I have to admit to being excited about this, as a follow up to the earlier news. I can't wait to watch this come together!
You may return to your Gekko-free lives. For now.
Wednesday, August 29, 2007
Friday, August 24, 2007
Blog Updates
You'll notice some updates in the recommended sites along the right margin of the blog. As I've been catching up on my reading, I've come across a gaggle of informative sites, including a bunch of real estate sites dealing with the Washington, DC area.
The first among the new sites is The Realinvestor, the blog of Sherman Ragland, a well known investor in the DC metro area. Sherman is also the head of the DC Real Estate Investors Association (REIA) of which I am a member, and he's generally a nice guy. His writing is and speaking is generally insightful and useful, even if its a bit inaccurate with some of the finer details of the financial machinery. We won't hold that against him. :-)
You'll also find the Baltimore Housing Bubble blog and Inside the DC Bubble as new additions. Both go into nice detail about their particular markets, clearly written from the perspective of residents of each city. "On the ground" analysis is always welcome. Patrick.Net contains a running tracker of major RE news stories from around the country along with commentary.
Under alternative investments, I added The Aleph Blog which provides really awesome yet readable commentary on markets from the perspective of a professional investment analyst.
In the news site category, I added the International Herald Tribune. I like their website, especially the layout, which helps promote readability. IHT helps round out my international reading, along with some sites I have yet to add. Those are forthcoming. You'll also notice the addition of Here is The City to the news category. I just found this site courtesy of my friend Finbar Taggit, and again, it adds to the diversity of news sources.
Under business sites we have The Epicurean Dealmaker, an wonderfully entertaining and insightful blog from a seasoned M&A banker. I can tell I'm going to expand my vocabulary by reading this one.
So, those are the newly recommended sites, for anyone who hadn't noticed. I hope you find them as informative and enjoyable as I do.
Time to get back to work...
The first among the new sites is The Realinvestor, the blog of Sherman Ragland, a well known investor in the DC metro area. Sherman is also the head of the DC Real Estate Investors Association (REIA) of which I am a member, and he's generally a nice guy. His writing is and speaking is generally insightful and useful, even if its a bit inaccurate with some of the finer details of the financial machinery. We won't hold that against him. :-)
You'll also find the Baltimore Housing Bubble blog and Inside the DC Bubble as new additions. Both go into nice detail about their particular markets, clearly written from the perspective of residents of each city. "On the ground" analysis is always welcome. Patrick.Net contains a running tracker of major RE news stories from around the country along with commentary.
Under alternative investments, I added The Aleph Blog which provides really awesome yet readable commentary on markets from the perspective of a professional investment analyst.
In the news site category, I added the International Herald Tribune. I like their website, especially the layout, which helps promote readability. IHT helps round out my international reading, along with some sites I have yet to add. Those are forthcoming. You'll also notice the addition of Here is The City to the news category. I just found this site courtesy of my friend Finbar Taggit, and again, it adds to the diversity of news sources.
Under business sites we have The Epicurean Dealmaker, an wonderfully entertaining and insightful blog from a seasoned M&A banker. I can tell I'm going to expand my vocabulary by reading this one.
So, those are the newly recommended sites, for anyone who hadn't noticed. I hope you find them as informative and enjoyable as I do.
Time to get back to work...
Wednesday, August 22, 2007
The Costs of Staffing a Mansion
Leave it to the WSJ to be all over this one! In case you were wondering, its bloody expensive. My question is when did 5,000 square feet of house become a mansion?
Tuesday, August 21, 2007
Friday, August 17, 2007
It Is Coming
Interesting perspective over at FinanceAsia.com from a credit risk management head at an investment bank. Not that any of this should be surprising, but it will be interesting to see just how accurate this prediction is. I personally don't think anyone will get away clean either.
Doubling Down?
Wow. I have to admit that when I read a story like this, my appreciation grows for the legal crime that now seems to masquerade as private equity.
An issue that pops up for me is this - if a PE firm acquires debt in the secondary market from one of its own acquisitions, isn't this doubling down on what is a clearly a weak investment. I mean, the ratios to EBITDA that deals have been done for over the last 12 - 18 months have been sick. 9x EBITDA? WTF? How does this make sense to anyone. I haven't lived through that many complete market cycles and I can say that it doesn't even pass a sniff test to me. If returns are going to be weak (or even horrible) on the latest vintage of PE deals, and a firm goes in and acquires the leveraged loans of one of its targets on the secondary market, they would seem to be dooming the IRR on that deal in the long run. (Of course, that depends on how cheap the debt gets and how much equity they put up originally.)
