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>Munger "Recuses Himself" As Frontrunning Focus Shifts To His BYD Purchase


>It’s coming out like a can of worms…. It’s not just with 2 and 20 that fund managers make a killing…seems they’re all guilty of the same thing – Frontrunning

Charlie Munger may be just as guilty of a comparable attempt at frontrunning a Berkshire purchase through his previously undisclosed holdings of a 3% stake in BYD

see the story below from zero hedge

Munger “Recuses Himself” As Frontrunning Focus Shifts To His BYD Purchase
Author: Tyler Durden
April 6, 2011


A few days ago, we disclosed that based on David Sokol’s testimony to CNBC, Buffett’s right hand man, Charlie Munger, may be just as guilty of a comparable attempt at frontrunning a Berkshire purchase through his previously undisclosed holdings of a 3% stake in BYD. And despite the Octogenarian’s wishes that this story remain dead and buried, Bloomberg has decided to once again bring it up to popular attention. “Berkshire Hathaway Inc. Vice Chairman Charles Munger said his family was invested in BYD Co. “for years” before his company took a stake in the Chinese automaker and that he disclosed the financial interest to his business partner Warren Buffett. “I certainly suggested that Berkshire look at investing in something that the Mungers were already invested in, but we’d been in it for years,” he said today in a telephone interview.” Of course, since there is no way to check,the general public will be happy to just take Munger’s word. After all, he is just as old and cuddly as that other guy, who following the recent spate of negative publicity, and especially Mike Steinhardt’s scathing review today, will very soon need his own reality show to preserve his “reputation.” Either way, here is the validation fro Munger why the SEC should not be currently deposing him: “I had Dave look at it, because I knew I couldn’t talk Warren into buying into the damn thing by myself. It’s a new technology-type investment. But David went over there, and he made the deal for Berkshire. I recused myself. But there’s no question about it, that I caused Dave’s original interest.” Of course, we would love to take Munger’s word for it: after all he represents just the same level of “integrity” as Buffett. But in the meantime, we would love to know at  what price Munger made his purchase, and, well, when, because at last check in the “years” preceding 2008, the stock was trading pretty much in line with any price achieved in 2008, not to mention the surge once the Buffett investment was announced. And we are convinced that while his self-proclaimed recusal will placate everyone that Munger may have committed a crime, perhaps the SEC should ask a question or two. If nothing else, than at least to clear the Vice-Chairman’s now thoroughly besmirched reputation.
From Bloomberg:

The Munger investment in BYD is different from Sokol’s in Lubrizol because of the longer amount of time that elapsed before Berkshire announced its intention to acquire shares, said James Cox, a professor of corporate and securities law at Duke University Law School in Durham, North Carolina.

“What really matters is the close time sequence that we all now know that Sokol made the investment,” he said.

We would respectfully, and completely, disagree. And while we will assume initially that Munger did not lie about how long he held BYD for (although we would not be all that shocked if our well-meaning naivete is proven wrong) a far greater issue is the cost basis which is the benchmark against which capital gains are calculated. But we certainly wouldn’t expect a corporate and securities law professor at Duke to know this. And what someone like Munger no doubt realizes is that once it becomes public that Berkshire is looking at a stock, regardless of whether Sokol, Munger, Buffett or the janitor is signing the actual wire transfer, the price would surge, making the cost basis that much more attractive… regardless if the holding period was 1 milliseconds or 10 years.

The Securities and Exchange Commission is probing whether Sokol, 54, bought shares in Lubrizol on inside information that Berkshire was considering buying the company, according to a person who declined to be identified because the investigation is secret. The SEC is seeking records from Sokol’s brokerage and examining trading data from the Financial Industry Regulatory Authority, the person said last week. Buffett said March 30 that he doesn’t think Sokol’s purchases were unlawful.

Munger’s account of the BYD investments doesn’t raise “any taint or question mark” for Berkshire, said John Coffee, a securities law professor at Columbia University.

“There’s always going to be some possibility that a director will have some interest in a company that your firm is looking at for a transaction and you disclose that and you recuse yourself,” Coffee said.

