YouSaid · the spoken record

Danny Moses

lines on the record: 67
first: 2017-04-25
most recent: 2017-04-25
sittings or episodes: 1
sources: podcast

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“Been great to me. And again, I would go back to people can open the doors for you. And it's what you do with it once you get it. And I'm the first to say my aunt got me my first job, but she didn't get me the promotion. You know, she didn't get me. So, you know, there's always been people that have opened doors for me, but I think people should never take that for granted and then always do the most with the opportunities that they get. I broke my leg in 1984 and Miss Sweden, who had just won Universe Pageant, signed my cast. That was probably one of the kindest things anyone's ever ever done for me. So there's many great people in my life. Awesome.”
2017-04-25 · Invest Like the Best · Danny Moses - The Big Short and Beyond - [Invest Like the Best, EP.34] · IDENTIFIED FROM THE TRANSCRIPT · source
“We're both Tough one. You got me. I mean, we went from bulldog football and long-term capital to the kindest thing. I mean, I've been given big, big breaks. And so anyone that says wherever they are in life that they weren't given an opportunity, I think it's what you do with the opportunity. I would say I was lucky to have the parents that I had. But secondly, there was a particular person, John Race, in my life that kind of was my, he runs a fund, DRZ to Prince Race and Zolo down in Florida. He was kind of a guy I looked up to, a good friend of my father, who's a little bit younger than him. And he got me my job at Freeman Billings and Ramsey at the time. Basically, made a phone call for me. And it was really out of kindness because he knew I was a good sales guy and so forth. So that turned out to be the biggest break of my life. And he's always been that kind of guy for me. That's kind of the guy I look up to, my mentor in this business. So I would say that was one of them. Trying to think what else. My wife does kind stuff for me all the time. I would have to mention that or I would be in deep trouble. But you got me on that one. Many people have.”
2017-04-25 · Invest Like the Best · Danny Moses - The Big Short and Beyond - [Invest Like the Best, EP.34] · IDENTIFIED FROM THE TRANSCRIPT · source
“Night every night. So I was a senior in Emory, and then I was interning. And I really felt that this was going to be my calling that I was going to, I was making tapes, and I've made some sports tapes before on air, not that never got released to the public, but on air. And then when it came down to it, like getting out of Emory in May of 91, all my friends are moving to New York City. And everyone was coming back and going to get Wall Street jobs or whatever, going to law school somewhere. And I went into CNN and I could have stayed as a production assistant and probably done that, but I was given advice to go to the Midwest and go cover like a high school football, be a local sports anchor. And at that point, I decided I chose that maybe I'll come back to this later in life, but I wanted to go be with my friends in New York City and live that life versus doing that. So I made that choice at the time. It's always been a passion of mine to, not necessarily be on air, but doing something in media, because I think it's fun you meet great people and so forth. So it's still something I may want to go back to in time, whether it's the version of this.”
2017-04-25 · Invest Like the Best · Danny Moses - The Big Short and Beyond - [Invest Like the Best, EP.34] · IDENTIFIED FROM THE TRANSCRIPT · source
“So I grew up in the south and my dad had an accent. He was from southern Georgia. You wouldn't believe that the accent. My mom's from Greenville, South Carolina. And so I always thought that I'd end up with this southern accent, which would be fine, except for the fact that from a very early age, listening to University Georgia football games, there was a broadcaster, Larry Munson, who was always my idol. I mean, he has some famous calls against Florida, always who I hated growing up, hated the Gators, growing up. And I would always find myself imitating him or some other sports broadcaster or doing my own show. So I'd watch games and I would basically sit there and I would do my own play-by-play. And so when I got to Emery, I went to Emory, I got an internship at CNN. And I worked in sports, and it was when Fred Higman and Nick Charles were the rage. I mean, this was before ESPN really took off, but also the sports show was 1130.”
2017-04-25 · Invest Like the Best · Danny Moses - The Big Short and Beyond - [Invest Like the Best, EP.34] · IDENTIFIED FROM THE TRANSCRIPT · source
“And it was like a dollar. Like, what the hell? Come on. A couple of products that I've kind of actually patented and working on. They aren't blackjack games or something else. There's potentially doing some type of podcast or something in the entertainment world. There's a reality show that I really want to get started and I talked to Michael Lewis about it. And it's kind of an interesting idea, has to do with former insider traders or white-collar criminals putting them with blue-collar criminals, so to speak, and seeing how those worlds mix something like that. Some of these private equity investments, I'm helping the companies either try to raise capital or touch. And really, I mean, I got to tell you, 20 years on Wall Street with a two-month break in between the entire time, took a toll on me physically, psychologically. I'm literally spending, you know, I've kind of been out of it now for almost two months. And so I'm just getting back into shape and spending time with the family and so forth. So right now I'm just kind of taking it easy, but I always have something going on.”
