Wall $treet Folly

Blackstone is starting up an Asian Event Driven fund business

With private equity deals few and far between, Blackstone is delving deeper into the event driven fund business. And they're looking to further expand their interests in Asia with their most recently announced move.  Schwarzman & Co is starting up a unit that will invest in Asian event drivn opportunities indluding those related to mergers and bankruptcies.  SAC Capital alum Aaron Nieman will run it:

Blackstone Altius Advisors will be led by Senior Managing Director and Chief Investment Officer Aaron Nieman, New York- based Blackstone said in a statement issued through BusinessWire today. The fund will be based in Hong Kong with employees in Tokyo, Mumbai and New York.

``As Blackstone continues to aggressively seek opportunities within Asia, Aaron and his team will provide additional investment capability that will bolster our presence in the region,'' Antony Leung, Blackstone's Greater China chairman, said in the statement.

Nieman joined Blackstone from SAC Capital Management, where he was a managing director in the Canvas Capital Management unit overseeing merger arbitrage and event-driven investments in Asia- Pacific, the Blackstone statement said.

Blackstone to Start Asian Event-Driven Fund Business - Blackstone

Was Bear Stearns' CEO's party invitation lost in the mail?

Or was Alan Schwartz just plain dissed at a luncheon hosted by Ben Bernanke and attended by most every other Wall Street BSD?  Or maybe he was invited and was just too busy trying to put out fires on the home front.  In any case, Bernanke hosted one hellofa gathering (click on picture to enlarge)....

Federal Reserve Chairman Ben S. Bernanke lunched on March 11 with a Who's Who of Wall Street leaders, including JPMorgan Chase & Co.'s Jamie Dimon, three days before the central bank rescued Bear Stearns Cos. from bankruptcy.

Other guests included Goldman Sachs Group Inc. Chief Executive Lloyd Blankfein, Lehman Brothers Holdings Inc. CEO Richard Fuld, Morgan Stanley President James Gorman, Citigroup Inc.'s Robert Rubin, Blackstone Group CEO Stephen Schwarzman and Merrill Lynch & Co. CEO John Thain. Alan Schwartz, the CEO of Bear Stearns, was not listed among the attendees.

Busy bee: Meredith Whitney dissed Citigroup's recovery plan yesterday and last night she lowered Goldman's, Lehman's, Morgan Stanley's and Merrill's earnings estimates

That Meredith Whitney is a busy busy bee.  Yesterday, Oppenheimer's financial stock soothsayer rained on Vikram Pandit's plan to put Citi back on the road to recovery where she said that the plan sounded all too much like one Chuck Prince had floated before.  She was interviewed by Bloomberg TV;  you can find the video here -- look for the link on the right that says "Whitney Says Pandit Faces `Impossible Feat' at Citigroup" under 'related video and graphics'....

Then last night Meredith continued to be busy, putting out a 20 page tome entitled: "What Goes Up, Must Come Down: FASB 159 Write-Ups Come Back To Bite 2Q08 Earnings".  She lowered her estimates for Goldman Sachs, Lehman Brothers, Morgan Stanley, and Merrill Lynch....

Jamie Dimon proclaims the credit crunch is nearly over....

But the U.S. recession is "just beginning" and that there's a one out of three chance that this one could be as bad as the early 1980's.  He also commented on how the Bear Stearns merger is going.  The firm lost  "several billion dollars since March 17", the announcement date of the merger....

At an investor conference Monday, Mr. Dimon referred to the merger with Bear Stearns -- a highly-watched deal set to close around June 1 -- as "mission: not accomplished." Mr. Dimon said the entire merger process will last through 2009, but provided a number of indications that the New York bank is well on its way.

Although the deal remains some weeks from closing, Mr. Dimon said J.P. Morgan has already found new job positions for 40% of Bear Stearns staffers, even as Wall Street endures heavy rounds of layoffs. Mr. Dimon reiterated previous comments that the remaining Bear Stearns employees will know their fates by the time the merger closes.

