Urban Sprawl in China... Pictures

Just had a friend in China, shared some pictures taken from the window of the bullet train from Beijing to Shanghai.  He said these real estate projects were far outside the city and in the middle of nowhere. Quite interesting to see.  Here's a the train route mapped out in Google maps if your interested. Google Maps

CLICK TO ENLARGE PICTURES:

The Bear Case against Philip Falcone, Harbinger Group Inc, and Spectrum Brands

The Bear Case against Philip Falcone, Harbinger Group Inc, and Spectrum Brands 

Three Parts:

1.       Philip Falcone

2.      Harbinger Group Inc (NYSE:HRG)                             

Last                        9.71

Mkt cap                1.36B    

P/E                           -

52 week               2.75 - 10.85

3.      Spectrum Brands Holdings, Inc.(NYSE:SPB)

Last                        47.50

Mkt cap                2.44B

P/E                         275.99

52 week               23.04 - 48.22

Part 1:  Philip Falcone

A Dirty Insiders Playbook + 3 New Equity Targets ($YUM, $SBAC, $SBC)

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.

This is how it tends to look;

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.

US-Listed Chinese Frauds…Connecting the US Hedge Funds and Banks.

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.

Focus Media plunges on Muddy Waters allegations | Reuters Nov 21, 2011

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?

From the Start, Melco Shareholders stood no chance...Now its time to lose

From my Melco Macau Macro Report I included a few things from the fillings which supported my theory that this company never intended to make money for its shareholders; instead it was a tool for money laundering, corporate side deals, and the final garbage dump for the other side of Hedge Fund trades betting against the property prices in China and Hong  Kong.

A few old filings of Las Vegas Sands / China Sands, skeletons in the closet?

I had spent so much time on Melco when really, Las Vegas Sands looks to be an even bigger POS!  If what I suspect here is true, it should be much easier to prove/show than it has been with Melco, that being these publiclly traded casinos are being used as dumpsters for the other side of hedge fund real estate trades and toxic paper no one wants.

A couple fillings which caught my eye in the breif scan of the companies filling:   

Could Steve Wynn be assisting banks in the shorting of $Wynn? Via Trust and corporate structuring, just like Hedge Funds do it? Why not? Illegal?

I just wanted to throw up a few of these corporate structures so you can get familiar with the games I think these guys are playing…I haven’t looked into Las Vegas Sands or Wynn extensively but from what I have come across as well as the cross over with Melco, I feel both are destined for steep declines. 

Steve Wynn and Sheldon Abelson have equity holders interests in mind about as much as Philip Falcone did when he manipulated and dumped Lightbridge & the package of residual housing bets that came with it on teacher pension funds.

If you follow the news about the tiff between Wynn and Kazuo Okada, how about this…they are in cahoots and this was a strategy to loosen up some shares.  Didn’t Wynn lie about getting divorced a couple years back, for the same purpose?

Famous CDO Manager and his Biz in Melco's Subsidiaries...Donald Puglisi with Puglisi & Associates

As you can see from the article below this guy's cup of tea is subprime backed CDO’s.  I find his name, Donald Puglisi, in Melco’s  fillings as far back as 2006; so my question is: how likely is it that this guy wasn’t hired for his Structured Finance expertise?  Take this together with the billion dollar “Project”, distressed debt players Oaktree and Silverpoint capital undertook for Melco, along with investment Banks lending and structuring deals for melco which bear a strikingly resemblance to how CDO’s are financed, ramped up, and managed      
     ***9-6-2012  Update for Muddy Waters (See below)

Busy Building Synthetic China REIT CDO's on the Shanghai and Shenzhen Stock Exchanges

Below is a recent article about the Shanghai and Shenzhen markets—where pledging equity in exchange for loans is HOT! I suspect I’m one of the few outside the investment banking and ISDA crowd who’s figured out….this is exactly how they constructed the US housing short back in 2005-08!  What kinda made me laugh was when I saw that one of the board of directors of Enron is Chairman of one of these property companies (When I draw out the capital flows, entities, name changes, and downright fraud in the financials you'll understand why they brought in the experts!.....more on that good stuff later). Translated: 58 Housing prices listed pledged 116 million shares of developers robbing Peter to pay Paul

Letter to Michael Lewis regarding CDO Manager, Harding Advisors, Wing Chau’s defamation suit.

