Value investing icon-cum-embattled hedge fund manager David Einhorn – in the midst of his own struggles with a dreadful stretch of returns – is not ready to throw in the towel on his criticisms of Tesla.
Coming off of Tesla’s Q3 report – which on the surface handily beat expectations – Einhorn proclaimed this quarter to be Tesla’s high water mark, stating on his Greenlight Capital Re call on Tuesday morning that Model 3 demand is now going to drop off.
During the call, Einhorn said that “We believe this will be as good as it gets for the company. We believe they’ve exhausted most of the demand from customers who can afford the highest-priced versions of the Model 3. Tesla is contending with a litany of competitive, regulatory, human-resources, vehicle-quality and capital-structure issues.”
Einhorn’s prediction flies in the face of guidance that Tesla would be cash flow positive and profitable going forward. As a reminder, for Q3, Tesla reported what Bloomberg dubbed a “historic” quarter because not only did Q3 revenue and earnings soar, smashing expectations, but the company reported an unprecedented $881 million in Free Cash Flow, over $600 million more than the $280 million expected. Tesla also produced 5,300 Model 3s in the last week of Q3.
Almost immediately several analysts took exception with Tesla’s results, including one who claimed the company used “every trick from every fraud to put lipstick on Q3 results”. The release of Tesla’s 10-Q over the last few days has helped some skeptics continue to find new reasons to voice concern about the company.
For example, the Wall Street Journal’s Charley Grant recently drew attention to the company’s statements about tax credits that it received during the quarter:
Tesla booked $189.5 million in credit revenue in the quarter, an unusually high result. Tesla had booked a total of about $135 million in the first two quarters of the year. These credits are almost pure profit for Tesla. Tesla’s earnings press release only mentioned $52 million in revenue from credits. The total amount was only revealed in Tesla’s 10Q regulatory filing on Friday, after a nearly 20% run in the stock.
He also pointed out a $56 million difference in net income that came from the company lowering its estimated warranty expenses per vehicle:
In the third quarter, Tesla set aside $187 million in estimated warranty expenses, or about $2,242 per vehicle delivered. In the second quarter, that expense was $2,910 per car. That quarter was the first period where the Model 3 was Tesla’s best selling product. Net income would have been about $56 million lower using the same figure as in the second quarter, according to analysts at UBS .
As a reminder, we wrote in early October that Einhorn had compared Tesla to Lehman Brothers:
In thinking through TSLA more, it brings us back to Lehman, which went bankrupt 10 years ago. One of our key insights into Lehman was that the company had faced a credit crunch in 1998, bluffed its way through and got away with it. In fact, rather than facing regulatory, legal or even market consequences for failing to own up to reality in 1998, the company was rewarded when its business turned. This emboldened management to be even more aggressive during the next credit crunch in 2007 and 2008.
Lehman threatened short sellers, refused to raise capital (it even bought back stock), and management publicly suggested it would go private. Months later, shareholders, creditors, employees and the global economy paid a big price when management’s reckless behavior led to bankruptcy. The whole thing might have been avoided had the authorities cracked down on Lehman in 1998.
There are many parallels to TSLA. In 2013, TSLA was on the brink of failure as customers who had paid deposits weren’t taking delivery of the Model S. TSLA’s cash reserves fell to a dangerously low level and CEO Elon Musk secretly and desperately tried to sell the company to Google. Rather than communicating the truth to shareholders, Mr. Musk bluffed his way through the crisis. There were no regulatory, legal or market consequences for failing to own up to reality. The business survived, and Mr. Musk was celebrated for his successful bluffing.
In our opinion, this has emboldened the TSLA CEO to embark on ever more aggressive deceptions.
MSNBC‘s Chris Hayes had egg on his face Monday evening after an infographic aired a full day before the election showing Democrat Andrew Gillum prevailing over GOP rival Ron DeSantis by more than 45,000 votes with 99% of the votes counted, as first reported by Deadline Hollywood.
Hayes told viewers: “Quick clarification here. Just want to say, earlier this hour, uh, we showed a graphic of the Florida gubernatorial race. May have caught your eye because our system had inadvertently populated some test numbers.”
