Friday, February 6, 2009

The Rapid Rise and Blistering Fall Of Boaz Weinstein

As we wrote two weeks ago in detail, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 massive unwind of basis trades in cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 post-Lehman world was a crushing blow to numerous hedge funds, Merrill Lynch's prop desk, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 reason why Citadel has to post a 100% return this year just to be able to pocket any incentive fees, and cost Boaz Weinstein his investing career (contrary to his aspirations to start a new fund). Today cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 WSJ picks up on cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 35 year old's very interesting story, and covers in detail how cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 card-counter, who in cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 heyday of Wall Street was getting paid $40 million a year, fell from grace with a counterparty-risk induced thud, after basis trades gone wrong cost his SABA group at Deutsche Bank a $1.8 billion loss. By cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 way, what is it with cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365se 30 year olds and cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365ir hubris: Nick Leeson, Jerome Kerviel, Boaz... Could companies such as Soc Gen and Deutsche Bank not afford some more experienced "risk managers" to run checks and balances on net portfolio risk?

The article presents an interesting picture of cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 trader in his final days:

Brooding in his office overlooking Wall Street, Mr. Weinstein remained outwardly calm as markets went haywire, traders say. The value of his group's holdings of corporate bonds and loans began to slide as ocá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365r investors, needing to raise money, sold such securities.

At cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 same time, trading in credit-default swaps was curtailed because market players were concerned about entering trades with banks that potentially could collapse. This left Mr. Weinstein's group increasingly unprotected against losses in corporate bonds and loans, because it used swaps to hedge those positions.

Mr. Weinstein wasn't alone. Similar positions held by banks and hedge funds across Wall Street fell apart amid cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 seismic dislocations after cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 Lehman collapse.

As prices of corporate bonds and loans slumped to new lows and stocks plunged too, Mr. Weinstein wanted to buy more swaps to protect his positions, traders say. He told traders that in such a trading environment, "cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 primary objective is to get as flat as possible to cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 market" -- not betting on eicá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365r a rise or a fall -- according to a person familiar with cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 conversation.

But in contentious conference calls, risk managers at Deutsche Bank told Mr. Weinstein to scale back positions or sell cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365m entirely, traders say. Mr. Weinstein's stock-trading desk was instructed to sell nearly every holding, effectively shutting it down.
Good reading, and presents some interesting, although not quite correct, perspectives on why cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 basis trade went from cash cow to guillotine in a span of 24 hours. And, by cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 way, we are kidding that Boaz will never get a job - Bill Ackman has said he would likely hire him in a heartbeat. Maybe Boaz can go and run cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 PSIV fund... We are hearing it has some PM openings and doesn't believe in diversification eicá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365r. After all basis trades and Target calls are pretty much cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 same thing.
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3 comments:

Unknown said...

Yeah but Boaz Weinstein plays chess so well, let him start anocá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365r fund.

Anonymous said...

The guy looks about 50. Heart attack in 5 years.

Anonymous said...

I never understood why being good at Chess would indicate great trading potential. Poker, I can see.