Bernie’s Victims
Posted by Eddy Elfenbein on December 15th, 2008 at 8:06 pm

Clusterstock has a slideshow.

SEC v. National Lampoon
Posted by Eddy Elfenbein on December 15th, 2008 at 3:17 pm

From the SEC’s website:

SEC v. National Lampoon, Inc. et al.
Defendants: National Lampoon, Inc., headquartered in Los Angeles, California, is a media and entertainment company that develops, produces and distributes media projects including feature films, television programming, online and interactive entertainment, home video, and book publishing. The company produced such widely known films as National Lampoon’s Animal House, and the National Lampoon Vacation series. National Lampoon’s common stock is registered with the Commission and is listed on the NYSE Alternext, formerly the American Stock Exchange (“AMEX”). Daniel S. Laikin, of Los Angeles, California, has been the Chief Executive Officer of National Lampoon since 2005. Laikin controls approximately 40 percent of the voting stock of National Lampoon. Dennis S. Barsky, of Las Vegas, Nevada, is a consultant to National Lampoon, and a significant stockholder. Eduardo Rodriguez, of Livingston, New Jersey, is a stock promoter. Tim Dougherty, of Webster, New York, is a stock promoter and principal of OTC Advisors, Inc., a stock promotion company.
The Commission’s complaint alleges that, from at least March 2008 through June 2008, Laikin, Barsky, Rodriguez and Dougherty engaged in a fraudulent scheme to manipulate the market for the common stock of National Lampoon. Specifically, Laikin, along with Barsky, paid kickbacks in exchange for generating or causing purchases of National Lampoon stock to Rodriguez, a corrupt stock promoter, and the CW, whom Laikin, Barsky and Rodriguez believed had connections to corrupt registered representatives. As part of this scheme, Dougherty generated purchases of National Lampoon stock in exchange for a portion of the kickbacks. Dougherty made his purchases over the course of a number of days and used various accounts to give the false impression of a steady demand for the stock.
The complaint alleges that Laikin and Barsky paid at least $68,000 that went to Rodriguez, Dougherty, and the CW to cause the purchase of at least 87,500 shares of National Lampoon stock. Through these efforts, Laikin and Barsky sought to artificially push National Lampoon’s stock price from under $2 per share to at least $5 per share, in part, to keep the company’s stock price above the minimum listing requirements of the AMEX, and to increase National Lampoon’s ability to enter into possible “strategic partnerships” and acquisitions. In addition to paying others to purchase the stock, Laikin shared confidential financial information regarding National Lampoon, non-public news releases, and confidential shareholder lists, and coordinated the release of news with the illegal purchases in the stock. Barsky helped direct the purchases and facilitated the kickback payments. National Lampoon and Laikin also made materially misleading statements in a tender offer.
The complaint alleges violations of Section 17(a) of the Securities Act of 1933, Sections 9(a)(2), 10(b) and 13(e) of the Securities Exchange Act of 1934 and Rules 10b-5 and 13e-4 thereunder. The complaint seeks permanent injunctions against all defendants, disgorgement of ill-gotten gains, together with prejudgment interest, and civil penalties, from the individual defendants, and an officer and director bar against Laikin.

(H/T: Kedrosky)

Madoff’s Campaign Contributions
Posted by Eddy Elfenbein on December 15th, 2008 at 1:19 pm

If anyone’s curious, Bernie gave a lot.
In light of the Madoff scandal, I’d like to announce that I’m opening a new hedge fund. We’re doing Bernie one better by not having any auditors. The savings is passed on to you. Assuming you’re an early investor.
Feel free to join us. The fund will be named Certified Asset Strategic Holdings. Just send me a check…you can make it out to our initials.

Harvard Forced to Make Do With Less
Posted by Eddy Elfenbein on December 15th, 2008 at 10:27 am

All the chappers down at Porcellian have been most dreadfully upset:

It’s as if an heiress had lost her trust fund.
At Harvard University, the talk of billion-dollar losses in its massive endowment has blown in a new age of austerity across the campus.
Faculty, administrators, and students – who had been riding what one professor termed “the gravy train” for as long as anyone could remember – are suddenly living a different reality in Cambridge.
The cuts are big and small. There are the hiring freezes that run to the core of the university’s mission. But there are also the cookies and soft drinks eliminated from small faculty gatherings. A noon-hour seminar series that used to provide catered lunches from local ethnic restaurants will now serve pizza.

Bernie Made-Off
Posted by Eddy Elfenbein on December 15th, 2008 at 9:36 am

Even by Wall Street’s standards, the Madoff scandal is stunning. It’s hard to imagine anyone with a better reputation than Madoff, and his entire enterprise was a scam. The wealthy enclaves of Florida are especially feeling the effects of Bernie’s downfall. Here’s the Palm Beach Post:

