a case, the assets are already priced at their value, and there won't be arbitrage plays.
On the other hand, the kind of inefficiency that makes a country attractive is of a specific sort. Hedge funds that are playing the credit markets aren't making their money off political chaos or inadequate infrastructure. They want stability, functioning courts, passable roads and reliable bridges etc. China and India possess both of these requirements. They've got the infrastructure that allows for the normal conduct of business, and they've got markets still inefficient enough for wily speculators to find profit opportunities.
A low place on that list, then, can be either good news for a country or bad. It's good news for Australia and Hong Kong, which both had efficient enough markets to scare off such funds. But its bad news for Thailand and Indonesia, where the basics aren't yet considered trustworthy.
The 2006 coup itself was presumably a large part of the reason for that in Thailand's case. I of course wish the people of the country well and hope that the routine resolution of the charges against Thaksin will prove something of a showcase for the routine functioning of a well-honed legal system.
Today I'll just briefly record the new developments there. Thaksin has pleaded "not guilty." Also, his request for a month-long trip to the UK has been granted.
Instead of covering the same ground I did last week about Thaksin's career, let's try to put it into a bit of context. In my day job at HedgeWorld we ran a story recently of a survey, released in November, by the consulting firm Oliver Wyman.
Wyman's study said that among hedge funds in Asia's debt markets, China and India are the two most popular destinations for their cash, despite the infamous illiquidity they can encounter in either place.
It found that Thailand was waaay down the list of desirable locales for such investors.
In fact, the list is this (name of country followed by the percentage of surveyed funds putting their money there).
China: 78
India: 76
Japan: 71
Taiwan: 59
South Korea: 45
Philippines: 44
Australia: 39
Thailand: 33
Indonesia: 30
Hong Kong: 29.
The significance of the list is perhaps not immediately apparent.
My take on it is this: such hedge funds make a profit only on inefficiencies. If a debt market is too well developed already, they'll turn away. Because in such a case, the assets are already priced at their value, and there won't be arbitrage plays.
On the other hand, the kind of inefficiency that makes a country attractive is of a specific sort. Hedge funds that are playing the credit markets aren't making their money off political chaos or inadequate infrastructure. They want stability, functioning courts, passable roads and reliable bridges etc. China and India possess both of these requirements. They've got the infrastructure that allows for the normal conduct of business, and they've got markets still inefficient enough for wily speculators to find profit opportunities.
A low place on that list, then, can be either good news for a country or bad. It's good news for Australia and Hong Kong, which both had efficient enough markets to scare off such funds. But its bad news for Thailand and Indonesia, where the basics aren't yet considered trustworthy.
The 2006 coup itself was presumably a large part of the reason for that in Thailand's case. I of course wish the people of the country well and hope that the routine resolution of the charges against Thaksin will prove something of a showcase for the routine functioning of a well-honed legal system.
30 January 2008
Chapter Five
This will conclude my reading of the Nicky Marsh book. Her final chapter involves the portrayal of women within the financial world in contemporary Brit fiction.
One of the novels featured here is Allison Pearson's I Don't Know How She Does It (2002). A footnote tells us that Miramax bought the rights to this novel, in the hope it would prve the next Bridget Jones' Diary.
Bridget Jones, though, was an assistant at a book publisher. Pearson's protagonist Kate Reddy, is a hedge fund manager. She has a rather grandiose view of what it means for a woman at the start of the 21st century to manage a hedge fund, thinking: "We are the foundation stones and the females who come after us will scarcely give us a second thought but they will walk on our bones."
The book doesn't have a lot of the detailed accounts of particular trades that get into the sort of "financial thrillers" Marsh discussed in her fourth chapter. Not only doesn't it contain many such passages but, as Marsh puts it, the book "resists" such passages.
"The real dramas in the novel occur not around the fluctuations of currencies or stocks but around the blurry definitions of care and responsibility that economics place upon the people who drive Reddy's car, wash Reddy's clothes, and, most crucially, look after her children."
