Mad-Cave Blueprints Procured

Well, it isn't apartment 14A/B in 740 Park, but Bernie's $7 million Guantanamo will make most studio and one bedroom NY dwellers green with unponziated envy. Our friends at Business Sheet have gotten good insight into just how sweet the future museum of unmitigated greed at 133 East 64th Street must be from the inside (at $25/admission ticket, assuming 5,000 visitors a day it will payoff $50 billion in investor losses in exactly 1538.4 years, not indexed for inflation, and Paulson (bald version, not the one who is actually good with money) is making damn sure that on a real basis it will be more like 4 years). Turns out the building, of which Bernie was president of the co-op board until a few days prior to his admission, is populated with other celebs such as NBC's own Matt Lauer, who is likely Bernie's penthouse neighbor.

We are, however, disappointed that despite the massive square footage apparently there is no Brazilian landing strip (Embraers are Brazilian you sickos) or hangar to house the Embraer 600.

Regardless, enjoy the layout of the penthouse in all its glory - this is what running a ponz for over 30 years buys you.

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Nortel Bondholders Biting Their Nails

As we reported on January 9, the likelihood of a Nortel bankrtupcy filing this coming Wednesday (coupon payment date) is high to quite high. Recent rumors from the underground community had suggested that Huawei was licking its chops at NT's metropolitan ethernet business and would pay up to $1 billion. However, based on reports from forbes and debtwire from earlier today, the deal is dead in the water. Ooops. Well, maybe some other suitors are left in the wings, although Lazard (which one should not forget is nicely tempted by the prospect of a $150,000 monthly retainer, and numerous diligence trips to Toronto as soon as the company hits "File") will likely press hard the issue that DIPs will likely be impossible to come by anywhere between now and when the new version of the G.W. bridge is built so Nortel should file sooner rather than later... NT bonds have run up a good 40-50% in the past few weeks on both the rumors and the phenomenal HY sucker rally in the last weeks of 2008, so portfolio managers are sweating whether or not to bail.

Either way, it is T minus 28 hours to funds flow so sit back, grab some popcorn and enjoy the show. Sphere: Related Content

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Just as All The Media Choppers Vacate Midtown...

BN 17:55 *U.S. GOVERNMENT SAYS IT WILL APPEAL MADOFF BAIL RULING

Time to refuel the Embraer

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Ze Germans Are Spending

BN *GERMAN COALITION PARTIES AGREE TO SPEND EU50 BLN ON STIMULUS

Good thing people are at least buying their bonds...mmm wait, nevermind... Oh well, fire up the reichsmark printing press and get those wheelbarrels ready Sphere: Related Content

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Too Much Bad Fish Scuttles Landry's LBO

Landry's stock tumbled today to an all time low of $6.63, before regaining a little and closing 50% down after announcing in a very cryptic press release that it is cancelling its LBO/MBO with Fertitta Holdings, the family that own Station Casinos (where you can book a vegas room for $40/night indicating just how hot the strip is right now), and Tilman Fertitta, current President/CEO of Landry's. If one reads the PR issued earlier, one will end up scratching a big bald spot in one's head... Turns out the MAC was having to disclose the terms of the "confidential" commitment letter:

"The SEC was requiring the Company to disclose certain information from a commitment letter issued by the lead lenders to Fertitta Holdings[.] The commitment letter issued by the lead lenders required that such information not be disclosed and be kept confidential. Although the Company informed the SEC of the foregoing and requested confidential treatment of the information, the SEC insisted upon disclosure of the confidential terms. When the lead lenders were informed of the SEC’s position, the lead lenders advised both Fertitta and the Company that the lead lenders would not agree to disclosure of the confidential information and that any disclosure by the Company or Fertitta would be in violation of the terms of the commitment letter and result in the lead lenders terminating their commitments for both the going private and alternative financing transactions."

