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The Hail Mary Pass


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#1 wndysrf

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Posted 02 September 2005 - 01:49 PM

Looks like that guy over at that Bayou Hedge Fund suffered some big trading losses and whittled $400 million down to $160 million.

Then, he does what a lot of traders to when they are down.

He goes for the "Hail Mary Pass".

Apparently, he took $100 million and left it in the hands of some other guys who promised to "Riverboat" the proceeds into $7 billion over the next decade.

Not many details yet, but I'm sure we'll be hearing the blow by blow pretty soon.

From today's WSJ:

Did Bayou Bet With Con Artists?

Arizona Says Manager Gave $101 Million to Shady Group, Desperate to Recoup Losses


By IAN MCDONALD and JOHN R. EMSHWILLER
Staff Reporters of THE WALL STREET JOURNAL

Arizona state authorities said the hedge-fund manager under investigation for what federal prosecutors now allege was a massive fraud turned over $101 million of his clients' money to a group of suspected con artists, in a long-shot bet to mask hundreds of millions of dollars in missing assets.

In the first official allegation that Bayou Management LLC was rife with fraud, the Justice Department's U.S. Attorney office in Manhattan yesterday alleged in a civil lawsuit that Bayou had overstated its assets and returns since 1998, a year after it started investing.

Arizona authorities seized the $101 million in May after becoming suspicious of a man to whom Bayou chief executive Samuel Israel III had turned over the money. The authorities said Mr. Israel either was duped into a fraud that promised to turn the money into $7.1 billion within 10 years, or participated in the scheme to cover up the apparent collapse of his hedge funds, based in Stamford, Conn.



..................................

And now the "Fund of Funds" are reeling from losses, being taken to the cleaners by the Bayou Boys

Scandal Puts Spotlight On Hennessee Group

By IANTHE JEANNE DUGAN
Staff Reporter of THE WALL STREET JOURNAL

Last year, Lee Hennessee went to Stamford, Conn., to visit Samuel Israel III, just after that hedge-fund manager had back surgery.

"I wanted to look at his face and see if he was back and looking strong," recalled Ms. Hennessee, an adviser who helps investors choose hedge funds. "He looked great. He actually jumped for me."

Today, Ms. Hennessee finds herself in the middle of a battle over the apparent collapse of Mr. Israel's hedge-fund firm, Bayou Management LLC, and the possible disappearance of hundreds of millions of dollars. She and her husband, Charles Gradante, run Hennessee Group, which recommends hedge funds for wealthy investors, and are two of the booming industry's biggest promoters. On their advice, Hennessee clients say they had invested tens of millions of dollars in Bayou.

The Bayou scandal has trained an uncomfortable light on the rapidly growing field of such consultants, as well as managers of "funds of funds" that pool clients' money in multiple hedge funds.

Funds of funds are the fastest-growing source of money for hedge funds, which are the loosely regulated investment pools that cater to institutions and wealthy individuals. Of more than $1 trillion invested in hedge funds, $282 billion has come from funds of funds -- a more-than-fourfold increase since 2000, according to an annual survey published by Hennessee.


Hennessee says it uses its clout -- its clients have more than $1 billion invested in 100-plus hedge funds -- to negotiate deals for its customers, including lower minimum balances and fees and quicker access to their money. Many Bayou investors are wondering why their consultants and funds-of-funds managers didn't see any red flags at the firm, including a lawsuit alleging possible securities-fraud violations and several regulatory actions.


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#2 tdultima

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Posted 02 September 2005 - 04:32 PM

not much follow through for a bottom

the downtrend that started a couple weeks ago is still intact imo

staying short

#3 KeyboardProspector

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Posted 02 September 2005 - 04:34 PM

I just looked at yesterdays (Thursdays) Treasury daily statement. They closed the day with $6B in their piggy bank. Today they had payments due of somewhere around $20B due. They didn't borrow it (they pre announced a Tuesday CMB announcement /auction). Tax receipts won't cover the bill. Where did it come from?

Maybe another shady Federal Finance Bank transaction?

I won't know the answer to that until close of business Tuesday....

Hiding Bear, what do you think?