NOTE:  I wrote this with the intention of sending it to author Michael Lewis; however due to abnormal difficulty in locating his contact information I decided to post it here with the hope one way or another he comes across it.

Dear Michael Lewis,

You're book The Big Short was not only excellent, it has been instrumental in the side project I'm currently working on.

I saw that you are being sued by Wing Chau and this bothered me.

Page 141 of the hardcover Big Short; when Eisman is shocked to find out Wing Chau had sold his portfolio of CDO’s and wasn’t carrying anything.   A lot of questions remain, where the housing paper losses went. It is my opinion based off my research; those losses were fraudulently disguised and merged onto the balance sheet of certain companies; for example WCI Communities.

What the Big Boys are looking at

Here are two examples of what these guys are shorting (Click to Enlarge)

It’s a no brainer if you ask me; I don’t think it will take much of a slowdown in China for this market to run into trouble.  If you take a
forensic look at what the Hedge Funds, Banks, and Structured Finance
Arrangers are doing to the underlying market; infecting it with structured finance schemes which act like a cancer, at the same time act as fuel for the asset bubble—similar to what Magnatar was accused of doing back in 2007.

I almost hate to call these guys game out because it’s a great trade and I wish I had the means to put it on (in an ethical, honest fashion).  That last part I don’t believe is possible for these guys as they are just too big; instead they resort to fraud, deceit, and downright thievery in order to build a market large enough for them to short.  

The methods in which the Banks, Funds, and Arrangers employ for this will be the topic of future entries.

Feel free to contact me with any questions.

Donny

John Paulson Connection to Madoff…

I'm very interested in the story of John Paulson.  The brilliance that he seems to get assigned is completely counter to the vibe he throws me.  Listening to his congressional testimony and the occasional story in the paper he never really struck me as a sharp guy; especially compared to a Soros, Faber, or Jimmy Rogers.

From the Big Short,

China Property CDO's...Merged On You're Balance Sheet...

Despite my efforts of sending my report to a large number of fund managers in Melco, global regulators, company auditors, reporters, and a good number of the Funds in the ISDA club, the stock seems little interested.  

What did Deutsche Bank and Morgan Stanley do with that Synthetic?

I mean just read how ridiculous this is.  A lease hold?  Its painfully obvious DB and ML, are advancing $ for the ramp up of a CDO.  I'll write some commentary on this soon, along with a big relationship map of how Melco connects to the HK and Chinese property market the hedge funds are currently shorting.

http://www.hkexnews.hk/listedco/listconews/SEHK/2007/0601/LTN20070601056.pdf

Macau Gaming license was revoked, Whats the rest worth?

What is the Equity of Melco, Las Vegas Sands, and Wynn worth if its Macau Gaming license was revoked for violations of law, thus subjecting it to asset seizer by the Macau Government?

Real simply: (From Melcos 20-F)

Propublica.org Las Vegas Sands Article: Inside the Investigation of Leading Republican Money Man Sheldon Adelson

7-16-2012

Propublica.org Las Vegas Sands Article:  Inside the Investigation of Leading Republican Money Man Sheldon Adelson

This was an great piece.  Something I found especially interesting was that Leonel Alves, being on the Macau legislative board, was outside council for Las Vegas Sands and billing exorbitant rates.  Worth nothing is that back in May 2006, there was a deal where Melco paid a down payment as part of a partnership with an entity managed by Angela Leong On Kei, member of Macau Legislative board, wife of Stanley Ho, and mother of Lawrence Ho (CEO of Melco).  The deal was terminated 40 months later: thus the whole thing seemed to just act as a 100M HKD loan, to the entity Angela Leong On Kei represented. 

What is also interesting is that as you can see from the 2009 filing, Angela was on both sides of the deal, which seems itself inappropriate, not to mention the possible foul play with that deal in regards to her being on the Legislative board and the purpose of the transaction to acquire concession rights.

9-17-2006 Downpayment                     http://www.hkexnews.hk

Termination Dec 2009                          http://www.sec.gov

For more of this and things like the connection between Stanley Ho and Sino-Forest, I recommend you read my report posted here titled IHS Research Report Macau.

http://www.scribd.com/Russian_Research/shelf

Donald Shekels

Email:  IHS.Research@Mail.Ru

Twitter:  @Donald_Shekels