That’s great. But how about we get the SEC’s opinion on the matter. After all, it is not like US capital markets are suffering from an overabundance of investor faith these days.
It would truly be a public service to clear up any possible confusion vis-a-vis just how criminal, if at all, the Munger purchase may have been. And, alas, for that we would fall back to the opinion of one Mary Schapiro, as much as we enjoy John Coffee’s non-porn surfing opinion. And lastly, the biggest issue here is what Buffett knew, and what he disclosed publicly: considering the general public had to learn of Munger’s massive purchase, and potential conflict of interest, only by parsing the transcript of a former member of the tainted and conflicted Berkshire family, one wonders: just who is hiding what here?
h/t Lizzie363

Read more…

Frontrunning: December 13


Frontrunning: December 13

Tyler Durden's picture

  • Must read: The eurozone is in bad need of an undertaker (Ambrose Evans-Pritchard)
  • If China Blows Up, So Will Every Other Market (Forbes)
  • China Risks `Rush’ to Tighten in 2011 After Inflation Surges (Bloomberg)
  • China Said to Plan for at Least $1.1 Trillion of New Lending (Bloomberg)
  • Spotlight On Banks’ Exposure in Europe (WSJ)
  • Backers and critics see passage of Obama tax deal (Reuters)
  • Irish Sovereign Debt Default Would Be Far From Armageddon (Bloomberg)
  • Paul Myners Op-Ed: Break up Britain’s uncompetitive big banks (FT)
  • No New Normal for 2011 in Forecasts for 11% S&P 500 Gain (Bloomberg)
  • Obama signals brighter vision of tax reform (FT)
  • Japan Said to Consider Extension of Tax Break on Dividends, Capital Gains (Bloomberg)
  • Push for shake-up of EU rescue facility (FT)
  • Banks Reduce Greek, Irish Holdings in Second Quarter, BIS Says (Bloomberg)
  • EU Should Pull Financial Support If Targets Missed, OECD Says (Bloomberg)
  • ECB’s Stark Says Greece Is on Track but Needs Structural Reform (WSJ)
  • U.S. to hold pivotal trade talks with China and then EU (Reuters)
  • The Ponzi Scheme That Changed My Life (NYT)
  • Krugman now opposes raising $850 billion in debt for short-term stimulus (NYT)

Economic Highlights:

  • UK Rightmove House Prices for December -3.0% m/m 0.4% y/y. Previous -3.2% m/m 1.3% y/y.
  • Switzerland Producer & Import Prices for November -0.2% m/m 0.1% y/y – lower than expected. Consensus 0.1% m/m 0.3% y/y. Previous -0.4% m/m 0.3% y/y.
  • Sweden AMV Unemployment Rate for November 4.3% – lower than expected. Consensus 4.4%. Previous 4.5%.
  • UK PPI Input NSA for November 0.9% m/m 9.0% y/y – higher than expected. Consensus 0.5% m/m 8.3% y/y. Previous 2.1% m/m 8.0% y/y.

FW: Frontrunning: December 7


Frontrunning: December 7

Tyler Durden's picture

  • Draconian Budget Set to Pass After Lowry Gives His Backing (Irish Times)
  • Euro Collapse ‘Possible’ Amid Deepening Divisions Over Bail-out (Telegraph)
  • China Outstrips Fed With Liquidity Risking 2011 Inflation Spike (Bloomberg)
  • Deal Struck on Tax Package (WSJ)
  • Dublin Woos MPs Ahead of Budget Vote (FT)
  • China Buys Most Korean Bonds in 6 Months as Won Falls (Bloomberg)
  • EU Rules Out Immediate Aid Boost, Banks on ECB to Fight Crisis (Bloomberg)
  • The theatrical farce continues: Obama Summons CEOs to White House for Talks Amid Change (Bloomberg)
  • U.S. Ends Citigroup Investment With $10.5 Billion Stake Sale (Bloomberg)
  • RBA Keeps Rate Unchanged, Sees Inflation Contained (Bloomberg)
  • China Hits Back at Criticism over North Korea (Reuters)
  • I Opt-out of California (New Geography)
  • Obamanomics: Only fat cats prosper (NYP)
  • Folding the Fed: Central bank isn’t equipped to save the economy (Washington Times)