“Obviously, we do not yet have any vote totals here, the night before the election,” Hayes. “That was a misfire. Don’t worry. I was pretty confused when I saw it up there, to see it there myself.”
According to a Saturday survey by St. Pete Polls, Gillum leads DeSantis 49-48% with a 2% margin of error.
As Americans head out to cast their ballots in Tuesday’s midterm elections, reports have been rolling in across the country of broken voting machines, long wait times and incompetent poll workers.
Voters in Jersey City waited in a seemingly endless line for up to two hours after reports that only two voting booths were functional:
New York voters arrived at the Bronx County Supreme Court House only to find an hour-long line and one out of five scanners working.
@BOENYC only 1 of 5 scanners is working at the Bronx County Supreme Court House. The line is at least an hour long, and the coordinator at the site said they have been calling for a technician before 7am but no one has come. WTF?
Some issues when #NYC voters went to cast their ballot 7of 8 scanners were down at this polling place in the @Bronx Many repaired now but long lines Latest EWN @ 12 & @ABC7NYpic.twitter.com/4RVhBF7s4u
Gwinnett County, Georgia voters also experienced long lines due to glitching voting machines – which were abandoned for paper or provisional ballots. The machines were later fixed.
MAJOR ISSUES reported at the Annistown Elementary polling location in Gwinnett County. Voters tell me the machines are down and they can only cast paper or provisional ballots.
Many have been waiting since 6am.@wsbtv#Election2018#ElectionOn2pic.twitter.com/Ckg8wMHd7T
In Richland County, South Carolina, a calibration issue with “aging touch-screen machines” has resulted in mismarked ballots.
“If the calibration slips, you can touch it but the screen will select either above or below because of the calibration issue,” said Richland County Elections Director Rokey Suleman. Similar issues have been reported in Westmoreland County, PA.
Officials in other South Carolina precincts have reported voting machine issues, and are now handing out paper ballots to voters, according to The Statenewspaper.
In Florida, where Democratic Tallahassee Mayor Andrew Gillum recently led Rep. Ron DeSantis by 7 points (via Correctbae), one woman reported long lines caused by more than half of the voting machines going down at a Miami precinct.
The same was reported at a Houston, Texas polling station:
Today’s 10Y Auction was a case study in opposites.
On one hand, the demand for today’s refunding 10Y auction, which was upsized to $27 billion, was stellar, with the high yield of 3.209% stopping 1.2bps through the When Issued, the biggest delta since March 2007. The yield was also just fractionally below below last month’s 3.225%, which was already the highest yield since 2011.
But the big surprise was once again within the internals. First it was the impressive bid to cover, which printed at 2.54, above October’s 2.39 and on top of the 6 auction average of 2.39. But it was the buyside demand that was fascinating, with Indirect Bidders taking down 73.8% of the final allotment, a record for this tenor. Meanwhile, Dealers took down 25%, below last month’s 30.1%, and below the average 26.85%, however as we have noted over the past month, this was entirely the result of another collapse in the Direct bid, which tumbled from 5.4% to 1.2%, the lowest going back to 2011, and a continuation of the bizarre trend of unexpectedly low Direct takedowns which we first observed 2 weeks ago with the 2, 5, 7Y auctions, and which flowed through into this week’s 3Y auction.
Overall, a very strong auction which helped push yields slightly lower from session highs, with the only exception the persistently low Direct demand which so far has yet to find a credible explanation.
In a world of algos, CTAs and quants conditioned to chasing momentum, and an entire generation of humanoid traders accustomed to buying the dip, recent market conditions have presented a unique quandary: “Where is momentum now?” This can be observed with a quick look at the recent collapse in the MTUM momentum ETF.
And according to BMO’s technical analyst Mark Steele, the question “where is momentum” is a query he often gets asked as it’s such a “quantifiable entity.”
His answer: currently, zero of the 21 benchmarks he incorporates into Index Constituents have an unblemished positive momentum, and to the contrary, three rank as momentum sells (Trending consistently lower, below falling MAs), or as he puts it “looking for positive momentum is a Where’s Waldo search.”