Dimon: Credit Crunch Nearly Over - Wall Street Journal

WSF Headline Roundup - 5/13/08 - HPQ acquiring EDS; WMT earnings; Lehman Q2 banking backlog down 15%; NMX seat holders balking over CME deal?; ResCap bondholders thinking war; Northern Rock overstatements?; Clear Channel deal near?; more

• HP to Acquire EDS for $13.9 Billion
• Wal-Mart Profit Increases on Discounts for     Groceries
• Investment Banking Backlog Down About 15% In 2Q: Lehman CFO
• Nymex Seat Holders Ready to Block Sale to CME, Glass Says
• ResCap Bondholders May Oppose Debt Exchange Offer
• Northern Rock overstated the quality of its mortgage book
• Clear Channel Surges on Possible Buyout Settlement
• Airbus Extends Delays on A380 Airliner     Deliveries
• Beazer Restates Results for 9 Years

Recent returns highlight risks of "Concentrated" hedge funds; CDS as weopons of mass speculation; Sentiment changing regarding SPACs?; Hedge funds warming up to stuck bank debt

• Lampert, Wood Show Risk of `Concentrated' Hedge Funds
• Credit Default Swaps: Weopons of Mass Speculation
• Shell game
• Hedge funds start to buy bank debt

Who was behind the ultimately aborted 'Bloomberg for President' movement?

Turns out that Stanley Druckenmiller, who runs hedge fund Duquesne Capital, was one of those behind the move.  Page Six tells us that he wrote a $250K check to the Draft Bloomberg Joint Fundraising Committee on January 14 when Mayor Bloomberg was noodling over becoming a third party candidate.
Mike's Boosters - Page Six NY Post

Video: FBN takes a look at Wii Fit

This thing looks kinda fun....

After Peloton Partners' demise the WSJ provides an autopsy

The WSJ delves into the rise and rapid flame-out of Peloton Partners....

When hedge-fund chief Ron Beller's investments in U.S. mortgages turned against him, he got a rude awakening to Wall Street's unsentimental ways. Bankers who had vied for his business reeled in credit lines and seized the fund's assets. In a matter of days, Peloton Partners LLP, once one of the world's best-performing hedge-fund operators, lost some $17 billion.

In its sheer speed, Peloton's demise offers an illustration of the delicate relationships upon which the financial industry is built, and the breakneck pace at which they have been unraveling.

Foreclosure crisis: If you still have money, you might be able to pick up that Hamptons crib you always wanted on the cheap

There's no escape from the mortgage crisis, not even in the Hamptons, as the NY Post reports that some very tony homes are facing foreclosure, including one from a former UBS executive.

In the first three months of this year, banks have launched preliminary foreclosure actions - known as lis pendens proceedings - against a record 120 borrowers in East Hampton and Southampton towns.

Twenty percent of those borrowers live in homes that are worth more than $1 million, according to figures from the Suffolk County clerk.

"This problem didn't even exist before," said John Brady, a broker with Coldwell Banker in East Hampton. "They used to pop up once in a while, and you wouldn't even pay attention. Now you expect to see new ones every week."

What some Bear employees are doing until they're actually fired

How some are coping: Since JP Morgan can notify Bear Stearns employees that they'll soon have no jobs but can't actually fire them until the merger is done, they still get paid.  To do essentially nothing.  So while many are no doubt beating the bushes for new jobs, NY Magazine reports that some are chilling at spas and working out at the gym....

“I’d say 50 percent of my department comes in at some point on a given day, and the trading floor is empty,” says one of the thousands of doomed employees who’ll receive full pay until JPMorgan Chase takes over next month. The paychecks keep coming thanks to a convenient technicality: “We’re informing people every day,” says JPMorgan spokesman Joe Evangelisti....Laid-off bankers will receive at least three weeks of severance for every year served, plus a bonus for sticking around till the sale closes. For now, they’re becoming spa swans and gym rats. “I take one call a week, maybe,” says the Bear employee. “Sometimes I have to, like, print something.”

