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| 5/23 |
| 2008/2/14-18 [Finance/Investment] UID:49146 Activity:kinda low |
2/14 Full-time and summer internship jobs available at Bain Capital.
Use CS to invest in stocks/bonds/commodities/etc.
Postings at http://tinyurl.com/3blwm2 and http://tinyurl.com/2tqe8c
\_ Isn't this Mitt Romney's company?
\_ Can I use my CS skills to assfuck school districts for phat bonus?
Not that there's anything wrong with that. Survival of the fittest
ba-by!
http://www.bloomberg.com/apps/news?pid=20601109&sid=ay5LDbjbjy6c
http://news.goldseek.com/GoldSeek/1202912760.php
\_ does it matter?
\_ Yes.
\_ Why? Where do you work that isn't involved in some way
with someone you don't like?
\_ There are lots of places to work that don't have
upper management I dislike. Your argument is silly.
So I should work at a company run by Charles Manson
because where can I "work that isn't involved in
some way with someone [I] don't like?"
\_ So you're equating Charles Manson with Mitt Romney?
And you call me silly? We're done here.
\_ I'm just taking your argument to the extreme
to point out how ridiculous it is. I mean,
I may as well work with Manson because where
can I work that isn't involved with someone I
dislike? I never equated Romney with Manson
other than to say I dislike them both. |
| 5/23 |
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| tinyurl.com/3blwm2 -> www.baincapital.com/baincareers/ViewPosition.aspx?position=87226b8a-eee7-4e52-9a28-de05e3e2d872 Sankaty Advisors Position Title Analyst Position Location Boston Position Description BAIN CAPITAL OVERVIEW Established in 1984, Bain Capital is one of the world's leading private investment firms with approximately $55 billion in assets under management. Bain Capital's family of funds includes global macro, private equity, public equity, leveraged debt assets and venture capital. Our competitive advantage is grounded in a value-added investment approach that enables the firm to deliver industry-leading returns for its investors. SYSTEMATIC GLOBAL MACRO HEDGE FUND OVERVIEW Absolute Return Capital (ARC) is the global macro affiliate of Bain Capital. ARC manages assets in fixed income, equity, commodity and currency markets to produce attractive risk-adjusted returns while maintaining low correlation to traditional and other alternative investments. The team employs a research-intensive, systematic approach to investing in these markets. Position Qualifications GENERAL QUALIFICATIONS: * Class of 2008 Computer Science major at a top university * Experience with an object oriented language like Python, C++, or Java * Excellent analytical and programming ability * Strong academic performance Helpful but not required: * Knowledge of statistics, machine learning, AI, finance, Python Position Responsibilities POSITION OVERVIEW We are looking for a brilliant computer scientist/programmer. The ideal candidate is someone who loves programming and wants to further develop his or her skills in computer science while learning about stocks, bonds, and commodities at a systematic global macro hedge fund. The successful candidate will work as part of the investment team on tasks involving risk modeling, security pricing, market prediction, order management, and strategy analysis and development. |
| tinyurl.com/2tqe8c -> www.baincapital.com/baincareers/ViewPosition.aspx?position=6f2e15e3-3f5a-4547-aab8-ef7cad3de0b4 Sankaty Advisors Position Title Summer Intern Position Location Boston Position Description Position: Intern - Graduate or Undergraduate Students Location: Boston, MA BAIN CAPITAL OVERVIEW Established in 1984, Bain Capital is one of the world's leading private investment firms with approximately $55 billion in assets under management. Bain Capital's family of funds includes global macro, private equity, public equity, leveraged debt assets and venture capital. Our competitive advantage is grounded in a value-added investment approach that enables the firm to deliver industry-leading returns for its investors. SYSTEMATIC GLOBAL MACRO HEDGE FUND OVERVIEW Absolute Return Capital (ARC) is the global macro affiliate of Bain Capital. ARC manages assets in fixed income, equity, commodity and currency markets to produce attractive risk-adjusted returns while maintaining low correlation to traditional and other alternative investments. The team employs a research-intensive, systematic approach to investing in these markets. INTERNSHIP POSITION We are hiring interns who want to apply their skills in computer science, math, and statistics to finance. The ideal candidate is someone who loves programming and wants to further develop his or her skills while learning about stocks, bonds, and commodities at a global macro hedge fund. Interns will work directly with the research staff on tasks involving risk modeling, security pricing, market prediction, order management, and strategy analysis and development. |