Economic Highlights

  • Norway Consumer Confidence for Q4 26.5-higher than expected. Consensus 23.6. Previous 22.7.
  • Switzerland Unemployment Rate 3.6%-in line with expectation. Consensus 3.6%. Previous 3.5%.
  • Australia Wholesale Price Index 0.8% m/m 7.7% y/y. Previous -0.2% m/m 7.0% y/y.
  • Denmark Industrial Production -4.8%m/m. Previous 2.4% m/m.
  • Denmark Industrial Orders 3.3% m/m.Previous -27.3% m/m.
  • Sweden Budget Balance SEK 13.7B. Previous -16.6B.
  • Norway Industrial Production 8.6% m/m -2.4% y/y. Previous 1.8% m/m -10.9% y/y.
  • Norway Industrial Production Manufacturing -0.3% m/m 4.0% y/y-lower than expected. Consensus 0.4% m/m 4.7% y/y. Previous 1.6% m/m 3.3% y/y.
  • UK Industrial Production -0.2% m/m 3.3% y/y-lower than expected. Consensus 0.3% m/m 3.9% y/y. Previous 0.4% m/m 3.8% y/y.
  • UK Manufacturing Production 0.6% m/m 5.8% y/y-higher than expected. Consensus 0.3% m/m 5.4% y/y. Previous 0.1% m/m 4.8% y/y.
  • Germany Manufacturing Orders 1.6% m/m 17.9% y/y-lower than expected. Consensus 1.9% m/m 18.6% y/y. Previous -4.0% m/m 14.0% y/y.
  • Irish parliament votes on 2011 budget.

MasterFeeds: Weekly Recap, And Upcoming Calendar


Weekly Recap, And Upcoming Calendar
– All Eyes On December 7 And The Irish Budget/European Bank Run – zerohedge.com
From Goldman Sachs
Week in Review

The European / IMF bail-out package for Ireland – announced one week ago – was somewhat smaller than expected at €85 bn and failed to calm market jitters spreading to other Euro zone periphery countries early in the week, most alarmingly to Spain and Italy. It was only with the ECB’s announcement that full allotment liquidity operations would continue through Q1 2011 and with a jump in ECB purchases of Portuguese government bonds on Thursday that stress in the Euro zone periphery abated somewhat.

United States labor market data were weaker than expected, with the unemployment rate jumping to 9.8%, even as the participation rate failed to rise from its very low level of 64.5%. The broadest measure of underemployment (U-6) remains stuck close to its peak level at 17.0%. After much market criticism of QE2, the weak state of the labor market in Friday’s data was seen as validating the Fed’s resumption of large scale asset purchases.

We published our global forecasts last week, as well as an initial batch of our top trades for 2011. The key feature of our forecast revisions is an upgrade to US growth to 2.7% in 2011 from 2.0% previously. This puts us slightly above consensus. On the back of this forecast revision, and with a view that the Fed will likely stay on hold through end-2012, our top trades have a decidedly pro-cyclical flavor. In FX, our top trade is short $/CNY via 2yr NDF.

Week Ahead

Central bank meetings Central banks will be meeting this week in Australia, Brazil, Canada, New Zealand, South Korea and the UK. We expect all of these meetings to keep policy rates on hold. Perhaps the most interesting meeting will be Brazil, where the central bank last week announced several measures to tighten domestic liquidity, perhaps indicating a shift to a more hawkish stance. We will be watching carefully for the minutes of the meeting, which will be published next week. In addition, it is also worth noting that this will be Governor Henrique Meirelles’ last Copom meeting, before his successor Alexandre Tombini takes over in January.

