This "Rabble-Rouser" Creates A Stir Yet Again

I retweeted today 5 posts with different takes on Daniel "Dan" S. Loeb's Second Quarter 2010 Investor Letter, as you can see from my Twitter widget on the right sidebar. I did so to highlight the various lenses through which to read the said letter.

Dan Loeb is an activist investor who founded Third Point LLC in 1995, a New York-based  hedge fund named after the biggest break in Malibu Surfrider Beach, now with approximately $3.4 billion of assets under management. In 2005, Bloomberg published a revealing 9-page write-up on Loeb by Deepak Gopinath, titled "Hedge Fund Rabble-Rouser," that profiles the man from way back when he was still a boy of 12.  Apparently, his "Wall Street's merchant of venom" image is a deliberately cultivated one. His aim is really "to shame companies into replacing their CEOs, shaking up their boards--whatever it takes to  boost the value of his investments." (for example, check out his letters to Ken Griffin and Salton,Inc., both written in 2005).

True to form, in his latest investor newsletter, Loeb railed at "inept executives in regulated institutions" and at the "incompetence of many boards of directors." But this time, however, he opened a new front--Washington. After what The Huffington Post calls "grandiose, introductory quotes from the likes of Ronald Reagan, Thomas Jefferson and President Obama," Loeb then proceeded to lambast the Obama Administration. His litany of government "sins" include: the lawsuit filed against Goldman Sach's (which, to him, is "politically-laced" and a "tipping point for shaky investor confidence"); laws/regulations that "promote redistribution rather than growth"; and a "rigged" system where former executives and regulators who admit to not seeing the crisis coming walk away with millions or move up to higher positions in government.

You may want to check out the following links to better appreciate these issues:

* Paul Krugman's "The Unbearable Pettiness Of Being Rich" - http://nyti.ms/d4zYLj.

* Bess Levin's "Paul Krugman: Dan Loeb & Co Are Mad At Obama Because They’re A Bunch Of Petty Little Rich Boys" - http://bit.ly/ajlw0P.

* Andrew Ross Sorkin's "Why Wall St. Donors Are Deserting Obama" - http://nyti.ms/9PLNCD.

*The Huffington Post's "Daniel Loeb, Hedge Fund Manager, Blasts Obama Administration's 'Redistribution Of Wealth'" - http://huff.to/c48dCD.

* Tech Ticker's "Hedge Fund Manager Dan Loeb: The Whole System Is Rigged" - http://yhoo.it/amFZPR.

(Photo courtesy of Google Images)

Microblogging On Twitter

Oh, I finally yielded to the siren call of microblogging by joining Twitter(@sarzi_m). Unlike younger "twitters," however, I don't intend to use this platform as an open personal diary. Instead, I plan to use it basically as my online reading list of interesting finance and banking news reports, articles and analysis/opinions posted in other blogs.

I know I can't blog as frequently as I want to, so I thought the next best thing is to share with you the current topics and issues that I find interesting to read, to keep abreast of a dynamically changing finance and banking environment. For this purpose, I have embedded on my sidebar a Twitter widget which displays 10 of  my most recent tweets/retweets. My blog feeds, by default, are automatically included in this tweet list. Please feel free to click on any of the links provided there that catch your attention.

Of course, I also follow some celebrities and personalities, some of my favorite authors, and monitor breaking news (from BBC, CNN, Philippine news organizations, etc.). By design, however, I did not include their tweets in the said widget for it will not serve my original purpose for joining Twitter.

Are you on Twitter, too? Follow me and I'll follow you in return. See you there!

(Photo courtesy of  http://www.esquire.com/)

A Blind Oracle "Sees" Something Omen-ous

We're not done yet with the Hungry Ghost Month and now here comes the so-called Hindenberg Omen, foreshadowing more market gloom. Some stock market pundits even go as far as to say that this heralds an imminent market crash. So what's this Hindenberg Omen that's been making the rounds in the Web?

Dimitra DeFotis of Barrons.com reported that the market went abuzz last week when James Miekka, the blind 50-year old former physics and math teacher, who now publishes the investing newsletter The Sudbury Bull and Bear Report, sold his stock positions. Miekka apparently commands such market attention for being the author of the Hindenburg Omen, a technical analysis pattern that is said to have portended past stock market crashes, notably those in 1987 and 2008.

According to DeFotis, the technical criteria that underpin and confirm the Hindenburg Omen were all present on Friday—new 52-week highs and lows exceeding 2.5% of issues traded on the New York Stock Exchange, the 50-day moving average rising, and three other factors. Some are skeptical, however, in the light of new fixed-income products masked as equity, which could affect one’s reckoning of the technical criteria.

“But, like a blind prophet of Greek lore, Miekka has seen something disturbing in recent weeks. We'll have to wait to see whether his aim is true,” wrote DeFotis (more details here). I'm also eager to find out.

(Photo courtesy of Google Images)

Man Versus Machine Redux

The New York Times' Julie Creswell has some good news (for us humans): "For a change, flesh-and-blood money managers are doing better than the machines. Much of the money that is flowing out of quant funds is flowing into funds managed by human beings, rather than computers." She reported recently that "one in four quant hedge funds has closed since 2007" and that the combined assets of quant funds specializing in US stocks have shrunked by 61% from $1.2 trillion in 2007 to $467 billion, due partly to investment losses and partly to client withdrawals (more here).

In hindsight, I find it surreal that as late as 2008, when a lot of quant managers were getting clobbered during the financial panic, a theoretical physicist who had founded a small biotech company had this idea that Wall Street trading desks could become smarter by completely getting rid of the people who run them! Although computers have already replaced many of the trading desks at the time, this physicist wanted supercomputers with artificial intelligence to totally run the show by doing away with even the math whizzes who program the market-predicting computer algorithms (more here).

These intellectual zealots have mightily fallen from grace since the near destruction of Wall Street two years ago. But like the phoenix, these rocket scientists seem to have the mythical ability to rise from their ashes, like they did after the collapse of the hedge fund Long Term Capital Management in 1998. Thus, despite their latest near-death experience I wouldn't write their story off as finis. Not yet...

(Photo courtesy of Google Images)