| www.bloomberg.com/apps/news?pid=20601109&sid=ay5LDbjbjy6c In September 2003, the superintendent of the Erie City School District in Pennsylvania watched helplessly as his buildings began to crumble. The 81-year-old Roosevelt Middle School was on the verge of being condemned. The district was running out of money to buy new textbooks. And the school board had determined that the 100,000-resident community 125 miles north of Pittsburgh couldn't afford a tax increase. David DiCarlo, an Erie-based JPMorgan Chase banker, told Barker and the school board on Sept. What New York-based JPMorgan Chase didn't tell them, the transcript shows, was that the bank would get more in fees than the school district would get in cash: $1 million. The complex deal, which placed taxpayer money at risk, was linked to four variables involving interest rates. During the past four years in Pennsylvania alone, banks have pitched at least 500 deals totaling $12 billion like the one JPMorgan Chase sold to Erie, according to records on file with the state Department of Community and Economic Development. Most of the transactions -- which occurred outside the state's largest cities of Philadelphia and Pittsburgh -- have been made without public bidding, which means that banks and advisers privately arranged the deals with small school districts, the records show. JPMorgan's Chief Executive Officer Jamie Dimon declined to say if he thought the bank's fee disclosure was proper and whether the bank acted in a fair, responsible and moral manner in Erie. JPMorgan spokesman Brian Marchiony says the deal gave the school district immediate debt savings and protected it against unpredictable interest rate risk in the future. Overpaying Fees The Pennsylvania transactions involve interest-rate swaps, which are derivatives. Derivatives are financial contracts whose value is based on other securities or indexes; interest-rate swaps are tied to future changes in lending rates. The Pennsylvania deals show that school districts routinely lose when making derivative deals. They pay fees to banks that are as much as five times higher than typical rates and overpay advisers by as much as 10-fold. That means banks often underpay schools on upfront amounts, as JPMorgan Chase did in Erie, public records show. And school officials aren't always well served by their supposedly independent advisers, whose fees are paid by the banks selling the deals -- only if the sale is made. Getting Fleeced' In 15 Pennsylvania school districts, officials entered into interest-rate-swap deals worth $28 million since 2003, according to data compiled by Bloomberg. Of that dollar amount, the schools took in $15 million, and banks and advisers got the rest as fees, Bloomberg data show. The school districts are getting fleeced,'' Pennsylvania Governor Edward Rendell says. The governor, 64, a Democrat who has been in office since 2003, says the state might in the future advise schools and municipalities on derivatives contracts before they sign with banks. Christopher Cox, chairman of the US Securities and Exchange Commission, says he's concerned that municipalities are taking on more risk than in the past when they raised money primarily from bond sales. It's a serious issue, not only in Pennsylvania but across the country,'' says Cox, 55, who has headed the SEC since 2005. Then, in September 2003, the state Legislature adopted a law allowing schools and towns to use interest-rate swaps to lower borrowing costs and raise cash. Exchanging Payments In a swap, two parties agree to exchange payments over a period of time that can last as long as 30 years. Typically, one agrees to pay a fixed rate and the other to pay a variable rate that changes with a benchmark index or formula defined in the contract. Public agencies can benefit by using derivatives to guard against swings in borrowing costs or to lock in current interest rates for bond sales they might not make for years. In many cases, school districts use swaps as a way to refinance bonds they've issued in the past. Derivative deals can bring banks fees three times higher than the traditional selling of municipal bonds, public records show. School districts don't know whether they're getting fair market values with swaps because the contracts are private; they don't know how to compare their deals with those done by other districts. Profits Are Greater' This lack of transparency is a boon for the banks, says Christopher Kit'' Taylor, executive director from 1978 to 2007 of the Municipal Securities Rulemaking Board, a panel that issues rules on municipal bond sales. Business moves from transparent and competitive markets to markets where there is less transparency and the profits are greater,'' he says. The legislation made the state a member of an expanding club. Forty states give government bodies explicit authority to make derivative deals, up from none 20 years ago, says David Taub, a lawyer who specializes in derivatives and is a partner at McDermott Will & Emery in New York. Derivatives aren't regulated by the SEC, the MSRB or by states. Pennsylvania offers a clear look at these deals because, by law, all the contract records must be publicly filed with the state. The Pottstown, Pennsylvania-based company was raided by the Federal Bureau of Investigation in November 2006 in connection with a criminal antitrust investigation of bid rigging of investment contracts that are sold to states and municipalities. The US Justice Department is also probing municipal derivative deals. In some Pennsylvania transactions, banks bought from school districts rights to exercise options on an interest-rate swap, or swaptions. Banks can choose to exercise the option if they stand to make money