There were plenty of interesting dustups for us to cover on the financial web this year. Below are some of the most memorable feuds along with a link that I think tells the story best or gives us the latest update…
David Einhorn vs Bruce Berkowitz re: the St. Joe Investment Thesis
So is St. Joe a company rich in Florida Panhandle real estate or is all that acreage simply “a moonscape”, worth only what it can be sold off for as raw land? Two of the most successful investors of the decade have taken opposing sides in this fight as we speak.
Further Reading: (Market Folly)
ETFs vs Academia
The financial media and blogosphere went wild upon the release of a Kauffman Foundation paper detailing just how detrimental ETFs have become to public equity markets. ETFs are blamed for virtually all the market’s ills, most notably they are held to account for the May 6th Flash Crash. Every single market participant, finance professor and industry expert with a WordPress account weighed in, as did all mainstream media outlets. The resolution was a grudging acceptance that, as with all groundbreaking innovations, there is always a bit of good and bad in the mix.
Further Reading: (Forbes)
Felix Salmon vs Henry Blodget re: Clusterstock’s Business Model
A lot of this bickering has been waged on Twitter, some in the pages of The Business Insider, Reuters and even at the Columbia Journalism Review. At issue initially was the firing of John Carney though the argument soon morphed into one abut pageview-whoring, clickbaiting and blogposts that take 11 seconds to write and are disposable within 12 seconds of publishing.
Further Reading: (Media Bistro)
Carl Icahn vs Lionsgate
The machinations and plot twits were absolutely endless – proxy fights, board elections, a tender offer, live debates on CNBC, letters to shareholders, counter-letters to shareholders, the court order in Canada, the bid for MGM and on and on. In the end, the billionaire activist investor failed to get control of the film studio, even after employing every single trick in the book.
Further Reading: (DealBook)
Bob Prechter vs Reality
Technician and Elliott Wave obsessive Bob Prechter has made several good calls…unfortunately they took place before many of us were born and they’ve been followed up with an endless stream stubbornly incorrect lunacy ever since. Prechter’s solipsitic tenacity illustrates the danger of a technician’s Church Orthodoxy – “only the lines on the chart matter, there is nothing else”. His latest prediction for the Dow is like 2000. It’s not the constantly being wrong that is so offensive – it’s the lack of honesty and contrition about it that has made him so irrelevant.
Further Reading: (Yahoo TechTicker)
Spanish Banks vs Generally Accepted Accounting Practices
The balance sheets at your average Spanish bank are the accounting equivalent of Don Quixote’s romantic delusions, long on hope but short on verity. Spain’s real estate binge made it the South Florida of Europe but in 2011 the central government, the regional governments and the banks there must raise around €300 billion to cover or refinance their debts. And no one believes in the asset values they’ve marked on any of their books.
Further Reading: (WSJ)
Research In Motion vs Apple re: the Smartphone/Tablet Wars
When the year began, Research In Motion’s BlackBerry phones were still the leader in the enterprise space. The conventional wisdom was that Apple’s iPhone would take a lot of the secular market leaving the parochial corporate vertical to RIM. And then the iPad arrived and turned the entire world on its head. Overnight, RIM found itself backed into a corner, short an apps ecosystem and without a tablet as Apple began penetrating into their core business customer user base.
Further Reading: (PadGadget)
Whitney Tilson and the Shorts vs Netflix
Whitney Tilson (T2 Partners) is not only known for his performance, he’s also perhaps the most vocal and transparent hedge fund manager out there when it comes to his own holdings. And he’s been pretty open about his reasons for shorting Netflix, even though the stock has been one of the biggest winners of the last decade. With NFLX ripping above 200 per share, Tilson penned a recap of his overvaluation thesis. The next day, Netflix CEO Reed Hastings wrote his very own column, telling Tilson to make like a rain tarp and Cover!
Further Reading: (SeekingAlpha)
JPMorgan vs the Silver Market
Supposedly, JPMorgan has spent much of this year short more silver than exists in the physical marketplace. The blogosphere has churned out hundreds of stories about JPM’s downward manipulation of silver prices. Recent scuttlebutt has it that the bank has begun to cover these trades although the CFTC currently has no rule that would force them to make any position size disclosures.
Further Reading: (Mish)
Bulls vs HFT/Bears vs POMO
Each side of the market had their go-to scapegoat this year, let’s keep it real. Bulls began blaming every blip down in the market (or even every failed trade) on High Frequency Trading. The paranoia about machine traders tricking us out of better executions or falsely creating the appearance of certain types of activity is, to some extent, justified – but the bulls have taken it to a whole ‘nother level. So too have the Bears in their persistent invocations of “POMO” to explain the relentless march higher across equity markets and, by extension, why they’ve continued losing money. Permanent Open Market Operations may have played a major role in providing liquidity to the banks (via the repurchase of government debt), but to tie POMO to once-in-a-lifetime rallies in Deckers Outdoor (DECK) and Chipotle (CMG) is a bit childish.
Further Reading: (Themis Trading) and (Zero Hedge)