2017-04-25 · Invest Like the Best · Danny Moses - The Big Short and Beyond - [Invest Like the Best, EP.34] · IDENTIFIED FROM THE TRANSCRIPT · source
“He tells me these stories about certain people like that in our industry, right? And again, I'm not going to say who it is, but there are certain people who you're like, really? The guy's worth obviously Uber, Uber money. And so, you know, it's funny stuff. It's a colorful world. He'll call me every once in a while. Hey, do you know so-and-so? I'm like, yeah, he goes, okay, well, there are sons about to get arrested. And I'll never share that information or something like that, but I'm like, wow, you know, that's going to be a scandal.”
2017-04-25 · Invest Like the Best · Danny Moses - The Big Short and Beyond - [Invest Like the Best, EP.34] · IDENTIFIED FROM THE TRANSCRIPT · source
“Call is Ira. And in the book, and not only that, Ira does things outside of that. So he'll work with you if you can't come up with the bail, right? He'll go, all right, do you have an aunt that has a house? Do you have something where I can get some type of collateral? Or sometimes he takes it in a good faith. But he's an insurance provider, right? So he has an insurance company behind him that has to sign off on the bails itself. So there is a regulatory process within your world. And I won't mention names, but I'd mention that there was a hedge fund person out there that was trying to help a friend that called an IRA, got his name, and said, Ira, I need your help. Ira helped him out. Bail went on for like six months. The case was actually dropped, ended up being dropped. And the money that was owed was like $7,200 that Ira was owed interest. And the head fund manager said, no, it's $7,054. And Ira had to go back and say, no, there's two days that have accrued that you didn't, the last, the first and the last.”
2017-04-25 · Invest Like the Best · Danny Moses - The Big Short and Beyond - [Invest Like the Best, EP.34] · IDENTIFIED FROM THE TRANSCRIPT · source
“Talk about working hard. It's a basic The service provided so just like the book says he's the fixer. So if a criminal attorney stakes his reputation on taking care of his clients or group of clients or gets reputation for being able to get you out on bail quickly, processed quickly through the system. So Ira knows the system well. He knows every clerk at every court. You know, he knows which judge is friendly, which one isn't going into it. So the criminal attorney may call, hey, Ira, I need you. Ira says, Where's the guy? What court is it going to be in so forth? So he has all the information ahead of time. So Ira, before he even meets the client, is already doing all the back end work, calls a clerk. I need to get this guy out. I don't know how, you know, I'm not going to say how he does. Maybe the guy's sitting in the front row of the Knicks games, the clerk. I'm not sure exactly. Won't go there, but he has his network of people. And so people know that IR will never drop the ball that'll get him out. So again, if you're a criminal defense attorney, you're first.”
2017-04-25 · Invest Like the Best · Danny Moses - The Big Short and Beyond - [Invest Like the Best, EP.34] · IDENTIFIED FROM THE TRANSCRIPT · source
“He goes, Yeah, something French, something. Yeah, I got to go. I'm like, dude, I'm coming with you. I go, Dominica's kind of just got arrested in New York City and the head of the IMF and the global financial crisis is ongoing and what's going on. So I got a great look into his world.”
2017-04-25 · Invest Like the Best · Danny Moses - The Big Short and Beyond - [Invest Like the Best, EP.34] · IDENTIFIED FROM THE TRANSCRIPT · source
“Meth just got arrested. And I said, the Bowling League? There's a president of a Bowling League. I don't understand. He goes, I don't know. Some guy Con. And I say, Dominic Strauss-Kahn?”
2017-04-25 · Invest Like the Best · Danny Moses - The Big Short and Beyond - [Invest Like the Best, EP.34] · IDENTIFIED FROM THE TRANSCRIPT · source
“So, my best friend, one of my best friends is Bell Bondsman to the Stars, Ira Juddleson, and he's done everything from Pleisco Burris to Lil Kim to any mobster family you can think of in the New York area. It's a real treat to go to Ray's with him because you literally get lifted on a chair when you walk in. So during the crisis, so I think it was in 2008, I have to check the date, but Dominique Strauss-Kahn, who was the head of the International Monetary Fund, the IMF, who was very central at the time to try to figure out what was going on worldwide, not just with the US financial crisis globally, was arrested as everyone knows, in Midtown, actually taken off a plane after he had tried to leave, after he had committed, you know, or supposedly committed a crime in a hotel. Well, that night I'm out with Ira and his wife Blake and my wife Alice and the four officer having dinner. And Ira gets a text on his phone and he looks at me and goes, I got to go to the city. I go, why? He goes, the head of the AM.”
2017-04-25 · Invest Like the Best · Danny Moses - The Big Short and Beyond - [Invest Like the Best, EP.34] · IDENTIFIED FROM THE TRANSCRIPT · source
“Into this, I lose. There is no way to outperform that unless you take cataclysmic chances and have a 12% stock position, which you're not really allowed to do in a mutual fund. So it's just reinforcing this false flow. Again, not O'Shaughnessy, not quant. You guys are perfect. But my point is that it's just reinforcing this. And at some point, it's got to go. You have ETF providers now closing ETFs because they can no longer put money to work. And then to your point, there's ETFs on ETFs. It's insane. It's not going to end well.”