#4 LeeWhee

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Posted 02 September 2005 - 04:36 PM

"Checks for $3.15 million from Mr. Israel to Mr. Starker -- bearing characters from the cartoon Sponge Bob Square Pants -- bounced, court records show. Mr. Israel's wife told Mr. Starker's counsel that she hadn't received any money from her estranged husband, according to court papers." :lol: :lol: :lol:


Maybe it's just me, but if I got a check from a hedge fund chieftan with Sponge Bob Square Pants on it, I'd get a little leery...

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"I'm not a real estate bum. I wear diamonds and Rolexes. I'm a classy Realtorô."--- Liz "Flaming Orange" Seither, Clearwater, FL, who owes lenders millions of dollars in debts.

"Men do not desire to be rich, but to be richer than other men."---John Stuart Mill (1806-1873)

"When the music stops, things will be complicated. But as long as the music is playing, you've got to get up and dance. We're still dancing..."---Citigroup CEO Chucky "Master of Timing" Prince, 7/9/07

"Wall Street is a graveyard of geniuses."---Chriss Street, Treasurer, Orange County, CA, 7/27/07

"It was never my thinking that made big money for me. It was my sitting. Men who can be both right and sit tight are uncommon. I found it one of the hardest things to learn."---Jesse Livermore

"You can kill a sheep just once, but you can fleece him 100 times."---Jeff Macke

"Stocks are no longer the weather glass of fortune, but a part of the mask employed to disguise the nation's own face to itself." ---Horace Walpole, 1782

#5 Sudaca

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Posted 02 September 2005 - 04:38 PM

All that talk about cheese steaks on IDS reminded me of a bad joke..

Three dogs (american, german and peruvian) walking down the street... they bump into the most gorgeous looking poodle ever, so they all rush up to her panting and trampling over themselves like crazy trying to get a piece of the action. But she tells them "the one who can articulate an intelligent phrase with the words liver and cheese can have a go with me". So the american dog says "I like cheese. I hate liver", to which the poodle scoffs at and says "that is very poor, next!". So the german dog says "I like liver. I hate cheese"... The poodle merely rolls her eyes at him.. "NExt!". So the peruvian dog looks at the other two and tells them "Liver alone. Cheese mine."
Thanks, David

#6 Tig 'Ol Bitties

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Posted 02 September 2005 - 04:40 PM

"Checks for $3.15 million from Mr. Israel to Mr. Starker -- bearing characters from the cartoon Sponge Bob Square Pants -- bounced, court records show. Mr. Israel's wife told Mr. Starker's counsel that she hadn't received any money from her estranged husband, according to court papers." :lol:  :lol:  :lol:


Maybe it's just me, but if I got a check from a hedge fund chieftan with Sponge Bob Square Pants on it, I'd get a little leery...

<{POST_SNAPBACK}>


I was just thinking the same thing.

#7 Sudaca

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Posted 02 September 2005 - 04:41 PM

Well, the potential weekly bullish engulfing candles from yesterday are not there today, where it counted.
Thanks, David

#8 Tchaikofsky

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Posted 02 September 2005 - 04:43 PM

Close: The equity market began on slightly positive footing after a reassuring August employment report served as an early bullish catalyst. Modest consolidation erased gains midday, but, by and large, the indices spent the session within a tight trading range that lied within close proximity of the unchanged mark... The trading session was a light one, with the long Labor Day weekend occupying participants' thoughts and with many of them getting an early start to it... To wit, the session's trading activity lacked any real sense of conviction and was based on relatively low volume...

Going back to the morning's employment data, Aug. nonfarm payrolls rose l69K, below forecasts of 190K, but an upward revision to July figures (to 242K from 207K) keeps payrolls on track for 3% or greater GDP growth in 2H05; hourly earnings were up just 0.1%, easing wage-pressure concerns, while unemployment rate fell to a four-year low (4.9%)...

#9 beardrech

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Posted 02 September 2005 - 05:07 PM

"Checks for $3.15 million from Mr. Israel to Mr. Starker -- bearing characters from the cartoon Sponge Bob Square Pants -- bounced, court records show. Mr. Israel's wife told Mr. Starker's counsel that she hadn't received any money from her estranged husband, according to court papers." :lol::lol::lol:


Maybe it's just me, but if I got a check from a hedge fund chieftan with Sponge Bob Square Pants on it, I'd get a little leery...