Bear Bankers Hibernate With Pay -- Until they get laid off. - NY Magazine

What a way to find our you're fired: Some Lehman Brothers employees bitten by COBRA letters

Amid rumors that layoffs would be announced this week at Lehman Brothers, some apparently found out their likely fate early -- by receiving notifications of COBRA medical benefits and costs, according a report from Henry Blodget on the Silicon Alley Insider.  Oops.

WSF Headline Roundup - 5/12/08 - MBIA losses; AIG under pressure; Morgan Stanley raises billions for funds; Nymex CEO confident of CME deal; HSBC, Sprint earnings; Shipping rates soar; Murdoch pulls Newsday bid with Cablevision buy likely

• MBIA Posts Loss of $2.4 Billion as CDO Slump Deepens
• AIG chief under mounting pressure
• Morgan Stanley fund targets distressed assets
• Morgan Stanley Fund Rakes In $4 Billion
• Nymex Chief Confident CME Merger Will Get Shareholder Approval
• HSBC Records More Write-Downs But Upbeat on First Quarter Overall
• Sprint posts wider loss
• Shipping rates near record levels
• Murdoch drops $580m Newsday bid

Amaranth's former chief is planning on opening a new fund later this year

Nick Maounis, skipper (and risk manager extraordinaire) of the imploded $6+  billionish hedge fund Amaranth, is trying to make a comeback later this year with a so far modestly sized $200 million multi-strategy fund venture called Verition Fund Management LLC.  Verition is based on a derivative of the Latin 'veritas' or 'truth'.  (Maybe it's a combination of truth and fiction, thus Verition....). For those who haven't seen the yearbook picture of Nick at the left, it's circa 1976-77 --- one of his former classmates sent it to us some time ago.

``Many of you have inquired as to my future plans,'' Maounis wrote. ``I welcome the opportunity to speak with you personally about my new venture.''

Maounis plans to open Greenwich, Connecticut-based Verition Fund Management LLC later this year with more than $200 million, according to two former investors briefed on the venture. Clients with money in Amaranth when it shut down won't pay incentive fees for three years, said the investors, who asked not to be identified because the fund is private. While the fund won't charge a management fee, all investors will pay the fund's expenses.

SNL show opener: This one should make Hillary Clinton cringe

Might this couldn't-hit-closer-to-home brutally scathing spoof from last night's Saturday Night Live signal the end?

Bankruptcy / Distressed: Corporate defaults running at the fastest pace since 2003

We suspect that it's going to accelerate from here....

The number of companies defaulting on their junk-rated debt and filing for bankruptcy in North America is running at its fastest pace in five years amid the slowing economy and contraction in credit markets.

So far this year, 28 “entities” have defaulted, according to Standard & Poor’s. The defaulted debt of the one Canadian and 27 US companies totals $18.4bn and exceeds the 17 defaults in the US for all of last year.

“As economic conditions deteriorated...and volatility in the financial markets protracted, corporate casualties began to emerge at a rate unseen in years,” said Diane Vazza, head of S&P’s Global Fixed Income Research Group. “The surge of defaults in the early months of 2008 is the first leg of an extended period of high default occurrences that will characterise the rest of 2008 and 2009.”

S&P said the pace of US defaults in the first five months of the year is the fastest since 2003.

