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Friday 19 May 2017

No Smoke Without Fire: Of Reputation: "Leon Cooperman"

NSWF:Reputation Degree
 We excerpt-edited the following report to disrepute Leon “Lying Legacy” Cooperman of Omega Advisors. The indisputable "circumstantial evidence" indicates a systemic legacy of insider at Omega Advisors; and indeed characterised by settlement out of court:
I’m not going to let these people destroy my legacy.” Leon Cooperman in Sept.2016 when the lawsuit was first presented.

Billionaire hedge fund manager Leon Cooperman and his firm Omega Advisors Inc settled out of court with America's financial regulator the Securities and Exchange Commission (SEC) over an insider trading lawsuit brought against them.

Thursday's 18th May settlement ends that process, and avoids a trial that had been scheduled for November 6. Federal court judge approval of the settlement is still required.

Cooperman and Omega did not admit wrongdoing in agreeing to the settlement, which includes $2.76 mn of fines.

A month after the SEC lawsuit was filed, Goldman Sachs decided to withdraw assets and stop having him manage about $300 mn for its employee retirement fund.

Omega has also suffered, with assets under management falling to about $3.6 bn as of March 31 from about $5.4 bn when the SEC sued in Sept.2016, and $10.4 bn two years before that.

The 73-year-old Cooperman, a former Goldman Sachs exececutive is the most prominent financier to be charged with insider trading in decades. Cooperman is worth $3 bn, according to Forbes magazine. 

The $4.9 mn in fines and forfeiture is a relatively piddly sum for a man who made $225 mn last year, according to Institutional Investor’s Alpha magazine.

Mr. Cooperman’s lawyers, Daniel Kramer and Theodore Wells at Paul Weiss, said in a statement, “We and our clients are very pleased with this outcome, which speaks for itself.

The SEC says, he will continue to break the law. Therefore a requirement that an independent consultant monitor Omega trading activity for the next five years to 2022.

Facts of The Case
Filed in a Pennsylvania, USA federal court, alleging insider trading in Atlas securities.

The decision by Judge Sánchez could set a legal precedent about the responsibilities that individuals who work outside of a publicly-traded company have toward that company when making an agreement to keep confidential company details under wraps.

Cooperman, the founder CEO of Omega Advisors, is accused of making dozens of trades in Atlas Pipeline Partners securities in 2010, netting profits of $4 million, after learning from a company insider that the troubled oil and gas company was on the verge of a merger deal

Cooperman learned from an insider that Atlas was preparing a sale of one of its operations, and he began to buy up the company’s shares, options, and bonds, the SEC says. Any corporate merger and acquisition (M&A) involving a public company can have insider-trading associated with it.

The SEC accuses Cooperman of trying to cover up his conversations and, according to its initial complaint filed in September, has three witnesses to bolster its case.

The SEC has argued that Cooperman "misappropriated" information from an Atlas executive about the sale of the Atlas Pipeline unit.

Cooperman's lawyers want the case thrown out arguing that he may have "broken a promise," if indeed he agreed not to trade on the information, but that he had not broken insider trading laws. A "promise" is within the scope of law about disclosure and confidentiality.

In an unusual move, the SEC threw in minor charges alleging more than 40 instances where Omega flouted reporting requirements regarding its ownership of other stocks — a seeming attempt to show disregard for the rules.

The case is replete with allegations of broken confidentiality, dozens of suspect trades and a pattern of misconduct; at least three government witnesses confirming Cooperman’s alleged misdeeds; and even an alleged cover-up.

Friday 28 April 2017

Vive La Fance or Vive La Republic on May 7th, 2017

The French Presidential Election of Marine LePen threatens the European Union project as much as Brexit already has done. We here at Fund Portfolio Management – FPM vehemently believe that this western phenomena of populist activism will garner a victory for the anti-EU candidate of Marine LePen.
Without going into how the historic 2nd round run-off between two political outsiders came about, or even understanding French politics nuance it is fair to say France is in desperate need of “change”.

Economically, and in other respects like eradication of its historic socialist values is at stake. Its national debt to gross domestic product is a staggering 96%. What does that mean? This all-time high figure of debt to GDP reached in 2016 means France's taxpayers i.e. the average citizen of that country will struggle to pay “national” debt for years to come with “austerity”. The chart below shows how the debt of the country has ballooned beyond incredulity since the US-led financial crisis of 2007-08.