So (to wrap this up) a bankers life, or a hedge fund managers life, can give rise to drama and literature, just so long as one takes it as a life. And not just as a matter of staring at a screen, or supervising people who stare at screens.
One of the novels featured here is Allison Pearson's I Don't Know How She Does It (2002). A footnote tells us that Miramax bought the rights to this novel, in the hope it would prve the next Bridget Jones' Diary.
Bridget Jones, though, was an assistant at a book publisher. Pearson's protagonist Kate Reddy, is a hedge fund manager. She has a rather grandiose view of what it means for a woman at the start of the 21st century to manage a hedge fund, thinking: "We are the foundation stones and the females who come after us will scarcely give us a second thought but they will walk on our bones."
The book doesn't have a lot of the detailed accounts of particular trades that get into the sort of "financial thrillers" Marsh discussed in her fourth chapter. Not only doesn't it contain many such passages but, as Marsh puts it, the book "resists" such passages.
"The real dramas in the novel occur not around the fluctuations of currencies or stocks but around the blurry definitions of care and responsibility that economics place upon the people who drive Reddy's car, wash Reddy's clothes, and, most crucially, look after her children."
So (to wrap this up) a bankers life, or a hedge fund managers life, can give rise to drama and literature, just so long as one takes it as a life. And not just as a matter of staring at a screen, or supervising people who stare at screens.
08 October 2007
Fraudulent conveyances
A defunct New York based hedge fund named Manhattan Investment entered chapter 11 protection seven years ago.
Earlier this year, in a surprise move, a bankruptcy court judge ruled that giant brokerage firm Bear Stearns -- which was the "prime broker" for Manhattan -- might be on the hook for $121.5 million in money that this particular client transferred thereto shortly before the collapse. Bear with me whilst I try to explain this to myself.
There's a large and convoluted body of precedent and principles that deal with pre-bankruptcy transfers. There's good intuitive reason for concern. After all, think of this on a Mayberry Scale. Suppose Floyd's Barber Shop (or FBS Inc.) has fallen on hard times. Too many of the men of Mayberry have gone bald, or have gotten into the habit of going to Raleigh to get their hair cut in fashionable styles, and poor Floyd just can't make ends meet.
He has lots of creditors, but we'll focus on two, the North Carolina Scissor Sales Co. (NCSS) and the Greater Mayberry Hair Tonic Supplier (GMHTS).
The folks at GMHTS have always been buddies with Floyd. They've hung out together out in front of the sheriff's office and all that. But Floyd hardly knows the NCSS at all. They're just the name of the invoice to him.
So what does he do when he is facing insolvency? If he declares bankruptcy, then his barbershop as an "estate" is protected from all creditors until the court-appointed trustee can come up with a plan for who gets what. The strangers at the NCSS and Floyd's buddies at the GMHTS will be on an even basis here.
Suppose that he doesn't like that idea. Giving in to a natural human temptation, he might make a large payment -- all the cash he has left in the register, against the GMHTS bill. Then declare bankruptcy the following day.
The NCSS will naturally be unhappy when they discover this. Floyd isn't allowed to do that. The Trustee may seek to "avoid" that conveyance -- in other words, get the money back from the scissors' salesmen and put it back into the barbershop's cash register until a general plan is developed, wherein of course the NCSS and the GMHTS will be treated equally.
Which conveyances are avoidable and which aren't? Ah, there's the rub. The $121.5 million question for Bear Stearns just now.
Earlier this year, in a surprise move, a bankruptcy court judge ruled that giant brokerage firm Bear Stearns -- which was the "prime broker" for Manhattan -- might be on the hook for $121.5 million in money that this particular client transferred thereto shortly before the collapse. Bear with me whilst I try to explain this to myself.