2017-04-25 · Invest Like the Best · Danny Moses - The Big Short and Beyond - [Invest Like the Best, EP.34] · IDENTIFIED FROM THE TRANSCRIPT · source
“And I think the current market, and so ETF driven and obviously quant driven and so many different strategies, it's money flows, right? It's just about supply and demand. And there's still money that's changing the market. So there's nothing you can really do about it right now. And I think each time we get a slight pullback or there's a macro event that happens, geopolitical, whatever, and it's reinforcing, I think, this false sense of non-fundamental stock market evaluation because the money flows, you know, just to touch on this for a second, which I think is an important point. Active can't beat passive if flows are going out of active into the benchmark, the active is against. It's math. If I have a billion dollar fund that is tracking a mid-cap growth ETF and the mid-cap growth ETF is attracting money at a billion dollars a month at a clip, and that's my index. And I need to see the structure of that ETF before I even looked at bottom-up stock picking because by definition, if money is flowing out of mine,”
2017-04-25 · Invest Like the Best · Danny Moses - The Big Short and Beyond - [Invest Like the Best, EP.34] · IDENTIFIED FROM THE TRANSCRIPT · source
“On a PE basis, on a GAP basis. So we've forgotten. And once you're on the non GAAP train as a company, you have to stay on the non-GAP train. And again, last year, the SEC was sending out letters. A couple of the larger companies have gone in, I think Amazon has now moved to Gap, or they're starting to move to Gap and so forth. So people are starting to move there. But that's going to be a rude awakening for people when they go from a $12 non-gap, even though the same company and same earnings to an $8 gap number, and then have to reassess the valuation. Nothing changed other than the way you reported, but the complexion changes. So identifying that, when does that trend stop? I don't know, but those are all.”
2017-04-25 · Invest Like the Best · Danny Moses - The Big Short and Beyond - [Invest Like the Best, EP.34] · IDENTIFIED FROM THE TRANSCRIPT · source
“One thing is that this use of non-GAP is really nuts. I mean, over two-thirds, at least, of S&P 500 companies report non-gap, sometimes it's valid, the most times it's not. A lot of technology companies exclude stock-based compensation out of it. I don't know, I don't understand how you can do that. It's part of doing business and so forth. A lot of the merging acquisitions, you extract out merger costs related to the greatest rosy scenario of all time, only to add them back later in time over a period of time. And that's where you got to be really careful in terms of your models, which I'm sure you guys do, and looking at what is the real earnings growth. I think, I don't know the numbers, right, not in front of you, but the non-GAP earnings of the S&P versus the gap earnings. The S&P is trading well above 20.”
2017-04-25 · Invest Like the Best · Danny Moses - The Big Short and Beyond - [Invest Like the Best, EP.34] · IDENTIFIED FROM THE TRANSCRIPT · source
“is the best approach. How healthy is it? And what is this company involved in? And then go from there. So work your way up off the balance sheet out to what the company actually does and then try to figure out what the long-term value is of the company and what the long-term.”
2017-04-25 · Invest Like the Best · Danny Moses - The Big Short and Beyond - [Invest Like the Best, EP.34] · IDENTIFIED FROM THE TRANSCRIPT · source
“You're willing to sit on a stock for a long period of time if you're confident that the business plan is good, the management is good and they know what they're doing and there's an exit strategy down the road, whether it's a special dividend that causes the stock to move higher. You can't ignore it for a long period of time. That's why I mentioned cash flow being the most important component. You're going to do something with your cash. You're going to either buy back stock, you're going to issue a special dividend. You're going to make an accretive acquisition. Another long-winded answer to your question. I think starting with the balance sheet.”
2017-04-25 · Invest Like the Best · Danny Moses - The Big Short and Beyond - [Invest Like the Best, EP.34] · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, it matters to your point, you and I talked earlier about something you guys do, which would be the growth in earnings and how do you apply metric to that, how important is that, and so forth. Starting up bottom evaluation, cash flow is always the”
2017-04-25 · Invest Like the Best · Danny Moses - The Big Short and Beyond - [Invest Like the Best, EP.34] · IDENTIFIED FROM THE TRANSCRIPT · source
“Was a great example. I think it was in the book where we found a motorcycle company that was just a finance company. And they had so much credit issues on their balance sheet. So it can be any, but I go back to, again, it always turns out to be the same. It always turns out to be the same thing.”
2017-04-25 · Invest Like the Best · Danny Moses - The Big Short and Beyond - [Invest Like the Best, EP.34] · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, well, think about like a Harley Davidson, which is not so much the motorcycle, how are they getting people into the motorcycle? Conn's was an interesting name, C-O-N, which has had their issues. They were selling plasma television mattresses and so forth. And they were charging customers to finance these mattresses. Well, when you take a mattress, I mean, take a car off, it's worth half. Take a mattress off a lot. It's down 99%. It's worth zero. But they were making their money on the financial. So if you took apart the earnings and the balance sheet and the drivers, it was late fees. It was finance charges. It wasn't the mattresses and the TVs. And those same TVs and mattresses were being sold much less, but these are subprime people that were coming in and being taken advantage of. It wasn't that they were doing that Tom was doing anything against the law at the time. They were within usury laws and so forth. It was more of it's not sustainable. Because of credit. So finding things like that, ideas like that when you see that. Harley Davids.”
