From The Jolly Contrarian
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| GMSA: famously secretive. There’s a perfectly valid reason for that: for its trading strategy to work, it has to keep out its trading activity of the public domain so far as possible to stop “strange loop” feedback (there are explicit “hum cancellers” in its strategy applied to every actual disposal or acquisition it makes).
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| The Armstrong Savile RCF:
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| Armstrong Savile always rated wham’s trading strategy and was anxious to get a piece of it
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| Hired breakspear as a split strike option strategy expert to replicate it
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| When breakspear couldn’t do that, unceremoniously fired him and at least provided financing: term loan and committed rcf
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| Uncollateralised and with a cheap commitment fee (money was easy) but v expensive money on drawdown
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| As a result wham kept the term loan drawn but used the rcf only for intraday cashflow management.
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| Now: Wham under pressure. There is a large influx of redemption requests, leading to market speculation about wrongdoing – speculation of money laundering or a ponzi (as it turns out, unfounded), a number of data providers terminate supply contracts (including the likes of linkedin, facebook etc) and SOCA suspends the transfer of precrime data. This sudden surfeit of WHAM related information and the paucity of data sends the algorithms haywire, and they start executing “balancing” trades against “phantom news” – of WHAM itself – leading to positions going out of the money.
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| Wham goes to Armstrong Savile to draw to meet the margin calls – this is crazy stuff. You see our positions. You know the trading is legitimate. We need to make a draw to meet margin calls on these lines. It will clear up as soon as we can restore the information services and get a press statement out.
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Revision as of 11:55, 8 November 2012