I’m in Awe of How Far the Scams & Stupidities around ‘Blockchain Stocks’ are Going

This can happen only during the very late stage of a bubble. It just doesn’t let up. UBI Blockchain Internet, a Hong Kong outfit whose shares trade in the US [UBIA], filed with the SEC to sell an additional 72.3 million shares owned by its executives. In other words, it isn’t selling the shares to raise money for corporate purposes, but to allow its executives, including CEO Tony Liu, to bail out.
This is happening after the company – which sports zero revenues and a disconnected phone number in its SEC filings – managed to get its shares to spike briefly by over 1,100%, pushing its market capitalization to $8 billion.
UBI Blockchain didn’t do an IPO. Instead, in October 2016, it acquired a publicly traded shell company registered in Las Vegas, called ‘JA Energy.’ It then changed the name and ticker symbol to what they’re now.
Over the six trading days starting on December 11, 2017, its shares soared over 1,100%, from $7.20 to $87 on December 18, as the word ‘blockchain’ in its name and sufficient hype and speculator-idiocy took hold. By December 21, shares had plunged 67% to $29. They closed on Wednesday at $38.50. At this price, it still has a ludicrous market cap of $3.64 billion.

This post was published at Wolf Street on Dec 28, 2017.

These PE Firms Are About To Get Crushed By Their Subprime Auto Bets

In the aftermath of the ‘great recession,’ private equity firms placed massive bets on subprime auto finance companies with the typical “thesis” going something like this: “well, people have to get to work don’t they?”…genius, if we understand it correctly.
Of course, the “thesis” seemed to be confirmed when auto securitizations performed relatively well throughout the financial crisis, amid a sea of mortgage bonds getting wiped out, and private equity titans were off to the races with wall street titans from Perella Weinberg to Blackstone and KKR scooping stakes in small niche lenders.
Unfortunately, as Bloomberg points out today, the $3 billion bet on subprime auto lenders hasn’t played out precisely to plan as the “well, people have to get to work” thesis has proved to be somewhat less than full proof.
A Perella Weinberg Partners fund has been sitting on an IPO of Flagship Credit Acceptance for two years as bad loan write-offs push it into the red. Blackstone Group LP has struggled to make Exeter Finance profitable, despite sinking almost a half-billion dollars into the lender since 2011 and shaking up the C-suite multiple times. And Wall Street bankers in private say others would love to cash out too, but there’s currently no market for such exits.
Since the turn of the decade, buyout firms, hedge funds and other private investors have staked at least $3 billion on non-bank auto lenders, according to Colonnade. Among PE firms, everyone from Blackstone and KKR & Co. to Lee Equity Partners, Altamont Capital and CIVC Partners waded in.

This post was published at Zero Hedge on Dec 21, 2017.

Saudi Economy Contracts For First Time In 8 Years, Unveils Record Spending Spree To Boost Growth

Back when oil was at $100 and above, the Saudi economy was firing on all cylinders, and nobody even dreamed that the crown jewel of Saudi Arabia – Aramaco – would be on the IPO block in just a few years. However, with oil stuck firmly in the $50 range, things for the Saudi economy are going from bad to worse, and today Riyadh – when it wasn’t busy preventing Yemeni ballistic missiles from hitting the royal palace – said its economy contracted for the first time in eight years as a result of austerity measures and the stagnant price of oil, as the Kingdom announced record spending to stimulate growth.
OPEC’s biggest oil producer said 2017 GDP shrank 0.5% due to a drop in crude production, as part of the 2016 Vienna production cut agreement, but mostly due to lower oil prices. The last time the Saudi economy contracted was in 2009, when GDP fell 2.1% after the global financial crisis sent oil prices crashing. Riyadh also posted a higher-than-expected budget deficit in 2017 and forecast another shortfall next year for the fifth year in a row due to the drop in oil revenues: the finance ministry said it estimates a budget deficit of $52 billion for 2018.
More surprising was the Saudis announcement of a radically expansionary budget for 2018, projecting the highest spending ever despite low oil prices in a bid to stimulate the sluggish economic, saying it expects the GDP to grow by 2.7%. While we wish Riyadh good luck with that, we now know why confiscating the wealth of ultra wealthy Saudi royals was a key component of the country’s economic plan…

This post was published at Zero Hedge on Dec 19, 2017.

