grinninbrit's Comments RSS Syndication from SeekingAlpha.com http://seekingalpha.comuser/81669/comments http://seekingalpha.com/article/142669-uptick-rule-correlation-does-not-imply-causation?source=feed#comment-542857 542857
You want to be an "investor" and not a "casino player." Sounds admirable but I hope you realize that it would take more years than any of us have left to make the US Stock market "pure investment". You don't start with some silly short regulations. You simply start and/or scale in removal of all margin (for purposes of short and long), outlaw hedge funds (that play games with "investor" greed on the upside just as much as "investor" fear on the downside.), outlaw any FDIC insured bank from in any way being tied to a business that buys/sells/owns securities. Brokers still exist but they can't loan out for shorting shares bought on margin to other players that want to long stocks on margin. Again, stocks bought long on margin have created the casino in as great a way also. Guess what the market for the "investor" would look like if we start unwinding all margin, either in one fell swoop or over 10 long painful years ? Your dreaming if you think you have ever been or ever will be an "investor" and not a "casino player"]]> Thu, 11 Jun 2009 16:54:54 -0400
You want to be an "investor" and not a "casino player." Sounds admirable but I hope you realize that it would take more years than any of us have left to make the US Stock market "pure investment". You don't start with some silly short regulations. You simply start and/or scale in removal of all margin (for purposes of short and long), outlaw hedge funds (that play games with "investor" greed on the upside just as much as "investor" fear on the downside.), outlaw any FDIC insured bank from in any way being tied to a business that buys/sells/owns securities. Brokers still exist but they can't loan out for shorting shares bought on margin to other players that want to long stocks on margin. Again, stocks bought long on margin have created the casino in as great a way also. Guess what the market for the "investor" would look like if we start unwinding all margin, either in one fell swoop or over 10 long painful years ? Your dreaming if you think you have ever been or ever will be an "investor" and not a "casino player"]]> http://seekingalpha.com/article/82272-6-stock-picks-for-a-weak-market-barron-s-interview?source=feed#comment-190610 190610 Sun, 22 Jun 2008 23:55:31 -0400 http://seekingalpha.com/article/39782-cornerstone-funds-alters-dividend-reinvestment-policy-no-more-nav?source=feed#comment-90738 90738 Mon, 09 Jul 2007 18:07:46 -0400 http://seekingalpha.com/article/39782-cornerstone-funds-alters-dividend-reinvestment-policy-no-more-nav?source=feed#comment-90388 90388
I should also say I have a short position in this and find the valuation here not merely ridiculous, but sure to be a element of some future financial thesis on the breakdown of efficient market theory as we know it...

That being said, the Renaissance team is far more intelligent than I. And years ago when you or I might have also suspected an "abrupt end" to this, they were far more right than us. They've milked this extraordinarly well. And I suspect not just for the dividends, even distributed at NAV. If your them, you don't pick up a vanilla large-cap closed end at 70-100% premiums for that little game.

They have another edge.

Most investors here are either not getting this stock short or paying 25-50%+ negative rebate fee's to their broker for the supply of this to short. My guess is that Renaissance corners the market on this security, and although your broker is getting a little piece of that 25-50, Renaissance or a "partner" collects the rest for providing supply to the brokerages. This is a guess. I need more education on how negative rebate fee's are determined and distributed once collected from the margin accounts holding the shorts.

But even if I'm completely wrong I believe there is another missing piece to this puzzle that is far more complex than we can know. You are correct that its certainly got nothing to do with the value of the fund or its holdings. Crazy, crazy, valuation. But I'll bet Renaissance has some type of "edge" here that the rest of the "public" market is not privy to. And they'll have it as long at they need or want to have it. An abrubt end should not be assumed.]]> Thu, 05 Jul 2007 02:47:40 -0400
I should also say I have a short position in this and find the valuation here not merely ridiculous, but sure to be a element of some future financial thesis on the breakdown of efficient market theory as we know it...