2017-04-25 · Invest Like the Best · Danny Moses - The Big Short and Beyond - [Invest Like the Best, EP.34] · IDENTIFIED FROM THE TRANSCRIPT · source
“Those things aren't sustainable for a long period of time. These aren't real numbers, real earnings. They're more ill-gotten gains, so to speak, that aren't sustainable. So, you know, just to dive into one other sector, which I think is really interesting, is that one of the sectors which we kind of within, especially finance, although they hide in retail, is looking at retail companies that have a finance arm that are really driven by their finance division.”
2017-04-25 · Invest Like the Best · Danny Moses - The Big Short and Beyond - [Invest Like the Best, EP.34] · IDENTIFIED FROM THE TRANSCRIPT · source
“The world of investments. And again, leverage is the root of every demise. It is. It can work for you for a long period of time. But when it works against you and there's a margin call like happened to long-term capital, it's over. And their portfolios are taken on the other side. And those brokers will turn on you in a second when they realize that they're now at risk. So I think understanding that no trade's ever as good as it appears, that all good things must come to an end to a degree, but it was more about, I think, the egos, again, so it doesn't matter that it's Russian ruble. It could be internet stocks, it could be subprime mortgages, it could be whatever. And the other thing is that one of the things I really look for is how do people get paid? So if I'm looking at a company that has a sales force out there that gets paid on commission, so forth, or gets paid by duping customers at the cash register to buy a warranty on a product, right?”
2017-04-25 · Invest Like the Best · Danny Moses - The Big Short and Beyond - [Invest Like the Best, EP.34] · IDENTIFIED FROM THE TRANSCRIPT · source
“My uncle got me an interview in there in 1996, I want to say, and it was over in Greenwich. And there was a room. They go, Danny, do you know Delta? I go, sure. I know Delta. Do you know gamma? And I go, yeah. He goes, do you know theta? And I go, sure, decay. He goes, how about Vega? It was something like that. I go, what do you mean Vega? And they take me in this room and there's like a war room. Meanwhile, Schollz is walking down one row. I'm like, hold on a second. So prior to the book coming out and the crisis, I actually got to meet the people in brilliant minds, obviously, and very good people. But that book changed the way forever that I, or the incident and looking back, changed the way that I approach anything. It's that no trade is as good as it appears. Leverage will always bury you in the end if you have the wrong trade on. Egos always tend to get in the way of a very good story. And eventually those things always unwind. So there's a cycle of life to all the, you know, it doesn't matter again what product you're trading. So it really changed the way that I viewed”
2017-04-25 · Invest Like the Best · Danny Moses - The Big Short and Beyond - [Invest Like the Best, EP.34] · IDENTIFIED FROM THE TRANSCRIPT · source
“I would say it was the JDS unifase that I mentioned before SDLI merger was a merger back, I don't remember the year it was, I'm going to say it was 1999, maybe 2000 somewhere in there. And I remember having done the bottom-up work on both companies, that both things have started to turn down. And both companies have started to turn down. And they merged with each other. And the stocks both went up at the time. And I remember thinking this isn't right. This math can't work. There's not enough, there aren't enough cost cuts, so to speak, at the time. So that was one of them. But what really changed the way I looked at investments was a book, The Rise and Fall of Long-Term Capital, when Genius Failed, Roger Loenstein, which is the best book about, it doesn't matter that it was about rubles and currency crisis. It mattered that it was the egos of the people, the willingness of the sell side to trade for free because it was an honor to cover these guys. I was in long-term capital's office.”
2017-04-25 · Invest Like the Best · Danny Moses - The Big Short and Beyond - [Invest Like the Best, EP.34] · IDENTIFIED FROM THE TRANSCRIPT · source
“Stock and not what the earnings were. What basket is in it? Long-winded answer to your question, but at the same time, we want to find companies that if they succeed the Sox can triple, and if they don't, they're out of business. There is no, it's zero sum in that world.”
2017-04-25 · Invest Like the Best · Danny Moses - The Big Short and Beyond - [Invest Like the Best, EP.34] · IDENTIFIED FROM THE TRANSCRIPT · source
“Three longs, three shorts that do exactly what these guys do. So find the best and the worst in each of the six sectors that JP Morgan plays in and go after those six companies. And to us, that was kind of our strategy. And unfortunately, our return's been fine. Nothing spectacular is that fundamentals, again, haven't mattered. Or it's just taken longer than you would have thought. And our investors timeline may be different than ours. So I think what you're seeing now and the hedge funds that are staying around are going to survive have to accept lower fees. But what they should do is get longer duration, capital. So if you go from 2.20 to 1.5 and 15 to 1 and 10, as that's coming down, I think the only logical thing is to ask for larger lockup so that you have much longer timeframe for these things to play out. And that's what's also been going on in the market. You know, these baskets of also, which we didn't talk about, which are the same as ETFs, but Goldman Sachs has all these baskets. What basket is?”
