If there’s one thing Jim Cramer taught Lenny Dysktra, it’s the value of a good endorsement for a good pal. Several years back Cramer spoke highly of Nails’ investing skills, telling HBO that the former ballplayer didn’t just have a knack for money managing but that he was “one of the greats” in this business. In the ensuing years, Dykstra got thrown out of his house, caught defecating on the floor, had his private planes repossessed, lived in a car and was accused of bouncing a check to a stripper but now he’s doing great, possibly thanks to Jim. In an effort to pay it forward, Dykstra is doing the same for his best bud, Charlie Sheen. Nails told reporters over the weekend that Sheen is “perfect,” among other things.

Lenny Dykstra, who has weathered the storms of scandal himself over the years, but is quick to heap praise on his friend, insisted in an exclusive interview with RadarOnline.com that “Charlie is a rock star, he’s perfect, and he’s a f**king genius.”

Dykstra was a guest at Sheen’s major league baseball gathering at his million dollar mansion in Los Angeles last Friday. The Two And A Half Men star had an impressive guest list that included SF Giants pitcher Brian “The Beard” Wilson, Kenny Lofton, Todd Zeile, and Eddie Murray. The athletes all joined Sheen for a private screening of his classic baseball flick Major League.

“I went to his house for the party and it was great!” Dykstra told RadarOnline.com, going on to share that “Charlie is sober and is doing really good.”

In related news, Dykstra also told Radar that he and Chuck are hanging out again this week, when they go house hunting in Beverly Hills for Nails’ new pad.

Charlie Sheen Is A Rock Star [Radar via Deadspin

Article courtesy of Dealbreaker

The hedge fund has taken a £100m short position in the bank.

[DES], which has $21bn (£13bn) in assets under management, disclosed that it had built a 0.26pc short position. The position is worth £97m after Barclays’ shares closed down 4.4 at 306.6p on Monday…Hedge funds on both sides of the Atlantic made considerable gains by betting against banks’ share prices during the financial crisis and DE Shaw’s move will raise fears that some again sense an opportunity. Analysts and investors remain split on the bank’s future prospects. Some have expressed concern over the performance of Barclays Capital, the investment bank, and the impact of the Basel III rules on the group’s future funding costs.

And on a slightly more optimistic note.

UBS and Merrill Lynch both issued upbeat notes last week in which they said Barclays could be moving towards a restructuring. UBS said Barclays could sell off assets and restructure to avoid a profit fall in the wake of the introduction of Basel III.

[Telegraph via BI]

Article courtesy of Dealbreaker

As we’ve discussed at length, the hedge fund quarterly letter to investors is an art form. In down months and in up, it’s become increasingly difficult to come up with an original way to say you got your ‘nads ripped off and shoved down your throat “but it’s okay! because this had nothing to do with our analysis and everything to do with the market’s ridiculous mispricing of equity” or write that you’ve been doing chest bumps with IR all morning on account of “making the market our bitch” without sounding like you’re getting too cocky. Regardless of performance, managers are faced with the issue of how to set oneself apart from the pack. If Larry Robbins were teaching a Learning Annex class on the subject, he’d write one word on the chalkboard and underline it twice: analogies. In his Q2 2010 letter to investors, for example, Robbins likened being a steward of capital to being a bus driver, which included a story about driving his kids to school and debting the merits of taking the GWB versus the Harlem River. Impressive, yes, but the Maestro was just getting started. For for his latest piece, the Q3 note, Lawrence pulled out all the stops. They involved:

* Football fields and sprinklers:

In other words, if you look at the total investing landscape and assume that it is a football field of 100 yards, we think that many different asset classes – Treasuries, investment grade bonds, non-investment grade bonds, CMBS, actual real assets, real estate, gold, etc. – have gone from potentially and then wildly undervalued to now being at least fairly valued, or, in some cases, overvalued. Certainly on the debt side, if you are an absolute return investor, things are quite sparse there. So where’s the only place for the liquidity to go? The only place left for the liquidity to go, which can absorb that liquidity, is high quality US equities. That is where the undervaluation is. If you think of the market as a giant football field, then if 80% of the field is saturated but the liquidity sprinklers are still on all around the field, then that means that 5x as much water is going to find the remaining 20% which is still dry.