There's a large and convoluted body of precedent and principles that deal with pre-bankruptcy transfers. There's good intuitive reason for concern. After all, think of this on a Mayberry Scale. Suppose Floyd's Barber Shop (or FBS Inc.) has fallen on hard times. Too many of the men of Mayberry have gone bald, or have gotten into the habit of going to Raleigh to get their hair cut in fashionable styles, and poor Floyd just can't make ends meet.
He has lots of creditors, but we'll focus on two, the North Carolina Scissor Sales Co. (NCSS) and the Greater Mayberry Hair Tonic Supplier (GMHTS).
The folks at GMHTS have always been buddies with Floyd. They've hung out together out in front of the sheriff's office and all that. But Floyd hardly knows the NCSS at all. They're just the name of the invoice to him.
So what does he do when he is facing insolvency? If he declares bankruptcy, then his barbershop as an "estate" is protected from all creditors until the court-appointed trustee can come up with a plan for who gets what. The strangers at the NCSS and Floyd's buddies at the GMHTS will be on an even basis here.
Suppose that he doesn't like that idea. Giving in to a natural human temptation, he might make a large payment -- all the cash he has left in the register, against the GMHTS bill. Then declare bankruptcy the following day.
The NCSS will naturally be unhappy when they discover this. Floyd isn't allowed to do that. The Trustee may seek to "avoid" that conveyance -- in other words, get the money back from the scissors' salesmen and put it back into the barbershop's cash register until a general plan is developed, wherein of course the NCSS and the GMHTS will be treated equally.
Which conveyances are avoidable and which aren't? Ah, there's the rub. The $121.5 million question for Bear Stearns just now.
03 May 2007
Why Should Wolfe Work?
Back on April 21, I wrote about Tom Wolfe’s article in the premier issue of Portfolio magazine. Chiefly, as you may remember, my point was simply that it was cool that Wolfe had turned his attention to hedge funds. That fact gives added importance to those of us who toil in those journalistic vineyards on a daily basis.
I didn’t presume to judge the literary merit of Wolfe’s story, though, until the final lines of my blog entry for that day, when I wrote (in one of the irresponsible examples of opinionating that make blogging fun), “Frankly, it stinks.”
Today, let’s look at the story and try to provide some basis for that judgment, shall we? Here, again, is the URL. http://www.portfolio.com/executives/features/2007/04/16/The-Pirate-Pose
But I’ll make three specific points. First, there’s the lame opening. Wolfe wants to describe for us a hedge fund manager banging on his landlady’s door in a manner that terrifies her, persuades her that a fire or a break-in is underway. The idea is to show that hedgers are unmannered to the point of barbarism. How does Wolfe do this? Here is the opening.
“Not bam, bam, bam, bam, bam, bam, but bama bampa barama bam bammity bam bam bammity barampa FIRE! was the first thing she thought of because nobody ever banged on your apartment door in a building like this nobody would be so impolite as to even rap on your door with his knuckles unannounced in a building like this much less bang on it with both fists for this was not one fist pounding on the door but both fists bama barampa bam bam bammity barampa bam bam—”
Now, does that work as onomatopoeia? Does anyone, hearing someone else banging on a door, however frantically, actually hear “bama bampa barama”? I doubt it. It sounds to me more like a line from an old doo-wop song. “Who put the rama in the bampa barama?”
One enviably snarky blogger has suggested that Wolfe must have been getting paid by the word. “Let’s put in another bam. That’ll count as a word, won’t it?”
Second, the whole point of the scene that follows, the conversation between (unnamed) landlady and (unnamed) hedge fund manager client, seems to be the re-enactment of a hoary cliché. She is old money, with cultivation. He is new money, with pretension.
He asks if her vase is Tiffany. She replies that it isn’t, and thinks to herself, “it was older and considerably more precious than a Tiffany, but she hadn’t the faintest desire to prolong the conversation with any discussion of the higher ceramics.” The sort of literary effect for which he’s reaching here is older and considerably more fragile than a Tiffany.