That said, Steele does find one answer, but it won’t help traders: “From a global asset allocation perspective, and given downtrends in World ex US equities, and breakdowns in North American markets, and commodities on October 31st, the only positive momentum is found in cash.“
Expanding the eligible universe, the BMO strategist notes that from a global industry perspective, only four of 67 are trending higher, above rising 50 and 200d MAs, three utilities and a staples group.
Bottom line: until the market continues to thrash wildly from one extreme to another, while going nowhere, traders who rely on momentum to shape their “investing” strategy are best advised to stick to cash or just put their money in the safest sectors one can find.
Voting has opened across the US in what will likely be remembered as the most contentious off-year election in recent history. Already, early voting has seen a massive increase compared with 2014, with the number of early voters climbing more than 50% to a staggering 36 million this cycle. As donors have poured a record $5 billion into the race, the market’s “base case” is that Democrats will wrest back control of the House, while the GOP will pick up a handful of Senate seats and expand its slim 51-49 majority by as many as four votes.
Despite the best efforts of grassroots progressives (who have been aided by a heavy turnout among ‘Democratic socialist’ organizers), the polls narrowed significantly in October as Republican candidates eroded the Democrats’ lead. In the latest round of polls, one mainstream pollster (Rasmussen, the same firm that predicted Trump’s victory), notably projected a win for the Republicans.
However, while pundits like 538’s Nate Silver have continued to place Democrats’ odds of winning the House at north of 85%, online betting markets are seeing the odds more heavily skewed in the GOP’s favor.
And while the professional pundits might be eager to dismiss these numbers as the work of amateur cranks, as currency traders who were on the losing side of the short-cable trade ahead of the 2016 Brexit referendum probably remember all too well,the wisdom of crowds can sometimes trump the wisdom of professional statisticians.
Unsurprisingly, some professional pundits, with their egos still bruised from their string of embarrassing failures in 2016, took umbrage at the suggestion that Predictit’s odds might be a better indicator of voters’ sentiment than their sophisticated polling methodology.
In response to the tweet above from @BrendanNyhan, Nate Silver unleashed a tired about why Predictit’s numbers are ill-informed and based on the “dumb” impulses of Republican-loving day traders. People with “real money” – ie hedge funds – would never rely on Predictit’s data (because, as even the casual consumer of financial media is no doubt aware, hedge funds have historically been great at generating alpha for their clients).
The overall price on D House chances at PredictIt dropped by 4 percentage points this morning after the Rasmussen generic ballot poll came out. That’s… not something that would happen in a market where skilled traders prevailed.
I’m not sure why we’re supposed to default toward caring about these markets? A lot of them are poorly structured. They don’t have a great track record, especially when they deviate from models. People with real money to bet (e.g. hedge funds) would not use PredictIt for it.
Put another way, I feel good about the 6-in-7 (~85%) chance our model gives Dems. We deliberately use models to NOT go by gut-feel, but it aligns with my intuition. I can’t control whether the 6-in-7 or the 1-in-7 comes up—that’s up to voters—but I think those are the right odds.
While Silver said he once put more stock in the leanings of online betting markets, he said they have become very “MAGA-ey” lately, and
Like, some tech-savvy reporter should do a story on what the fuck has happened to these markets. They’re very #MAGA-y now and full of traders who think polls are fake news and Rasmussen Reports is the only reliable pollster.
Given the flaws in polling models that appeared oh-so-obvious in hindsight, one would think that Silver and his peers would approach the subject of projecting election results with a little more humility.
Refusing to let a golden opportunity to poke fun at one of their biggest critics, the people at Predictit on Tuesday sent out an email to customers with the subject line “Nate Silver just called you dumb”.
You all know Nate Silver, the famous prognosticator and founder of fivethirtyeight.com. Great guy. Except that he just called you “dumb.”
Okay, not exactly, he said prices on PredictIt are dumb. And it’s true there are some markets where your expectations and his are a bit out of whack.