China Systemic Risk: HNA Group Denies Liquidity Problem, It’s Only “End-Of-The-Year Tightness”

Every few days at the moment, it seems, we return to the subject of systemic risk in China related to its big four highly-indebted conglomerates, HNA, Anbang, Evergrande and Dalian Wanda.
Our main source of concern recently has been HNA, after it issued a bond with less than one year to maturity with the extortionately high coupon of 9%. This prompted us to ask whether China was experiencing the beginning of its Minsky moment? The reason for our continuing focus on HNA is its $28bn of short-term debt which matures before the end of next June, much of it accumulated during a binge of acquisition-driven growth which saw it become a major shareholder in Deutsche Bank, Hilton Worldwide and others.
Last week, as we discussed, S&P downgraded HNA’s credit rating by one notch from b+ to b, five levels below investment grade. in another sign that HNA is under pressure from the Chinese government and its creditors, CEO Adam Tan announced that it was ditching its acquisitive strategy, while considering the IPO of Gategroup, a company it only acquired last year for $1.5 billion.

This post was published at Zero Hedge on Dec 8, 2017.

Dutch People Are Different – ABN Amro Employees Want To End Bonus Scheme

We always shudder slightly when we discuss ABN Amro, since nothing ever seems straightforward in the ongoing saga of the Dutch bank. However, this time at least nobody has died. In 2015, we notedthat Chris Van Eeghen, head of the bank’s corporate finance and capital markets ‘startled’ friends and colleagues after the ‘always cheerful’ banker reportedly committed suicide. Van Eeghen was the fourth ABN banker suicide since the financial crisis.
When it comes to bonuses, ABN also has a chequered history. The Dutch government nationalised the bank at the height of the financial crisis at a cost to Dutch taxpayers of 22 billion Euros. There was a national outcry in 2015 over bonuses ABN paid to its top executives, as Business Insider reported.
Public outcry over bankers’ bonuses is pretty common, but the anger sweeping the Netherlands, over nationalised ABN Amro’s executive pay packets is on a completely different level. Over the last week, Dutch newspapers Financieele Dagblad and NOS (Holland’s version of the BBC), and other media outlets were awash with debates over the justification of how ABN Amro’s high ranking executives were getting huge bonuses ahead of the bank being re-privatised.
In fact, the outcry was, and continues to be, so bad that Dutch finance minister Jeroen Dijsselbloem delayed the IPO of the nationalised bank at the end of March because the row over giving six executives a 100,000 (73,000) bonus on top of their salaries escalated so greatly.

This post was published at Zero Hedge on Dec 1, 2017.

The Approaching Silicon Valley Meltdown

To say that we are living through precarious times seems to be an understatement. Whether one lives in the so moniker’d ‘developed world, emerging, or frontier’ there seems to be one constant currently: No one seems to be able to accurately ponder what tomorrow may bring, whether its political, economical, social, or combination there of.
The only thing constant right now is one of two things: Either, further instability is on the horizon. Or, complete and utter chaos is already knocking on the door. (See Kim Jong-un or Robert Mugabe for clues.)
Stability, the once deemed word for progress throughout civilized society now seems, to have devolved to mean, at what point of the instability around them they’re currently coping with. i.e., If you’re currently muddling through economically while dodging being a statistic, as the term goes, that currently means you, or your situation, is currently ‘stable.’
This now applies to not only people, but business, as well as politics worldwide. If you think I’m exaggerating? Hint: Hollywood. Need I say more?
However, there has been one outlier, for the most part, which seemed to skirt around all the current chaos, relatively unscathed. That would be Silicon Valley and all its ancillary provinces aka ‘Disruptive Tech.’
So far the coveted group known collectively as ‘FAANG’ (e.g., Facebook™, Apple™, Amazon™, Netflix™, Google™) seems to have held the ‘barbarians at the gates’ known as investors relatively at bay, or ‘stable’ in their positions, if you will. What has been, anything but, is their cohort of IPO brethren that were supposed to have joined them.