All that bama bampa has led us only there??
Third, there’s the “gee whiz, what big houses” stuff. The guy banging on the door is a renter, of course. He may be living in very nice apartment, in Manhattan yet. But he’s still living in an apartment. He doesn’t really suit Wolfe’s theme of wretched excess, so soon enough we forget about him and we’re talking about the manicured lawns of Greenwich, Connecticut.
Or, rather, we’re calling them, “manicured-bucolic wildernessless-woodsy rolling hills and arboreal dells, all ornamented by mansions and irrigated by cash flow.”
I don’t think we can really blame the hedge fund industry for the fact that Greenwich isn’t a wilderness anymore. It hasn’t really been wilderness since a Dutch colony lay next door.
The whole thing is just lazy. Poorly researched (he’s Tom Wolfe – he doesn’t have to work to sell his writings anymore – so why do any real research) and stylistically a pathetic self-parody. Enough!
I didn’t presume to judge the literary merit of Wolfe’s story, though, until the final lines of my blog entry for that day, when I wrote (in one of the irresponsible examples of opinionating that make blogging fun), “Frankly, it stinks.”
Today, let’s look at the story and try to provide some basis for that judgment, shall we? Here, again, is the URL. http://www.portfolio.com/executives/features/2007/04/16/The-Pirate-Pose
But I’ll make three specific points. First, there’s the lame opening. Wolfe wants to describe for us a hedge fund manager banging on his landlady’s door in a manner that terrifies her, persuades her that a fire or a break-in is underway. The idea is to show that hedgers are unmannered to the point of barbarism. How does Wolfe do this? Here is the opening.
“Not bam, bam, bam, bam, bam, bam, but bama bampa barama bam bammity bam bam bammity barampa FIRE! was the first thing she thought of because nobody ever banged on your apartment door in a building like this nobody would be so impolite as to even rap on your door with his knuckles unannounced in a building like this much less bang on it with both fists for this was not one fist pounding on the door but both fists bama barampa bam bam bammity barampa bam bam—”
Now, does that work as onomatopoeia? Does anyone, hearing someone else banging on a door, however frantically, actually hear “bama bampa barama”? I doubt it. It sounds to me more like a line from an old doo-wop song. “Who put the rama in the bampa barama?”
One enviably snarky blogger has suggested that Wolfe must have been getting paid by the word. “Let’s put in another bam. That’ll count as a word, won’t it?”
Second, the whole point of the scene that follows, the conversation between (unnamed) landlady and (unnamed) hedge fund manager client, seems to be the re-enactment of a hoary cliché. She is old money, with cultivation. He is new money, with pretension.
He asks if her vase is Tiffany. She replies that it isn’t, and thinks to herself, “it was older and considerably more precious than a Tiffany, but she hadn’t the faintest desire to prolong the conversation with any discussion of the higher ceramics.” The sort of literary effect for which he’s reaching here is older and considerably more fragile than a Tiffany.
All that bama bampa has led us only there??
Third, there’s the “gee whiz, what big houses” stuff. The guy banging on the door is a renter, of course. He may be living in very nice apartment, in Manhattan yet. But he’s still living in an apartment. He doesn’t really suit Wolfe’s theme of wretched excess, so soon enough we forget about him and we’re talking about the manicured lawns of Greenwich, Connecticut.
Or, rather, we’re calling them, “manicured-bucolic wildernessless-woodsy rolling hills and arboreal dells, all ornamented by mansions and irrigated by cash flow.”
I don’t think we can really blame the hedge fund industry for the fact that Greenwich isn’t a wilderness anymore. It hasn’t really been wilderness since a Dutch colony lay next door.
The whole thing is just lazy. Poorly researched (he’s Tom Wolfe – he doesn’t have to work to sell his writings anymore – so why do any real research) and stylistically a pathetic self-parody. Enough!
