Friday, April 17, 2009

Goldman Sachs and Thursday's trading activity in SPG

It looks like Goldman Sachs is back up to their old tricks again.

Anybody that saw today's noon onward monster ramp up in the price of Simon Properties Group(SPG) has to be wondering what was going on especially after the previous day's continuous upward move.

Shorts trying to cover in the face over Great news?

Let's have a closer look:

After the 2nd largest Mall owner General Growth Properties Inc. filed the biggest REIT bankruptcy ever, their competitor SPG opened near the lows of the day and did not do much for a couple of hours until seemingly out of nowhere or based on a programed trade, it staged a unrelenting upward move that left short term technical reading such as the RSI, slow and fast stochastic all at the highest overbought readings possible of 100 for over 3 hrs!

The spike looked very suspicious since it did not abate until a few minutes before the end of the day almost reaching the 50 options strike range after starting the day closer to the 40.

Could this have been a case of bullishness based on the idea that SPG can now pick up GGP property on the cheap?

If this thesis was the case for the massive upward mid day move in SPG, it turned out to be a false one after Hedge Fund manager Bill Ackman emphatically stated the following:

"Ackman Sees ‘Zero’ Chance of General Growth Fire Sale"

“The probability of Simon (Property Group Inc.) or the other mall REITs buying any of General Growth’s properties on the cheap is zero,” Ackman said in a telephone interview. General Growth is “not going to be forced to do anything because they’re in bankruptcy.”

Link -

Surely Goldman Sachs and their gang wasn't trying to stick it to this Blogger for mentioning the history of their recommendations and conviction buy list yesterday where SPG happens to be the latest addition.

Could it be Goldman's way of sticking it to anyone who's had posts linked to the blog site they're suing ?

Lowly blogger conspiracy theories aside(cough, cough)

what could it have been? has an idea:

"Yesterday Goldman Sachs added Simon to their Conviction Buy List with a target of $46. This rec came exactly 3 weeks after Goldman, UBS, and Deutsche Bank completed a big offering equity/debt offering for Simon. GS held $177 million worth of SPG as of 12/31/08. RREFF America LLC , a subsidiary of Deutsche Bank, held $330 million.

The basic gameplan for a investment bank bank like Goldman might look something like this:

1. Borrow dirt-cheap money from the Fed
2. Loan that money to risky commercial real-estate companies by underwriting juicy offerings (10.35% for the Simon debt, equity was ~8% discount to current price).
3. Collect fees from client(s), plus interest from the spread on the debt. If there’s not enough demand for the stock, keep it yourself, then proceed to steps 4 and 5.
4. Research dept adds stock to Conviction Buy List
5. (This step seems the least likely, but it’s possible.) If GS traders and Quant-funds were to brutally squeeze the stock higher, that would be icing on the cake for the whole deal, hypothetically. What’s to stand in the way? Dennis Gartman and a few dozen retail investors?

Sounds very profitable, and pretty foolproof to me. Unless, of course, the SEC gets involved like they did in 2003. That incident resulted in $110 million in fines for GS." Here are some excerpts:

The Complaint also alleges that Goldman Sachs published exaggerated or unwarranted research and failed to maintain appropriate supervision over its research and investment banking operations.

Goldman Sachs “aligned” its research, equities, and investment banking divisions to work collaboratively in order to fully leverage its limited research resources.

Goldman Sachs failed to establish and maintain adequate policies, systems, and procedures reasonably designed to ensure the objectivity of its published research."

Link to the Full details at -


Goldman Sachs?


Surely you must been joking!

And the sound of a RICO beat goes on.....

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