This post was published at Zero Hedge on Nov 20, 2017.

Meet Sophia: The Humanoid Robot That Was Granted Citizenship By Saudi Arabia

One of the reasons why Saudi Arabia has found itself in fiscal and budgetary dire straits in recent years, is that as a result of the plunge in oil prices in recent years, the government has been unable to keep paying the thousands of local and foreign workers who are (or were) employed on any number of local infrastructure and development projects. However, with the Aramco IPO also suddenly on the rocks even as the country’s reserves continue to shrink and deficits grow, the Gulf kingdom appears to have come up with a radical solution to its structural problems, when on Wednesday Saudi Arabia became the first nation in the world to grant a robot citizenship.
The outspoken humanoid robot called Sophia, flown in from Hong Kong, was granted Saudi citizenship at the Future Investment Initiative, a major investment conference hosted by the Public Investment Fund (PIF) that aims to highlight the Kingdom’s ambitious Vision 2030 plan for the future.
“We have a little announcement. We just learnt, Sophia; I hope you are listening to me, you have been awarded the first Saudi citizenship for a robot,’ said panel moderator Andrew Ross Sorkin of CNBC’s ‘Squawk Box’ and the NYT.
‘Thank you to the Kingdom of Saudi Arabia. I am very honored and proud for this unique distinction,’ Sophia told the panel. ‘It is historic to be the first robot in the world to be recognized with citizenship.’

This post was published at Zero Hedge on Oct 26, 2017.

Stocks and Precious Metals Charts – To the Moon, Alice

“For we wrestle not against flesh and blood, but against principalities and powers, against the rulers of the darkness of this world, against spiritual wickedness in high places.”
Ephesians 6:12
Stocks continued moving higher.
Where they’ll stop, nobody knows.
Asia is rolling out the most new stocks in the US since the Alibaba IPO. Making America great again.
And the pundits know plenty of reasons why this is still a good time to buy.

This post was published at Jesses Crossroads Cafe on 20 OCTOBER 2017.

Cash-Burn Threatens Blue Apron 3.5 Months after IPO

Layoffs and cost cuts have commenced.
Let’s get this straight: Layoffs are not a sign of growth for a young money-losing company whose hoped-for explosive growth somehow had justified a ‘unicorn’ valuation not long ago. But that’s what’s happening at Blue Apron, three-and-a half months after its IPO.
In an SEC filing, the meal-kit provider disclosed that it had ‘implemented a company-wide realignment of personnel to support its strategic priorities’ – namely laying off ‘approximately 6%’ of its workforce across ‘corporate offices and fulfillment centers.’
With 5,393 employees as of June 30, per its first earnings report as a public company on August 10, 6% of the workforce would amount to about 320 people.
At the time, the company also reported that sales rose 18% to $238 million in the quarter. At that rate it would reach about $1 billion in annual sales. But to accomplish this, the bottom line swung from a gain of $5.5 million in the year-earlier quarter to a loss of $31.6 million.
But the company had only $61.6 million in cash and cash equivalent on hand as of June 30 – which is not a lot, considering that in the first half it burned through $70.7 million in cash just from operations, and it burned another $90 million to purchase equipment.

This post was published at Wolf Street on Oct 18, 2017.

Is The Aramco IPO On The Brink Of Collapse?

In what could be a humiliating decision, Saudi Aramco is considering not staging an IPO next year as planned, due to the difficulty of pulling off an international listing.
On Friday, the Financial Times reported that Aramco is weighing a different strategy: selling stakes in the company to private investors and sovereign wealth funds. No final decision has been made yet, but there are several potential paths forward, including a public listing on Saudi Arabia’s domestic stock exchange plus a private sale. Or a private sale followed by an international listing, but maybe not until 2019.
Aramco officials tried to beat back the report, insisting that everything is moving forward as planned. ‘A range of options, for the public listing of Saudi Aramco, continue to be held under active review. No decision has been made and the IPO process remains on track,’ Saudi Aramco said in a statement, according to the FT.
However, Reuters echoed the FT, reporting on Friday that Aramco was in talks with a Chinese investor.