2017-04-25 · Invest Like the Best · Danny Moses - The Big Short and Beyond - [Invest Like the Best, EP.34] · IDENTIFIED FROM THE TRANSCRIPT · source
“The best in credit card if you're JPMorgan, you can operate the best in your CNI book if you're JPMorgan. You can be the best at what you do, but your alpha maybe is very small, in our opinion, and our whole idea at SeaWolf was don't raise too much money, so cap yourself at $500 million in assets so that you can go play in small and mid-cap names and really no need to trade the Bank Americas and the JP Morgan's, except at the inflection points oversold, overbought, and so forth, and really find the best management that we think runs a particular company, the best industry with the best growth. It could be in student loans. We could have a long and a short in the student loan group. You could have a long and a short mortgage insurance. You could have too long too shorts. We never looked at it that way. We didn't need a long to have a short. We were just looking at an absolute basis, and it just kind of works out. And Puerto Collins, my former partner, always had the best example. He goes, why would I trade a JPMorgan when I can create six companies”
2017-04-25 · Invest Like the Best · Danny Moses - The Big Short and Beyond - [Invest Like the Best, EP.34] · IDENTIFIED FROM THE TRANSCRIPT · source
“They're going to be in trouble. If they don't have enough in reserves on their balance sheet, then we've seen, we still see this all the time. Of course, the stocks don't go down. But we see stuff coming down the pipe. It's just a question of timing. The big banks, for the most part, it's a rate trade. They're all kind of grouped together. There's not a lot of different”
2017-04-25 · Invest Like the Best · Danny Moses - The Big Short and Beyond - [Invest Like the Best, EP.34] · IDENTIFIED FROM THE TRANSCRIPT · source
“Very good question. Like I mentioned before, the specialty finance group, so the non-deposit funded banks, so to speak, that don't have access to our deposits to go, as we saw with the whale trade, that got in trouble, JPMorgan, right? You're using customer deposits to go. You're not allowed to do that. So companies that have a unique strategy within a certain sector, again, whether it's going to be auto or mortgage or mortgage insurance or whatever. Someone that doesn't have access to an endless amount of capital is dependent on the securitization markets to get funding. So for us, it becomes, what is the rate you're willing to accept in that securitization market? That's your cost of funds, basically. And then how are you running your business? How are you underwriting your business? So most time we're talking about it's something in the lending space that where you and I are talking about. And if you can find out the trends or the way that they're running their business, you can easily see what's going to happen down the road. If they're growing too quickly,”
2017-04-25 · Invest Like the Best · Danny Moses - The Big Short and Beyond - [Invest Like the Best, EP.34] · IDENTIFIED FROM THE TRANSCRIPT · source
“Or miss at various firms. What's also happened, I just want to add this, certainly in the hedge fund land, is hedge funds have come much more dependent on their brokers to raise them capital, to lend them money to for shorts. And that whole business prime brokerage business has been now consolidated to two or three firms. So you got Morgan Stanley, Goldman Sach, JP Morgan, but Deutsche Bank's been slowing down and backing out credit Swiss and so on. So you're kind of prisoner to those firms also. So you need to pay those firms X amount. You're going to use their resources more. So things are pyramiding a little bit towards the top as far as buy side accessing sell site at the same time. That being said, you always have these spin outs and these smaller unique broker dealers that can provide in various sectors.”
2017-04-25 · Invest Like the Best · Danny Moses - The Big Short and Beyond - [Invest Like the Best, EP.34] · IDENTIFIED FROM THE TRANSCRIPT · source
“First and then go to, I think, to the street to see. So there are still some great ideas generated out of the sell side. There's some great analysts that are out there, and I can really only speak for our sector, financial services, that will throw you good ideas. Now, people, though, need immediate gratification. If the idea doesn't work within an hour or a day or so forth, that's where we've gone. It's about immediate returns. And they'll say, oh, you were wrong. No, the thesis may be playing out over a period of three to four quarters, and you're judging that call over a period. So you can actually weed out the good buy site analyst and the good sell site analyst at the same time through the same process the ones that are willing the ones that understand the dynamics so the ones that don't on either side won't be around forever the ones i like to call the athletes will always survive the roaches of this business so when we do have a washout on the market at some point whether we do or not i don't know but when we do the survivors will be those people the people that truly understand fundamentals so you know i think the value is really”
2017-04-25 · Invest Like the Best · Danny Moses - The Big Short and Beyond - [Invest Like the Best, EP.34] · IDENTIFIED FROM THE TRANSCRIPT · source
“A hundred percent, yes. For the most part, I think the great analysts that are on the buy side use every resource they have to them. Many don't want to be confused or swayed a certain way. Like I said before, if I being on the buy side and if I love a name, I would search out the person that had a cell rating on it. If I hit a name, I would seek out the person that had a buy rating, right? That's what you're supposed to do in terms of finding the other side of your trade. As I mentioned before, the access to management. So if the portfolio manager or the analyst knows he has to pay a certain firm because he does want to see this company and he doesn't want access to them, it's kind of a quid pro quo. You have to act like you like the analyst, but they may indeed use it. So I think it's a tool now more than a necessity, these sell site analysts, because they are compromised. And again, not all of them, but many of them are. And so I think as an analyst on the buy side, you're doing yourself a disservice if you don't do your own work.”