Still, I like this strategy overall. Its smart, if not ingenious. It maintains the PE firm's control over the target. It saves face with the investors, if they even know what's going on.
Anyone carrying a gun to commit theft is a rank amateur!
Until next time...
An issue that pops up for me is this - if a PE firm acquires debt in the secondary market from one of its own acquisitions, isn't this doubling down on what is a clearly a weak investment. I mean, the ratios to EBITDA that deals have been done for over the last 12 - 18 months have been sick. 9x EBITDA? WTF? How does this make sense to anyone. I haven't lived through that many complete market cycles and I can say that it doesn't even pass a sniff test to me. If returns are going to be weak (or even horrible) on the latest vintage of PE deals, and a firm goes in and acquires the leveraged loans of one of its targets on the secondary market, they would seem to be dooming the IRR on that deal in the long run. (Of course, that depends on how cheap the debt gets and how much equity they put up originally.)
Still, I like this strategy overall. Its smart, if not ingenious. It maintains the PE firm's control over the target. It saves face with the investors, if they even know what's going on.
Anyone carrying a gun to commit theft is a rank amateur!
Until next time...
Quick REI Musings
Isn't it fun watching to see who was swimming naked when the tide goes out?
Man, real estate investing definitely got harder in some key ways over the past few weeks. No surprise there, even for someone like me who was in the hospital last week. However, there is opportunity here. I've been dealing with another investor for a number of weeks over some properties he wants to unload. I think these conditions will help him see that if he wants out of these investments, he's going to have to give up some of his ideas about the number he wanted/wants. Of course he could always sell to some out of state buyer who thinks they are getting a steal. (Damn New Yorkers and Californians! I hate those fuckers!) However, I don't see that happening. I deal with the man all the time and I can barely get an appointment with him. I have his cell phone number, and I'm certain he doesn't just give that out to anyone. We've got a multi-year relationship.
For those who read this blog and have seen me post on Baltimore real estate investing, all I have to say is "whoa!" That's it. Whoa! Man, so many people will take it in the ass in Baltimore that its going to look like a bad prison rape porn flick. I love it, because I won't be one of them. Yay! To be the last man standing, that's the plan. The credit rating is becoming immaculate. The cash is waiting and growing, albeit a bit more slowly than I'd like but it is still growing. Relationships are being forged. All I need to see is a bit more blood. Soon, I think it will be time to attack!
Whoa!
Man, real estate investing definitely got harder in some key ways over the past few weeks. No surprise there, even for someone like me who was in the hospital last week. However, there is opportunity here. I've been dealing with another investor for a number of weeks over some properties he wants to unload. I think these conditions will help him see that if he wants out of these investments, he's going to have to give up some of his ideas about the number he wanted/wants. Of course he could always sell to some out of state buyer who thinks they are getting a steal. (Damn New Yorkers and Californians! I hate those fuckers!) However, I don't see that happening. I deal with the man all the time and I can barely get an appointment with him. I have his cell phone number, and I'm certain he doesn't just give that out to anyone. We've got a multi-year relationship.
For those who read this blog and have seen me post on Baltimore real estate investing, all I have to say is "whoa!" That's it. Whoa! Man, so many people will take it in the ass in Baltimore that its going to look like a bad prison rape porn flick. I love it, because I won't be one of them. Yay! To be the last man standing, that's the plan. The credit rating is becoming immaculate. The cash is waiting and growing, albeit a bit more slowly than I'd like but it is still growing. Relationships are being forged. All I need to see is a bit more blood. Soon, I think it will be time to attack!
Whoa!
Quant Correlations
Sorry, but I found this one quite funny. Even though I was out of it last week, as I get caught up, this story stays on my mind.
So if all of these quant funds are sitting on proprietary models, where was the protection? Where were the hedges? How much leverage was/is in play? Liquidation obviously spread to other markets so that these funds could meet margin calls and generally de-leverage.
