All about risk
Excerpt:
Understandably, many Americans would like to push back against Wall Street and enjoy fiscal karma. I know I am and tempted to purchase one share.
However, there are likely to be real market consequences for participating in this “short squeeze.”
Author: Leslie Eastman
Publication Date: 1 February 2021
Publication Site: Legal Insurrection
Excerpt:
A hedge fund founder admitted to bankruptcy fraud for abusing his position on a Neiman Marcus Group Inc. bankruptcy committee to purchase securities at a deflated price.
Nassau County resident Daniel Kamensky, of Roslyn, the founder of the New York-based hedge fund Marble Ridge Capital pleaded guilty to pressuring a rival bidder to abandon its higher bid for assets in connection with Neiman Marcus’s bankruptcy proceedings.
U.S. Attorney Audrey Strauss said that Kamensky was the principal of Marble Ridgewhich had assets under management of more than $1 billion that invested in securities in distressed situations, including bankruptcies. Prior to opening Marble Ridge, Kamensky worked for many years as a bankruptcy attorney at a well-known international law firm, and as a distressed debt investor at prominent financial institutions.
Author(s): Zak Failla
Publication Date: 7 February 2021
Publication Site: Daily Voice
Excerpt:
Some New York lawmakers are planning legislation designed to blunt hedge funds’ ability to resist sovereign-debt restructurings, while easing financial settlements for government borrowers in distress.
New York state Sen. Gustavo Rivera and Assemblywoman Maritza Davila, both Democrats, plan to introduce legislation as soon as this week to allow a supermajority of a nation’s creditors to amend or restructure its debt contracts and bind any dissenters that could otherwise hold out.
Many sovereign bonds in Latin America, Africa, and other emerging markets contain collective-action clauses that require all creditors to honor agreements that a majority of them make with the borrower. But others lack such mechanisms, leaving no ready way for settlements made with majority support to become binding on all members of a creditor class.
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A risk of the legislation is that investors would sue to challenge it because it could retroactively change certain contracts already in place. Changing contract rights can be justified under certain circumstances, if doing so advances a compelling state interest.
Author(s): Alexander Gladstone
Publication Date: 9 February 2021
Publication Site: Wall Street Journal
Link: https://taibbi.substack.com/p/this-is-for-you-dad-interview-with
Excerpt:
Since 2008, the tendency among mainstream commentators has been to shrug off reverberations from the crash that force their way into news, usually on the grounds that the millions who lost homes, careers, marriages, lifetimes of savings, health, and in thousands of cases, their lives, are not truly poor or “working class,” or are only “relatively low-wealth,” as New York magazine recently put it. In the case of GameStop, there’s been a parade of stories describing investors as dupes, dummies, financial Trumpists, irresponsible gamblers, even crooks, their trade pegged as almost everything but what on some level it surely was and is, an echo of a suppressed national disaster.
Was GameStop “recreational” investing gone haywire, or a climax to a story building for a generation? Here’s one person’s answer:
SP: I grew up watching my parents struggle with money. Money was discussed all the time. They fought all the time. The older I got, the more I felt I had to do anything to keep my own kids from going through the same thing.
My parents worried in different ways. With my mother, I regularly knew how much money was in her checking account because she would stress-yell the amount whenever I asked for anything. It was really difficult for her.
My dad was the opposite. He wanted you to think he had money, but you were looking around and thinking, “I’m pretty sure we don’t.” Because I don’t have a bed, and my brother is sleeping on a couch. So if you’ve got it, maybe we should use it, I don’t know. So they were different in that regard.
Author(s): Matt Taibbi
Publication Date: 6 February 2021
Publication Site: TK News
Excerpt:
KEY POINTS
Retail investors such as Reddit users have targeted stocks like GameStop that are heavily shorted by Wall Street.
Some hedge fund losses extended into the double digits.
That could spill over to pension plans. Some invest more than 20% of their assets in hedge funds.
Author: Greg Iacurci
Publication Date: 1 February 2021
Publication Site: CNBC
Link: https://www.sportico.com/personalities/owners/2021/steve-cohen-gamestop-1234621368/
Excerpt:
Less than a decade after the Bernie Madoff scam roped in the Wilpons and supposedly handcuffed the New York Mets payroll as a result, the team’s fans are panicking that new financial market weirdness in the form of bizarre trading in video-game retailer GameStop is going to harm new owner Steve Cohen’s ability to make the Mets amazin’ again.
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Melvin Capital? It has lost perhaps 30% in January alone, as a series of short bets including GameStop turned bad, according to a report by the Financial Times.
In comes Steve Cohen. Melvin Capital founder Gabe Plotkin used to work for Cohen and already had $1 billion of Cohen’s money in his fund. To help Melvin weather its awful month, Cohen and another hedge fund billionaire invested another $2.75 billion into Melvin this month.
That in turn is why Mets fans are now freaking out. One Reddit poster claimed yesterday Cohen’s fresh capital must be gone, burned in Melvin’s desperate need to cover the short bet on GameStop. Suddenly, visions of a super wealthy new owner who could finally spend money on the team were replaced with another Wall Street catastrophe. Mets fans worried while GameStop pumpers teased Cohen.
Author: Brendan Coffey
Publication Date: 27 January 2021
Publication Site: Sportico
Link: https://www.marketwatch.com/story/stop-laughing-about-gamestops-stock-mania-no-really-11611760785
Excerpt:
“I get that people think it’s funny when bad things happen to Wall Street types, but this GameStop GME, -44.29% thing is not a joke,” I tweeted. “These are stock traders conspiring to manipulate the markets in open view of us all and using the ‘nah, its for the lulz, and the other side sucks’ as an excuse.”
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You may think it’s funny to value GameStop like it’s 2007 again and hurt some hedge funds in the process, but you might not think the next target is funny, nor the next, nor the next. You won’t laugh when you read the eventual feature about a teenager misplaying GameStop options on his dad’s account and costing them the house, or a first-time investor putting their savings into GameStop just before it all fell apart.
Author: Jeremy C. Owens
Publication Date: 27 January 2021
Publication Site: MarketWatch
Excerpt:
A short update on the Mayberry v. KKR, a pathbreaking public pension suit targeting customized hedge funds designed for the sitting duck Kentucky Retirement Systems by Blackstone, KKR, and PAACO. The litigation is on track to becoming a Jarndyce v Jarndyce level case study in the (mis)use of procedure to delay a case.
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I neglected to add that one reason for trying another amendment as opposed to a new filing would be to assure that Shepherd remained the trial judge. New cases are assigned randomly to judges and the other judge in Frankfort is pro-corporate. However, the Attorney General’s Motion to Intervene was assigned to Shepherd’s colleague, and he bounced it over to Shepherd, so that risk looks to no longer be operative.
Author: Yves Smith
Publication Date: 8 January 2021
Publication Site: naked capitalism