21 April 2007
Tom Wolfe: On Hedge Funds
Tom Wolfe's novel, "Bonfire of the Vanities" (1987), chronicles the troubles of a "Master of the Universe." That's the self-describing phrase Wolfe puts into the head of his protagonist in that novel, Sherman McCoy, a successful bond salesman. McCoy takes a wrong turn one day, ends up in a traffic accident, and becomes what Wolfe says is every urban prosecutor's dream, the Great White Defendant.
That was then. This is now. Bond salesmen are still around, and of course many are still quite successful. But they aren't the ones that Wolfe targets as examples of hubris twenty years on.
Last year, Conde Nast announced plans to add a new business/financial glossy to its line up of periodicals (Conde Nast publishes Vogue, Architectural Digest, Glamour, GQ, etc.). CN went out of its way to lure talented and well-known writers to the new magazine, which it dubbed Portfolio. Indeed, Kurt Eichenwald left the New York Times for Portfolio, as I've mentioned before on this blog.
CN didn't ask me to write for Portfolio but, heck, they've never yet asked me to pose for GQ either. I've survived.
Their really big "get," though, was Tom Wolfe. And now that the first issue is out, there he is. The Wolfe story isn't Bonfire. To begin with, it's non-fiction. But this, too, one has to qualify immediately. It's non-fiction peppered with the use of novelistic techniques, the sort of thing he did for test pilots and the early astronauts in The Right Stuff.
Who is the new protagonist? Who has the right (or self-righteous) stuff in the financial world as Wolfe sees it? who has the hubris of a Sherman McCoy? Hedge fund managers do.
I find this fact intriguing, because when I began covering hedge funds regularly nobody in the literary world of Wolfe's stature would write about them. They were still happily obscure. Obviously, they are obscure no more. I think it's good that folks like yours truly, toiling in the day-to-day vinyard of hedge fund news, have gradually dragged these important pieces of the financial world out into the sunlight so that they've come to the attention of the lions of the forest, the Tom Wolfes. You're welcome, Tom.
My opinion of the story? Frankly, it stinks. Judge for yourself though.
http://www.portfolio.com/executives/features/2007/04/16/The-Pirate-Pose
That was then. This is now. Bond salesmen are still around, and of course many are still quite successful. But they aren't the ones that Wolfe targets as examples of hubris twenty years on.
Last year, Conde Nast announced plans to add a new business/financial glossy to its line up of periodicals (Conde Nast publishes Vogue, Architectural Digest, Glamour, GQ, etc.). CN went out of its way to lure talented and well-known writers to the new magazine, which it dubbed Portfolio. Indeed, Kurt Eichenwald left the New York Times for Portfolio, as I've mentioned before on this blog.
CN didn't ask me to write for Portfolio but, heck, they've never yet asked me to pose for GQ either. I've survived.
Their really big "get," though, was Tom Wolfe. And now that the first issue is out, there he is. The Wolfe story isn't Bonfire. To begin with, it's non-fiction. But this, too, one has to qualify immediately. It's non-fiction peppered with the use of novelistic techniques, the sort of thing he did for test pilots and the early astronauts in The Right Stuff.
Who is the new protagonist? Who has the right (or self-righteous) stuff in the financial world as Wolfe sees it? who has the hubris of a Sherman McCoy? Hedge fund managers do.
I find this fact intriguing, because when I began covering hedge funds regularly nobody in the literary world of Wolfe's stature would write about them. They were still happily obscure. Obviously, they are obscure no more. I think it's good that folks like yours truly, toiling in the day-to-day vinyard of hedge fund news, have gradually dragged these important pieces of the financial world out into the sunlight so that they've come to the attention of the lions of the forest, the Tom Wolfes. You're welcome, Tom.
My opinion of the story? Frankly, it stinks. Judge for yourself though.
http://www.portfolio.com/executives/features/2007/04/16/The-Pirate-Pose
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