Bernard Madoff didn’t accept money from just anyone. Clients ideally had to have at least $10 million to open an account with his New York investment firm.
While such wealthy people don’t turn up just anywhere, the Palm Beach Country Club provided enough to make Madoff’s membership in the predominantly Jewish club worthwhile.
On Friday, many of those who had considered themselves lucky to invest their millions with the part-time Palm Beacher were calling their accountants, their brokers and each other, wondering whether they had lost it all.
“Everyone is in shock,” said Richard Rampell, a Palm Beach accountant. “They’re embarrassed. They don’t want to believe they got taken.”
But, according to federal investigators, that’s exactly what happened.
“It’s all just one big lie … basically a giant Ponzi scheme,” Madoff told senior employees this week, according to documents filed in U.S. District Court in New York City.
The feds swooped in quickly and arrested the 70-year-old, who splits his time between a Manhattan apartment and a $9.3 million mansion on the Intracoastal Waterway just north of Flagler Memorial Bridge. The five-bedroom, seven-bath Palm Beach property once belonged to Herbert and Hilary Pulitzer.
After he told the employees that he had lost $50 billion invested with him, investigators were afraid he would carry through with plans to give the $200 million to $300 million that remained to favored employees, family and friends, according to court documents.
The $50 billion loss, if accurate, would be one of the biggest frauds in history. By comparison, when energy trading giant Enron filed for bankruptcy in 2001, it had $63.4 billion in assets.

Deconstructing Rushing Yardage
Posted by Eddy Elfenbein on December 14th, 2008 at 2:18 pm

For a nice weekend diversion, here’s another stab at pro football sabermetrics. I’m new at this, so if anyone’s interested in this subject, I’d welcome any feedback, particular with the statistical analysis.

I wanted to look at rushing yards which is an interesting data set. I’m amazed at the wide dispersion of rushing gains in football. Basically, it works likes this—when running the ball, the key is to break out for a big gain.

While this sounds obvious to anyone familiar with football, the numbers are pretty striking. Consider that roughly 92% of a team’s rushing yards come on just half its rushing plays. The other half accounts for just 8%.

I could go so far as to say that we should no longer look at a rushing as the some total of yardage, but rather as a question, did the runner break out or not. I also wanted to see if a particular break out point could be identified.

For my data, I went to FootballOutsiders.com and bought the play data sets for the 2005, 2006 and 2007 seasons (the final week of the 2005 regular season isn’t included). I then separated out the 40,000+ running plays.

Here are some stats: The average run is for 4.24 yards. The median run is for 3 yards and the mode is for 2 yards. Both numbers suggest that the histogram has a strong rightward tilt.

What I wanted to do was construct a running play as a series of odds. Think of it as a probability game. If you gain one yard, what’s the probability that you’ll gain at least one more. Let’s say you pass that threshold and now have a two-yard gain, what’s the probability that you’ll gain at least one more. As I expected the probability that you’ll gain one more yard increases the farther down the field you go. In other words, rushing gains accelerate.

Here’s a graph of what rushing gains look like. The chart shows: if you can at least X yards what are the odds you’ll get at least X+1.

As you can see, as the running back breaks out, the yards are increasingly easier to gain. Gains beget more gains — that’s the key. (If you’ve notice a stock market equivalent, then you’ve probably read this blog before.)

Here are a few items I need to mention. There’s an unusual depression and spike at the 9- and 10-year mark. That’s probably due to NFL accounting which creates an unusually high number of 9-yard gains (plays that are just short of a first down). For my purposes, I’m side-stepping that issue since it’s not what I’m looking at nor does it seem to have an impact of the trend I’ve found.

You’ll also notice that the data become much more volatile as the run goes down the field. This is due to less data. For example, the outlier at the 76-yard mark (80%) is simply due to three runners being tackled there. Remarkably, Fred Taylor accounted for two of those runs! I should add that the graph refers to runs that are stopped, not touchdowns.

The hardest yard to gain is going from 3 yards to 4 yards. That’s just a 78.00% chance. But 4 to 5 is 78.11% so it’s not much better, and 5 to 6 is 78.52%. After that the yards are increasingly easier to gain. It would seem that the defense dominates 18 feet behind the line of scrimmage. After that, the field slowly turns in the runners favor. Runs of 7 or more yards make up about 20% of all runs but 60% of all yards gained.

Here’s a histogram of the rushing gains with a log scale. I had to exclude the extremes since the ones and zeros don’t work well with a log scale.

It’s that long, fat tail that’s so, so important.

Here’s a spreadsheet of my data.

Peter Cook & Dudley Moore
Posted by Eddy Elfenbein on December 13th, 2008 at 2:52 pm

Not terribly mature or safe for work.

Contrary Indicator
Posted by Eddy Elfenbein on December 12th, 2008 at 4:01 pm

Harry Reid’s market call from yesterday: “I dread, Mr. President, I dread looking at Wall Street tomorrow. It’s not going to be a pleasant sight.”

Perhaps he was short.

Think You’re Having a Bad Day?
Posted by Eddy Elfenbein on December 11th, 2008 at 2:54 pm

It could be worse:

Visa CEO loses his credit cards
Imagine running the world’s largest credit card network, and not having your own plastic.
That’s what happened to Visa Inc Chief Executive Joseph Saunders.
He spoke Thursday morning at a Goldman Sachs financial services conference in New York, and had come from San Francisco, Visa’s headquarters.
Unfortunately, his credit cards didn’t make the trip.
“I’m supposed to start off, and say that I’m very happy to be here, and I guess I am. But it’s 4:15 in the morning as far as I’m concerned, and I lost my wallet on the way here,” Saunders said. “It’s rather embarrassing when somebody steals my credit cards.” The comment prompted laughter.

Truth in Advertising
Posted by Eddy Elfenbein on December 11th, 2008 at 10:47 am

I’ve never understood the appeal of Starbucks. This McDonald’s ad sums it up pretty well.