or can let the option expire if interest rates aren't favorable to them. Banks Hedge Risk The banks that arrange these deals create the swap contracts before pitching them to schools. Using software programs designed for valuing swaps, they calculate prices for which they can sell them after a school signs a contract. They load it off instantly,'' says Taylor, who's now on the advisory board of Rockwater Municipal Advisors LLC, an Irvine, California-based investment firm. Banks hedge their risk in derivative deals by making trades to cover possible losses to school districts. The banks make their money from fees, regardless of interest rate movements. The reason Erie and other districts don't know how much the bank makes from a deal is because banks don't tell them, the records show. Fees are hidden from schools because banks include those costs in the contract by adjusting interest rates up or down. SEC Disclosure Rules While the SEC doesn't regulate derivatives, it has authority to oversee how banks conduct transactions. SEC Chairman Cox says all financial firms should tell clients what their fees are before signing any deals. Brokers and advisers should disclose their compensation and conflicts of interest to their customers, and to the extent that they are regulated by the SEC, they must,'' he says. Cox also says school district officials have a responsibility to the public and to bond investors to ensure their advisers are actually independent and acting in the best interests of taxpayers. To the extent that municipalities are participating in transactions they are not qualified for, there is an obligation to get good independent advice,'' he says. More than two dozen Pennsylvania school districts bought swaps that bet on the spread between two interest rates. Since 2006, at least 27 school districts gambled that the spread would widen between either the five- or 10-year London interbank offered rate on the one hand and weekly municipal bond yields or the one-month Libor on the other. The opposite happened: Spreads narrowed as long-term interest rates fell. The schools had to pay banks, or they could pay a steep exit fee, as Erie did with its swaption to cancel the deal. Historical Fluke School district officials say their advisers have told them the contracting of the spreads was a historical fluke. They tell me that's never happened before,'' says Ernest Werstler, who was business manager of the district until November, when he reti... |
| news.goldseek.com/GoldSeek/1202912760.php com early last week, detailing how many school districts in Pennsylvania have got into big trouble due to OTC (over the counter) derivative products such as swaptions sold by investment banks. It reminds me many years ago in 1990s when Orange County in California went into bankruptcy by getting into some very exotic derivative contracts. A lesson is never learned and history always repeats itself. Last time the blame was mainly on Orange County, but this time, the blame most likely falls on the investment banks at Wall St. Public financing used to be a low margin and low profile business compared to all the other business for investment banks. It is not that much different than the real estate mortgage business in the good old days. The last 7-10 years, however, similar to the increasing mortgage securitization and MBS products, there have been a large increase of complex OTC municipal derivative contracts between municipalities and investment banks. Lucrative fees are not made by issuing municipal bonds, but by following up services and selling additional derivatives related to the original financing. This process is very similar to printer manufacturers selling inkjets, they make little money on the printer itself to get you hooked, then reap great profit in the ink cartridges which they have the monopoly and consumers do not have any choice. Similar practice also happens when stockbrokers or insurance agents continually sell and resell the same or similar products to you in order to make more in fees. Let us take a look at one particular example in details from the article. Erie City School District in Pennsylvania, back in 2003, was in desperate need for cash. One of the schools, Roosevelt Middle School, was out of money to buy text books, had no cash to fix the building with heating failure, had a roof leaking and ceiling tile falling on students heads. Here comes one of the most prominent investment banks at Wall St. They persuaded the school board to engage a complex 4 factor swaption contract by betting basically that the short term rate will stay low and the spread between the 1 year and 30 year will widen. As a result of this bet, Erie received $785k cash upfront, their financial advisor firm got $60k, the bond insurer received $57k, and lawyers and others $106k. This contract, according to Bloomberg data, was worth $2M by selling it at the open derivative market at that time, so the i-bank reaped $1M profit without taking any risk. Of course, out of convenience, neither the i-bank nor the financial advisor firm which is supposed to be at Eries side told the school board how much profit the bank was making. Actually it was up to the bank to decide how much of the $2M it would give to the district. As you might have guessed, the interest rate bet did not work out when