* Ornery tubes of toothpaste:

We have a different analogy to say the same thing – we are folding the bottom of the toothpaste tube. If you take a toothpaste tube that is half empty and you smack the bottom of it, nothing really happens, right? It moves a little bit to the right or left. But, if you fold that tube of toothpaste 8x, you’ve built pressure. Now, if you hit the bottom of that tube, all of a sudden things go far.

* TOMMY BOY:

What types of companies are we investing in? We think the economic forecast is too unpredictable to have a cyclical sailboat and so we think you need a motorboat. Again, I use an analogy, in this case, in the movie “Tommy Boy”, Chris Farley in his comedic wisdom is sitting in a sailboat waiting for the wind to blow and, of course, the wind never comes and his sailboat never moves. If you invested in cyclical companies and consumer related companies in the 1990s, you looked like a genius. Why did you look like a genius? Well, because you had a 4% GDP growth tailwind in the US. Most anybody can move forward in a sailboat if there is wind. The problem is when the wind dies down. So we’re trying to find companies which have cyclical growth drivers that don’t necessarily need an economic tailwind in order to move
the boat forward. We’re not saying that there is definitely going to be no wind in the next five to ten years. What we’re saying is that it’s highly uncertain, and therefore we do not want to be dependent on economic wind power in order to power your capital forward.

* And bowling, which no quarterly investor letter worth its salt should be without:

Glenview Q3 2010 Letter [PDF]

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As you have most likely heard, yesterday afternoon, DE Shaw cut ten percent of its workforce. The news probably suggests that anyone who’s been trying to make a jump who’d been considering shooting the hedge fund a resume ought to shelve that idea for now. Looking down the road, however, the firm will at some point start hiring again. And when it does, should you get a call back, there’s a question you may not get in interviews with inferior firms that you’ll want to be prepared to answer.

An acquaintance looking for a new gig had dinner with a friend whose buddy worked at DES. It was an informal meeting, though knowing he was rep’ing the firm, the Shaw guy came armed with what is presumably the hedge fund’s typical spiel. The conversation went like this (this was just after they’d sat down):

DE Shaw Guy: Did you go to an Ivy League school?

Acquaintance: Yes.

DE Shaw Guy: Did you have a 4.0?

Acquaintance: Yes.

DE Shaw Guy: Doesn’t matter– everyone at DE Shaw has that. You know who we hire at DE Shaw?

Acquaintance: Uh–

DE Shaw Guy: GENIUSES. [pauses for emphasis]. How do I know you’re a genius?

I’m sure many of you likely consider yourself geniuses but right there, how would you answer that question? Would you whip out a nearly-finished Rubix cube, solve it, throw it on the table and walk out? Start working on figuring that out now.

Article courtesy of Dealbreaker

You might not have known it at the time, but in March 2008, circa the same month Jim Cramer called him the greatest mind on Wall Street, Lenny Dykstra was going through some money trubs. This was just prior to Dykstra putting his beloved Thousand Oaks home on the market, at a selling price that indicated he believed it possible to see a 33% return on the place, after having bought it from Wayne Gretzky for $18.5 million in August 2007 and owning it for ten months. As you are probably aware, despite LD’s streak of crazy spot on the money calls, this one did not pan out as he’d predicted, and the home was foreclosed on, though not before Nails ripped out the bathroom fixtures, left “unfit to print” items on the walls and floor (knowing Dykstra, one must assume feces), and blamed the whole thing on JPMorgan née WaMu. This was also prior to the former car wash king of California being forced to live out of his car and auction off phone calls with himself on Craigslist. But we’re getting ahead of ourselves.