For example, you’ve got the GOP at 58% to win Arizona’s Senate race. Nate is at only 38%. You’re pricing Claire McCaskill at only 39% to keep her Missouri Senate seat. Nate is much more confident at 57%. And, the Democrats to win the House? He thinks it’s nearly a foregone conclusion at 88%. You’re hedging your bets at 72%.
So who’s right? We’ll know that later today. In the meantime, are you comfortable being called “dumb”? If not, get back on the site and vote with your money. Or maybe you want to take the advice of an expert and hedge your bets.
Either way, please spread the word about @PredictIt on Twitter and Facebook and let’s have some fun today. And may the best side win… for now. Remember, 2020 is just around the corner!
To be fair, Silver did distinguish himself in 2016 by being one of the only mainstream pollsters to recognize just how poor Hillary Clinton’s odds really were. In a now infamous appearance on ABC on the Sunday before the 2016 vote, Silver declared that Clinton “was just one state away from losing the electoral college.” But the notion that the odds that Democrats will retake the House are a virtual certainty deserves to be viewed with a healthy dose of skepticism. And it says something about Silver’s own biases that he has apparently failed to understand this.
At a campaign rally last night, President Trump came very close to defending Obamacare, warning that if Democrats came to power, they will “obliterate” the health care law.
“If Democrats gain power on Tuesday, one of their very first projects will be a socialist takeover of American healthcare,” he said, according to The Washington Examiner. “You know what’s happening. And your taxes are going to triple, maybe quadruple. You’re not going to be happy. I know you well. The Democrat plan would obliterate Obamacare. It will also — which is good but leave the bad parts behind. It will destroy Medicare.” (Emphasis mine.)
This might sound strange coming from Trump, who campaigned against Obama’s health care law, and who backed measures last year that would have repealed much of the law. And to be fair, Trump suggests that obliterating the law is “good”—while also saying that the real problem is that Democrats would leave the “bad parts” of the law in place, implying there are good parts he wants to keep.
It’s possible that it was simply a verbal misstep, and that what Trump really meant was to say Democrats would destroy Medicare, and then tried to cover the mistake before going back to what he intended to say.
But it’s just as plausible that Trump now views defending Obamacare, which has gained popularity under his presidency, as a winning political issue.
Despite his support for last year’s Obamacare repeal bills, Trump has more recently taken to arguing that Republicans support maintaining protections for pre-existing conditions—even though his administration is refusing to defend those rules in court. Other Republican candidates have been even more aggressive in clarifying that they mean support for insurance company regulations, with Arizona Senate candidate Martha McSally running ads saying she has led the fight to “force insurance companies to cover pre-existing conditions.”
In addition, Trump—as he did last night—has repeatedly defended Medicare, the federal health program for seniors, arguing that Democrats would ruin it with “socialism,” a strange (yet somehow unsurprising) argument given that Medicare, in its current form, is already America’s biggest socialist health care program. That argument has been echoed by other Republican candidates, suggesting that Republicans are continuing to grow more comfortable defending large government-run health care programs.
Not all Republican rhetoric this campaign season has been objectively pro-Obamacare. Senate Majority Leader Mitch McConnell, for example, recently said that Republicans might take another run at a health care bill, depending on the election results. But even McConnell’s rhetoric has undergone a subtle shift. Where he used to talk more openly about repealing Obamacare, he now says things like, “We’re not satisfied with the way Obamacare is working.” This could be sloppy phrasing on his part, but it also sounds as if, given the opportunity, he might work to tweak the Obamacare rather than wipe it off the books.
If all this sounds somewhat muddled and confused, that’s probably because, when it comes to health care, Republicans don’t really know what they think. That was apparent during last year’s repeal push, when GOP lawmakers struggled to craft a replacement plan despite years of promising a replacement, and now, in the shadow of the repeal effort’s failure, it is even more clear.
There are both political and policy reasons for this confusion. Under President Obama, repeal was a winning slogan, because Obamacare was unpopular. But under Trump, the law has become a political winner, and Republicans have struggled to figure out how to respond. In part they have chosen to obfuscate, particularly when it comes to pre-existing conditions. But those statements, which offer rhetorical acceptance of the underlying premise of Obamacare’s regulatory scheme, also suggest that Republicans may be stumbling towards defending the law, or something roughly like it, partly as a response to shifting polls, and partly as a response to growing Democratic support for single payer.