short term interest rates had actually risen and the yield curve flattened thus the spread narrowed. I checked the short term rate and yield curve, if they could have held on for another year and half, when short term rate dropped and yield curve became steep again, they would probably have made money. This makes mafia loan sharks look good, maybe even qualified as a charitable organization. This swaption is a OTC derivative, meaning it doesnt get regulated by the SEC, and it doesnt go through the public bidding process, and it is purely a private contract between the two parties. It is probably the most unequal, unfair and aggressive contract one can ever imagine. One side is the school board members who have their regular daytime jobs and are doing this part time and voluntarily, and have no knowledge about finance, capital markets, or derivatives, let alone a swaption which is an option (derivative) on top of an interest-rate swap (another derivative), and they are fully blind sided. The other side is the most sophisticated i-bank who has full knowledge of this complex product from their computer models, has its value from the open derivative market with bid/ask price, has the markup, and can sell this product at anytime they choose to reap unbelievable profit without committing any capital and risk. Unfortunately in 2003, under many years of heavy lobbying by financial advisory firms, both the House and Senate in Pennsylvania passed the law by 197-0 and 45-0 margin to allow municipal derivatives, based on the claims made by those firms that these products can give them much needed upfront cash and save them money. The founder of the financial firm advising Erie district had contributed $469k to Pennsylvania elected officials, political action committees and candidates for office. When the Erie district needed help to understand the deal proposed by the i-bank, conveniently this firm became Eries financial advisor as recommended by the i-bank. As someone said to Bloomberg, this situation is like trying to decide whether a used-car dealer is offering you a good price or not. Theres a car appraiser down the street who tells you he will provide an independent evaluation. What is worse here is that the appraisal is lobbying very hard for your business and pretends to be on your side, but what he does not tell you is that he is actually working for the party at the other side of the table to rip you off. In 2005, the school board had entered two interest-rate swaps with this i-bank and another prominent Wall St. This time, the district took in $900k, the financial advisor firm made a $630k fee, the two i-banks each made $840k and $900k respectively. According to Bloomberg, the fees to i-banks were 5 times higher, but the fees to the financial advisor firm in this case were amazingly 10 times higher than comparable interest-rate swap deals at that time. During the past 4 years in Pennsylvania alone, banks have pitched at least 500 deals totaling $12B like the one sold to Erie, and most of them have been made without public bidding, by just taking the word for it from their financial advisor firms. Many of the swaps today turn out to be wrong bets and schools have to pay banks or they need to pay a steep exit fee as Erie did to cancel the deal. And since these deals are over the counter, we dont know how many and how bad of these municipal derivatives are out there in the country. If more of these kind of bad deals surface in the future at mainstream newspapers and magazines, it is particularly damaging to the reputation and image of i-banks at Wall St. Local districts and state governments have already faced declining tax revenues from falling real estate markets but increasing expenses from foreclosure, and many government pension funds have suffered subprime losses, you dont want to get them angrier with another ticking OTC derivative time bomb. Merrill has made a sound judgment, probably from the new management, by buying back the subprime loan from Springfield, MA pension fund at the same price as it was originally sold. Merrill no doubt suffers losses by doing this but avoids a potential lawsuit from angry municipality. But most importantly, Merrill shows that they are capable of doing the right thing in order to repair its badly damaged image and reputation from previous top management. It might be wise for i-banks to just bite the bullet, rewind those derivative contracts, and waive any losses on the school districts, as Merrill did to Springfield. Otherwise this will become a growing and very bad publicity issue for them. The current OTC derivative debacle is quite different than Orange County in 1990s which was a more isolated case. This time, it is more widely spread and globally, involved much more capital and parties that no one can get out alone but everyone is tangled together. Also Orange County in CA is one of the richest counties in US, many families there can afford to send kids to private schools, not the case for many counties in Pennsylvania like Erie. Unfortunately Roosevelt Middle School mentioned above was eventually shut down in 2007, and kids have to go to a temporary space the school district is leasing from a church today. i-banks and their financial advisors) dont have to put their interests over the kids. com/thomast Disclaimer: The c... |