Now this is about as odd as odd comes, as even the greenest lawyer would assume the SEC would want full disclosure in a going private deal. One knows how fond Jefferies is of issuing Highly Confident/Committed/Contingent Letter, so is it possible that something along these lines ended up scuttling the deal? Parallel to the going private process, the company is refinancing its $400mm of 7.5% December 2014 notes, and it seems which process seems to be on track but due to the lack of legal foresight in the MBO, is there something very scary here too? The bonds are quoted at par on TRACE, but if that price is right, and if the refi process was vetted with the same due diligence as the MBO, four out of five analysts bet the bonds wont be wrapped around par for too long... Sphere: Related Content

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His Name Is Robert Paulson... Er, JP Morgan

All is well.... Repeat All is well.... In fact we can't wait to tell this to you asap.

BN 16:20 *JPMORGAN CHASE HAD EXPECTED TO RELEASE 4Q EARNINGS ON JAN. 21

BN 16:20 *JPMORGAN CHASE SETS NEW DATE OF JAN. 15 FOR 4Q RELEASE :JPM US

BN 16:20 *JPMORGAN CHASE SETS NEW DATE FOR 4Q EARNINGS RELEASE :JPM US

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Another Kick in Cox' Balls

All you ever needed to know about Icon Wealth Management, that the Government already knew of course. Courtesy of Marc Schrenker

http://www.adviserinfo.sec.gov/IAPD/Content/Search/iapd_OrgSearch.aspx

type in Icon Wealth and read to your heart's delight.

Looks like this is Mini-Bernie at best. He has filed $27mm in assets with the SEC, and only 182 accounts.

Also, keep an eye out on Andrew Steven Geyer, the IARD listed COO of Icon Wealth Management... Odd that he didn't whistleblow on his boss... Sphere: Related Content

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One Day Archeologists Will Care About This

This explains pretty well why some people still choose to make the mega rich even mega richer (although less so with each passing day). Why there is a video of it out there is really odd... Props to hedgefundblogger for tracking this down. Sphere: Related Content

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Quick Robin, to the Mad-Mobile, so We Can Escape with the Mad-Plane

Because we all know the old man has an escape plan up his sleeve, that may very well include a top secret Mad-Cave somewhere deep inside 133 East 64th street (if anyone has blueprints for the house, please send to us), Zerohedge is very curious to find out where exactly Bernie's Legacy 600 is parked. As CNBC noted the Brazilian jet is likely a key cog in the plan to flee to Mexico or elsewhere. Granted range may no be sufficient for a nonstop flight to Fiji, but it does present options. So, if anyone knows whether this 16 seater is parked at Tetterboro and can confirm it, one would say that the ability to rush the guards at the private airport with a small to moderate lynch mob should present no significant difficulty. Sphere: Related Content

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S&P Pretending Like Its Opinion Still Matters

One can say many things about the ratings agencies, one could be bribed and even say one good thing, but recently S&P has decided to get really proactive to have some ammo ahead of the inevitable congressional hearings (Moody's has Buffet in its back pocket so smooth sailing over there). On Jan.12 S&P put not Rotorooter, not even Sham-Wow, but the entire Country of Spain's AAA rating on CreditWatch with negative implications. For the un-nuanced, this means S&P doesn't have the guts to actually downgrade Spain but if things there get so bad that not even unemployed Wall Street analysts care to participate in the annual Tomatilla festival, they will throw the hammer down, and in the meantime can say they had the foresight to see what a fiasco that country has become...

Speaketh S&P: "A CreditWatch listing signals a potential but not inevitable change in a rating over the short term[. The] CreditWatch placement reflects our view of the significant challenges facing the Spanish economy as it traverses a period of very weak growth, and a sustained period of deleveraging, which we expect to lead to are balancing toward traded sectors requiring real exchange rate depreciation,"Standard & Poor's credit analyst Trevor Cullinan said. "The likely result of such factors will be a much weaker potential growth rate over the medium term than that experienced over the past decade. At the same time, we project a substantial worsening in the Kingdom's public finances."

This seems to have spooked sovereign CDS traders with all of Europe going batshit (i.e.wider) and Spain's CDS specifically hitting 104, after closing at 95 yesterday.