The change that we believe the country needs is to adopt its own currency, and take control back of its sovereignty. So getting out of EU is essential! Being in the EU allowed France to exceed the regional union's own prescribed debt management levels; while hampering it's ability to devalue it currency and export itself out of debt, in the recent past since the financial crisis. That is, growth in its economy has been anemic to non-existent due to its hands being tied by being in the EU. 

Controlling its economic levers of power, like currency alone will not fix the economic despair that the nation faces; other factors like being able to set it's own interest rates with conditions for limiting  migration should help contain the outflow of currency. This strict border-control aspect IS NOT possible under the EU rules of freedom of movement of people and  Shengen agreement; and which every student of economics would understands as a closed-economy i.e. being able to prevent money flowing out of a system. Unwinding an association of 40 years or so is not difficult, as UK proved in recently triggering Article 50.  

We strongly believe the phenomena of “globalisation”, as defined below, is singly and solely the reason for France's woes. Remember that the world globalisation did not even enter the lexicon before the 1980's. As the dictionary of those times describe what it ORIGINALLY meant, and how it entered the business then popular language vocabulary, as a good and positive phenomena.
Nationalism and protectionism as prescribed by the National Front candidate Le Pen is a MUST solution NOW. Unless of course collectively the EU can have the power to default on debts or destroy debt by allowing inflation, it is a slow road to third world country status. The strong nations in the EU bloc like Germany and Switzerland, which was originally started as an European Economic Co-operation treaty, will NOT BACKSTOP France if it collapses (fails to repay debts) under the strain of its national burdens. The Nation's debts are with countries that have large foreign currency surpluses, like its close neighbour Germany in the EU; and broader countries like China, and the oil states. This link here will take you to a France and other indebted nations' woeful economic statistics.

Like its other close neighbour across the Channel, United Kingdom who exited the EU on epochal day 23-June-2016, even though they controlled their own economic levers to a large extent, France has little other options than to leave the Union. Maybe France is happy to part of larger union like Scotland with Britain and others forming the UK. That union is 300 years old and visibly at least a healthy marriage, despite occasional public remonstrances! Or perhaps, if France exits, the EU will reform or be rolled-back to be once more an European economic cooperation area, without the the binds of a currency union, and its "Euro Zone". 

The speculations are limitless though one thing is certain, come May 7th, the day of the French Elections we may herald “Vive La France” but not “Vive La Republic” as well! Why? Because France would affirm itself as State of Europe in federalist plans, if it elects Emmanuel Macron instead of the nationalist candidate. For fear of over-simplification a republic is independent of a monarchy. And as "Brexiteers" know, being answerable to an unelected European Commission is tantamount to reign under an absolute ruler or de facto monarchy (of bureaucrats and capitalists).

Monday 17 April 2017

Why I hate Globalisation!

"Globalisation" is meant to mean warm fluffy goodness of togetherness. Far from it you stupefied idealists! It is singly about sheer corporate expansion and its corollary market growth. 

It is also about dominion expansion in geopolitical territorial terms for countries, especially enacted by politicians. This has been conveyed in an early dictionary definition (or was not in the dictionary until the 1980s):

The other side-effects of globalisation are discussed further,  such as people movement, "global village", uncontrolled immigration, climate change, national and regional identity loss, hegemonic power, 24-hour consumption, food waste, monopsonist buying, global oligarch, unlimited air travel, mono-culture and diversity, etc etc     

Sunday 5 February 2017

Moving Markets - Mnuchin Style

Fund Portfolio Management - FPM have speculated on Treasury Secretary nominee, as at time of writing, Steven Mnuchin's motives circumstances and ethics, among other considerations, for assigning an insider-trading reputation, under the “NoSmokeWithoutFire:Of Reputation” investigative enterprise.