In March 2008, our boy, likely due to the brain damage inflicted by seeing how far he could push a Twizzler into his ear and not stopping when he felt resistance, just thought he need a little cash. Two-hundred and fifty thousand would probably do the trick, and as luck would have it, someone was offering him that exact amount!

In the late winter of 2008, an entrepreneur named Richard O’Connor, who had become Dykstra’s favored adviser, introduced him to Shannon Illingworth, the founder of a publicly traded company called Automated Vending Technologies, or AVT, and the two quickly cut a deal. O’Connor told me that on March 25, 2008, Illingworth gave Dykstra roughly $250,000 worth of AVT stock in exchange for plugging the company on Cramer’s website, TheStreet.com, and promising to provide a personal introduction to Cramer. O’Connor claims that Dykstra told him he knew the pay-to-plug arrangement was illegal. To avoid getting caught, O’Connor says, the former All-Star baseball player had a solution: “We can just put the stock in Keith’s name,” referring to his brother-in-law, Keith Peel.

And so it was done. O’Connor provided me copies of stock certificates showing that on March 25, 2008, Keith Peel was issued 250,000 shares of AVT stock, which traded at roughly $1 a share. “Keith didn’t know anything about it,” says O’Connor, maintaining that using Peel’s name was a way to stash the stock away from potential regulatory oversight. The shares were held at Dykstra’s mansion, which is where O’Connor retrieved them. Just two weeks later, on June 6, 2008, Dykstra offered his premium subscribers a curious “bonus” recommendation: a plain old penny stock named AVT, “which gives investors a lot of potential upside.” Dykstra droned on endlessly about the stock, with all the conviction of a prisoner of war extolling the cause of his captors for the cameras.

When I contacted him shortly before The Zeroes printed, AVT founder Illingworth admitted that he hired Dykstra as a consultant for his “relationships with TheStreet.com, Cramer,” and that the idea for Dykstra to tout his company’s stock was “mutual.” (Despite the certificates, Illingworth denied ever giving Dykstra or Peel $250,000 worth of stock; instead he claims the only money he gave to Dykstra was $15,000 to trade on his behalf, a sum that disappeared.)

O’Connor claims that Illingworth was angry that he didn’t get more plugs from Dykstra, or a meeting with Cramer. O’Connor also says while advising Dykstra in the first half of 2008, he saw multiple other offers from small company CEOs offering Dykstra cash in exchange for access to Cramer, though he does not know if Dykstra ever cashed in on those opportunities.

Lenny Dykstra Stock Scandal [TDB]

Article courtesy of Dealbreaker

Last week, RBS’s Stamford trading floor lost power for about ten minutes. Many wondered what was going on, and with no official word from the bank, imaginations ran wild. Had someone kicked over some crucial cords? Was RBS going out of business? As is our wont, we printed a rumor about what had happened, a rumor which, in fact, turned out to be true. Someone had clogged a toilet on 7th floor and it leaked into a communications closet on 6th floor (trading). Before I get into what senior management’s reaction was to that story, let’s take a few moments to backtrack and offer a little color on how we got to this place.

Last April (of ‘09), we wrote about a food eating challenge taken up by a RBS Greenwich Capital analyst, who endeavored to consume 40 vending machine items in less than an hour, with $400 at stake. He ended up puking with moments to go, and couldn’t find it in himself to rally. This event was attended by employees from top to bottom, including those much more senior than the analyst in question. We chronicled the contest, as we often do. About 10 minutes after our story went up, we were informed, “That kid just left the head of North America global banking’s office (hi Mike!) and was told to go home.” To that end, we were also told that RBS was fairly bent out of shape about the story appearing in the press, and while “there have always been plenty of those challenges here before, that was the first time it got out like that, and it never mattered when times were good. They’re not happy with you.” At this point I’d like to throw out some questions– did we organize the event? Did we hold a gun to this kid’s head and say ’shove these vending machine items in your mouth as quickly as possible or I shoot’? Don’t answer yet, just marinade on those points and and we’ll revisit them in a bit.