Spain immediately dismissed the news, with the Finance Ministry quoted saying that "Spain is doing everything necessary to restore growth". rrrrright - even illegal immigrants are scratching their heads and deciding the trek through the Pyrenees isnt worth it in order to do pro bono garbage pick up.

This leads to the broader question of Sovereign risk. According to Bloomberg the top 5 riskiest countries right now are Argentina, Venezuela, Iceland, Kazakhstan and Russia. Spain now climbs to be on par with the U.K. in terms of credit risk, while the bankruptcy-free subsidiary that the US is perceived to be is at 53 bps, just slightly more risky than France, Germany and Norway. Of course the question of how you collect money on a short risk bet in the US is more philosophical than practical... ISDA would need a few more phone lines in order to handle the physical settlement of US Treasuries if the unthinkable somehow came true...

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Bernie Forced To Find More Creative Ways to Launder Assets

BN 12:09 *BERNARD MADOFF STAYS FREE, MAGISTRATE JUDGE RULES
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*MADOFF IS CHARGED WITH SECURITIES FRAUD IN $50 BLN PONZI SCHEME
*MADOFF HAS BEEN UNDER HOUSE ARREST, GUARD, ELECTRONIC MONITOR
*MADOFF'S ATTORNEY SAID TRANSFER WAS AN `INNOCENT' MISTAKE'
*FEDERAL PROSECUTORS SAID BERNARD MADOFF IGNORED COURT RULING Sphere: Related Content

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Dead Men Walking in South Beach

In what is the greatest annual boondoggle in the hedge fund community, the JP Morgan South Beach Conference, this year held February 2-4 in the Loews Hotel, one should be able to spot some very good leading trends of the credit markets for this year. Aside from this being the biggest job fair among the very nervous hedge/mutual fund analyst pool, one will be keeping a close eye on which companies redefine the rhythm method and pull out ahead of their scheduled presentations, presumably to amend bank agreements, shut down plants, or outright file chapter 11 (or 7), and not have to answer compromising questions just ahead of Q4 earnings.

JPM lists 150 overflowing with debt companies participating at the conference, the majority of which make up the HY11 index (which trades at around 1125 bps spread and implies 63% of the companies in it will go bankrupt by March 2014), so for people on a credit death watch, this will likely be a very interesting venue to cast stakes and take coffin measurements.

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Show me the mo' money

BN 11:25 *OBAMA ASKS BUSH TO NOTIFY CONGRESS OF INTENT TO SEEK TARP FUNDS

speaks for itself Sphere: Related Content

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I've got a stomachful of Xanax. I took what was left of a bottle. It might have been too much.

You can't make this shit up. All you Hollywood agents scouring under the skirts of Daily Grill waitresses for your next script look no further (I will merely accept a firm virtual handshake and advance rights for my upcoming book), and all you employed sales people, here is a brilliant idea for how to bring your career to new heights...

Here is a guy, let's call him Mr. X (for the full blow by blow click here). Mr. X works as an institutional sales guy, a gatekeeper to the powerful worlds of hedge funds, who makes a base of 100k and total comp for three years running over a cool half a mil. So instead of focusing on a calm suburban existence, Mr. X decides to use his corporate AmEx to procure questionably sanitary services from "Ce Soir of New York" (no link, which would undoubtedly be NSFW, but here is the phone #: (212) 213-0505, toll free: (800) 621-9808). The guy does this not once, not twice, not even three time, but three and a half times (last usage was diluted by the presence of one of his hedge fund buddies, whose arm is twisted to show up at an unnamed hotel where Ce Soir's services were consummated); these charges are subsequently ascribed to the purchase of tickets for Broadway, Springsteen (2x), and U.S. Open tickets for his wife and clients. And then Mr. X gets caught... And to top this, Mr. X is married. In a subsequent psyc evaluation, an "expert" claims "[Mr.X] determined that the risk to his marital relationship outweighed the risk that Lazard would discover his expense reports were fake." If all you can come up with as defense to an arbitration panel is using escorts as a way to save your marriage , you may consider getting a second opinion. Incidentally, it is curious how Mrs. X reacted when her husband's ways were disclosed. Also curious who the menage-a-troisee was and how pervasive this practice in the industry may be.... although of course this could very well be the sole, isolated incident...