Euro zone crisis Following last week’s turbulence on the periphery, this week’s key event will be the Irish parliament vote on the 2011 budget, which is scheduled for Dec 7. A failure to pass the budget could quickly exacerbate tensions across the Euro zone periphery, by highlighting the political costs of needed budget cuts.

Monday 6th

Chile monthly indicator of economic activity (Oct) We expect this indicator to register growth of 6.0% yoy, above consensus of 5.8% yoy but down from 6.5% yoy in September.

Also interesting Taiwan CPI inflation for Nov, given our focus on food price inflation in EM

Tuesday 7th

Australia central bank meeting We expect the RBA to stay on hold at 4.75%, in line with consensus. Bank bill futures are pricing essentially a zero probability of a rate hike as well. We think the RBA will be confident about tightening monetary policy again from March next year, as the data flow should improve from what we see as a mid-cycle slowdown going into 2011.

UK industrial production (Oct) We expect IP to expand 0.3% mom, in line with consensus, after an expansion of 0.4% mom in September.

Irish parliament votes on 2011 budget

Chile CPI (Nov) We expect CPI inflation of 2.5% yoy, in line with consensus and up from 2.0% yoy in October. Consensus expects CPI excluding perishables and fuel to be flat mom, after a -0.1% mom drop in October.

Chile trade balance (Nov) We expect a trade surplus of $980 mn, below consensus which is looking for a surplus of $1,311 mn. Either way, there will be a big jump from October’s surplus of $215 mn.

Canada central bank meeting In line with consensus we think the Bank of Canada will remain on hold. Indeed, even though we upgraded our Canada growth forecast this week, we continue to believe that the Bank of Canada will remain on hold throughout 2011, as it looks over its shoulder at the Fed’s QE2.

Also interesting Philippines CPI for Nov, given our focus on food price inflation in EM

Wednesday 8th

Germany industrial production (Oct) We expect a strong print of 1.2% mom, slightly above consensus of 1.0% mom after a relatively weak reading of -0.8% mom in September.

Turkey industrial production (Oct) We expect a reading of 7.0% yoy, above consensus of 6.4% yoy, but down from 10.4% yoy in September.

Brazil IPCA inflation (Nov) Following the elevated reading for the IPCA-15, we expect IPCA inflation in November to be 0.92% mom, which is above consensus of 0.86% mom.

Brazil central bank meeting We expect the Copom to remain on hold at this meeting, in line with consensus. Last week’s reserve requirement hike and other measures could be seen as a shift to a more hawkish stance by the central bank, but whether or not this raises the probability of a hike this week depends on whether one sees this as a substitute or complement to a hike. Our economists think the latter and believe the probability of a rate hike has gone from something like 25% before last week’s measures to 45% now.

Thursday 9th

Australia employment report (Nov) We expect the unemployment rate to drop to 5.2% from 5.4% in October, in line with consensus, as we think the participation rate drops back from its higher level after last month’s jump. We think the strong trend of employment growth will continue. We are looking for +25k employment change, above consensus of +20k.

New Zealand central bank meeting In line with consensus, we expect the RBNZ to remain on hold this week.

South Korea central bank meeting We maintain our view of no rate hikes in the December and January Monetary Policy Committee meetings. We expect the next rate hike, 25 bps, to be in February 2011.

UK central bank meeting We expect the Bank of England to keep rates unchanged.

Brazil GDP (Q3) We are looking for growth of 0.5% qoq, above consensus of 0.4% qoq but below the strong pace of 1.2% qoq in Q2.

United States initial claims (Dec 4) Consensus expects initial claims of 425k, following 436k last week.

Friday 10th

China trade balance (Nov) We expect November export growth to accelerate to 27.0% on a yoy basis, from 22.9% yoy in October. Meanwhile, we believe import growth will rise to 26.0% yoy, from 25.3% yoy in October. This implies net exports will likely stay at a high level of around US$25.0 bn, slightly lower than US$27.1 bn in October. Our estimate for the trade balance is thus above consensus ($21 bn).

Turkey GDP (Q3) Consensus expects growth of 6.5% yoy, down from 10.3% yoy in Q2.

