100%(2)2 out of 2 people found this document helpful
This preview shows page 11 - 14 out of 16 pages.
(more in slide)owhen shares are loaned, title to shares is transferred to the party that the borrower sells stock short toothis means that the short buyer receives dividends if title is held on a “record date” and is able to vote in shareholder electionsoin most cases, the stock loan agreement provides that whenever short buyers received dividends, the borrower(short seller) must pay to the lender a cash amount that is equal to the dividendsNaked ShortingoSometimes sold short without borrowing shareoIf it is done to avoid settlement failure, this is considered legal naked shortingMargin Callso(diagram in slides)FICC TradingClaims in BankruptcySr DebtoEither get cash back or lose all rights to cash and get new equity in revivedcompanyoWhat Lampert (ESL) is interested inSubordinate debtPreferred stock
Common stockTuesday November 5th NotesEnterprise value – net debt = equity valueFICCoInterest rate productsForeign echange, govt bond trading and interest rate derivativesoCredit productsCorporate bonds, mortgage backed securities, asset backed securities, structured credit and credit derivativesoCommodities Structured Credit ProductsoCDOsCBOSCLOSo(more in slides)Credit Default SwapsoContract between two counterparties whereby one party makes periodic payments in return for receiving a payoff if an underlying security or loan defaultsSwap that acts as insurance contractParty that receives the fee is credit protection seller, fee payer is a credit protection buyerCan be very speculative; no requirement to own the actual underlying security or loan when entering into contractCDS market came under regulatory scrutiny because of its massivesize, lack of regulation, and potential to permit insider-trading activity Not a security (or derivative) or commodity, because it wasnew, it wasn’t regulated by anyoneWhen PE firms were buying companies (meaning adding a lot debt/leverage), people with inside knowledge would buyup CDS’s before the takeover was announced; however, it wasn’t insider trading because no one regulated themoOne part of Dodd-Frank addressed thisSome people use CDS prices as basis for credit risk of companies before Moodys or S&PoGS and Och-Ziff chart shows magnitude of GS’s proprietary trading which may be 25% of earningsASSET MANAGEMENT AND RESEARCH
Professional management of investment funds for individuals, families and institutionsoStocks, bonds, convertibles, alternative assets (hedge funds, PE, real