Wednesday, August 13, 2008

T. Boone gets picked off

Remember when T. Boone Pickens picked up 10 million shares of Yahoo because his buddy Carl Icahn had bought 70 million shares?

Does anybody also remember the block of just under 10 million shares of Yahoo that was dumped at the close in the last week of July? That was T. Boone's sale. He said:

Pickens, who bought 10 million Yahoo shares in May in hoping that an acquisition was imminent, said that he got tired of waiting for a deal.

According to the San Francisco Chronicle, Pickens was quoted as saying; “I think Yahoo management was pathetic.”

It looks like T. Boone Pickens lost $70 million on this sale. But T. Boone was a big oil bull, and last month his fund dropped 35% when oil dropped! He got picked off twice!




Meanwhile Carl Icahn's funds dropped 9% in Q2.

The $3.7 billion dollar man, John Paulson, also picked up 50 million shares of Yahoo, and took a hit also.

His merger/arbitrage fund was down 3.7% for July mostly on this bad bet.
Billionaire see, billionaire do.

That's the group think that exists in this marketplace, where we constantly have big bets going bust by the billionaire boys club, and the fast money trading hedge funds. And every time we see stock or commodity prices move, some pundit reports this as though the movements are news!

These three guys controlled 130 million shares of Yahoo. Let that sink in for just a minute. 130 million shares of a second rate Internet company? What would these guys do if they really liked something? Now these are the billionaires that follow the rules. How about the hedge funds that don't?

And that's this market. We have swings that are reported to be "related" to fundamentals, when they are just related to supply/demand imbalances caused by bets blowing up in someone's face.

How about the action in WYNN? Monday I said book the profit at 119. It closed today 102.73.

Who was buying the stock at 119? Just find out who was short on the bad bet! It's not any tougher than that. (But MGM which I banged out Monday at 38, was a buy on the close today at 32.)

Now look at the action in the financials today. We had three analysts get negative yesterday-Meredith Whitney, Mike Mayo, and Dick Bove. But the stocks had rallied to far. Now in two days they have already corrected enough in the sell-off that we always get during expiration week. Now GS, BAC, MS and JPM can rally into option expiration.

It wasn't that the analysts just came up with a new piece of material that was so outstanding. They didn't. It was just that they are smart enough to time their news when the market is vulnerable.

Now remember how the billionares lost money on Yahoo? Well look at the games that the fast money crowd was playing with SunTrust (STI 39.92). Some clown bought almost 10,000 of the August 35 puts for .15 cents, and rumors were whispered everywhere on this number. So if it opens down tomorrow, or sells off in the first hour, it's a buy, because you have someone pressing a bet, and spreading a rumor. They need the stock down, and this market won't cooperate.

Just ask those billionaires that bought Yahoo!

How pathetic!

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