At the moment, Republicans lack policy support for their rhetoric, but that’s not particularly surprising at a moment when Republicans lack much of a domestic policy agenda of any kind. And it’s not as if the GOP would need to look too far: After all, Obamacare was built on ideas that were initially championed by Republicans. Although the party never fully rallied around the plan, it wouldn’t be surprising to see Republicans shift towards support for a system that relies on private providers as Democrats push for greater direct government intervention.
So Trump’s remark about Obamacare may or may not have been a slip of the tongue, but either way, I suspect that they offer yet another preview of how I expect the nation’s health care debate will shape up, with Republicans awkwardly defending something like Obamacare, and Democrats making an increasingly aggressive case for something like single payer.
Buffett’s holding company, Berkshire Hathaway, just announced a blockbuster quarter, earning nearly $7 billion.
And Buffett’s still sitting on over $100 billion of cash. That means he’s got enough money to buy almost any company he wants, anywhere in the world.
But the only move Buffett made in the last quarter was buying $928 million of Berkshire Hathaway stock.
Some people might say this is a sign that Buffett thinks Berkshire’s stock is incredibly undervalued.
To be fair, nobody knows Berkshire better than Buffett. And shares may present a good value at this level – an all-time high price.
But it’s clear to me that Buffett simply can’t find anything else worth buying.
Remember, Buffett’s got over $100 billion in cash (and he could use debt to fund an even larger acquisition).
So he could buy stock in any publicly traded company. Or he could buy most any private company (the last time he did this was Precision Castparts in 2016 for $32 billion).
He’s got so much cash he could even buy any one of the 451 out of 500 largest companies in the US – Nike, Starbucks, Goldman Sachs, etc.
But, nope… He just bought back some Berkshire stock.
Back then, Buffett had a whopping $116 billion. But still couldn’t find anything to buy. As he said:
In our search for new stand-alone businesses, the key qualities we seek are durable competitive strengths; able and high-grade management; good returns on the net tangible assets required to operate the business; opportunities for internal growth at attractive returns; and, finally, a sensible purchase price.
That last requirement proved a barrier to virtually all deals we reviewed in 2017, as prices for decent, but far from spectacular, businesses hit an all-time high.
As we wrote back then, it seems people are still willing to pay far too high a price for not that great of businesses.
Buffett is famous for saying “be fearful when others are greedy and greedy when others are fearful.” And he’s sticking by that mantra today.
Like Buffett, I’ve also been raising cash. In fact, I’m sitting on more cash today than at any other time in my life.
And, like Buffett, I’m mostly holding that cash in 28-day T-bills.
However, unlike Buffett, I don’t have $100 billion to spend.
If I make a 20-50% return on a $5 million investment, that’s meaningful to me. But that’s peanuts to a guy like Buffett.
He’s got to put billions of dollars to work to generate enough cash to make a difference. And that severely limits the areas he can hunt for value.
But I’m able to look at all kinds of opportunities – like loans backed by fine wine, loans backed by bullion or European real estate and various, small-cap stocks around the world.
Despite most markets trading at or near all-time highs, there’s still a ton of value if you’re willing to do some extra work and look outside the US.
In The 4th Pillar, Tim Staermose just identified a consumer products company in South Korea trading for a 12% discount to its net cash backing.
He’s also recommended a security that holds portfolio of blue-chip stocks (including companies like Starbucks) trading for over a 20% discount to their market value.
And those are just two of the many opportunities you can take advantage of today in his 4th Pillar portfolio.
Value investing has been left for dead as the dumb money has chased up the value of companies like Uber and Tesla.
But when you can buy a profitable company for less than the amount of cash it has in the bank, it’s pretty hard to go wrong.
I’ll bet Buffett would make those investments if he could.
Unless Oumuamua suddenly returns with some reinforcements, it’s looking like none of the 17 Libertarian candidates for the United States Senate will make history by raising the gold flag in a chamber too long dominated by red and blue.