From my reading, the valuation factor was what kicked most of these in the ass. Stat arb plays got reversed, shorts had to be covered while longs got whacked. Beautiful! Now, I recall seeing an article that mentioned comments from someone at Goldman to the effect that they had too much weight on the valuation factor and not enough on their proprietary factors. So here's a stupid question - why? Aren't the proprietary factors what earn you your money? I mean, it doesn't take a genius to figure out that most of the quant funds were executing similar strategies and even similar models. How much originality can there really be? No idea is original, in my opinion. However, everyone can tweak their models in various ways, and that should be where the money is. So if Goldman had proprietary factors in their model(s) which were not being weighted as heavily as standard valuation models, you really have to wonder what you're paying for.
Don't get me wrong. This is not simply a Goldman issue. It looks like lots of quants got dinged on this one. Highbridge, AQR, Campbell & Company and Renaissance are just a few of the names I've seen reported. Clearly there were more, although some probably got out sooner, or have held on longer. (Even though I doubt that last one, because anyone who got whacked for a larger percentage than Goldman was going to be outed by an investor.)
Anyway, I have to admit that although I am taking a serious hit in my portfolio, I am enjoying watching this credit crunch and sell-off. Do I like losing money? Oh hell naw! However, the day of reckoning was long overdue. Thankfully I have some cash available to put to use. I've been waiting for this, particularly in the housing market, for years.
Until next time...
Update: I found one of the articles talking about these "crowded factors".
So if all of these quant funds are sitting on proprietary models, where was the protection? Where were the hedges? How much leverage was/is in play? Liquidation obviously spread to other markets so that these funds could meet margin calls and generally de-leverage.
From my reading, the valuation factor was what kicked most of these in the ass. Stat arb plays got reversed, shorts had to be covered while longs got whacked. Beautiful! Now, I recall seeing an article that mentioned comments from someone at Goldman to the effect that they had too much weight on the valuation factor and not enough on their proprietary factors. So here's a stupid question - why? Aren't the proprietary factors what earn you your money? I mean, it doesn't take a genius to figure out that most of the quant funds were executing similar strategies and even similar models. How much originality can there really be? No idea is original, in my opinion. However, everyone can tweak their models in various ways, and that should be where the money is. So if Goldman had proprietary factors in their model(s) which were not being weighted as heavily as standard valuation models, you really have to wonder what you're paying for.
Don't get me wrong. This is not simply a Goldman issue. It looks like lots of quants got dinged on this one. Highbridge, AQR, Campbell & Company and Renaissance are just a few of the names I've seen reported. Clearly there were more, although some probably got out sooner, or have held on longer. (Even though I doubt that last one, because anyone who got whacked for a larger percentage than Goldman was going to be outed by an investor.)
Anyway, I have to admit that although I am taking a serious hit in my portfolio, I am enjoying watching this credit crunch and sell-off. Do I like losing money? Oh hell naw! However, the day of reckoning was long overdue. Thankfully I have some cash available to put to use. I've been waiting for this, particularly in the housing market, for years.
Until next time...
Update: I found one of the articles talking about these "crowded factors".
Sunday, August 12, 2007
In Search of New Employment
I have finally decided to pursue the dream of finding employment in the world of alternative investments. It has not been easy to make this decision, since it is completely foreign to the world with which I am familiar (technology). However, I have felt myself stagnating in the technology realm since leaving California in 2002. Now I look up, 5 years have passed, and its all a blur.
I miss the excitement, the energy, the fear of working in a startup. As much as I would love to find something similar in the technology arena, I'm not sure such exists in the Washington, DC metro area. Pretty fuggin' sad, actually, but wholly unsurprising.
Finance has always been a personal interest of mine, literally since I was a kid. I mean, I had the audacity to attempt to calculate the value of the contents of Scrooge McDuck's money bin using the prevailing per-ounce price of gold in the mid 80s. Of course, I was guided into other arenas by well meaning but unfamiliar people in my life but such IS life. I've maintained my interest in markets, finance, and how money works through all of those changes and it has even grown significantly. The whole "game" (if I may use that word) is fascinating to me.
It has become clear that a new challenge is in order. I like what I do (whom I do it for, that is another story). However, among other things, writing this blog has shown me that I need to actually start playing full on w.r.t. to this "hobby". Consider this the first step.
