Author Topic: Chanos and SAC Saw Non-Public Fairfax Research - Bloomberg  (Read 7980 times)

Parsad

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Chanos and SAC Saw Non-Public Fairfax Research - Bloomberg
« on: February 12, 2009, 02:46:23 PM »
Bloomberg reports that both Kynikos and SAC Capital had access to John Gwynn's preliminary analyst report on Fairfax before it was published.  As we all know, Gwynn was subsequently fired by Morgan Keegan for releasing non-public information, and it was his original report insinuating that Fairfax was nearly $5B under-reserved that stirred the hornet's nest.  This gets better and better!  Cheers!

http://www.bloomberg.com/apps/news?pid=20601087&sid=a1gpkAyXa8iw&refer=home
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Parsad

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Re: Chanos and SAC Saw Non-Public Fairfax Research - Bloomberg
« Reply #1 on: February 12, 2009, 02:50:24 PM »
What's also very interesting is that Chano's little forum called CNBC has yet to report any of this story.  Cheers!
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Parsad

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Re: Chanos and SAC Saw Non-Public Fairfax Research - Bloomberg
« Reply #2 on: February 12, 2009, 04:10:54 PM »
On the updated version on Bloomberg, SAC says that they held shares of Fairfax and weren't shorting.  Now what if two or three funds colluded in driving down a stock's price? 

What if one firm bought shares and held them.  Then one or two shorted the hell out of the thing.  The one with the actual shares could also lend the shares out and receive considerable interest income.  This would also allow the others to cover positions when the stock moves in the opposite direction.  Working together by naked shorting a stock, putting out negative analyst reports and media reports, they drive the stock down until the point where the funds shorting cover and pay back the hedge fund that lent the shares out.

SAC's comments prove nothing about their intentions.  The emails being sent between the two firms indicates that there is more to this than meets the eye.  I can't wait for the trading activities at Kynikos to be unsealed.  Cheers! 
No man is a failure who has friends!

oec2000

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Re: Chanos and SAC Saw Non-Public Fairfax Research - Bloomberg
« Reply #3 on: February 12, 2009, 07:53:49 PM »
What if one firm bought shares and held them.  Then one or two shorted the hell out of the thing.  The one with the actual shares could also lend the shares out and receive considerable interest income.  This would also allow the others to cover positions when the stock moves in the opposite direction.  Working together by naked shorting a stock, putting out negative analyst reports and media reports, they drive the stock down until the point where the funds shorting cover and pay back the hedge fund that lent the shares out.

I don't see how this would work. Assuming SAC was a conspirator, what would they have to gain from the long position? Besides, the conspirators, in total, being net neutral, would not profit from the sell down.

The statement by SAC lawyer Klotz sounds quite unequivocal to me. Given that their trading positions are well documented and easily verified, it seems unilikely that a lawyer would make such a declaration without basis. Based solely on the "facts" from the article, I don't see how a case can be made for SAC's role in a conspiracy.

The Chanos/Gwynn link looks more promising and points to unethical and perhaps illegal activity but whether it is enough to prove conspiracy is still questionable, imo.





oec2000

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Re: Chanos and SAC Saw Non-Public Fairfax Research - Bloomberg
« Reply #4 on: February 12, 2009, 11:17:09 PM »

oldye

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Re: Chanos and SAC Saw Non-Public Fairfax Research - Bloomberg
« Reply #5 on: February 13, 2009, 03:30:34 AM »
http://online.wsj.com/article/SB123449787320481341.html

this link seems to work without membership

Uccmal

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Re: Chanos and SAC Saw Non-Public Fairfax Research - Bloomberg
« Reply #6 on: February 13, 2009, 04:36:17 AM »
Being a lead story on Bloomberg, and in the WSJ, cant be good for business.  Oh, to be a fly on the wall at SAC and Kinkos Capital to see how they are going to manage redemptions.  In this climate investors will run so fast you will hear the wind roaring past.  No one wants to get stuck unable to redeem if there is a big fine.  The unfortunate side effect is the lawsuit will be bleeding a stone at the end. 


Never mind that the enforcement agencies are going to play "pile on the rabbit" now.  What choice have they got?  F--ers deserve everything they have coming. 
GARP tending toward value

link01

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Re: Chanos and SAC Saw Non-Public Fairfax Research - Bloomberg
« Reply #7 on: February 13, 2009, 07:48:15 AM »
<<F--ers deserve everything they have coming.>>

raw, primal elegance...touche! couldnt agree more. the sec needs to put an end to illegal trading & market manipulation. period...exclaimation point!

tooskinneejs

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Re: Chanos and SAC Saw Non-Public Fairfax Research - Bloomberg
« Reply #8 on: February 13, 2009, 07:51:41 AM »
From today's WSJ coverage:

"Trading records obtained by Fairfax through discovery in the lawsuit show that Kynikos put on a $5 million "short" position, or a bet against Fairfax shares, in the month after Mr. Chanos learned of Mr. Gwynn's report, including $2.5 million the day before the report came out, a Fairfax attorney, Michael Bowe, said during a September court hearing."

That pretty much says it all, doesn't it?  Seems like it should be a pretty simple criminal case for some young government attorney to earn a notch on his belt with.

tooskinneejs

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Re: Chanos and SAC Saw Non-Public Fairfax Research - Bloomberg
« Reply #9 on: February 13, 2009, 08:39:29 AM »
Here is Henry Blodget's take on the news:

http://www.businessinsider.com/chanos-sac-snared-in-wall-street-research-scandal-2009-2#comments

His comments and the comments from readers at the bottom are kind of interesting.  Sounds like a lot of folks think insider trading and market manipulation is no big deal.