<{POST_SNAPBACK}>

Its a dead giveaway that they were dealing with a sociopath-- which by the way is one of the attributes old-time bankers-without degrees in psychology had to be able to discern and judge
beardrech: You say that you were unable to see it coming-that the symptoms were indiscernible Why?
==== :ph34r: :ph34r: I think it was because my eye problems force me to look through my telescope backwards

#10 Sudaca

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Posted 02 September 2005 - 05:13 PM

I dunno anout the US, but Mexico and Brazil look like they still have gas in their tanks...

http://stockcharts.com/gallery/?eww

http://stockcharts.com/gallery/?ewz
Thanks, David

#11 beardrech

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Posted 02 September 2005 - 05:18 PM

All that talk about cheese steaks on IDS reminded me of a bad joke..

Three dogs (american, german and peruvian) walking down the street... they bump into the most gorgeous looking poodle ever, so they all rush up to her panting and trampling over themselves like crazy trying to get a piece of the action.  But she  tells them "the one who can articulate an intelligent phrase with the words liver and cheese can have a go with me". So the american dog says "I like cheese.  I hate liver", to which the poodle scoffs at and says "that is very poor, next!".  So the german dog says "I like liver.  I hate cheese"... The poodle merely rolls her eyes at him.. "NExt!".  So the peruvian dog looks at the other two and tells them "Liver alone.  Cheese mine."

<{POST_SNAPBACK}>


Verguenza en usted Sudaca
beardrech :ph34r: :ph34r: No a la vez como esto!

#12 wndysrf

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Posted 02 September 2005 - 05:19 PM

I dunno anout the US, but Mexico and Brazil  look like they still have gas in their tanks...

http://stockcharts.com/gallery/?eww

http://stockcharts.com/gallery/?ewz

<{POST_SNAPBACK}>


U.S. Markets are lagging badly.

The "rest of the world" markets are booming, thanks to unlimited liquidity provided by a sea of Trade Deficit Dollars and Petrodollars.

Most likely, the HedgeFunds are exiting the U.S. stock markets and piling on the foreign markets.

Or worse, they are shorting the U.S. markets and going long other markets in a "paired trade".

As usual, the HedgeFunds must always put their money to work.

They are always short something, or always long something, or a combination of both.

That could explain the sky high bearishness in the U.S. indexes, as measured by the 20-day put/call ratios and the Rydex ratios.
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#13 Sudaca

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Posted 02 September 2005 - 05:22 PM

:unsure:

Man, that article got me nervous. I went looking for the last check my hedge fund advisor sent me after I sold. Maybe I should run it by the authorities to see if it's any good....

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Thanks, David

#14 beardrech

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Posted 02 September 2005 - 05:23 PM

I dunno anout the US, but Mexico and Brazil  look like they still have gas in their tanks...

http://stockcharts.com/gallery/?eww

http://stockcharts.com/gallery/?ewz

<{POST_SNAPBACK}>

Yeh Sud
Lots of gas--Nitrous oxide--I'm thinking of going long on a chain of Laughing Clubs,the fashionable insttution of the day--it seems

beardrech :ph34r: :ph34r:Ive got plenty o money so why am I crying all the way to the bank???

#15 fxfox

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Posted 02 September 2005 - 05:28 PM

"Checks for $3.15 million from Mr. Israel to Mr. Starker -- bearing characters from the cartoon Sponge Bob Square Pants -- bounced, court records show. Mr. Israel's wife told Mr. Starker's counsel that she hadn't received any money from her estranged husband, according to court papers." :lol:  :lol:  :lol:


Maybe it's just me, but if I got a check from a hedge fund chieftan with Sponge Bob Square Pants on it, I'd get a little leery...

<{POST_SNAPBACK}>


is this for real? Whats next? A Homer Simpson Hedge Fund? A Barney Gumble Beer Fund? A Millhouse Trash Fund?
'patriot' is formed with 'patria' and 'idiot'





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