Seems as though Oliver Stone and Michael Douglas are bringing one of the most famous Business Industry movie characters to the screen.
Take a look at the preview, however the SPECS feel as though it will be hard to top the 1st Wall Street.
Jeff Greene was already a well-known real estate investor before his recent investment in that industry netted him about $1 billion. His investment decision was more common sense than analytical rationalization.
What Greene did was the direct opposite of that which Wall & Main Street America dived into. He bet on people’s greed. And Won convincingly.
What Jeff Greene did was to buy Credit Default Swaps in Florida and California sub-prime mortgage backed securities. Basically, if these loans portfolios ever defaulted, the seller of the Credit Default Swap would pay the buyer (Mr. Greene) the lost value amount.
So, if certain securities after default are worth only $.07 on the dollar (as determined by a Bankruptcy judge or credit rating agency), the CDS seller would pay the buyer the difference. In our example, the remainder value would be $.93 on the dollar. Not a bad investment return. This is especially true for those purchasing default protection without holding the underlying securities.
These CDS products were the cause of Bear Sterns and Lehman Brothers demise, while causing AIG to function daily on U.S. government life support.
Jeff Greene is the 2008 Investor of the Year! No bailouts for this man.
StreetSpeculators.com some time ago profiled the storied business life of former High-Yield (”Junk Bond”) financier Michael Milken. We attempted to layout all he accomplished, including financing some of today’s biggest corporations as well as his notable legal trouble.
Since released from federal custody, Milken has been involved in some extraordinary societal work. The Milken Institute (http://www.milkeninstitute.org/) and the Milken Foundation (http://www.mff.org/) are two outstanding institutions whose goals include but are not limited to providing strategies to governments and private enterprise, promoting the access of capital for entrepreneurs (especially those in under-served communities), funding for Prostate Cancer research (Milken is a survivor), and strengthening education (Foundation gives an annual cash reward to the nations best teachers and administrators in the public school system).
His community efforts are astounding and we should be delighted to see the enthusiasm and passion for education. Milken can definitely be an asset to society and to government (Government needs some advice).
Submit you support for Micheal Milken’s pardon!!! Former U.S. Solicitor General Ted Olson is preparing a pardon letter for Milken to present to the President.
Carl Icahn is a well known corporate investor. One of his principles (As should be the case with any shareholder) is to create value, or rather unlock value.
He is very outspoken in his disagreement with CEO “golden parachute” pay packages when exiting a company left in bad financial shape. His M.O. is to target companies he thinks are being poorly run by management. Icahn then through his investment funds buys enough shares of a specific publicly traded company to get board sheets. Once successful in getting the corporate board sheets, Icahn then attempts to change management and in some cases have the current CEO removed (Ed Zander, former Motorola CEO).
Icahn’s approach is sometimes successful (Imclone, BEA Systems), and sometimes not (Yahoo, TWA). Many view him as a “corporate hitman.” Investors call on him to shake things up, especially those shareholders who desire changes but refuse to be publicly known. These are the people who have lost a great deal of money with stock share drops. This group may include other corporations, pension funds, and even hedge funds.
If you are a shareholder either through an employer plan or as a day trader, you could probably use his services today. He would be especially helpful in shaking-up management with some of the major U.S. financial institutions. The SPECs have learned about rumors on the street (Wall Street) that many banks have losses in the billions that are not yet reflected on their current balance sheets (Citigroup, JP Morgan Chase, etc…). But rumors as they may be, it is still a possibility.
Icahn on 60 minutes:
Watch CBS Videos Online
StreetSpeculators.com love innovators.
Michael Milken was well-known in the 1980’s as the man to see if your company needed to raise capital. Milken headed the bond department in the California office of investment bank Drexel Burnham Lambert.
Milken was arguably responsible for creating the market for high yield securities (Or what is known as “JUNK BONDS”). These securities were called “Junk” because there was a very high risk of default. The interest rate on these bonds were high. The companies who issued them were seen as not having the ability to repay due to weak balance sheets or low credit rating .
Milken’s analysis of these companies stated otherwise and this is where his troubles began. Many would argue that Mike Milken knew some of these institutions had no possible means of repaying these bonds to the investors. But as the consummate salesman, Milken would portray these securities as no more risky than U.S. Treasury bonds, but offered a higher yield and the potential of higher returns on investment.
ONE HAND WASHES THE OTHER
Once Milken would raise capital for a company, he would then expect this company to purchase the bonds of subsequent companies where Drexel was the underwriter. His investment circle included Insurance companies, Savings and Loans (S&L’s), and even mutual funds. This cartel-like group participated in the trading of the bonds of companies Milken would bring to the market on a primary and secondary marketplace. There was a sense of unfettered loyalty amongst them all.
As long as Milken had buyers for his bond issues he would continue to generate enormous fees. I believe Drexel Burnham would receive up to 10% of each bond issue. For example, if Milken would raise $200 million for a company, Drexel would receive $20 million. In 1986, Milken is said to have made over $500 million (personally), which included bonuses.
WHAT WE COULD NOT SEE
It was later discovered that this money machine was nothing more than a well refined ponzi scheme, like Social Security. When a particular company would default on his bond debt, Milken would just refinance and issue more debt. With a refinance, Milken and Drexel would still receive its fees for raising the money or in finance terms, RECAPITALIZATION.
Milken would later raise capital for so-called corporate raiders such as Carl Icahn, Boone Pickens, and others. There was nothing wrong with this. It became an issue, a legal issue rather when Milken started purchasing stock in companies he knew would become takeover or potential takeover targets. This is what is known as INSIDER TRADING.
Milken was eventually charged with Insider Trading along with 70+ other federal securities violations. He was sentenced to 10 years in prison of which he served about 18 months. He also paid up to $1 billion in fines and civil penalties.
SUBPRIME v. JUNK BOND era
Milken was said to have raised debt capital for companies whom he known or should have known had a very high potential of default. In the current credit crisis due to subprime lending, many banks and mortgage brokers are said to have placed borrowers into loan products where they knew the borrower would not be able to pay back. Now we have a high mortgage default rate just as the high rate of high yield bond defaults in the late 80’s and early 90’s.
Is Michael Milken to blame? This argument is one that many people present. In the Milken era, a large number of S&L’s and insurance companies went out of business as they held large portfolios of Milken “JUNK”. Now many financial institutions are either going out of business or having to raise capital to stay afloat (Bear Sterns, Lehman Brothers, Merrill Lynch, Wachovia, etc…).
You can further your research on Michael Milken and what he did for the capital markets by reading the following books:
Den of Thieves by James Stewart
A License to Steal by Ben Stein
The Predators’ Ball by Connie Bruck
In closing, I personally look at Milken as a rather intriguing individual. From the information I gathered it seems he started with good intentions and then greed started to control his decision-making. He now focuses his time and energy on education through the Milken Family Foundation (which gives an annual Teacher Award), providing funding to research the cure for prostate cancer (Milken is a prostate cancer survivor), and to global finance through the Milken Institute (www.milkeninstitute.com) which holds an annual conference featuring some of the worlds best known business leaders and innovators.
On another positive, Milken did raise money for the following companies and individuals whom are still in existence:
TED TURNER- Turner Broadcasting (CNN)
STEVE WYNN- (Wynn Resorts)
RUPERT MURDOCH- (News Corp.)