Redirecting

Monday, May 17, 2010

Sarcasm - MGM - Paulson

I just found out that John Paulson is on the other side of my trade.  I'm short MGM, and he filed his latest 13-Fs today, showing ownership of 40MM shares. WTF?!?!?  This is so unfair. If I knew Paulson was on the other side of the trade, I never would have shorted the stock.  I'm going to sue Etrade for not telling me about this.

-KD

note: this post is sarcasm - I even put it in the title to avoid confusion. if you don't get the reference, don't sweat it - it's not worth your trouble.  also, it's important to note, despite mainstream media confusion to the contrary,  that the suit against Goldman Sachs isn't about the fact that Paulson was on the other side of the trade, but that the person on the other side of the trade (who happened to be Paulson) may have played a larger-than-stated role in the design of the portfolio.  Anyway...

note 2:  Paulson's purchase of MGM actually surprised me. I understand his purchase of the banks (which I'm also short!) - he's playing the "shake hands with the government" card, but MGM had me scratching my head.  I was wondering if it was possible that he might somehow be short their recent convert and long stock against it, but that's about 6 sigmas.  He also bought BYD, so I guess he's just bullish on Vegas, which I can't fathom.   Dirty Dave chimed in with a suggestion: "Hedging his upcoming stay at Aria's baccarat salon?"  As usual with Dirty Dave's inimitable wit, if you get it, you love it.  If not, well, on to the next post...

10 comments:

Anonymous said...

Given his style, I wonder if these are hedges for CDS shorts? Not sure that disclosure gives you all
sides of a trade so you see long MGM or BYD 'stock' but perhaps there is capital structure trade on here?

Kid Dynamite said...

anon - that disclosure definitely does not have all parts of the capital structure, although i think they actually do disclose equity options positions now.

i racked my brain trying to figure out anything it could be a hedge for - a Vegas real estate deal he's SHORT? but i highly doubt it.

obviously, i can't know Paulson's motivations, but i'm guessing he's making a levered bet on economic recovery, and thinks MGM's recent capital raise takes bankruptcy off the table for them.

i think Vegas is dead money for a long time, and I think Paulson is a smart guy, which is why this disclosure struck me as surprising

Kid Dynamite said...

anon - here's an analysis supporting your theory (long CDS (short credit), long stock):

http://www.zerohedge.com/article/complete-paulson-q1-portfolio-holdings-update-major-additions-financial-and-gold-exposure-ne#comment-357488

CP said...

I'm short MGM too. You would have to be the dumbest fucking moron on the planet to be outright long MGM.

Maybe so dumb that you would own Beazer and tons of financials stocks too?

RoachApproach said...

So funny that so many people in the U.S. do not grasp irony that you even have to explicitly put it in the headlines....

Cheers,
M

Downtown Josh Brownq said...

Tee Hee, Paulson is short Vegas tourists and Chinese businessmen.

Ariel said...

Along with listed equities, 13F Filings will show long call options and long put options.

Sneak Attacker said...

JP also says its a great time to buy a house! If you don't have the money to do so, he recommends borrowing from relatives.

Kudos to JP for his housing trade, but lets not be too quick about designating him as the new market oracle. A lot of folks called the 87 crash as well and never made a dime on anything after that.

Also, the brains behind Paulson's CDS trade - Paolo Pelligrini - left to start his own hedge fund at the start of 09.

Jon said...

What if you were only short parts of the MGM business? And Paulson got to pick those parts? And you didn't know that?

Note: not sarcastic.

Also not sarcastic about the Red Sox mauling last night.

Kid Dynamite said...

re: Sox - the funny thing is that it went from being a turnaround character building game - come from behind and win for the SOX - to a heartbreaking, soul crushing defeat when they blew it in the 9th.

and jon - come on - you're really going to make me rehash the ACA-GS story? really? ACA picked the portfolio. really. truly. the selected the whole thing. it's a fact.