2017-04-25 · Invest Like the Best · Danny Moses - The Big Short and Beyond - [Invest Like the Best, EP.34] · IDENTIFIED FROM THE TRANSCRIPT · source
“And then people would immediately extrapolate the 12% to mean, oh, 12% every quarter is going to compound at 60%. And so there was time periods. I would say really during the tech bubble. So I got to live through the tech bubble and the subprime crisis bubble. Like I got to see a lot of iterations. You know what? It doesn't matter what the product is. It doesn't matter if it's tulips in the Netherlands. In 1800s, it doesn't matter if it's cotton and cotton in the 20s. Jesse Livermore style, it doesn't matter what it is. It's the same. People behave the same regardless. They want to believe what they want to believe. They'll chase when they feel like they're missing something, so forth. So there was a lot of those I'd have to think back. But again, I go back to your point. It was more about access to information at the time. It wasn't as prevalent. So you depended upon it took a lot more detective work to find out what was actually moving markets.”
2017-04-25 · Invest Like the Best · Danny Moses - The Big Short and Beyond - [Invest Like the Best, EP.34] · IDENTIFIED FROM THE TRANSCRIPT · source
“Actually, now that I just remember Zheng Jahan, Jim, Jungjahan, one of the greatest guys and one of the greatest analysts at the time, he covered SDL, JDS Unifase, and all these companies that were building telecom fiber. So you'd have level three who was renting it out. You'd have, you know, you'd have all these companies. And the time was like telecom fiber was the greatest thing of all time. And so if you earnings were growing exponentially on these companies, or I should say revenues were growing exponentially on these companies because companies were coming to them, telecom companies were coming to the fiber companies to lease the fiber so they could use it in their networks. Well, you could actually do the math that as much fiber as people have been talking about that was possible would wrap around the earth a million times. There was just too much of it out there. So these stocks would go up literally 20% a day, 32% a day on an analyst like Jim doing a revenue update saying I'm going to take my revenues up 12% for the quarter. It's too low.”
2017-04-25 · Invest Like the Best · Danny Moses - The Big Short and Beyond - [Invest Like the Best, EP.34] · IDENTIFIED FROM THE TRANSCRIPT · source
“They'd move markets because there was as much information couldn't access as much information as quickly on Twitter and so forth. Now it comes and goes in four seconds somebody's already traded it before the news comes out. So I'm trying to think of times where back to Steve's example in the auto, right? The stocks were probably down 25% that day when people are calling in and saying what's going on are you guys saying something and so forth. There was time periods during the crisis where Fannie and Freddie were trading down a lot so people couldn't figure out what was happening and we would understand what was happening exactly that the losses were mounting. We were looking at monthly data again equity guys at that time weren't looking at any credit data. They were just looking at earnings per share. So we're so back before information became as easy to access as it is now to your point you were able to have market moving events in various names. I mean there was some, I'm trying to think of all the analysts that we had back in the day, a lot of telecom, a lot of media. There was one guy.”
2017-04-25 · Invest Like the Best · Danny Moses - The Big Short and Beyond - [Invest Like the Best, EP.34] · IDENTIFIED FROM THE TRANSCRIPT · source
“And I'll add one thing to that, which you've touched on briefly with the REITs, is that a lot of these equity ETFs are fixed income ETFs. And that's a big problem. And the SEC, well, now, I don't know if there is an SEC any longer. I think they were just taken out. But they were looking into the mismatch between the duration of the assets in the ETF versus the ability to redeem in four seconds. And there's a massive mismatch. And so you've seen a couple times where in various bank loan ETFs, I would even say there's been times where people have panicked and there hasn't been the time yet where mom and pop have opened up their portfolio and seen a real change in understanding what's going on, what just happened to my bank loan, ETF. But you have an equity security that's trading and fixed income. To me, that can't end well. So again, I don't think people understand, to your point, they see yield like, oh, great, 7% a year. I'll just buy this ETF. That's great without any understanding of what they truly own.”
2017-04-25 · Invest Like the Best · Danny Moses - The Big Short and Beyond - [Invest Like the Best, EP.34] · IDENTIFIED FROM THE TRANSCRIPT · source
“Right Look at this upprime mortgage rates. Have those that have been in existence, they were 40% dividend yields at the time before they went out of business. Correct.”
2017-04-25 · Invest Like the Best · Danny Moses - The Big Short and Beyond - [Invest Like the Best, EP.34] · IDENTIFIED FROM THE TRANSCRIPT · source
“Understands the entire quantity and gets it and it'll be there to protect everyone. What I'm saying is that there is something that really needs to happen here. And so I think we're going to come full circle back to the research question. But unfortunately, the only way you're going to get back full circle is if people figure out how broken the markets are.”
