Do you think it’s a coincidence that Michael Burry, George Soros, and Passport Capital—all big names from their short bets in the 2007 housing collapse-- all just happen to come across and invest in Focus Media Holdings, while all hell was breaking loose here? For those not familiar, Focus Media Holdings is accused of being yet another Chinese fraud by Muddy Waters.
If you have read The Big Short by Michael Lewis, you’ll agree Michael Burry is a very intelligent guy who does his own homework. He, like myself, actually reads through these obnoxiously long securities fillings (globally) most people ignore. Burry was also one of the first to actually put on these CDS housing trades; and with billions in exposure and his clients breathing down his neck, do you really think he gave a fuck about a Chinese company making LCDs?
So why did Michael J Burry have $70 Million, Passport Capital $12 Million, Soros $12 Million; in Focus Media Holdings?
Studying these Chinese frauds in detail the same patterns become evident; the way cash flows, advisor/partnership relationships, pledging assets/securities, future purchases/sales, acquisitions, prepayments, cross boarder transactions, and certain percentages to name just a few.
What I believe is that these transactions are related to payouts from the banks to the funds resulting from their housing profits. Certain transactions also represent the CDS premium payment, which I believe take the form of equity securities which are placed into a trust (then shorted by the trustee secretly; ex: Deutsche Bank / Emerson Case) This is also how I think Funds like Paulson avoid paying taxes, they (funds/banks) launder it through different securities on different exchanges for 5 years and then just try to scratch where they “acquired” them. On that same note, this is why I suspect Paulson was pushing that investor presentation in Hartford where he wanted to break it up—while no expert in Hartford, I have read numerous fillings where upon company divesting assets/lines-of-biz, certain things such as warrants/ restricted shares instantly freed/convertible.
I’d love to talk to someone about some of the idea’s/ways to monetize what I’ve put together and working on; I’m hungry and looking for anything. I’d appreciate any feedback, inquires, or suggestions.