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Count Vikula Mid-Term Grade in Accounting Alchemy: A+

In the latest round of government-mediated financial synesthesia, Citi is parting with its brokerage crown jewel and making it seems like a sweet deal for investors, tax payers (also investors), and the three or four other people who care about the mass insanity that occurs in present day capitalism. In a nutshell, modern alchemy goes something like this: sell Smith Barney + wave magic wand + hold conference call in which you kidnap the next of kin of all potential call participants to prevent any relevant questions from being asked = book $6 after tax billion profit. Brilliant

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Ackman and Burkle Agree to Disagree over America's Illiteracy Trends

Even as Barnes and Noble posts a scary -7.7% comp store number for the "holiday" period, two major holders play hot potato with a big chunk of the retailer's equity. Ackman's Pershing Square announced on January 9 that it has liquidated its 12% stake in BKS, a few days after Ron Burkle shelled out $67 million for 8.3% of the common stock. While it is not initially clear how critical Bill Clinton's advice was when making the investment decision, it is expected that Burkle will leverage his relationship with the teamsters by giving every long-haul trucker half-off deals on Danielle Steel romance novels and Hillary's autobiography. The market rewarded BKS stock with a 25% hike after the supermarket billionaire's stake was announced, however those gains may be lost Monday when the market digests Bill's abdication. While Pershing's retreat may arise from redemption requests, the fund has obviously not lost its hope that America will stop reading evidenced by its 17.5% stake in Borders. As for Yucaipa, it is still not very clear what the fund's strategy for world domination is: according to Bloomberg its public fund currently has holdings in supermarket staples A&P and Whole Foods in addition to BKS. On the private side, Yucaipa's distressed investments in car carriers Allied Holdings and PTS, as well as Wonder Bread maker Interstate Bakeries, have had mixed results at best...

-----------------------------UPDATE

Looks like BKS is trading down $1.00. Sphere: Related Content

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Titanium Looking Kinda Rusty Too

People suffering from a morbid obsession with titanium dioxide and its principal producer, Tronox Inc., are frantically clicking refresh on Pacer to see the moment the company files for Chapter 11 in Southern District of NY on this cold evening. Reuters cites sources that the filing should come any moment. Of course this will come as no surprise to holders of the company's $350 million of 9.5% Notes due 2012 which recently traded at 10 cents on the dollar, and whose semi-annual interest payment from December 1 got lost with the paperwork. The Company's Third Waiver Extension on its credit facility expired January 9, after which lead arrangers Lehman (or in this case probably Barclays but most likely neither) and Credit Suisses can enforce their rights to push the company into bankruptcy. The rumored $125 million DIP will be provided by CS thanks to the hard work of Rothschild analysts who have presented the CS loan committee with numerous memoranda showing the hockeystick demand curve for artifical coloring agent E171 which makes skim milk look white (as opposed to what? purple?) and SR-71 jet planes, and will probably prime existing secured lenders although since it is the same lender group, not many tears will likely be shed there.


*********** UPDATE*************

We struck F5 gold at 2.29 am on Jan 29 (or rather our intern in Bangalore) when Trinox posted this on their website: http://www.tronox.com/NewsReleaseFiles/news_20090111.htm. Looks like a bankruptcy judge is to be assigned still, but with Peck's head still spinning from the "almost trillion" in doodoo he has found himself in with Lehman, all signs point to Drain. Now for the abnormally morbid out there, wouldn't it be amusing if Chris Cox and Judge Robert Drain started Cox Drain Capital LLC? This could easily compete with David Blood and Al Gore's attempt at asset management if the latter two didn't pussy out and call their venture Generation Investment Management. Sphere: Related Content

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Steel Partners in Need of Serious Rust Removal

Steel Partners, the fund of activist investor and up-to-now wunderkind manager Warren Lichtenstein, has fallen for some tough times. In what could turn out to be the next paradigm in the HF world, FT.com reports, Steel plans on converting its biggest hedge fund into a publicly traded holding company, in a move to stem redemptions as investors would likely only be able to sell their shares in the market, likely at a substantial discount, however gaining some incremental liquidity. FT notes that the fund was down 39% in 2008, and suspended redemptions in December after receiving redemption requests for 38% of assets. It is likely that more funds will follow this example to allow unhappy investors to exit without necessarily liquidating outright.

