It is my opinion that that things like Hedge Funds CDS, Mortgaged backed securities, and worthless debt obligations like student loans are actually structured and held corporate balance sheets, unbeknownst to most. The Banks, Hedge Funds, and Corporate Insiders I believe, work in concert on a mutually beneficial level, for the purpose of rigging the game.
1. A group of hedge funds all purchase equity interests in a listed company.
2. The hedge funds elect new board of directors
3. The directors replace management with someone of low moral regard who has a fetish for excessive leverage.
4. Banks extend a line of credit to the company
5. Company starts aggressively making asset purchases and entering into agreements (Land/Coal/Trees/Rights, etc), with either third parties or entities controlled by insiders themselves.
6. Company starts issuing convertible debt, bonds, and private placements; funds raised are used to pay back line of credit.
7. Company partners in joint ventures as part of a growth strategy due to "rosy prospects".
(Without digging through hundreds of corporate fillings on several different exchanges, you'd have no idea a pair of US based distressed debt hedge funds with loads of toxic paper they are looking to dump, are overseeing the development of a casino in Macau
8. Company starts acquiring bigger and bigger stake in the joint venture, paying higher and higher prices which helps inflate their balance sheet…an important point for leverage purposes. The payment is in form of both cash and stock, which very well could be used to construct equity swaps and actually get short!
9. Ask Carl Icahn to start spewing lies on T.V about his intention to take the company public, (like WCI Communities or the dozens of other firms he comes in to bid for at the absolute top)…as means to goose the market so he can dump (or probably even short)…
On and On..... The object seems to be to leverage to the max, acquire dozens of BVI entities and their associated debt obligations, insist on issuing 10% debt to pay back interest free credit facility with bank, make interest free promissory loans to insider controlled entities, accept loans from insider controlled entities with high interest and collateral requirements, and inflate the value as high as possible under any means necessary so the hedge funds have no problem layering into short exposure via equity, bonds, and CDS…so they synthetically can get short things like student loans, Greek debt, muni bonds or whatever disease their pal John Corzine was instructed to with.
I will be writing about XXX and XXX in the next few days; which I believe on the bearish China story alone make great shorts, however I have some serious concerns in regards to their financials, certain people’s involvement, risk of certain obligations hidden on their balance sheet, potential legal concerns, as well as the most SERIOUS concern....synthetically being used to short China REIT?
Spectrum Brands is another short in my opinion. After reading about that $104 million whistleblower payout, I’m putting together a piece on why Philip Falcone should be criminally charged.
Anyone interested in a report on the equities mentioned above , similar to this one, shoot me an email. The reason I started this blog and continue to post is with the intention of getting a couple consulting agreements, so if you are interested please contact me.