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Thursday, June 3, 2010

Thursday Brainstorming - part 1

1. One wonders what kind of pot the dirty old man from Omaha is smoking these days - he has turned into a huge disgrace as he claims no one saw it coming to defend his own dirty holdings. He has now proven to be a snake oil salesman as well as he makes calls and claims which are insane if he meant them but I assumes he knows better but still makes the claims. He obviously lost he grip on investments as he did not sell than everyone was greedy and has accumulated very dangerous weapons of mass-destruction (OTC derivatives) himself.


Buffett Defends Moody's Managers

Billionaire Warren Buffett defended his firm's investment in battered Moody's Corp., saying that mortgage-bond ratings issued by the firm were overwhelmed by the "greatest bubble I've seen in my life."

But the Berkshire Hathaway Inc. chief executive expressed doubts that even radical changes to the credit-ratings industry, such as creating a government-appointed board to select rating firms, would improve the quality and accuracy of ratings.

"I'm not arguing that this is the perfect model," Mr. Buffett said Wednesday at a hearing by the Financial Crisis Inquiry Commission, which subpoenaed the investor as part of the congressional panel's probe of the ...

2. That is a sample how Goldman's superior risk management works - a web of insiders giving them a headstart - that's the way the good old Rothschilds did it and one of their outlets ( Goldman) keeps doing it


A Series Of Lucky Coincidences Involving Goldman Sachs And BP plc

Tyler Durden's picture

Earlier, when observing the US AG disclosure of a civil and criminal investigation into BP plc, we noted in passing that BP's former Chairman, Peter Sutherland, who left the firm is a Chairman of Goldman Sachs International. Mr. Sutherland holds some other interesting titles, including a position on the Trilateral Commission, he was a chairman of the London School of Economics in 2008, he is a UN special representative for migration and development; he was the founding director-general of the World Trade Organisation, he had previously served as director general of GATT since July 1993 and was instrumental in concluding the Uruguay GATT Round Negotiations. Needless to say, we focused on the Goldman relationship. When digging deeper, we uncovered some amusing correlations, most notably between the BP plc sellside ratings by Goldman BP analyst Michelle della Vigna and the Goldman Sachs Asset Management holdings of BP plc. These are summarized on the attached chart.

And in case this is not enough, another way to visualize Goldman's rating history, together with price targets on BP is presented below, straight from GS itself:

As the first chart above demonstrates, there is an "odd" correlation between Goldman's sellside sentiment on the stock, and the amount of stock held by Goldman's asset management arm, especially evident in the days between December 31, 2009 and March 31, 2010, when despite a recent Buy rating attached to the firm, GSAM sold off more than 40% of its stake in the name. On December 31, Goldman held 71 million BP shares, and three months later this number went down 42.5 million. Another oddity is that back in 2008, when GS had the stock at Neutral, GSAM doubled its stake in the firm from 28.8 million shares to 57.3 million days before Ms. della Vigna raised the stock to a Buy, albeit if only for just over a month. Oddly enough, in the half year period when Goldman was telling its clients to Sell the stock, between 3/31/2009 and 10/28/2009, GSAM holdings declined by a whopping -3.9%.

Yet while the fact that GSAM did not follow the recommendations of its very own analyst is not peculiar. We have long pointed out that Goldman does precisely the opposite of what it advises its "clients" to do. What is slightly more troubling is the combination of Mr. Sutherland's departure from BP effective January 1, the release of his fiduciary obligations to BP shareholders, the upgrade of BP by Goldman from Neutral to Buy 4 days before Sutherland's full, and non-conflicted return to the GSI Chairmanship, and last but not least, the dumping of 28 million BP shares by GSAM in the next three months, an act which has saved the asset manager roughly GBP50 million.

We are confident that all of the above is purely coincidental.

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