Gary Johnson may have gotten shivved last week with a damning poll that, uh, didn’t include his name (see below), but throwing that survey out still leaves the former New Mexico governor averaging 16 percent across five independent polls, compared to 45 percent for Democratic incumbent Martin Heinrich, and 27 percent for Republican Mick Rich. While I am genuinely grateful for Johnson’s succinct pitch to millennials—”Young people are getting fucked“—it’s looking once again like that message is not the magic key for unlocking electoral victory.
But that doesn’t mean there aren’t important things at stake today for the party, for the broader political/philosophical tendency it shares a name with, and for the country more generally. (See also Joe Setyon’s, “Control of the Senate Could Depend on These 10 Races.”) With a Senate that caucuses 51-49 GOP, surging anti-Republican enthusiasm, voters streaming to the polls, yet electoral math that keeps the smart money at or even above that 51-49 split, there is a lot of potential major-party anger ready to be unleashed at any third-party candidate who receives more votes than the gap between Democrats and Republicans.
So here are those 17 Libertarian candidates for U.S. Senate ranked by their own polling average (in nonpartisan surveys) minus the average point spread between the major-party contenders in those same polls. Whenever given the option, I chose results among likely voters rather than registered voters. For your convenience, you can also find projections for each race, the latest poll (when possible; some Libertarian candidates never did get polled, in which case I ranked them here according to the eyeball test), plus other scattered notes of interest.
D Joe Donnelly (incumbent) 43.5%, R Mike Braun 41.8%, Brenton 5.9% (8 polls)
Last poll: Donnelly 45%, Braun 38%, Brenton 5%, other 2%, undecided 9% (Oct. 27-30 Fox News, which one month prior had the percentages at 43-41-6-2-9).
Forecast: “Toss-up,” according to eight out of the 10 prognosticators aggregated by Wikipedia’s 2018 U.S. Senate elections page, with one “Lean R” and one “Lean D.” FiveThirtyEight projects 50.6%-46.9%-2.5%, and the betting markets aggregator Election Betting Odds (run by our own John Stossel and Maxim Lott) gives Donnelly a razor-thin 51%-49% advantage as of this morning.
Democrats over the past week have been advertising Brenton’s conservative bona fides to Republican voters, in a bid to split the right-of-center vote. The gamble may be working—Brenton’s inclusion in an August Marist College poll reduced Donnelly’s lead from six percentage points to three, but that same survey in late October measured the Libertarian effect as a net +1 for the Democrat. The president, for one, is not amused:
Rumor has it that Senator Joe Donnelly of Indiana is paying for Facebook ads for his so-called opponent on the libertarian ticket. Donnelly is trying to steal the election? Isn’t that what Russia did!?
D Jacky Rosen 44.0%, R Dean Heller (I) 43.2%, Hagan 3.6% (5 polls)
Last poll: Rosen 48%, Heller 45%, Hagan 2%, none of the above (which is on the ballot in Nevada) 4%, undecided 1% (Oct. 24-29 CNN/SSRS, which a month prior had the percentages at 47-43-4-5-1).
Forecast: 8/10 Toss-up, 1 Lean D, 1 Tilt D. FiveThirtyEight classifies it a toss-up, though projects a Rosen squeaker of 49.3%-48.3%, with 2.5% for “others.” Election Betting Odds lists 62.5% for Rosen.
D Claire McCaskill (I) 44.3%, R Josh Hawley 43%, Campbell 2%, Green Party’s Jo Crain 1.4% (8 polls)
Last poll: McCaskill 47%, Hawley 44%, Campbell 3%, Crain 2%, undecided 4% (Oct. 30-Nov. 1 Marist College, which three months prior had the percentages at 44-40-5-3-8; Marist this cycle has consistently polled third-party candidates higher than any other independent researcher).
Forecast: 8/10 Toss-up, 1 Lean R, 1 Tilt R. FiveThirtyEight has it a toss-up, though projects McCaskill holding on at 49.2%-48.1%, with 2.6% other. Election Betting Odds says Hawley 60%.
