Macquarie short-sell
FT just reported that $3 bn Macquarie stock has been lent for short-sell speculation. It seems that the market is thinking that Macquarie's model would stop working as credit market dries up.
I wonder everybody's opinion on how likely Macquarie's business model would implode. Also, anybody could shed some light on Macquarie's deal pipeline this year? (NA in particular) Would the new coming analysts worry about similar fate as the Bear Stearns' new hires this year? How likely this would affect the year-end bonuses?
Chanos has been bearish on Macquarie for a long, long time. He's usually right about these things. The thesis is:
Macquarie model ·Raise , leverage billions to buy infrastructure assets. ·Sell assets to separate Macquarie funds and collect advisory, fund management, and performance fees on every leg of transactions. ·Australian accounting rules allow MBL to write up the value of an asset. ·This allows them to increase leverage. ·Overvalued assets are moved into in unlisted funds. ·Due to the accounting advantage Australians can continually outbid US investment banks for assets because of their model. This has further fueled the asset inflation.
Here's an article:
http://www.marketwatch.com/news/story/chanos-highlights-Macquarie-short-trade/story.aspx?guid=%7BB6B00508-B5AF-42CC-9F8D-5C1B43A9038C%7D
Well, their CDS's are trading lower than Merrill, Lehman, even Goldman! That would make me think twice before shorting them...
http://www.economist.com/finance/displaystory.cfm?story_id=11052919
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