Reading the Fine Print: How ArcelorMittal burned their Hybrid Investors

It's been a while since I posted, so I figure I would post a story about ArcerlorMittal and their Hybrid security.

For those monkeys who don't know a Hybrid security is, its a security that works and looks like a bond (usually a perpetual bond), but for accounting purposes it counts (partially or in full) as equity.

ArcelorMittal had an outstanding High Yield Hybrid bond that was perpetual and had a coupon of 8.75%. This particular security was very attractive for investors due to its floating reset after its first call, which was in 2018.
Before January 20, this bond was trading in the 108-110 range. However, this bond had a very important caveat: A Rating Agency Event.

Hidden in Page 51 of the prospectus of this security, There is a short explanation of what a Rating Agency Event is. Basically, if one of the rating agencies (Moody's, Fitch, S&P) changes the way they apply equity treatment to the hybrid, Arcelor has the right to call the security at 101.

The Reluctant Fundamentalist [Movie Review]

The Reluctant Fundamentalist (2012)
130 min - Thriller - 3 May 2013 (Sweden)
Director: Mira Nair
Writers: Ami Boghani (screen story), Mohsin Hamid (novel),
Stars: Riz Ahmed, Kate Hudson, Liev Schreiber, Kiefer Sutherland

I tend to enjoy movies that have a current events theme to it. Syriana, Thank You for Smoking, and Up in The Air are a few examples of what I am talking about.

The Reluctant Fundamentalist has this theme, but also has the finance theme, which could appeal to many WSO users.

This movie follows the story of Changez (Riz Ahmed), a young Pakistani man who attends a target school and joins a PE firm as an analyst. Changez was a rising star at his firm until the events of September 11 throws a wrench into his 'american dream'.

GDX Vs Gold Discussion

I've been having the discussion on the title lately with a client, coworkers, and last night, with Certified Users in the WSO chat.

The discussion stems from the fact that since about June 2008, the return of GDX vs Gold Spot has deviated significantly.

For those of you who don't know, GDX is the Market Vectors Gold Miners ETF. (You can find the Factsheet of the ETF Here) From the Factsheet:

My CFA Study Tracking Sheet

I managed to pass Level II with a good breakdown (> 70% in 7 sections including all the big ones, 3 between 50-70) in exactly three months. I attribute my success mainly to discipline and desire to pass (Unlike 90% of people taking the test, I've been wanting to take the test since sophomore year, when I learned that 1/5 PMs had their Charter) but also this little simple sheet I created.

The sheet is very simple. I don't think I have to explain much. So I will be brief.

1. Only you will be seeing this sheet, So you'll only be lying to yourself if you inflate hours. I used my iphone timer and paused every time I went to the washroom or took a break. That 10 hour day somewhere on that sheet was the equivalent of 15 hours from the time i left to study till I came back.

2. I like these sheet over using calendars mainly because it takes 30 seconds to input. You can also add a comment section to input your thoughts about the study session.

Waging a moral war on Herbalife

Considering most of my clients are out in their beach and country homes vacationing leading to a very slow day at work, I figure I write about one of my favorite market developments of the year, The Hedge Funds vs. Herbalife war.

EDIT: Guys I think its important to get this site to the top of the google search when you search for 'Herbalife':

Herbalife LTD. is a network marketing company that sells weight management, nutritional supplement, and personal care products. The Company sells its products globally through a network of independent distributors. Herbalife also sells literature and promotional materials.

Man I love this story. As some of you know, Einhorn started the war on MLM in May of this year, when he nonchalantly asked a couple of questions on HLFs earning call which led to one of the most awesomes live drops in a stock price I've seen. (You can hear and read WSO comments about the call here.

Think quickly! what's the financial play following the death of Kin Jong Il

As sick as it sounds, I've been waiting for an event like this to blog.

This announcement seems unprecendented and its big enough to be able to make a profitable financial play.

Here are my thoughts:

While this might bring joy and relief tonight, tomorrow morning the feeling is going to turn into uncertainty. We all know uncertainty brings volatility so what can we do?

I predict the following:

- Shock depreciation of the Korean Won against the USD
- Depreciation of the Yen against the USD
- Selloff of Korean sov and corps, leading to a rise in korean rates.
-Widening of the long-short spread of Korean won denominated bonds

So if my predictions pan out, would this be the play?

- Short won/long usd
- Borrow in Korea, lend in USA/Canada/Swiss

Rest in Peace, Ted Forstmann

"Ted Forstmann, the Wall Street dealmaker who sounded the alarm in the 1980s when junk bonds reshaped the leveraged-buyout industry he had helped create, has died. He was 71."


Be first, be smarter, or cheat: Margin Call Review

Margin Call (2011)
105 min - Thriller - 21 October 2011 (USA)
Director: J.C. Chandor
Writer: J.C. Chandor
Stars: Zachary Quinto, Stanley Tucci and Kevin Spacey

I read somewhere this weekend that this movie came out on Friday and I decided like a good finance geek to go watch it tonight. I must say that out of all the finance movies I've seen and own (Boiler Room, both Wall Streets, Rogue Trader, and a plethora of documentaries), this might be my favorite one.

Alexander's Blog: Muammar Qaddafi Dead

Please refer to my introductory blog post to understand what I'm trying to do with this blog:

The Libyan State TV stated this morning that Muammar Qaddafi has been captured. The reports have been conflicting and it is yet to be confirmed by an international organization that this is in fact true. Here's a few news links with the story:

Which assets might be affected by this report:

Introduction to "Alexander's Blog"

Its been a while since I've wanted to start a blog. I even created a Wordpress account and started designing the blog but I got tired of all the spam tips and the fact that I would have to spend time building an audience. Luckily for me I browse WSO all the time and found out that any user could have a blog. Sweet.

The purpose of this blog is simple. Study major socio-economic, geopolitical, and major regional or global events such as natural disasters and test to see if certain opportunities that most people don't see do pay off. I hope I can get a couple of Monkeys interested in working with me on this and hopefully all of us involved become better at analyzing how information affects assets that most people are not looking at while the event is happening/just happened.

WallStreet Prep Master Financial Modeling