Wall $treet Folly

Fed Decision: 25 basis point cut on both the Fed Funds and Discount Rate

Here's the text of the FOMC statement

The credit crunch is hitting the Hamptons as prices fall

Itching to buy a spread in the Hamptons?  Prices are dropping....

The median price declined 7.1 percent to $882,500 and the number of sales dipped 29 percent from the last three months of 2007, according to a survey by appraisal firm Miller Samuel Inc. for New York-based Prudential Douglas Elliman Real Estate. Part- time Hamptons residents include Lazard Ltd. Chief Executive Officer Bruce Wasserstein and comedian Jerry Seinfeld.

``There's caution because of more potential layoffs in the future, so people are taking longer to make buying decisions,'' Miller Samuel CEO Jonathan Miller said in an interview. ``We're seeing a sharp drop in sales transactions, which are likely influenced by the problems on Wall Street.''

Lehman CFO Erin Callan is moving into 15 CPW

Welcome wagon alert: Erin Callan, Lehman Brothers' CFO, is moving into 15 CPW according to the NY Observer, recently having shelled out $6.5 million for a condo on the 31st floor.  She'll join fancy neighbors Dan Loeb, Sandy Weill, Lloyd Blankfein, and Danny Och as well as some of her compatriots from Lehman Brothers...

She will have plenty of colleagues in the building. The co-chief of Lehman Real Estate Partners Raymond Mikulich bought a $17.9 million apartment on the 15th floor; Arthur Estey and his wife Evelyne have a $16.9 million four-bedroom unit on the seventh floor (one of the largest non-penthouse units at 15 CPW); and the head of European fixed-income sales at the UK office, David Bizer, has a $5 million apartment on the 4th floor.

Though Ms. Callan brings the total number Lehman folks at 15 CPW to four, they are still lagging behind Goldman Sachs with at least 7 bankers who’ve bought in the buildings. A few more from each bank and they might have enough people to form rival softball teams—co-ed of course.

15 CPW Alert! Lehman Lady Lands $6.5 M.Pad - NY Observer

Forbes Profile: Passport Capital's John Burbank

One of the big sub-prime winners last year was Passport Capital's John Burbank. He's profiled in Forbes.....

When housing began to melt down last summer, the value of Burbank's short positions and swaps soared. Investors in his flagship hedge fund, $2.5 billion (assets) Passport Global Strategy, ended 2007 up 219%, even after his 1.5% management fee and 20% cut of profits. Passport also runs three smaller funds, with total assets of $1 billion, that own slices of what Global does in basic materials, oil rigs and India. They ended last year up between 64% and 134% after fees. All this earned Burbank an estimated $370 million, ranking him No. 17 on FORBES' list of Wall Street's Highest Earners

"There's no way you can make 30% returns being long the S&P 500," the scruffy 44-year-old says of his swing-for-the-fences investing style. "If you're going to hit that kind of return, you have to go places where it can happen."

"To invest with John you have to put your seat belt on," says Timothy Schilt of Berens Capital Management, a fund of hedge funds that is invested in Passport.

RIP: LSD inventor dies at 102

What a long strange trip....

Albert Hofmann, the pioneering Swiss chemist and advocate of psychedelics who discovered the hallucinogenic properties of LSD, died Tuesday. He was 102.

Hofmann reportedly died of a heart attack at his home in Basel, Switzerland.

Hofmann's most famous discovery happened on April 16, 1943. He was researching the synthesis of a lysergic acid compound, LSD-25, when he inadvertently absorbed a bit through his fingertips. Intrigued by the effect it had on his perception, Hofmann decided further exploration was warranted. Three days later, on April 19, he ingested 250 milligrams of LSD, embarking on the first full-fledged acid trip. That day became known among LSD fans as "bicycle day" because Hofmann began experiencing the drug's intense effects on his bicycle trip home from the lab.

LSD Inventor Albert Hofmann Dead at Age 102 - Wired Blog

WSF Headline Roundup - 4/30/08 - Citi selling $3B in stock; Goldman's China partner makes first investment; Time Warner splitting cable; MSFT's next YHOO move soon?; SAP, Alcatel losses; GM preliminary results; Macy's doesn't expect tax rebate gains

• Citigroup to sell $3 bln in stock; shares fall
• Goldman's China Partner Makes First Private Equity Investment
• Time Warner Says Profit Fell, Will Split Off Cable
• Microsoft's Next Move on Yahoo is Imminent
• SAP Posts 22% Profit Drop, Missing Analyst Estimates
• Alcatel-Lucent Posts Loss, Forecasts 2008 Sales Drop
• GM Reports Preliminary First Quarter 2008 Financial Results
• Macy's doesn't expect big impact from rebate checks
• NYC calorie-count rule effective immediately: court

Rockefellers looking to shake up Exxon; Ex Fed staffer calls Bear Stearns rescue the "worst policy mistake in a generation"; S&P assumption change puts pressure on CDOs; Pimco to trade CDS in Asia Fund

• Rockefellers to demand Exxon shake-up
• Fed's Bailout Is Questioned by Ex-Staffer
• S&P delivers blow to CDOs
• Pimco Will Trade Credit-Default Swaps in Asia Fund

Contrarian Capital sued by former portfolio manager who claims that his pay and bonus were withheld

Did Jon Bauer and his $4 billion Contrarian Capital "arbitrarily" withhold a former portfolio manager's regular pay as well as his bonus while he was away on leave tending his son who was battling inoperable cancer?  That's what Stephen Czech, employed by Bauer for around five years,  is claiming in a lawsuit filed against Contrarian in state court in Stamford:

Stephen Czech claims that Jonathan Bauer, who runs the roughly $4 billion Contrarian Capital Management in Greenwich, Conn., is withholding Czech's regular base pay and bonus "arbitrarily," according to a lawsuit filed in state court in Stamford.

The teeth of the complaint centers on an approved personal leave of absence that Czech had taken from Jan. 6 to Feb. 16 to seek medical attention for his 11-year-old son, who had been diagnosed with an inoperable brain tumor.

Citigroup's hedge fund headaches: two blowups, low returns and redemptions at another

So much for Citigroup's move into hedge funds.  Two of its funds, Falcon and ASTA/MAT, have blown up, down 75% or more.  Citi is offering to at least partially bail out investors in one and possibly both of the two funds, in exchange for promising they won't sue. (The investment was billed as low risk, but that's not exactly how it turned out.)

And it's lucky for Vikram Pandit that he sold his hedge fund, Old Lane, to Citi at around the market top.  That fund isn't doing so well either,  plagued by low returns and investor redemptions.  Earlier this month Citi wrote down that unit's value by $202 million.   Oops....

When Citigroup Inc. was launching a pair of hedge funds last year, it didn't have to look far for investors. Brokers at the firm's Smith Barney unit drummed up hundreds of millions of dollars from retail clients, including some who were told the fixed-income funds were a safe place to stash money.

Since then, the hedge funds, devastated by the credit crunch, have plunged by 75% or more in value. After weeks of internal debate involving Sallie Krawcheck, the global wealth-management head, Citigroup is offering to cover some of the losses. An investor who put $500,000 into one of the hedge funds filed a federal lawsuit against Citigroup earlier this month.

JP Morgan could swallow Bear Stearns by May 29

JP Morgan's firesale purchase of Bear Stearns could be completed "within hours" of the May 29 vote according to Reuters sources....