2017-04-25 · Invest Like the Best · Danny Moses - The Big Short and Beyond - [Invest Like the Best, EP.34] · IDENTIFIED FROM THE TRANSCRIPT · source
“There's all kinds. So as a CEO of a company, I'm no longer care about meeting with Fidelity. I care about meeting the criteria of what these ETFs have in them. So if the ETF, if my biggest ETF is based upon earnings momentum, well, and I'm reporting non-gap, and I know that the ETF is following my non-Gap earnings, I can make up whatever number I want. That's going to make my stock price go up. So in what universe does fundamental investing matter in that now it'll all come out in the Wash eventually, right? But so I guess fast forwarding into that and bringing that all the way back to research, research right now fundamentally at this moment has never been less important. It will be important again. There is no doubt that we will transition and circle back to bottom up investing at some point. The irony in that is I feel that in order for that to happen, the market needs to have a major correction and an unwind, except for O'Shaughnessy, which completely”
2017-04-25 · Invest Like the Best · Danny Moses - The Big Short and Beyond - [Invest Like the Best, EP.34] · IDENTIFIED FROM THE TRANSCRIPT · source
“Taking over the landscape in terms of what's driving, if you look at some of these companies, just pick a company, random company in the S&P, there's a chance and probably more in the mid-cap small cap. There's a chance that seven of the largest ten shareholders of that company are ETFs. And so you're better off knowing what ETF owns your stock than what this company even does. And that's scary to me. And that's when fundamental investing goes by the wayside. And so you haven't asked this question, but I'm going to take this to the next step from an earnings quality perspective that's in the marketplace. If you move to a non-gap, which I'm taking us completely off subject, but gap earnings versus non-gap earnings, and once you get on the non-gap train, obviously 99% of the time your non-gap earnings are higher than your gap. You're excluding Stock Comp and all these things which you need to live and breathe, so forth, these ETFs, this is where I'm going, are driven. There's momentum ETFs, there's earnings quality ETFs, there's dividend ETFs.”
2017-04-25 · Invest Like the Best · Danny Moses - The Big Short and Beyond - [Invest Like the Best, EP.34] · IDENTIFIED FROM THE TRANSCRIPT · source
“It is completely bottom-up and objective. Now, there are a couple like autonomous, which is a great firm that follows our sector financials. It's doing a great job. And they're completely agnostic. They get no investment banking fees. If they can get a company to come around, they do it if not, but they're just putting out data. And they're starting to build a larger following. And I think that just to take it one step further, just in the market, you're obviously in the business, so you understand this. With more and more computers,”
2017-04-25 · Invest Like the Best · Danny Moses - The Big Short and Beyond - [Invest Like the Best, EP.34] · IDENTIFIED FROM THE TRANSCRIPT · source
“Analysts that are turning a blind eye, I believe, to fundamentals in companies and listening to what the CEO tells you as opposed to doing their own work, knowing that they're getting compensated. It's all how you get paid in this business. If you get paid because you have access to managements and the big Boston funds say, hey, you're in our top quartile now because you got us 12. Well, CEOs that are only going to be willing to travel with you if you have a buy rating. I always try to get that list because I would short a lot of them. Because if I was a CEO of a company, I would want to travel with a guy that has a cell rating on me. Of course. Right. Why do you have a cell rating? So there's a lot of gamesmanship that goes on, but I would say this is the worst in aggregate that Wall Street research right now has ever been because I believe it is compromised. Listen, there's great analysts out there. There's great firms out there. There's people that really do good work, but it's hard to get a lot of momentum and stability at a firm.”
2017-04-25 · Invest Like the Best · Danny Moses - The Big Short and Beyond - [Invest Like the Best, EP.34] · IDENTIFIED FROM THE TRANSCRIPT · source
“Algorithmic Trading Universe with not a lot of high touch trading, that's choppier, that's harder, with the commission rates dropping from what was an eighth to six cents to four cents to two cents. At the same time that the only reason many of these analysts are covering stocks is get access to the managements. You also had a lot of these small boutique-y brokerage pop up that were trying to be independent analysts that did not have investment banking at the time. And they realized how hard it was to survive when you're independent because inevitably you're going to have sell ratings. If you're doing real bottom-up work and you're not going to get access to management, you're not getting any banking fees. So great on paper, but not strong on execution. And we like the independent. I mean, I love some of these independent firms which have emerged today, and some are going to make it. Some will be bought by the larger firms probably. So I've seen a really disturbing transition of”
2017-04-25 · Invest Like the Best · Danny Moses - The Big Short and Beyond - [Invest Like the Best, EP.34] · IDENTIFIED FROM THE TRANSCRIPT · source
“banking revenues to buy ratings on stocks so that I can have the CEOs of those stocks that I'm covering to visit portfolio managers so that I can get paid. So pick your poison on either one, okay? So I just skipped like eight years, but that's really where we had gone. And in the same time, when Dodd-Frank comes in and the large banks are unable to really prop trade any longer and make money in various other ways, the capital starts shrinking at these firms. So from a trading perspective,”
2017-04-25 · Invest Like the Best · Danny Moses - The Big Short and Beyond - [Invest Like the Best, EP.34] · IDENTIFIED FROM THE TRANSCRIPT · source
“Great question. So when I got into it, this was the DLJ was kind of the premier platform, right? It was entrepreneurs. You were paid on commission. It wasn't banking first. It was research driven first. And so when I got in, Oppenheimer was a little miniature DLJ. It wasn't small, but it was kind of run that way, right? Entrepreneur, great sales traders, great traders, great analysts and so forth. So it was set up well. And then obviously fast forward a few years, we had the technology issue with Quatron and so forth all over the street where it was, all right, my research is based upon how many banking fees can I garner. And we went through that whole process and so forth. So we re-emerged later with, okay, street's always going to pay, when I say the street portfolio managers are always going to pay for very good research and so forth. But it became more about an access to management will pay you for access to management. And so we moved from buy ratings on stocks to generate investment.”