Backgound To FPM's NSWF:Reputation

FPM's new millennium financial technology "fintech" enterprise seeks to arbitrate governance in the space of illegal insider trading, initially in the financial investment management sector. In the 21st Century, an age old white-collar corruption of capital markets for the benefit of the few and to the detriment of the many, CAN AND SHOULD BE ERADICATED. Insider trading with "non-public material information", creates an un-level playing field for the majority of stockholders in listed companies or corporations. Through exclusivity of procuring share-price moving information, a bias and distortion affects stock market buyers and sellers. Such "exclusivity" and extended to broader circumstances has contributed to  social wealth inequalities in the history of money-lending.

FPM's bold and honed challenge is to intervene in application of Rule 10b-5 of the US Securities Exchange Act of 1934 about illegal insider trading. The equivalent laws inherent in other global financial capital markets is also of great concern. The service FPM provide is especially for those institutional shareholders and indirect vested parties, that are perhaps unwittingly disadvantaged materially through insider trading. The privileged few insiders exchanging non-public material information about a stock-holding in their trading portfolio will by magnitudes make profit at the expense of majority of investors. Otherwise if everyone had had access to the same information at the same time everyone affected similarly. Most economic student are falsely taught from the beginning that this is the prevalent state through "Efficient Market Hypothesis" (EMH). While economic finance and investment students, and professionals alike are inducted to believe in efficient capital markets with "perfect" knowledge i.e. level playing field, for all participants; on closer inspection a merely illusory proposition termed "hypothesis" . That is it is merely theoretical of the expected and legal reality; whereas the "sharp practices" exist in reality.

The illicit insider trading parties benefit from the market participants as a whole reacting to an eventual public announcement, which moves the asset-price in question in a certain big-swing direction. The illicit traders were already positioned with their stock-holding to realise profit from the eventual and actual market announcement.

Exclusive Insider Trading: An Example

Say one is a pension investor holding Google stock (GOOG) in a portfolio, and was not privileged to have prior information, i.e. ahead of a share-price moving announcement by the company representatives.  While another hedge fund investor who was privy to the leaked-information of this announcement, through law-breaking means, can anticipate the degree of significant share-price swing and accordingly adjust his holding of Google to make a confident no-risk trading profit, for his portfolio investors. Whereas the former fair-trading pension investor may not have foresight or opportunity to reduce or increase his Google stock-holding, or otherwise sufficiently adjusted his portfolio, to benefit from the subsequent announcement and share price swing. FPM strongly believe that without a level playing field in the investment management industry for long-term savers, there exists a two-tier system of returns; the superior savers' return system is the one through which  stealing of inside information information is the edge.

Mnuchin Case Minutiae

Specifically pertaining to an investigation action, Mr Mnuchin moved the markets as recently as 29th November 2016, when share prices of “Fannie Mae” and “Freddie Mac” spiked up some 30%. The speculative question is whether his material public announcement or speech was also made earlier and privately to a few investors? If Mr Mnuchin gave his former investment trading colleagues, at ESL for example, an information edge prior to public speaking, then this can potentially compromise his integrity. FPM say “potentially” because of the technical burden of legally proving malfeasance is onerous presently. “Fannie” and “Freddie” are investor's cant for stock market listed Government Sponsored Enterprises (GSEs), a quasi Government and private-sector entity backing American house mortgage loans.

The share-price spike as depicted in above diagram was based on traders and analysts speculation. Betting that Mr Mnuchin, supporting his nomination for Treasury, had suggested that the housing focused and taxpayer-backed GSEs, struggling since the financial crisis of 2007-08, might be restructured and “privatized”.  What he had said, which created the sharp uplift in “Fannie" and “Freddie” share prices in November, is shown below:

"We got to get Fannie and Freddie out of Government ownerships, it makes no sense that [the two federal mortgage agencies] are owned by the government and have been controlled by the government for as long as they have." Speaking to Fox Business Network’s Maria Bartiromo on 29-Nov-2016.

This surge in related shares price settled down, and on 19th January 2017, at the Financial Committee confirmation hearing for Mr Mnuchin's candiditure for Treasury chief, he clarified his comments about the two quasi public-private mortgage agencies:

"My comments were never that there should be recap and release."

Shares of Fannie and Freddie sold-off around 11% in the minutes after Mnuchin made his comments - both recovered a bit by close. FPM wonders if that was interpreted by investors as political double-speak denial for exactly the opposite which the Treasury under Mnuchin is expected to do under its top 10 priority? Since that Finance Committe confirmation hearing rebuttal of “recap and release”, the two GSEs have surprisingly resumed an uptrend in share-price. 

