Going Private

The Spiral - Part I - Those Vultures

It is beyond amusing the lengths to which CDO managers have gone (had gone) to avoid price discovery.  But the day of reckoning approaches them all, if it has not yet arrived.  Amusingly, two CDO managers I knew tangentially simply refused to accept reality.  Their superior management ability made it impossible for their CDO structures to fail.  The (Markowitz) efficient frontier was calculated to blend the tranches to perfect proportions, down to two decimal precision.  Superior in every way these structures.  Until they weren't.  I can't help but poke fun.

cdo.mov [1 minute 18 second, 10mb quicktime H.264 movie]

The Spiral - Part II - Managing Directors Everywhere

Part II of the Going Private miniseries "The Spiral." Time is running out for the firm after the Fortress sale and the news of a pending Department of Justice investigation.  Even the thick disgust for leadership that middle management has, for years, carefully cultivated, cheers no one.  Resumes are flying.  The CFO makes a bold, last minute effort to persuade the Chairman and CEO, and the Head of Compliance has a run-in with legal over a point of ethics.

mde.mov [4 minute 15 second, 10mb quicktime H.264 movie]

The Spiral - Part III - On Stage

Part III of the Going Private miniseries "The Spiral." A mortal betrayal by the CFO is revealed.  The head of the firm's mortgage desk airs his concerns about the firm's aggressive hedging positions, but the CFO cannot be bothered.  The exodus of firm personnel begins.  The CEO is repeatedly urged to consider asset sales, or at least an equity raise to prop up the firm's dwindling capital, but his focus is on the future, and the phoenix-like rise he believes the firm will undertake.  The sounds of financial panic, however, echo through his corner offices.

onst.mov [3 minute 28 second, 23.9mb quicktime H.264 movie]

The Spiral - Part IV - Liquidation

Part IV of the Going Private miniseries "The Spiral." The firm's most decorated and loyal Managing Director and Portfolio Manager of three of the firm's internal hedge funds gets wind that his funds are to be liquidated for refusing to buy the firm's distressed assets.  A visit to headquarters, and an encounter with a highly intoxicated bunch of the firm's accountants, makes it clear the leadership is misinformed and quickly deteriorating.  An unwanted promotion follows hard upon.

liqu.mov [2 minute 52 second, 19.6mb quicktime H.264 movie]

The Spiral - Part V - The Board

Part V of the Going Private miniseries "The Spiral." The Board of Directors is increasingly perturbed with the Chairman and CEO, but their loyalties are difficult to shed.  Self-interest also prevents any meaningful change.  Meanwhile, the Chairman and CEO presents bonuses to prized members of his salesforce, but the effort now feels like something antique and obsolete.

boar.mov [2 minute 35 second, 44.6mb quicktime H.264 movie]