In December, we mentioned the firm’s holiday party, which, given its manifold success, essentially consisted of rationed bags of generic-brand chips (one per group). The information was passed on to us by a fairly level-headed employee, one not prone to exaggeration, simply interested in sharing the truth.

In February, we wrote about a MD who’d been fired on account of the fact that he was embezzling money from the company, which left a bad taste in many a staff member’s mouth. Because we occasionally like to exercise caution, we got this story confirmed, by RBS, before printing it. Still, there were some people who were not happy about the shit coming to light. A thinking man might reflect on the situation and realize that the anger at Dealbreaker was a tad misdirected, but please! We are talking about RBS here, where there is no place for rationale thought.

Later that month, we waxed poetic on the firm’s kick-ass new building. Were we the ones who sanctimoniously wondered if anyone inhabiting the palace on I-95 should feel guilty about the fact that despite having 84 percent of its ass owned by the British government and being the recipient of a massive taxpayer bailout, the bank had shelled out the money to build one of the most enormous trading floor in the world, where needn’t leave headquarters to grab a massage, because they’re provided on-site? Were we the ones who asked if the company ever consider “canceling the move in light of the bank’s problems,”? Were we the ones who compared RBS TO AIG? No, those honors go to the Gray Lady.

And over the course of the entire year, we’ve written a fair amount about the bank’s method of compensating its employees (which at RBSGC includes base salaries for over two years, no bonus since March 2008 (for calendar 2007) and the next bonus coming…this June. It’s unclear at this time if those will involve any cash, or simply a bunch of that sweet RBS debt). This information has been confirmed by many other outlets by this point, some of whom are helpfully pointing out will lead to a “mini exodus” from the bank, as people have been planning to get the hell out of there once they get paid. I believe we’ve also mentioned the rampant ship-jumping of employees to another shop down the road, where every day isn’t a trip to idiot island, and it’s not necessary to fantasize about life that doesn’t so closely resemble Hell.

And finally, we come back to the toilet clogging incident! I’ve been informed by many an irate employee this morning that the reaction by management to the leaking (you like that?) of the story was to officially ban Dealbreaker. Which, in the minds of the the Queen’s bitches, is genius! We can’t turn a profit to save our lives, the Queen’s got a shiv up our asses, we haven’t paid our employees jack in years, which has resulted in at least one of them simply helping himself to a bonus, we make Citi look good, and at this point we’re literally up to our ears in shit. So, what then? Oh, oh wait, we’ve got it! We’ll ban our people from reading a completely non-threatening website that merely tells the truth. We don’t want to, of course, because that place does have its charms. Pretty nifty with the Photoshop. Tells a great dick joke, and you know we love those. Etc. But it’s got to be done. Because, other than the stories appearing on this corner of the internet, things have been going swimmingly for us. Yes, THIS is the thing that will ruin our reputation, not the incredibly impressive ass-bleeding, or the “damaging losses,” or the amateur hour embezzlement, or the headlines like, “RBS Alone Among U.K. Rivals in Posting Quarterly Loss.” No, no, it’s THIS, this insidious Dealbreaker.

Okay. Now that I’ve regained my composure I’m going to give you an opportunity to think about how ridiculous this makes you look. Who do you want to emulate? The institutions that know how to make money and by no coincidence allow their employees to get on this shit, like Goldman and JPMorgan and the hedge funds down the road? Or do you want to proudly join the school of thought employed by the dearly departed Bear Stearns and the cat food eaters at Wachovia? We’re taking care of your employees in ways you can’t. Unblock us now and it’ll be water off a duck’s back. Let’s go.

Article courtesy of Dealbreaker