D Martin Heinrich (I) 45.3%, R Mick Rich 26.8%, Johnson 16.3% (6 polls*)
Last poll: Heinrich 47%, Rich 33%, Johnson 11%, undecided 9% (Nov. 1-3 Research Co.).
Forecast: 9/10 Safe D, 1 Likely D. FiveThirtyEight predicts 51.8%-31.6%-14.6%. Election Betting Odds likes Heinrich 96.5%.
* I didn’t include in this poll-average the survey that came out last week from Carroll Strategies showing Johnson at just 8 percent. Why? Because Johnson’s name had been mistakenly swapped out for that of the previous L.P. nominee for that swap, New Mexico State Land Commissioner Aubrey Dunn. A chastened Carroll Strategies then got right back in the field with Johnson’s name, and produced strikingly similar results. Color me skeptical.
Johnson, who entered this race with an idea to win the damn thing outright, is still polling much higher than any Libertarian Senate candidate, and will likely become the fifth L.P. Senate candidate to get double digits at the polls.
D Robert Menendez (I) 48.3%, R Bob Hugin 40.7%, Sabrin 2.3% (3 polls)
Last poll: Menendez 51%, Hugin 39%, Sabrin 3%, other 4%, undecided 1% (Oct. 25-31, Stockton University, which two months prior had the percentages at 45-43-3-5-2).
Breckenridge went wobbly at the finish line of this one, telling reporters last week that he “endorsed” his Republican opponent, but then explaining to Reason‘s Brian Doherty that he was not dropping out, and really just meant it on the narrow issue of going after “dark money” in politics. The Montana Libertarian Party then issued an extraordinary statement saying that many party members “feel betrayed by Breckenridge’s statement,” after which the candidate walked back his initial comments, and now the damned thing is being adjudicated at Snopes.
Whatever; he’s still on the ballot, though it’s hard to see the shenanigans helping Breckenridge’s final numbers.
With bankrupt retailer Sears still struggling to find a bankruptcy financing package to allow it to continue operating (although Reuters reported that a loan as much as $600 million may be available soon), an even greater headache has emerged for the company’s owner: Sears creditors have asked bankruptcy court to probe transactions involving Sears’ biggest shareholder, Eddie Lampert, that they say may have resulted in Lampert stealing bilking them of $2.6 billion.
According to Bloomberg, based on a limited investigation since Sears filed for bankruptcy less than a month ago, the official committee of the company’s creditors said it believes there are claims over “related-party transactions” involving Lampert, his hedge fund ESL Investments and Fairholme Capital Management. In court papers, the committee also said some claims are related to Seritage Growth Properties.
“The circumstances surrounding the various transactions raise the possibility that ESL and other insiders may have exercised undue influence to siphon value away from the company on favorable terms,” the creditors alleged in the documents.
It is now up to the judge to decide whether to grant the motion for a probe, which would give the creditors the power to subpoena documents and witnesses. And, as noted above, the probe comes at a sensitive time for Sears which is evaluating more funding and a potential sale that could stave off a liquidation.
According to Bloomberg, Lampert-related transactions to be probed include:
July 2015 rights offering and sale-leaseback with Seritage, a publicly-traded real estate investment trust controlled by ESL
The October 2012 separation of Sears Hometown and Outlet businesses
An October 2012 spinoff of the debtors’ 45 percent interest in Sears Canada and the November 2014 rights offering for additional shares
The April 2014 spinoff of the Lands’ End business
Various financing transactions, in which assets including intellectual and real estate property, became subject to liens, and “various Company entities appear to have incurred material debt obligations to satisfy other debt”
In recent months, there has been growing speculation and accusations that during Sears’ long-running collapse – which inevitably culminated with Chapter 11 – Lampert had (ab)used his position to cash-strip the now defunct company, using it as his personal piggy bank, allegedly infringing upon other stakeholders’ rights.
If a probe is granted and finds that Lampert indeed exercised “undue influence” to impair other creditors and engage in “fraudulent conveyance”, the billionaire hedge fund investor may end up having to plug the liquidity shortfalls with money out of his own pocket.
At a campaign rally last night, President Trump came very close to defending Obamacare, warning that if Democrats came to power, they will “obliterate” the health care law.
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