One can only harken back to the days of 2007 when there was so much money flying around that people would come up with crazy things like SPACs to provide special purpose investing vehicles to fatcats who could only buy so many shares of Sears Holdings at $150/share. Guess now it's time for the opposite... Things would be so much simpler if people could just say enough is enough, and follow Andrew Lahde's example graciously out of the industry. Seems like "Greed is good" is alive and well.

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Investing Was The Beginning, Now It's Moved Out Of The Basement, It's Called Project Mayhem

And Mayhem it is, as investors are running for the hills, unwilling to find out who the next Madoff turns out to be, and end up stuck with a big fat donut. According to an analysis done by Hedgebay, a secondary hedge fund interest market maker, the average dollar invested in hedge funds traded for an all time low of 87 cents as of November (waiting for December numbers with baited breath).


Total bidside interest across all funds in the secondary market was roughly $900 million, compared with $2.3 billion of sell interest. Among funds where timid investor elements would probably settle for large discounts just to bail ship were Amber, BlueMountain, Castlerigg, Drawbridge, DB Zwirn, Harbinger, Marathon, Polygon and QVT, while others were eager to snap up any available interests at Blackstone Kailix, Millennium, Perry and York. Most transactions would still need the approval of the fund manager to get approval to transact so investors may be stuck holding on to bids or offers for a long time. Sphere: Related Content

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There Can Be Only One!!!

We all know about West vs. East, 2-Pac vs. Notorious B.I.G., LA vs NY, etc... How does this express itself in the HF community where most managers are either grads of Steinberg-Dietrich Hall (that Huntsman hall phallic monstrosity will never take the place of the brick facade that Saul Steinberg's Reliance renovated with a whole pile of hard-earned, scandal-free dollars) or ex-Yale Lacrosse players, yet where on occasion you may find the odd Westsider... And they can be quite floral.... from Bob Chapman, whose insidiously delirious letters revolutionized the world of activist investing (plus the link to Chapman capital is http://www.hedgefunds.com/, which is either retarded or brilliant, we can't decide), to Steinhardt protégé Charles Davidson, to Robert Beyer of TCW, who somehow managed not to lose his company when Jerome Kerviel made a bit of a bad bet for parent company Suck Gen, to.....


(Scott in full Proxy Fight Attire)

...SCOTT GALLOWAY... The man is a legend, a titan amongst titans, a former Muffkateer, Vagilante, and Trim Reaper, and looks incomparably better semi-naked, dressed in just a garbage bag and a sword, than Stevie Cohen.... The former ZBT brother (UCLA's notoriously bad-boy frat as seen here, and here, which boasts among its alumni some of the most respected and prominent muffkateers in the world including the original Ari Gold), and founder or Firebrand Partners, presumably dressed in a business suit, together with Phil Falcone, were appointed to the Board of Directors of the New York Times last spring after buying a whole lot of shares at way inflated prices. One can only imagine the carnage at Board meetings if Scotty kept his Highlander garb and Lisa Falcone would show up to do a feeding with the girls.

Speaking of the New York Times (the newspaper your grandparents used to read occasionally), walk, or better yet run, to your closest Off Track Betting saloon or Schwab retail brokerage outlet, whichever received its TARP gift package from Baldy more recently, and buy 5, 10 or 100 million worth of CDS (which are cheap at only 13 points upfront). NYT's $400 million credit line which expires in late May will likely drag the Sulzberger family heirloom all the way down to 1 Bowling Green unless Connor McLeod here somehow manages to do a sale-leaseback for the NYT building at 2007 peak market valuations... As we are big fans of the obituaries section in the newspaper, we hope all's well that ends well. Sphere: Related Content

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