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National Bank of Greece S.A. Message Board

  • ansirkerah ansirkerah Nov 4, 2013 10:49 PM Flag

    Paulson investing in Greek banks a Good thing?

    Google "Will John Paulson’s Deal With Goldman Sachs Cost Him His Seat on the Board of Spence?"


    "Since the SEC civil fraud suit against Goldman Sachs laid bare the ugly details of the transactions that allowed John Paulson to make billions shorting the housing market, parents at the Spence School, the Upper East Side all-girls day school attended by at least one of Paulson's daughters, have taken to UrbanBaby [webpage] to vigorously debate Paulson's actions and his recent election to the school board"

    ""I don't believe that the way he structured his deal was illegal, but it was certainly immoral and displayed all the instincts of a social parasite," wrote one poster. "I wonder how everybody feels to have him on the board of Spence." Wrote another:"

    Also be sure to google the article "Johnny (Paulson) Got His Gun (and is aiming at some grim, Greek pickings)"

    You be the judge! Also be sure to keep track to see if this post gets deleted in the future, as my other two threads got deleted (and account locked out) after openly discussing Paulson and his possible motivations for getting involved in these Greek banks.

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    • Congrats! Post is still here! I’m not sure I understand the bad rap on Paulson re the warrants. The warrants were offered only to institutions and certain foreign citizens (bankers). Note this is indicated on BNY website under Other Programs for Alpha – that’s what Program 144A is, a restriction to only sell ADRs to qualified institutional buyers (QIBs). NBG doesn’t have a 144A; this is probably why Paulson and other hedge funds are not investing in NBG. Do you have a reference indicating NBG was selling to QIBs? Anyway, it seems to me Paulson is just an opportunistic buyer – I don’t believe he flew to Greece and suggested to the banks that they create the warrants, did he? Does the fact that he’s a trader in Alpha and not interested in the future of Greece make the stock risky or the situation in Greece worse?
      And as for his background on Wall St during the financial crisis, did he and Morgan Stanley really bring down the banks or were they already in trouble over the bad mortgages? He had no background in real estate but was smart enough to see the bubble and hedge his bets. This hits a nerve for many because he was able to profit while others lost money. And of course I don’t believe in causing others to lose money. BTW he co-wrote a journal suggesting a plan to stabilize the markets in 2008. Maybe he’s trying to be helpful. :) He’s also made several donations, among them $200M to NY Central Park Conservancy and $20M to his NY University alum.

      • 1 Reply to brendabreeze77
      • as one of my posts in this thread state, real estate was in trouble, banks were in trouble, he correctly saw this but he also helped be the straw that broke the camels back. nothing illegal in this (apparently), but something definitely immoral in this. Goldman Sachs took the fall for this scam, but Paulson was the one who most profited off of it. This says it all right here:

        "The SEC alleged in a civil lawsuit that Goldman structured and marketed a collateralized debt obligation that hinged on the performance of subprime residential-mortgage-backed securities, or RMBS. However, it failed to disclose the role that a major hedge fund, Paulson & Co., played in the portfolio selection process as well as the fact that the hedge fund had taken a short position against the CDO"

        Paulson didn't bet like an investor who is accepting a bit of risk for the potential upside, Paulson bet like an insider would bet, he bet LARGE, and he made billions in the biggest trade in history. I'm not really sure a few hundred million thrown here or there qualify as philanthropic after you have just profited by 3 billion dollars by pushing the global economy over the tipping point.. *shrug*

        Anyways, I tend to agree with that seeking alpha article that the reason Paulson and others are in Piraeus and Alpha are because they have more to gain from a Greek recovery (and because NBG doesn't seem to be in very good shape compared to those two others and is trading at a high premium over its book value currently).

        I agree that Paulson is an opportunistic buyer and there may be nothing to any of this, and it may be simply a case of paranoid Greek phd holders in economics writing spurious doom and gloom stories. I'm not sure. I have noticed one common thread -- Greeks are extremely pessimistic about the future for their country, I'm sure even holders of phds are not immune to this infectious emotion.

    • What makes u think alphabank will suffer but not nbg then?