Under the heading of “Where The Wind Blows”, FPM's adduced assessment of which organisations and individuals are involved in insider trading, is speculatively framed. In Mnuchin's case, using internet and its subscription resources such as Muckety interactive relationship mapping, we know straightaway that Goldman Sachs, Edward Lampert's ESL Investments, and alumni of his failed hedge fund, Dune Capital could potentially be tipped-off, ahead of share-price moving public statements. Further opportunity for insider-trading would be afforded by the public-relations lobby group connected to very inflential people, corporations and sovereign-state clients, Patton Boggs, LLP.

Our presumptive spotlight for financial market malfeasance falls on William Ackman of hedge fund Pershing Square Capital Management. Fannie and Freddie are large positions of Mr Ackman’s Pershing Square, who suspiciously converted to a Trump fan right after the election! On the 10-Nov-16, 2 days after the election of Donald Trump as President of the USA, Mr Ackman made this statement at a press conference organised by New York Time: 

"I think Fannie and Freddie are going to get resolved in the first 12 months of this new administration, and I'm looking forward to having my second meeting with Donald Trump and negotiating a deal...William Ackman of Pershing Square Capital on days after Trump election.

Another set of illuminaries and cabal hunting as pack-of-wolves are highlighted in “Moving Markets Mnuchin Style”. They are hedge funds who have openly welcomed privatising the now profitable public entity which as public-private concerns the two GSEs cost the taxpayer $188 bn to rescue at the height of the financial crisis, despite reports that taxpayer bailout have being repaid in 2013/14. These billionaire financiers attacking in pack like wolves, tended to have power under politics-for-sale and policies-for-donations operandi  of recent successive USA adminstrations. We will keep tabs on "Tumpet-Trump" to see if he will take on wolves that include Bruce Berkowitz (Fairholme Capital), Richard Perry and Mnuchin’s pal and ex-partner, John Paulson. Add to this list Carl Icahn, "a longtime business Trump Friend and business partner, has invested $50 mn in Fannie and Freddie"

Further stage of FPM insider-trading ratings research, would come under template heading “Spreading Like Wildfire”. This would be related to Mnuchin's reputation from previous mentioned "where the smoke blows" identification of his past and present working and personal relationships. Spotting Mnuchin's relationships with motive and opportunity in their profile (indicated e.g. by past loose practice codes in relation to ethics, greed, morality and humanity), starkly points to another close associate of Mnuchin, Edward Scott Lampert, of the mentioned eponymous hedge fund ESL Investments. 

In short ESL is the largest shareholder of the famous Sears Department retails stores which had merged with equally historical “K-Mart” stores under difficult times. However, the storied Sears now synonymous in reputation as Edward “Sears” Lampert, since he is its decade-long chief executive and chairman. At least one commentator  has questioned Mr Lampert's role as Sear's hedge-fund stockholder and the store's chief executive Chairman (“His dual roles give him inside information that motivates his actions.”). See the 2-years stock price chart below, compared with benchmarks “retail – consumer discretionary” and “retail – consumer staples” to see the declining and unarrested fall of this retail giant of America:

The Long Slow Ruination of Sears Holding Under ESL Investments
FPM's greater critical rating, as opposed to corporate “mainstream media muppets” dubbing as the next “the next Warren Buffett” is not based on agenda; which we at FPM know in hedge-fund terms of shorting, leverage, CDS and other means of disaster-capitalism that our review degree reputation for Mr Lampert is Eddie “Sears-Stealing” Lampoon”. This NSWF:Reputation degree has double-edged meaning too; especially when we balance a Zerohedge narrative “Sears Kept Alive by itsCEO, Eddie Lampert, Againon 29-Dec-16. 

In relation to Mnuchin's interview and market moving comment about housing-backers Fredie and Fannie, we know Mr Lampert is reputedly asset-stripping Sears department and former Kmart stores for its real-estate value. So this bad-boys link, as well as Mnuchin's connection as Director of Sears Holding Corporation, places them at the scene of the crime shown in the ruination price chart of Sears above.