I would love to find an analyst position within a hedge fund or PE firm, although after this past week, employment with the former may be a bit difficult to come by. I'd even consider a technology position within one of these entities, as a stepping stone to becoming an analyst and then into portfolio management. I'm completely open. What I do know is that my current situation isn't working. So, with that said, from time to time, don't be surprised if I use this space to document my trials and tribulations in searching for employment in the world of alternative investments.
Until next time...
I miss the excitement, the energy, the fear of working in a startup. As much as I would love to find something similar in the technology arena, I'm not sure such exists in the Washington, DC metro area. Pretty fuggin' sad, actually, but wholly unsurprising.
Finance has always been a personal interest of mine, literally since I was a kid. I mean, I had the audacity to attempt to calculate the value of the contents of Scrooge McDuck's money bin using the prevailing per-ounce price of gold in the mid 80s. Of course, I was guided into other arenas by well meaning but unfamiliar people in my life but such IS life. I've maintained my interest in markets, finance, and how money works through all of those changes and it has even grown significantly. The whole "game" (if I may use that word) is fascinating to me.
It has become clear that a new challenge is in order. I like what I do (whom I do it for, that is another story). However, among other things, writing this blog has shown me that I need to actually start playing full on w.r.t. to this "hobby". Consider this the first step.
I would love to find an analyst position within a hedge fund or PE firm, although after this past week, employment with the former may be a bit difficult to come by. I'd even consider a technology position within one of these entities, as a stepping stone to becoming an analyst and then into portfolio management. I'm completely open. What I do know is that my current situation isn't working. So, with that said, from time to time, don't be surprised if I use this space to document my trials and tribulations in searching for employment in the world of alternative investments.
Until next time...
Disappearing Act
I have to apologize to all my readers for my disappearance from last Tuesday, 7 August until today. I was hospitalized for a Sickle Cell crisis from Tuesday through Friday, 10 August. It was the first time I've had a crisis that bad in over 3 years. Of course, I missed all the fun in the markets, which really sucks ass. But I have to apologize to you all since I know that I'm supposed to be on the front lines, commenting on what I see. For that, I do hope you'll forgive me.
Sunday, August 05, 2007
Domain Name Auction
The auction for one of my domains has started. I won't have an idea of the results until later in the week, as it is part of a silent auction. With any luck, I'll be 1 domain lighter and several thousand dollars richer by the time this auction ends. We'll see how it goes. In the meantime, I've been listing my domains with all the marketplaces I can find. Now to start actually developing my crown jewel to get more interest and possibly even some cash flow!
Wednesday, August 01, 2007
AHM Underwater
Boy, I'm glad I didn't buy that AHM (WSJ.com sub req'd) when I was thinking about it! I mean, I believe in my stop-loss orders and all, but the best way to prevent a loss is to avoid it outright.
Now, it will be interesting, purely as an observer, to watch what happens to AHM going forward. My partners and I have used AHM for the majority of our loans in Baltimore. While we're still performing, we'll definitely be looking for a new source of funding. That will be easier said than done.
90% haircut in one session. Its crazy to think that I was leery of them with a yield of 17%, ain't it? I liked the numbers, but given the expected (now realized) turmoil in real estate, I foresaw problems with their stock price even before this blowup. Now there aren't even earnings to calculate a P/E. Dot com, anyone?
The lesson to be taken away from this, if it wasn't already clear, is listen to your instincts.
Now, it will be interesting, purely as an observer, to watch what happens to AHM going forward. My partners and I have used AHM for the majority of our loans in Baltimore. While we're still performing, we'll definitely be looking for a new source of funding. That will be easier said than done.
90% haircut in one session. Its crazy to think that I was leery of them with a yield of 17%, ain't it? I liked the numbers, but given the expected (now realized) turmoil in real estate, I foresaw problems with their stock price even before this blowup. Now there aren't even earnings to calculate a P/E. Dot com, anyone?
The lesson to be taken away from this, if it wasn't already clear, is listen to your instincts.
Citadel Loves a Company in Misery
How interesting that this piece should run in today's Journal. (WSJ.com sub req'd)
From the sound of it, Citadel is definitely moving to become a market maker. You have to wonder when it will go for its broker-dealer license.
From the sound of it, Citadel is definitely moving to become a market maker. You have to wonder when it will go for its broker-dealer license.
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