United States trade balance (Oct) We expect the trade deficit to narrow to -$40.5 bn, against consensus which expects the trade deficit to remain unchanged from the September reading at -$44.0 bn.

United States U. of Michigan consumer confidence (Dec) Consensus expects this preliminary reading to be 72.5, up from 71.6 for the November reading.


View article…

Afternoon Humor | zero hedge


Afternoon Humor

Links:
[1] http://www.zerohedge.com/sites/default/files/images/user5/imageroot/gono/Bang.jpg

Afternoon Humor | zero hedge

GM Breaks For Trading


from zerohedge.com

GM Breaks For Trading

Links:
[1] http://www.zerohedge.com/sites/default/files/images/user5/imageroot/gono/GM.png

GM Breaks For Trading

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The MasterFeeds

Frontrunning: November 18


Tyler Durden's picture

  • Fed Orders 2nd Round of Stress Tests  (WSJ), translation: more capital raises for Bank of America, Wells Fargo and Citi.
  • Lenihan Says Ireland May Ask for Bank Package as Bailout Nears (Bloomberg)
  • One in 20 Irish Mortgages in Arrears (FT)
  • China Vows to Tame Inflation (Reuters)
  • Korea to Revive Tax on Foreigners’ Bond Holdings to Slow Capital Inflows (Bloomberg)
  • IMF Says HK Currency Peg Boosting Property Prices (FT)
  • India Microcredit Faces Collapse From Defaults (NYT)
  • Vilsack: Food Costs Won’t Surge  (WSJ)
  • Failed Models and the Real Costs of QE2 (Economics21)
  • California Shrinks Planned Tax-Exempt Sale, Expands Taxable (Bond Buyer)
  • OECD Reduces Global Growth Outlook, Predicts Soft Spot in 2011 (Bloomberg)
  • OECD backs much-criticized Fed easing steps (Reuters)
  • Wolin: No Meaningful US Impact from Euro Zone Crisis (Reuters)
  • Bank of America and the middle-man hedge (Housing Wire)
  • QE2 could drive Asia 30% higher (City Wire)
  • Ally CEO of mortgage operations says foreclosure flaws “unacceptable” (Housing Wire)
  • GM IPO Increase: How They Turned It All Around (Steve Rattner)
  • CDS spreads can be volatile and prone to false positives (FT)
  • Sticking it to the unemployed (LA Times)

Economic Highlights:

  • Euro-Zone Current Account nsa for September -9.2B. Previous -10.6B.   
  • ECB Euro-Zone Current Account SA for September -13.1B. Previous -6.9B.
  • Switzerland Trade Balance for October 2.10B – higher than expected. Consensus 1.40B. Previous 1.68B.  
  • Switzerland Exports real SA for October 6.2% m/m. Previous -3.1% m/m. 
  • Switzerland Imports real SA for October 1.9% m/m. Previous -4.0% m/m. 
  • Switzerland Credit Suisse ZEW Survey (Expectations) for November -30.9. Previous -27.5.
  • Sweden Unemployment Rate for October 7.5% – lower than expected. Consensus 7.6%. Previous 7.8%.
  • UK Retail Sales Ex Auto Fuel forOctober 0.3% m/m 1.2% y/y – in line with expectations. Consensus 0.2% m/m 1.5% y/y. Previous -0.3% m/m 1.3% y/y.     
  • UK Retail Sales w/Auto Fuel for October 0.5% m/m -0.1% y/y – in line with expectations. Consensus 0.4% m/m 0.0% y/y. Previous -0.5% m/m 0.0% y/y.     
  • UK Public Finances (PSNCR) for October 2.4B – lower than expected. Consensus 6.0B. Previous 20.7B.    
  • UK Public Sector Net Borrowing for October 9.8B – higher than expected. Consensus 8.9B. Previous 14.4B.UK PSNB ex
  • Interventions for October 10.3B – higher than expected. Consensus 9.6B. Previous 15.0B.     UK CBI Trends Total
  • Ordersfor November -15 – higher than expected. Consensus -24. Previous -28.