Bankruptcies and defaults gather pace -Financial Times

WSF Headline Roundup - 5/9/08 - Citi may sell $400B in assets; Oil over $125; Fortress losses; AIG Losses; Merrill expects higher consumer loan defaults; Wachovia splits chairman & CEO titles; UK giving homeowners foreclosure help; Sears cutbacks

• Citigroup considers $400bn asset sale
• Oil surpasses $125 per barrel ahead of US driving season
• Fortress battered after first-quarter loss
• AIG plunges to record loss
• Merrill Expects U.S. Consumer Loan Defaults to Rise
• Dresdner Drags Allianz Results Lower
• Wachovia splits two top jobs
• U.K. Offers Help for Homeowners as Foreclosure Claims Rise
• Sears, Like Consumers, Cuts Back

Busted!: If you're doing anything illegal in your home, you might wanna think twice about missing those mortgage payments

If your house is in foreclosure, isn't it kind of a foregone conclusion that at some point, you'd get a visit from your friendly banker coming to inspect the place?  Apparently Angel Wayhung Kou, of Rancho Cucamonga, Ca. was either really stupid or wasn't thinking all that clearly on account of the fumes of the funny stuff he was growing, in massive quantities, in his home -- a crop of marijuana worth an estimated $4.5 million. He got himself busted....

Angel Wayhang Kou, 30, of Rancho Cucamonga was booked into jail on suspicion of cultivating marijuana, maintaining a residence for drugs, theft of utilities and conspiracy.

He posted bail and was released Saturday, according to police records.

"The likelihood of other people being involved is probably high," said police Sgt. Jeff Decker. "But he's the only one we have in custody at this time."

Bad blood at the Bear: Ace Greenberg vs Jimmy Cayne; We can't wait for the book....

Both yesterday and today we had major internet problems that have prevented  us from posting. As a result, this one, on the nasty feud between Ace Greenberg and Jimmy Cayne goes up a day late.  But we already had the artwork ready to go, so.... 

By now you all must have read  the great article in yesterday morning's NY Times on the icy relations between Bear Stearns' Ace Greenberg and Jimmy Cayne. A telling contrast between two men. Even after the Bear Stearns implosion, Ace still command a tremendous amount of respect and loyalty from current and former Bear Stearns employees; And he's "very happy" that he's got a nice new job with new parent JP Morgan as vice chairman emeritus (and no doubt, chief resident magician). Jimmy on the other hand, only commands contempt and disdain these days, for his fiddle-with-his-golf-clubs and bridge tournaments while Bear burned attitude.  And as for a job, got bupkus. He's keeping a low profile  these days.

“I walk around with a horrible, horrible heavy heart each day,” Mr. Cayne has told friends. “It’s a severity of pain that cannot be measured, because you can’t measure the pain of 14,000 families.”

Jeffrey Epstein thought about staying in Israel after a recent trip....

But the smarmy billionaire financier, awaiting trial, is back in the U.S. Per Page SIx:

JEFFREY Epstein, who made a trip to Israel last month, thought about staying there, as Roman Polanski did in France, rather than face trial and possibly jail on charges of soliciting sex from prostitutes. But the money manager came home. "Would you want to live in Israel?" he asked Vanity Fair's Vicky Ward yesterday. At the screening the night before of HBO's documentary about Polanski, the crowd - including Harvey Weinstein, Jeff Bewkes, Dustin Hoffman, Emmy Rossum , Alec Baldwin and filmmaker Michael Mailer - was buzzing that Epstein had absconded. In fact, he was in his Upper East Side mansion. Ward wrote yesterday on the VF Web site, "He'd even thought about going to the Polanski screening until various friends e-mailed him to say, in so many words, 'Are you in- sane?' "

Second Thoughts - Page Six NY Post

WSF Headline Roundup - 5/8/08 - Consumer Debt Rise; Rice gains; Nasdaq earnings jump; BOE holds rates at 5%; Investors braced for bad AIG news; UBS returns $35M to towns; Private banks tax evasion crackdown; Northern Rock legal challenge; more

• U.S. Consumer Debt Rises More Than Forecast in March
• Rice Gains for Fifth Day on Myanmar Cyclone, Increased Demand
• Nasdaq Profit Surges on Record Trading, OMX Merger
• Pound Stays Higher as Bank of England Holds Rate at 5 Percent
• AIG's Marks May Be Deep
• UBS to return $35 million to Massachusetts towns
• Private banks face tax evasion crackdown
• Northern Rock investors begin legal battle
• Facebook users give thumbs down to Microsoft
• Icahn ups stake in Motorola to 7.6%
• Best Buy and Carphone in £1.1bn European link
• Sam's Club giving away memberships-with a purchase

Did a senior UBS banker help American clients evade taxes?