Inexorably, for exploring the investigative focus, we also note than another of President Trump's nomination, for health secretary Tom Price, had a confirmation hearing discussing links to insider-trading. FPM won't elaborate on this “wildfire” of insider-trading but point to research by staff at “Crooks and Liars” - a website service. To access that by them story click on the link provided.

Further Reading:

Saturday 21 January 2017

Winds Of Change: American Geopolitics 2017

A Seduction and Flirtation With America.
FundPortfolioManagement-FPM have analysed Donald J. Trump's Inauguration speech as the 45th President of the United States on Jan. 20, 2017. Speech was short and sweet,  to the point (one of the shortest speeches), which we have filtered into three themes below. We feel President Trump's brand has been consistently conveyed at least in rhetoric, and even apparently in policy. Soon after the Presidential swearing-in speech, the President's team put out a press release that they are withdrawing from the controversial Trans Pacific Partnership (TPP - trade deal with Asia), and keenness to re-negotiate the existing "NAFTA" trade agreement.

If we believe that the 45th President of United States wrote his own speech, and optimistically consider the pledges given with his high conviction attitude, then indeed our organisation's effort will be to hold him to the moral rectitude / uprightness he presented as a business man, and now as the most powerful man in the World. 

Our mechanism to enforce the President's veracity between rhetoric and reality is under our thesis of conveying his reputation. His past reputation is dubious not to say the least, but the stalwartness of his impressions and deeds in the Oval office is our time-line of watchfulness, under "NosmokeWithOutFire:OfReputation".

After internal dialogue, FPM have filtered the speech into three policy agenda, from the sworn-in administration:  

1) Against the Status Quo Political-Corporate Agenda:

We are transferring power from Washington, D.C., and giving it back to you, the people.”

Washington flourished – but the people did not share in its wealth. Politicians prospered – but the jobs left, and the factories closed. The establishment protected itself, but not the citizens of our country.”
January 20th 2017, will be remembered as the day the people became the rulers of this nation again.”
This American carnage stops right here and stops right now.
So to all Americans, in every city near and far, small and large, from mountain to mountain, and from ocean to ocean, hear these words: You will never be ignored again.”

2) Anti-Globalization of Trade, Migration, Etc:

For many decades we’ve enriched foreign industry at the expense of American industry... We’ve defended other nations’ borders while refusing to defend our own.”

We’ve made other countries rich while the wealth, strength, and confidence of our country has disappeared over the horizon.”

We must protect our borders from the ravages of other countries making our product, stealing our companies and destroying our jobs. Protection will lead to great prosperity and strength.”

Every decision on trade, on taxes, on immigration, on foreign affairs, will be made to benefit American workers and American families.”
We will follow two simple rules: Buy American and Hire American.”

3) Less Foreign Policy Intervention:
We do not seek to impose our way of life on anyone, but rather to let it shine as an example for everyone to follow.”
At the bedrock of our politics will be a total allegiance to the United States of America, and through our loyalty to our country, we will rediscover our loyalty to each other.”
We will not fail. Our country will thrive and prosper again. We stand at the birth of a new millennium, ready to unlock the mysteries of space, to free the Earth from the miseries of disease, and to harness the energies, industries and technologies of tomorrow.”

In Brashness - So What?
FPM will be interpreting and tracking these broad scope Presidential pledges as they become specific policy commitment over the coming months. For example, TPP, which was already struggling to get passed in Washington under outgoing President Obama, is already shelved by incoming Trump administration under anti-globalisation theme. We believe we have identified an overriding principle that underpins some of the key themes.

For example, under the "Less Foreign Policy Intervention" mission, we expect the new administration to get congress and Senate to begin reducing its commitment to finance and support wars and regime-change in the Middle East. The war  is not merely for oil! This would be due to  America's reserves of oil being the largest already; but yet possibility of those energy reserves  being a "redundant asset" under fossil fuel bans due to climate change concerns.

Like most of the Americans who voted for President Trump, FPM believe he represents maverick hope for a foundering economy and country, weighed down by US$ 20 trillion of National Debt and 40 years of neoliberal Friedman monetary policy economics.
Yet the newly inaugurated President of the United States said in his realty salesman pitch style:
"From this day forward, a new vision will govern our land."
And the  morning after?