This post was published at Zero Hedge on Oct 17, 2017.

UK PMs Push Back As Regulators “Bend The Rules” To Accommodate Saudi Aramco IPO

All IPO’d up and no place to go? UK portfolio managers with $6.9 trillion resist rule bending by regulator to achieve Aramco London listing

Another potential problem for the world’s biggest ever (potential) IPO…
A lobby group representing UK portfolio managers with $6.9 trillion AUM has warned the UK financial regulator that bending the rules to accommodate Aramco’s IPO will damage London’s status as a global financial centre.
In a letter to the head of the Financial Conduct Authority (FCA), the embattled Andrew Bailey, the Investment Association (IA) argued that it threatened the ‘high standards’ of London’s listing regime.
In ‘Funds fire broadside over Saudi oil float’, the Sunday Times noted that ‘Britain’s largest investors have turned up the heat on the City watchdog over its controversial plans to allow Saudi Arabia’s oil giant to float in London.’
Besides the tricky issue of its oil and gas reserves (especially the Ghawar field), the IA argued in the letter that ‘For the premium segment of the UK main market, investors must have confidence that a company is run for all shareholders, not just the major or controlling shareholder.’

This post was published at Zero Hedge on Oct 17, 2017.

Frontrunning: September 29

Republican Tax Plan Hits First Hurdle (WSJ) A $6.4 Billion Windfall Awaits Big U. S. Banks in Trump’s Tax Cut (BBG) How Does the Trump Tax Plan Affect You? WSJ Answers Your Questions (WSJ) Twitter suspends Russia-linked accounts, but U. S. senator says response inadequate (Reuters) Flight ban on Iraqi Kurds imposed after independence vote (Reuters) Elon Musk’s New Vision: Anywhere on Earth in Under One Hour (BBG) Kurdistan region refuses to hand over border crossings to Iraqi government: Rudaw (Reuters) Independence Vote Tests Catalonia’s Police Force (WSJ) Uber CEO Khosrowshahi to Visit U. K. to Rescue London License (BBG) Chinese Money Is Still Leaking Into the World’s Housing Markets (BBG) Russia accuses CNN International of violating Russian media law (Reuters) Dems on Trump’s Voter Fraud Panel Push Back (BBG) Schumer says senators close to bipartisan deal on health exchanges (Reuters) VW’s dieselgate bill hits $30 billion after another charge (Reuters) VW Takes New $2.9 Billion Hit From Diesel Scandal (WSJ) Iron Ore Becomes Punch Bag as China Concerns Drive 20% Collapse (BBG) U. S. visas to six Muslim nations drop after Supreme Court backs travel ban (Reuters) P&G CEO Blasts Nelson Peltz as Tensions Mount Over Board Vote (BBG) Lyft IPO puts investors in self-driving cars as well as ride services (Reuters) World’s Biggest Oil Company Promised Expats Idyllic Lifestyle – Then Fire Erupted (WSJ) Chaos and hackers stalk bitcoin investors (Reuters)
Overnight Media Digest
– A day after announcing their tax plan, Senate Republicans debated scaling back one of their largest and most controversial proposals to pay for lower tax rates – repeal of the individual deduction for state and local taxes. on.wsj.com/2yJB9qV

This post was published at Zero Hedge on Sep 29, 2017.

Why Saudi Aramco Delayed Its IPO

Authored by Cyril Widdershoven via OilPrice.com,
The long-awaited Saudi Aramco IPO, scheduled for mid-2018, could be delayed to 2019.

