Roddy Boyd Sucks It Like He’s Paying the Rent
October 10th, 2008
by Patrick Byrne
In the adult novelty & video arcade shop that is our New York financial establishment, one of the mop-and-bucket spooge-boys is one Roddy Boyd, formerly of the New York Post (for folks who move their lips when they read Entertainment Weekly), and currently, of Fortune Magazine (also known as “People Magazine for Capitalists”). I have met Roddy on occasion, and a more seedy and furtive character would be difficult to name. I once knew a one-eyed Chinese guy named “Chaney” who ran a Bangkok pawn shop/mail-drop who turned out to be working for Taiwanese, Chinese, and Soviet intelligence, simulatenously, but by appearances anyway, Chaney was a model of probity and fair-dealing when compared to Mr. Boyd.
Admittance into Roddy’s New York financial journalism spooge-bucket-brigade is conditional upon acceptance of The Fundamental Principle and First Corrollary of that illustrious fraternity:
The Fundamental Principle - Hedge funds can do no wrong, particularly if they belong to a small constellation whose brightest lights are Stevie Cohen, Dan Loeb, David Einhorn, Jim Chanos, David Rocker & Marc Cohodes.
The First Corollary - Any corporation or individual appearing to have been wronged by one of these hedge funds, up to and including stock counterfeiting and manipulation, blackmail and intimidation, use of private eyes and internal moles, endless expensive dubious investigations incited, and so on and so forth, it must certainly because they deserved it (see The Fundamental Principle for proof).
Today Roddy Boyd and Fortune Magazine give us fine illustration of these journalistic principles, in an article on hedge fund Copper River Partners (née Rocker Partners). This is the same Copper River/Rocker Partners whose exploits are so ably chronicled throughout DeepCapture, who have been frequent benefiaries of lotion-jobs from Karen Richardson, Roddy Boyd, Herb Greenberg, and Jim Cramer, and have been long-time recipients of Bethany McLean’s very special but highly-regarded regulars-only service. (Full disclosure: They are also on the business end of a Marin County lawsuit filed by Overstock.com, in which I played modest role.)
In today’s think-piece, Roddy treats us to such insights as:
* “But for noted short-sellers Copper River Management, a $1 billion hedge fund based in Larkspur, Cal., the month turned into a perfect storm. A devastating combination of counter-party failure, sudden regulatory edicts and margin calls conspired to turn the fund’s performance on its ear, leading to a 55% loss in just two weeks.” Translation: In the last two weeks Copper River lost 55% of its funds, but not through any decisions it made: counter-party failure, regulators, and those pesky margin calls “conspired” to create “a perfect storm” that lost them their investors’ funds.
* In case that the point was lost that none of this had to do with the quality of this hedge fund’s investment judgments, Roddy Boyd writes it. he really does, in these words: “What’s worse for Copper River is that the battering had nothing to do with the quality of its investments.”
* We are treated to a bit of financial arcana: “On top of that, as Lehman unwound its own internal hedges to the Copper River trades, its trading desks bought shares of these companies, driving up their prices and leading to losses for Copper River.” Tranlsation: Lehman sold Copper River puts that they hedged by shorting stock, most likely in more flagrant abuse of the option market-maker exception, and when Lehman covered its shorts it hurt Copper River, whose investment strategy assumes an environment where shorts never have to cover (and understandably so). As far as Copper River and Roddy Boyd are concerned, the possibility that shorts would have to “cover” (that is, “at some point come into the possession of”) things they sell is a damn imposition.
* And as though that littany of impositions was not harrowing enough, Roddy goes on to chronicle the further injustices suffered by Copper River: “That was bad enough, but on September 19, the bottom fell out for the fund. That was when the Securities and Exchange Commission ordered unprecedented restrictions in short sales” (simply because our nation’s financial system was imploding). And further, “As prices in those stocks shot upwards, Copper River was forced to cover - or buy back - some of its positions at steep losses. ” Clearly this further injustice is intolerable: how could a hedge fund such as Copper River ever be expected to make money, if it sells things expecting them to go down, and they go up? Damn inconsiderate of reality, when you think about it. And lastly, “The rising stock prices also led to a series of margin calls (demands for additional cash collateral to be deposited in a margin account) from Goldman Sachs, Copper River’s prime broker.” I’m with Roddy on that one: it’s just damn inconsiderate of Goldman Sachs to insist that Copper River have funds to back its play.
Perhaps I am too hard on Roddy. “Out of the crooked timber of humanity no straight thing will ever be made” and all that. Molded are we all of imperfect clay. A gal moves to the big city, gets behind, does things of which she is not proud.
But normally, she doesn’t write home about it. It’s just Roddy’s bad fortune to have to do these things in national print.
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