That's what the Justice Department is looking into.  UBS banker Martin Liechti isn't charged with anything -- at least not yet -- but is being held “under a ‘material witness’ warrant” in connection with the DoJ investigation and would remain in the US “pending discussions with the US authorities regarding resolution of his status as a witness”.  UBS is cooperating in the probe.

Martin Liechti, the Zurich-based head of North and South America for UBS’s international wealth management business, was held in connection with a US justice department investigation into investment advice that UBS gave its American private banking clients between 2000 and 2007.

The Swiss lender confirmed on Tuesday that it was also being investigated by the US Securities and Exchange Commission over whether UBS client advisers “engaged in activities in relation to their US-domiciled clients that triggered an obligation for UBS Switzerland to register with the SEC as a broker-dealer and/or investment adviser”.

Top UBS banker detained by US - Financial Times

WSF Headline Roundup - 5/7/08 - Legg Mason losses; Deutsche Bank CEO says fin'l crisis nearing end; UBS exits muni biz; Lazard losses; Wachovia takes a hit; No surprises at Cisco; Sprint / Clearwire combining high speed network; Steel pennies?

• Legg Mason Writes Down Private Capital as Assets Fall
• Ackermann Says Financial Crisis at `Beginning of End'
• UBS Leaving Municipal Bond Business After a Decade
• Fannie Mae Offers $2 Billion of Convertibles at 9.25%
• Lazard Profit Falls 71%, Missing Analysts' Estimates
• Wachovia hit by policies revaluation
• Analyst warns of oil at $200 a barrel
• Cisco Profit Falls 5.4%; Forecast Meets Estimates
• Sprint to Combine High-Speed Network With Clearwire
• Advanced Micro Shares Surge on Breakup Speculation
• Surging Copper Prices Have Some In Congress Calling for Steel Pennies

Bill Miller has Yahoo losses up the ying Yang....

It kinda serves him right for blowing Microsoft off: Legg Mason's Bill Miller -- Yahoo's second largest shareholder with 83.8 million shares -- was one of those fund managers who most vocally opposed Microsoft's bid for Yahoo because he felt that it grossly undervalued the shares. But after all of his bluster, he got a rather nasty and unexpected surprise when Mr. Softy pulled its bid.  And he also got some big losses as well.  Now he wants Jerry Yang to use some of Yahoo's cash to buy stock.

Monday’s selloff in Yahoo (YHOO) is creating more pain for value manager Bill Miller. Miller is chief investment officer at Legg Mason Capital Management, which at Dec. 31 was Yahoo’s second-biggest shareholder, with a 6.9% stake, according to Lionshares.com. Yahoo had been one of the standout performers in Miller’s Legg Mason Value Trust, which lost 20% of its value in the first quarter as big bets on beaten-down financial stocks such as Bear Stearns (BSC) went sour. But Monday’s 14% decline in Yahoo takes the stock about half the way back to where it was trading before Microsoft (MSFT) unveiled its $31-a-share bid on Feb. 1. Should they stick, Monday’s declines will reduce the fund’s gains in Yahoo accordingly.

Bill Miller wants Yahoo buyback - Fortuns

2500 UBS souls have a reprieve....

The company is cutting 5500 jobs, not the up to 8000 speculated yesterday....

UBS AG, battered by $17.3 billion of first-quarter losses at its investment-banking unit, plans to cut 5,500 jobs, or about 7 percent of the workforce.

The reductions will include as many as 2,600 position