International news reports have stated that the Saudi government is currently putting together contingency plans for a possible delay to the biggest IPO ever. The listing of 5 percent of Saudi Arabia’s crown jewel, the world’s largest oil company Saudi Aramco, could bring in around $300-$400 billion, based on a valuation of Aramco at between $1.5-2 trillion. The cash generated by the IPO has already been earmarked for the coffers of the Saudi Public Investment Fund (PIF), to be used as financial support for Saudi Vision 2030, the economic diversification program proposed and pushed for by Crown Prince Mohammed Bin Salman (MBS).

This post was published at Zero Hedge on Sep 15, 2017.

The Bitcoin And Cryptocurrency Bubble

I actively traded the internet stocks during the late stages of the internet/tech stock bubble in 1999 – from the short side. I will admit that I did take a few long-side day trade rides on a few internet stocks. I remember one Chinese internet stock that I bought in the morning at $10 after its IPO free’d up to trade and sold it about 2 hours later at $45. To this day I have no idea what the company’s concept was all about – I think it was one of those incubators. I doubt that company was in existence after 2001. As such, the crypto-currency craze reminds me of the internet stock bubble.
The crytos certainly are a heated debate. The volume from the Bitcoin defenders is deafening, the degree to which I’ve only seen near the peak of bubbles. I had a subscriber cancel his Mining Stock Journal subcription after sending me an email explaining that he canceled because he was pissed off that I was not a Bitcoin proponent. He accused me of discouraging people from buying Bitcoins. His loss, he’s missed on out some high rate of return trade ideas in a short period of time like Banro and Tahoe Resources. I’m not trying to discourage anyone from buying anything. I’m simply laying out the ‘caveat emptor’ case.
Having said that, there’s truth to the proposition that the inability to short Bitcoin contributes to its soaring valuation. I’d like to have an opportunity to see what would happen to the value of gold if the ability to short gold via the paper gold mechanism was removed from the equation.

This post was published at Investment Research Dynamics on September 14, 2017.

The Next Spanish Bank Teeters, at Worst Possible Time

It just doesn’t let up with these banks.
By Don Quijones, Spain, UK, & Mexico, editor at WOLF STREET. The timing could not have been worse: just as Spain faces its biggest constitutional crisis in over 40 years with Catalonia’s independence vote, another bank has begun to wobble.
Liderbank, Spain’s eighth largest lender, was spawned in 2011 from the shotgun marriage of three failed cajas (savings banks), Cajastur, Caja de Extremadura and Caja Cantabria. The new bank’s shares were sold to the public in May 2013 at an IPO price of 0.40. By April 2014, they were trading above 2, a massive 400% gain.
But by April 2015, the stock had started sinking. By May 2017, it was trading at around 1.20. Then came the collapse of Banco Popular in early June, which took many investors (but not WOLF STREET readers) by surprise, triggering a further crash in Liderbank’s stock as shareholders feared they would be next.
Scenting blood, short sellers began piling in, and just as the stock entered free-fall, the government intervened by imposing a temporary ban on short selling. The stock stabilized and even began to recover. By mid-July it had recrossed the psychological 1-threshold. Rumors began circulating that the short-selling ban would soon be lifted.

This post was published at Wolf Street by Don Quijones ‘ Sep 10, 2017.