      • 1 Reply to hitlerchan
      • I think all Greek banks could potentially suffer something due to shady dealings. What that might be I'm not entirely certain. While Paulson hasn't stated having taken a position in NBG (he stated he was only in Alpha and Piraeus), it stands to reason that others would be in NBG as the primary concern lies with the Warrants which all three banks (Piraeus, NBG, Alpha) have issued.

        Google "Beware the Warrants Greek Banks"

        "A rational bubble?
        Low exercise prices and fixed dates for exercising the warrants may lead investors,
        especially retail ones, playing the musical chairs game again. They could possibly
        think they will exit before others and, surely, before the influx of tens of billions of
        new share in the market. But having enjoyed large paper gains for some time,
        investors could face a shallow and possibly collapsing market when trying to liquidate
        their shares en masse.
        Such market failure could be particularly detrimental to economic recovery by
        causing market dislocations. Long-term investors may also be discouraged from
        acquiring strategic stakes in banks if shares are trading at a large premium compared
        to their European peer group. Alpha Bank was the first to open the recapitalisation
        round. During the ex-rights date it was trading at a price-to-book ratio of 0.86,
        compared to a European average of around 0.6.
        In the current conjuncture, the significant premium at which Greek banks are trading
        compared to the European peer groups is driven by the large number of free warrants,
        the low exercise prices and the impact warrants have on market capitalisation."

    • For those who aren't familiar with the Goldman Sachs / Paulson connection, here are some highlights which may leave you scratching your head in amazement that this individual is not behind bars, or rather, that laws don't [or didn't] exist to prohibit this kind of arrangement:

      "The SEC alleged in a civil lawsuit that Goldman GS +0.14% structured and marketed a collateralized debt obligation that hinged on the performance of subprime residential-mortgage-backed securities, or RMBS. However, it failed to disclose the role that a major hedge fund, Paulson & Co., played in the portfolio selection process as well as the fact that the hedge fund had taken a short position against the CDO."

      ""Goldman wrongly permitted a client that was betting against the mortgage market to heavily influence which mortgage securities to include in an investment portfolio, while telling other investors that the securities were selected by an independent, objective third party," said Robert Khuzami, director of the SEC's division of enforcement, according to a statement."

      You see, a relative nobody like Paulson does not make billions of dollars overnight by 'being smart' or even by 'being lucky'. It doesn't happen. Paulson bet heavy because he had already ensured that he had it locked up in his favour. This isn't to say that he single-handedly orchestrated the collapse of the US economy in 2008, I'm not sure any one person could do such a thing. The economy/banks were undergoing a severe imbalance and the chances are that the collapse would have taken place eventually without Paulson intervening. However, what is significant is that Paulson (for his own profit) essentially slipped his toxic brew into the CDOs, which he then knew would fail (he designed them to fail!) and cause a ripple effect taking down the entire house of cards -- while betting against those same CDOs.

      This next isn't related to Paulson per-se: Google "Is Greece Using a Ponzi Scheme to Remain Solvent?"

      • 1 Reply to ansirkerah
      • The thrust of that article for the tldr folk is that Greek banks essentially borrowed from eachother in order to achieve recapitalization. This isn't necessarily a bad thing, but it does show some of the shady dealings that take place in this sector of the world and within banks in general.

        This is a lot of doom and gloom postings and I want it stated that I'm long on ALBKY and formerly on NBG, I have a lot at stake with a large position in ALBKY, perhaps this is my interest in trying to think ahead of the curve, try to foresee any landmines that may be lurking around the corner. To be blunt, I am highly suspicious when a character like John Paulson enters into a stock I'm holding. Paulson is *not* the kind of investor to bet on a dying state with a longterm horizon. Paulson is a trader, he moves in and out quickly, he has no interest in exposing himself to long-term unknowables. Like your common day trader he seeks to jump in at opportune moments, preferably with insider information/an edge of some sort, bets heavy, exits his position with a profit, leaving a lot of pain in his wake (sorry hyperbole, I've probably in my search for Paulson info wandered into some fringe type hyperbolic webpages that cast him like the antichrist).