Tag Archives: White Shoe Boys

John Paulson Is Starting to Cash In on His Big Land Grab

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“Hedge-fund manager John Paulson, who made billions wagering against subprime mortgages, has started to profit from a U.S. housing bet that took longer to ripen: owning land.  After acquiring about 35,000 lots since 2009, Paulson & Co. shifted toward selling last year and is accelerating its disposition pace. Paulson’s funds had invested $770 million, mostly in lots bought out of bankruptcies or other distressed sales, and acquired two dozen communities in Arizona, California, Colorado, Florida and Nevada.  He’s joining other large land buyers who are selling.  Builders replenishing land holdings are finding that prices for finished lots across the U.S. jumped 57 percent since the bottom in 2009.”

http://www.bloomberg.com/news/articles/2015-08-12/john-paulson-starts-selling-land-to-reap-gains-in-u-s-housing

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Should Puerto Rico Shut Down Schools to Pay Its Debts?

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“The hedge fund report, authored by a trio of former International Monetary Fund economists, noted that Puerto Rico’s education spending had risen 39 percent in a decade during which school enrollment actually fell by a quarter. Surely, there must have been some unnecessary fat in the system to cut.  It’s easy to understand why this might seem outrageous. Firing teachers in the middle of what’s essentially a nine-year depression seems like a good way to further exacerbate Puerto Rican unemployment, possibly while sacrificing some childrens’ educations.”

http://www.slate.com/blogs/moneybox/2015/08/04/puerto_rico_s_debt_crisis_hedge_funds_say_the_island_should_shut_down_schools.html

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NYC Rips Hedge Funds Over Puerto Rico, While Giving Them Billions

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“Hedge funds that hold billions of dollars of Puerto Rico’s high-yield debt ‘are feeding off the misery of the island,’ Mark-Viverito, speaker of the City Council, told a cheering crowd last week at a City Hall rally. She accused the funds of trying to gut wages, education and health care for the island’s 3.5 million residents.  What she and other critics who spoke that day didn’t say was that New York taxpayers and retirees entrust some of those hedge funds with more than $2.2 billion of the city’s $166 billion in pension assets.  The Puerto Rican government said officials need to cut spending and take other steps to revive the economy, such as cutting the island’s minimum wage below the federal $7.25 level.”

http://www.bloomberg.com/politics/articles/2015-08-06/nyc-rips-hedge-funds-over-puerto-rico-while-giving-them-billions

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Hedge Funds Gear Up for Another Big Short: High-Yield Bonds

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“Wall Street is preparing for panic on Main Street.  Hedge funds are lining up to profit from potential trouble at some ‘alternative’ mutual funds and bond exchange-traded funds that have boomed in popularity among retirees and other individual investors.  Financial advisers have pushed ordinary investors into those funds in search of higher returns, a strategy that has come into favor as Federal Reserve benchmark interest rates remain near zero. But many on Wall Street worry that junk bonds, bank loans and esoteric investments held by some of those funds will be extremely hard to sell if the market turns, leaving prices pummeled in a rush for the exits.”

http://www.wsj.com/articles/hedge-funds-gear-up-for-another-big-short-1437504910

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Blackstone Selling 1,300 Atlanta Houses in Strategy Shift

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“Blackstone Group LP’s Invitation Homes, after spending more than $9 billion in a U.S. property-buying spree, is starting to sell some houses as it shifts focus from rapid expansion to fine-tuning its holdings.  Blackstone led private equity firms, hedge funds and other large investors in buying thousands of houses after the real estate crash, creating a new asset class of single-family rentals. Shares of publicly traded single-family landlords have trailed apartment companies as investors remain wary about the costs of running scattered-site rental properties. Landlords need thousands of homes in a market to achieve the scale needed for efficient management. That’s pushed smaller and mid-size owners to sell.”

http://www.bloomberg.com/news/articles/2015-07-13/blackstone-selling-1-300-atlanta-houses-in-strategy-shift

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House Flippers Are Back Together With Wall St.

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“Bridge loans, also known as hard-money or asset-based loans, give flippers cash for home purchases and construction with about a year to repay, and are backed by the real estate. Blackstone, the world’s biggest alternative-asset manager, is seeking to make $1 billion of the loans a year, according to Nick Gould, executive chairman of the firm’s B2R Finance unit.  Home flippers are benefiting from rising prices, limited new construction and a shortage of inventory on the market. While quick resales have decreased from the start of the housing market’s rebound, when investors snapped up discounted distressed homes, profits are getting bigger.”

http://www.bloomberg.com/news/articles/2015-05-08/hard-money-comes-easy-as-wall-street-funds-home-flippers

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Risky Loans Shunned by Banks Are Booming in Wall Street’s Shadow

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“Regulators’ efforts to rein in Wall Street’s biggest banks are in danger of backfiring.  Guidelines aimed at strengthening lending standards are shifting the market for high-yield credit to less-supervised loan funds, raising alarm this week from the Financial Stability Oversight Council. Because the funds don’t have depositors, some of their money comes from Wall Street banks, leaving systemically important institutions exposed to risks regulators hoped to avoid.  BDCs and private credit funds [are called] ‘Dodd-Frank banks’ because they’ve grown in the wake of the 2010 Dodd-Frank Act’s heightened supervisory scrutiny of regulated lenders.”

http://www.bloomberg.com/news/articles/2015-05-22/wall-street-flouts-fed-standards-to-fund-high-risk-loans

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While the smart money is selling in the US, it’s buying emerging markets

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“Private equity (PE) firms are selling stocks at the fastest pace in history.  According to Bloomberg, PE firms have sold $73 billion of their holdings to the public so far this year. Like all investors, PE firms want to sell their investments at the best price possible. So they sell the most when they think the market is topping out. PE firms have access to information that the public doesn’t have.  So when they’re selling, it’s a bearish sign. The S&P 500 has now rallied 204% since bottoming in March 2009. And it hasn’t had a 10% correction in more than three years. Bridgewater Associates, the largest hedge fund on the planet, now has 60% of its portfolio invested in emerging markets (EM).”

https://www.caseyresearch.com/articles/the-smart-money-is-selling-everything-thats-not-nailed-down

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Chicago Public Schools’ pain is these financial firms’ gain

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“Struggling to make payments for pensions and pay down billions of dollars in debt, the Chicago Public Schools last week announced 1,050 layoffs and $200 million in spending cuts to keep the school system afloat.  Dozens of financial and legal firms have been paid $18.1 million in fees from CPS borrowing and debt-refinancing deals since 2011, according to records obtained by the Chicago Sun-Times.  CPS still owes billions on borrowing deals dating to the mid-1990s, when then-Mayor Richard M. Daley took formal control of the school system, which then began renovating and building schools using borrowed money.”

http://chicago.suntimes.com/news/7/71/740413/watchdogs-cps-bond-fees

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ECB Money Printers Tip Hedge Funds In Private Meeting

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“Shortly after 6pm London time yesterday, The ECB’s Benoit Coeure told a non-public audience of hedge funds in London that ‘the central bank would moderately front-load its purchases in its quantitative easing program because of the seasonal lack of market liquidity in the summer.’ The reaction was a 50 pips drop in EURUSD… but this was inside information was not released to the trading public until around 8am London time – and resulted in a 150 pip plunge. Translation: a select private group of head funds in London were leaked ECB front-loading news 14 hours before The ECB deemed it ‘correct’ to publicly release the comments.”

http://davidstockmanscontracorner.com/the-ecb-money-printers-are-dangerous-incompetent-and-corrupt-tip-hedge-fund-in-private-meeting/

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