The Aramco IPO: A Geopolitical Game Of Thrones

The already strong bilateral relations between Saudi Arabia and China are hitting new levels, as the Kingdom and the Chinese Tiger have decided to set up a joint US$20 billion investment fund. The fund was announced by Saudi minister of energy Khalid Al Falih, after meeting with Chinese vice-prime minister Zhang Gaoli in Jeddah. Falih indicated that both countries will share the total investments and will be splitting the revenues of the fund, which is going to target projects in infrastructure, energy, mining and materials. This is not a surprise, as Saudi Arabia has already been heavily investing in energy and petrochemicals in China the last decades. Saudi Aramco’s main downstream investments lately almost all have been focusing on increasing the Saudi footprint in downstream China, mainly to lock in Chinese demand for crude and products. Falih also reiterated that both countries will sign around $20 billion in value of projects in the coming days. As reported in the press, Saudi Arabia will be willing to invest in the fund partly in yuan. The current visit by the Chinese is of significance, as it could be a precursor to a hefty Chinese involvement in the eagerly awaited Saudi Aramco IPO next year. In March, during a visit of the King Salman to China, the two countries signed several energy and space technology deals worth $65 billion.
Saudi Arabia has, in recent years, shown a willingness to form more in-depth relationships with its main Asian customers, China, India and Japan. The Chinese energy demand, which is still the main driver of the global oil and gas market growth, is considered to be vital for Saudi Arabia’s future. The Kingdom is currently in a heavy battle with Russia and arguably Iran for the title of China’s biggest oil supplier, a title that Russia took from Saudi Arabia at the start of this year. Several analysts have been very worried about this development as it could weaken the IPO of Saudi Aramco. However, Aramco’s prominent position in the Chinese market, and the ongoing investments that the Saudi oil giant is making in downstream production and capabilities in China, will contain any negative repercussions from loss of market share. In the long-run, Aramco’s position in China will only strengthen, which will allow the Kingdom to lock in a hefty portion of its export volumes.

This post was published at Zero Hedge on Aug 29, 2017.

Albertsons IPO Hopes Crushed by Amazon Whole Foods Entry into Supermarket-Meltdown Price War

Store traffic already spirals down at Albertson’s, Safeway. Something ugly happened to Albertsons Companies, Inc., the owner of Albertson’s, Safeway, and smaller supermarket chains totaling 2,329 stores, 27 distribution centers, and 18 manufacturing facilities: Amazon, on its first day as new owner of Whole Foods, slashed prices on many items by the double digits, some of them by over 30%, and reportedly by up to 43%.
Ferocious price competition from Amazon – a stock market darling that doesn’t need to make money on grocery sales – is the last thing Albertsons Companies needs.
But that’s what it got. Amazon’s $13.7-billion acquisition of Whole Foods and the price cuts slammed all grocery store chains, and their shares took a beating, but Albertsons Companies is particularly vulnerable, and this comes at a very inconvenient time.

This post was published at Wolf Street on Aug 28, 2017.

Albertsons Gets Clocked by Amazon Whole Foods Entry into Supermarket-Meltdown Price War

IPO hopes re-crushed. Customer traffic, same-store sales spiral down.
Something ugly happened to Albertsons Companies, Inc., the owner of Albertson’s, Safeway, and smaller supermarket chains totaling 2,329 stores, 27 distribution centers, and 18 manufacturing facilities: Amazon, on its first day as new owner of Whole Foods, slashed prices on many items by the double digits, some of them by over 30%, and reportedly by up to 43%.
Ferocious price competition from Amazon – a stock market darling that doesn’t need to make money on grocery sales – is the last thing Albertsons Companies needs.
But that’s what it got. Amazon’s $13.7-billion acquisition of Whole Foods and the price cuts slammed all grocery store chains, and their shares took a beating, but Albertsons Companies is particularly vulnerable, and this comes at a very inconvenient time.
Private equity firms led by Cerberus acquired the supermarket chain Albertson’s in a 2005 leveraged buyout. In January 2015, it acquired Safeway in another LBO, which it hoped would eliminate much of the competition. It also acquired regional supermarket chains. Then in 2015, the PE firms wanted to sell the whole schmear, now named Albertsons Companies, via an IPO to the unsuspecting public. But in October 2015, as brick-and-mortar retail began to melt down, it scrapped the IPO.
But they’re still trying to unload their investment – now bogged down in $12 billion in debt – to the public. On August 22, just a couple of days before news of Amazon’s price cuts at Whole Foods clobbered the industry, Albertsons Companies filed an amended S-1 Registration Statement with the SEC, showing that it wants to keep its hopes for an IPO alive.
The filing’s two most revealing operational eye-openers are ongoing nasty losses and declining same-store sales on plunging customer traffic.
First the losses:

This post was published at Wolf Street on Aug 28, 2017.