Saba Capital and the Ancient Art of Whale Hunting
Tweet
Share
E-mail
Get Alerts JPM Hot Sheet
Price: $337.72 +1.43%
Overall Analyst Rating:
SELL (= Flat)
Dividend Yield: 1.8%
EPS Growth %: +13.1%
Overall Analyst Rating:
SELL (= Flat)
Dividend Yield: 1.8%
EPS Growth %: +13.1%
Join SI Premium – FREE
It has been a few weeks now since we first broke the news about JPMorgan's (NYSE: JPM) $2 billion dollar trading loss, and we are getting more clarity about exactly how the ill-fated trades at the nation’s largest and most successful bank came about.
Last week we reported that Bank of America (NYSE: BAC), Goldman Sachs (NYSE: GS), Ellington Management, Saba Capital Management, CQS (U.K.) LLP., BlueMountain Capital Management, and BlueCrest Capital Management were a few other counterparties to the JPMorgan trades. This weekend we have received new information about how the trades developed.
According to an article in the New York Times, a trader named Boaz Weinstein of Saba Capital was the person spearheading efforts to crush JPMorgan and Bruno Iskil, aka the 'London Whale.'
The story began when Weinstein noticed "aberrations" in the credit markets last autumn. That's when he decided to put some of Saba Capital's $5.5 billion to work. Iksil sold, Weinstein bought, and that's how things went for a while.
According to reports, due to JPMorgan's strength and the size of Iksil's $100 billion portfolio, Weinstein was getting crushed during the early days of the trade. But that all changed during a conference in February when Weinstein made a presentation that urged other traders to take his side of the trade and buy the Investment Grade Series 9 10-year Index CDS.
Other hedge funds got on board, and that's when the tables began to turn against JPMorgan. The rest, as we all know, is history.
Although it is still unclear exactly how the trades will settle and exactly how deep the losses at JPMorgan will be, one thing is clear: The world of hedge funds is still an interesting place made up of individual traders, not bank managers and certainly not bank regulators. And no one, not even a company the size of JPMorgan, can steamroll the markets. And traders, no matter how fat, can be cut down to size.
Last week we reported that Bank of America (NYSE: BAC), Goldman Sachs (NYSE: GS), Ellington Management, Saba Capital Management, CQS (U.K.) LLP., BlueMountain Capital Management, and BlueCrest Capital Management were a few other counterparties to the JPMorgan trades. This weekend we have received new information about how the trades developed.
According to an article in the New York Times, a trader named Boaz Weinstein of Saba Capital was the person spearheading efforts to crush JPMorgan and Bruno Iskil, aka the 'London Whale.'
The story began when Weinstein noticed "aberrations" in the credit markets last autumn. That's when he decided to put some of Saba Capital's $5.5 billion to work. Iksil sold, Weinstein bought, and that's how things went for a while.
According to reports, due to JPMorgan's strength and the size of Iksil's $100 billion portfolio, Weinstein was getting crushed during the early days of the trade. But that all changed during a conference in February when Weinstein made a presentation that urged other traders to take his side of the trade and buy the Investment Grade Series 9 10-year Index CDS.
Other hedge funds got on board, and that's when the tables began to turn against JPMorgan. The rest, as we all know, is history.
Although it is still unclear exactly how the trades will settle and exactly how deep the losses at JPMorgan will be, one thing is clear: The world of hedge funds is still an interesting place made up of individual traders, not bank managers and certainly not bank regulators. And no one, not even a company the size of JPMorgan, can steamroll the markets. And traders, no matter how fat, can be cut down to size.
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- Forgent Power Solutions closes stock offering at $49 per share
- Postal Realty Trust expands credit facility to $615 million
- BofA Securities Upgrades T-Mobile (TMUS) to Buy
Create E-mail Alert Related Categories
Insiders' BlogRelated Entities
JPMorgan, Hedge Funds, BlueMountain Capital Management, BlueCrest Capital ManagementSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