That being said, the Renaissance team is far more intelligent than I. And years ago when you or I might have also suspected an "abrupt end" to this, they were far more right than us. They've milked this extraordinarly well. And I suspect not just for the dividends, even distributed at NAV. If your them, you don't pick up a vanilla large-cap closed end at 70-100% premiums for that little game.

They have another edge.

Most investors here are either not getting this stock short or paying 25-50%+ negative rebate fee's to their broker for the supply of this to short. My guess is that Renaissance corners the market on this security, and although your broker is getting a little piece of that 25-50, Renaissance or a "partner" collects the rest for providing supply to the brokerages. This is a guess. I need more education on how negative rebate fee's are determined and distributed once collected from the margin accounts holding the shorts.

But even if I'm completely wrong I believe there is another missing piece to this puzzle that is far more complex than we can know. You are correct that its certainly got nothing to do with the value of the fund or its holdings. Crazy, crazy, valuation. But I'll bet Renaissance has some type of "edge" here that the rest of the "public" market is not privy to. And they'll have it as long at they need or want to have it. An abrubt end should not be assumed.]]> http://seekingalpha.com/article/38086-the-cornerstone-funds-are-sucker-bets?source=feed#comment-89898 89898
There is certainly a supply demand aspect to it. But there is so much disparity I have to wonder if there is any regulation and/or structure to it.

For a stock like "Travelzoo" lets say where there is a high negative rebate fee and an extremely large short position I imagine the mechanics would be that there are several hedge funds and market specialists competing to offer their long positions to various discount brokerages for a fee they feel would be likely to place their long stock and earn the income from that fee.

But what about these even more thinly traded stocks such as the Cornerstone closed-ends. If rather than many hedge funds and market specialists owning, rather one hedge fund corners the market supply on that stock, a stock which will be in great demand to short due to a crazy premium for a vanilla basket of large cap stocks, can they essentially dictate a charge to the brokerages to be passed on to the customer that shorts? Or might they be well connected to an entity that does set that fee? I know people prefer demand and supply market forces over SEC regulation, but I'd be interested from someone knowing a little bit more about the mechanics here. Is the structure here conducive to supply demand market fundamentals? Any SEC regulations in place for "charges" to lend out stocks?]]> Thu, 28 Jun 2007 11:14:16 -0400
There is certainly a supply demand aspect to it. But there is so much disparity I have to wonder if there is any regulation and/or structure to it.

For a stock like "Travelzoo" lets say where there is a high negative rebate fee and an extremely large short position I imagine the mechanics would be that there are several hedge funds and market specialists competing to offer their long positions to various discount brokerages for a fee they feel would be likely to place their long stock and earn the income from that fee.

But what about these even more thinly traded stocks such as the Cornerstone closed-ends. If rather than many hedge funds and market specialists owning, rather one hedge fund corners the market supply on that stock, a stock which will be in great demand to short due to a crazy premium for a vanilla basket of large cap stocks, can they essentially dictate a charge to the brokerages to be passed on to the customer that shorts? Or might they be well connected to an entity that does set that fee? I know people prefer demand and supply market forces over SEC regulation, but I'd be interested from someone knowing a little bit more about the mechanics here. Is the structure here conducive to supply demand market fundamentals? Any SEC regulations in place for "charges" to lend out stocks?]]> http://seekingalpha.com/article/38086-the-cornerstone-funds-are-sucker-bets?source=feed#comment-88878 88878 Mon, 18 Jun 2007 00:17:45 -0400 http://seekingalpha.com/article/38086-the-cornerstone-funds-are-sucker-bets?source=feed#comment-88424 88424
not because anything of what the author is wrong, he's head on. But to short this you could be charged a massive "negative rebate fee" by your broker to hold it. Also consider that its in great demand from hedge funds as a short. And the supply of less-liquid desirable shorting shares creates a situation where the big player can trounce the small player because of under-regulation by the SEC. Whenever you short shares they fall under the margin agreement you have signed with the broker. Which means he can call them anytime due to "supply" reasons. So a hedgefund or investment banking arm which is likely a LARGE customer of the brokerage, knowing they can borrow these shares out at 25% per year goes to the brokerage house and says we'd like your supply of CRF and we'll pay you $2 per share more than current market value (which they are happy to since they'll make $5 per share loaning it out over the year). Now the broker calls the little customer on the phone Tuesday and says due to "supply" constraints we are calling your shares by Friday. You'll need to close the position yourself over the next few days or we might do a forced close on Friday. Again, this is not due to insufficient funds in the small guy's account, just a supply call. And the small guy shorted the stock a year ago, paid 12% in dividends along the way, CRF has gone up to a yet larger crazy premium where the small guy has lost more than even the 12% dividends. I've had it happen to me.