2017-04-25 · Invest Like the Best · Danny Moses - The Big Short and Beyond - [Invest Like the Best, EP.34] · IDENTIFIED FROM THE TRANSCRIPT · source
“By the way, he would have been right eventually, right? But here I'm making one call in TechLand that things have never been rosier. Oppenheimer was a big tech had a big tech platform in banking. And then here's Steve on the other side, quote, ruining the investment banking business for the financial banker upstairs, right? So you have this ongoing. So I may call Amazon's going to 1,000. This is our morning called Amazon's Going 1,000. And the following six stocks are going to zero. Hey, it's Danny. Call me if you have any questions. I'll be at my desk. So it was an ongoing, but having that variety. So having other sectors to cover was great because you needed stuff to other stuff to talk about. But I actually love the whole cell site experience.”
2017-04-25 · Invest Like the Best · Danny Moses - The Big Short and Beyond - [Invest Like the Best, EP.34] · IDENTIFIED FROM THE TRANSCRIPT · source
“Area of all, I think, in the entire stock market. And that's not just because we have focused on financials for so long. Non-deposit funded institutions have the ability to do great things. And if they get greedy, they're going out of business. So it doesn't matter if it's auto, doesn't matter if it's mortgage, right? It doesn't matter what area you're in, what you're lending in. If you don't underwrite correctly, then it's over. That going through with that type of call was great because it was a great learning experience. And being on the sell side, I loved it because you felt that you were an extension of all the portfolio managers that were paying you as a broker to find them ideas and to search for it. So calls like Steve's at the time, there was a handful of those on the street. No one makes those calls the following six stocks are going to zero. I really think that's exactly what he said. So imagine as a salesperson, okay, well, I guess I'll just go with that then. We had Henry Blodgett at the time. So here's all this going on, right? And Henry Blodgett's out with a, you know, a thousand dollar target on Amazon.”
2017-04-25 · Invest Like the Best · Danny Moses - The Big Short and Beyond - [Invest Like the Best, EP.34] · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, they were ignoring the raising capital thing and they were still producing these loans at a very high eclipse. So that was just math. And so the beauty of that is as a salesperson, when someone gives you that information, you make that phone call, and I used to get, you know, you get hung up on or you can't get the portfolio manager on the phone. And I may find an owner. So I would search out to see who owned these stocks, right? And I may cover that hedge fund or mutual fund or not. And so I would call up, hey, Patrick, listen, I see that you guys own $450,000 of Ames Financial. I really think you need to get Steven Vinney in your office, Andor, let me just pitch this to you for 30 seconds why I think you should sell it. Not even short it. You need to sell the position. You may ignore me. You may want. But whenever I got Steven Vinnie in a room with that person, inevitably that person would sell it. And if they did not own it and they were hedge fund, they would short it. It was so compelling. It's just numbers. Really, then you apply that to what happened later on in the mortgage. It doesn't matter what it is. Specialty finance is the most interesting.”
2017-04-25 · Invest Like the Best · Danny Moses - The Big Short and Beyond - [Invest Like the Best, EP.34] · IDENTIFIED FROM THE TRANSCRIPT · source
“So, I would say that when you get hung up on whenever you make a short call, pretty much on the street to anybody. But I would say, like I had mentioned, in the auto land, data is the data, so it's produced monthly. And you get to see the monthly rolls from Moody's and S&P because if you have outstanding debt in the marketplace in the form of a securitization, then you have to put this data out. And the data shows you what your loss rates, what are your delinquency rates, and how much cash do you have to back up these pools. And so it was pretty obvious that the underwriting that had been going on in kind of the mid-90s, 96, 97 was starting to catch up because auto loans, as you know, are two to three to four years. The loan to values go up, and all that was occurring. So all that data was available. So what Steve and Vinny saw at the time was it was inevitable that the companies would either have to raise capital or go bankrupt.”
2017-04-25 · Invest Like the Best · Danny Moses - The Big Short and Beyond - [Invest Like the Best, EP.34] · IDENTIFIED FROM THE TRANSCRIPT · source
“Came out of that conversation. And so from that point, I dealt with Michael again. And really that was more me than anyone else on the team at that point because I was trading. And so that kind of relationship. So then Flashboys came out a couple years later. So I'm still talking to Michael a lot. So I had nothing to do with his latest book, but we're friends and we talk. He's always looking for the next great story. So we talk from time to time.”
2017-04-25 · Invest Like the Best · Danny Moses - The Big Short and Beyond - [Invest Like the Best, EP.34] · IDENTIFIED FROM THE TRANSCRIPT · source