Quote Of The Week: Prince Alwaleed

“Full and complete support to Citi management, led by Vikram Pandit…”
-Prince Alwaleed

We have a leadership crisis in the US Financial System. The longer it takes to see it for what it is, the more protracted this bear market is going to be. Seeing the Street go back to the old well gives me a headache.

I completely disagree with the Saudi Prince’s current view of Vikram Pandit. The “New Reality” of seeing our US Financial System recover in 2009 and beyond is going to be predicated on winning back what the old boy network of Wall Street lost – credibility. Vikram Pandit’s senior management team is simply a Morgan Stanley redo of all that is imploding today. This reactive management team is no different than that which Hank Paulson led at Goldman or Dick Fuld oversaw at Lehman. Their names are different; their process is the same.

Sound judgment, accountability, and trust are at the heart of my definition of leadership. Take those coordinates on your moral compass and add a proactive risk management approach and you have yourself a winner to “completely support.”

There is not a Great Depression in this country, but there should be in the board rooms of ‘Investment Banking Inc.’ Franklin D. Roosevelt called the actual Depression “a result of the lack of honor of men in high places.” Think about that.

To believe in the illusion of the yellow brick road that the Prince painted this week requires a serious dose of groupthink and then an injection of narrative fallacy. It’s amazing what a five day rally in the stock market can do to the mind of the financial media. Don’t invest alongside their momentum chasing. Once they are done squeezing the shorts in Citigroup’s stock, I will be considering a short sale of this ex-Morgan Stanley management team.

The Pandit “Bandit” not only plugged Citigroup shareholders with an $800M sale of his hedge fund, Old Lane, but he then proceeded to make his partner at Old Lane, John Havens, head of Citigroup’s investment banking unit! I couldn’t make this up if I tried. These two didn’t know how to manage the risk in their own hedge fund, and now Alwaleed is signing off with “full and complete support” in their leading one of the world’s largest banks? Wow… do we ever live in interesting times.

After seeing oil prices drop 64% from their peak, and Citigroup’s shares lose over 80% of their value, you don’t need a major in economics to understand how self perpetuating Alwaleed’s financial motive is here. After Pandit saw the $8.4M in stock he bought get cut in half in less than 2 weeks, you don’t need to wonder about his either.

In the immediate term, Citigroup’s stock still has upside to $10.27/share. That’s 11% higher than where Pandit and Havens bought insider stock in mid-November. Notwithstanding that they made these purchases in front of one of the largest corporate bailout’s in the history of America, investors are best served watching what these pirates do versus what they say.

Somali pirates got the better of some of the Saudi Prince’s oil. Don’t let these ‘Investment Banking Inc.’ pirates of a broken Wall Street past get the best of you.

Keith R. McCullough
CEO / Chief Investment Officer

Did the US Economy Just “Collapse”? "Worst Personal Spending Since 2009"?

This is a brief note written by Hedgeye U.S. Macro analyst Christian Drake on 4/28 dispelling media reporting that “US GDP collapses to 0.7%, the lowest number in three years with the worst personal spending since 2009.”

read more

7 Tweets Summing Up What You Need to Know About Today's GDP Report

"There's a tremendous opportunity to educate people in our profession on how GDP is stated and projected," Hedgeye CEO Keith McCullough wrote today. Here's everything you need to know about today's GDP report.

read more

Cartoon of the Day: Crash Test Bear

In the past six months, U.S. stock indices are up between +12% and +18%.

read more

GOLD: A Deep Dive on What’s Next with a Top Commodities Strategist

“If you saved in gold over the past 20 to 25 years rather than any currency anywhere in the world, gold has outperformed all these currencies,” says Stefan Wieler, Vice President of Goldmoney in this edition of Real Conversations.

read more

Exact Sciences Up +24% This Week... What's Next? | $EXAS

We remain long Exact Sciences in the Hedgeye Healthcare Position Monitor.

read more

Inside the Atlanta Fed's Flawed GDP Tracker

"The Atlanta Fed’s GDPNowcast model, while useful at amalgamating investor consensus on one singular GDP estimate for any given quarter, is certainly not the end-all-be-all of forecasting U.S. GDP," writes Hedgeye Senior Macro analyst Darius Dale.

read more

Cartoon of the Day: Acrophobia

"Most people who are making a ton of money right now are focused on growth companies seeing accelerations," Hedgeye CEO Keith McCullough wrote in today's Early Look. "That’s what happens in Quad 1."

read more

People's Bank of China Spins China’s Bad-Loan Data

PBoC Deputy Governor Yi says China's non-performing loan problem has “pretty much stabilized." "Yi is spinning. China’s bad-debt problem remains serious," write Benn Steil and Emma Smith, Council on Foreign Relations.

read more

UnderArmour: 'I Am Much More Bearish Than I Was 3 Hours Ago'

“The consumer has a short memory.” Yes, Plank actually said this," writes Hedgeye Retail analyst Brian McGough. "Last time I heard such arrogance was Ron Johnson."

read more

Buffalo Wild Wings: Complacency & Lack of Leadership (by Howard Penney)

"Buffalo Wild Wings has been plagued by complacency and a continued lack of adequate leadership," writes Hedgeye Restaurants analyst Howard Penney.

read more

Todd Jordan on Las Vegas Sands Earnings

"The quarter actually beat lowered expectations. Overall, the mass segment performed well although base mass lagging is a concern," writes Hedgeye Gaming, Lodging & Leisure analyst Todd Jordan on Las Vegas Sands.

read more

An Update on Defense Spending by Lt. Gen Emo Gardner

"Congress' FY17 omnibus appropriation will fully fund the Pentagon's original budget request plus $15B of its $30B supplemental request," writes Hedgeye Potomac Defense Policy analyst Lt. Gen Emerson "Emo" Gardner USMC Ret.

read more