This thing has sat up this high for years now, and the large hedge fund holding this long and loaning it out has high confidence they'll keep this thing floating long enough to risk paying the $9 per share premium since they make about $7 per year between the 25% loan-out collect and the dividend collect of $2 per year from the shorter. Not sure how they have this confidence, "special" relationships with other large market participants? Not saying I have any evidence of that. All speculation, because although I don't subscribe to the efficient market theory, this type of imbalance creates heavy curiousity in my mind.

It doesn't seem like the type of "market" the SEC would want... where the little guy this extreme of a disadvantage to the big guy in this playing field. But I guess they might focus on how market mechanics ensure a level playing field on shares held long. The short holding stockholder is perhaps not a great concern, but I do think that is wrong, created by the ability of short "supply" to be bounced around without regulation of free-market price.]]> Wed, 13 Jun 2007 08:40:25 -0400
not because anything of what the author is wrong, he's head on. But to short this you could be charged a massive "negative rebate fee" by your broker to hold it. Also consider that its in great demand from hedge funds as a short. And the supply of less-liquid desirable shorting shares creates a situation where the big player can trounce the small player because of under-regulation by the SEC. Whenever you short shares they fall under the margin agreement you have signed with the broker. Which means he can call them anytime due to "supply" reasons. So a hedgefund or investment banking arm which is likely a LARGE customer of the brokerage, knowing they can borrow these shares out at 25% per year goes to the brokerage house and says we'd like your supply of CRF and we'll pay you $2 per share more than current market value (which they are happy to since they'll make $5 per share loaning it out over the year). Now the broker calls the little customer on the phone Tuesday and says due to "supply" constraints we are calling your shares by Friday. You'll need to close the position yourself over the next few days or we might do a forced close on Friday. Again, this is not due to insufficient funds in the small guy's account, just a supply call. And the small guy shorted the stock a year ago, paid 12% in dividends along the way, CRF has gone up to a yet larger crazy premium where the small guy has lost more than even the 12% dividends. I've had it happen to me.

This thing has sat up this high for years now, and the large hedge fund holding this long and loaning it out has high confidence they'll keep this thing floating long enough to risk paying the $9 per share premium since they make about $7 per year between the 25% loan-out collect and the dividend collect of $2 per year from the shorter. Not sure how they have this confidence, "special" relationships with other large market participants? Not saying I have any evidence of that. All speculation, because although I don't subscribe to the efficient market theory, this type of imbalance creates heavy curiousity in my mind.

It doesn't seem like the type of "market" the SEC would want... where the little guy this extreme of a disadvantage to the big guy in this playing field. But I guess they might focus on how market mechanics ensure a level playing field on shares held long. The short holding stockholder is perhaps not a great concern, but I do think that is wrong, created by the ability of short "supply" to be bounced around without regulation of free-market price.]]> http://seekingalpha.com/article/35921-converting-closed-end-funds-to-etfs-has-the-trend-begun?source=feed#comment-86561 86561 Sat, 19 May 2007 11:02:50 -0400