Tag Archives: Paul Singer

When the cure is part of the disease

Have you seen that issue in your life, the claim that the cure is worse than the disease, or perhaps that the cure is not worth the disease. There are medical situations where this applies and they are usually used in cases of huge risks, but it is always in a stage where it is about optionally curing the person who got that winning lottery ticket, and the cure will hit him or her full on. It happens, yet what is the stage where the cure is the disease? I am not talking about a vaccine where we are making the body stronger by fighting a weaker version of the disease, no this is a stage where we give the person Ebola or Hantavirus to let the body cure it. The problem becomes that once you have the virus you are actually sick and the complications start from that point onward.

This is the stage we are confronted with in ‘IMF accused of ‘reckless lending’ to debt-troubled states‘ (at https://www.theguardian.com/business/2019/oct/07/imf-accused-of-reckless-lending-to-debt-troubled-states). It is not merely “the Fund broke its own rules by not ensuring sustainable debt burden“, I personally believe it to be a much larger problem in all this. It is also not merely: “encouraging reckless lending by extending $93bn of loans to 18 financially troubled countries without a debt restructuring programme first“, I believe it to be a larger play to push revenue away from vulture funds to create a systemic problem for these nations to become part of the consumer feeding frenzy to banks for generations. when we see: “Debt sustainability has come into the spotlight over the past year after the IMF controversially lent a record $56bn to Argentina even though its annual debt repayments far exceeded the Fund’s own limit” the given excuse ‘The IMF said Argentina, the second biggest economy in South America, was a special case‘ the handed excuse should be casted aside and given no value at all. the supporting evidence is seen in “The crisis intensified when, on 5 December 2001, the IMF refused to release a US$1.3 billion tranche of its loan, citing the failure of the Argentine government to reach its budget deficit targets” (source: https://www.nytimes.com/2001/12/11/business/argentina-scrambles-for-imf-loans.html). When I asked about the situation about 5 years ago from these so called Australian ‘economic reporters’, none of them had any level of a clear answer for me. The case was clear 5 years ago when certain vulture funds issues got to the surface, and now 17 years later they are giving out $56 billion, whilst refusing a $1.3 billion option 17 years earlier. There is a much larger flaw in all this and there have been whispers (read: gossip) that the IMF is very much into facilitating towards the needs of Wall Street and the financial operators out there. The bottom dollar line of Wall Street needs to be met and no one cares how it is done.

the stage becomes a lot less acceptable when we consider the stage Afghanistan; Angola; Cameroon; Central African Republic; Chad; Ecuador; Egypt; Ghana; Jordan; Mauritania; Mongolia; Pakistan; São Tomé and Príncipe; Sierra Leone; Sri Lanka; Tunisia; and Ukraine, all whilst Egypt, Pakistan and Ecuador are regarded as high risk, I personally feel that the risk factors of Ukraine, Sri Lanka and Jordan are also way above normal with only Jordan being in a better long term position however, if Jordan does not address its water shortage issues, Jordan could drop into the ultra-high risk group a lot faster than anyone could state: ‘Would you like a glass of water?‘, and in all this we see a larger failing.

It becomes a more visible issue when we see the IMF spin doctors at work. We partially accept the statement: “More than half that amount is accounted for by one programme – Argentina, which has unique circumstances“, yet I am much less forgiving when I see: “We have clear guidelines about not lending into unsustainable debt situations and all programmes require approval by the IMF’s executive board“. It is my response that they publish clearly all their guidelines (and policies), but we will not ever get that. In addition, the Argentina matter after the Vultures were done with it is also a failing of the highest degree, the fact that over 17 years $1.3 billion has required $56 billion implies more than merely 4,300% more funds needed. It gives rise that over 17 years a debt increase of 23% year on year was accumulated one way or another. It is a direct optional sign of complete and utter governmental financial malfeasance. It is a failure on a scale never seen before and the fact that no one stepped in shows the larger failure by the IMF. You see, the overall lack of illumination also constitutes evidence that the players wanted this to be kept out of the lime lights.

In addition, when we look at the 17 nations, when we ignore the obvious three, we see a larger issue in Jordan. Jordan stepped up and towards the issue that there are well over 1.4 million refugees in Jordan and Jordan was not ready in any way shape or form to deal with that. In their current state the Jordan desalination plants will not be able to keep up (so far it cannot keep up) and the fact that the Jordan population grew by 14% in 2-3 years due to the refugees was never clearly illuminated and now Jordan has a larger issue, even if another desalination plant is added in the Gulf of Aqaba, the issue will not diminish and the loans towards Jordan would become unsustainable. In addition, when you consider Sri Lanka, the newspapers all gave the same quote a month ago: ‘Sri Lanka’s economy has shown a ‘fair bit of resilience’‘, they quoted that to the letter, yet who was feeding them that information? Only 14 hours ago we see: “Sri Lanka’s tourist arrivals in September were down 27.2% from a year earlier“, those factors did not really change did they? When we consider a month ago, we see an economy that is getting hit hard, especially when Reuters gives us: “a sixth consecutive monthly fall“. It seems to me that Sri Lanka are betting on the required roll of the dice, when we get the clear indication that the dice are loaded and it seems that they are loaded towards the needs of the IMF/Wall Street and not in favour of Sri Lanka.

When we add the Reuters information: “Arrivals in the five months from May to September were down 44.4% to 468,737 from 843,569 a year earlier” we get a level of clear indication that the quote: ‘Sri Lanka’s economy has shown a ‘fair bit of resilience’‘ should be seen as media BS. And there is more regarding Sri Lanka, the quote less than 24 hours ago is “Sri Lanka’s Finance Minister Mangala Samaraweera said all the money the current government has borrowed since 2016 was to repay the loans of the previous government of Mahinda Rajapaksa“, if that is true, then there are additional questions towards the IMF in regards to their spin doctors giving us: “Our decisions to lend to countries are not simply based on numerical thresholds, but on comprehensive debt sustainability analyses and policies needed to address economic imbalances and debt burdens“, which in the case of Sri Lanka shows a much larger issue, the fact that the quote on repaying from a previous government and that loan has been in place for 3 years shows a larger problem, so how much was given to them? In addition to this I wonder how much of the $56 billion is going to Elliott Advisors, so much is the IMF helping out Manhattan bad boy Paul Singer? In my view, the question becomes: ‘How much of the $56 billion goes to Hedge funds manager Paul Singer?‘ Under those conditions I reckon anyone could get their fingers on the penthouse in Sky Lofts building in Manhattan’s Tribeca neighbourhood. If it is good enough for Bobby Axelrod (Damian Lewis), it is good enough for the Lawlordtobe (Lawrence van Rijn), and I could do with a change of scenery, especially if Google buys my 5G IP portfolio.

So if my new address becomes 145 Hudson St New York, NY 10013, I promise that I will not consider the ’13’ in my zip code to be a bad omen and at least I will not have used the IMF to gain my fortune (although I will admit that I am perfectly willing to do that too #weallneedtoeat).

When we see these two issues and we see that I have not even looked at the 12 others (three were known issues) I wonder when any reporter will give us the entire down low on these so called analyses and policies that the IMF has in place, I feel with some level of certain ty that I will find a lot more issues under the waterline than the IMF spin doctors will be able to hide. Especially when we realise the quote in the Guardian: “concerns that a general election later this month will oust incumbent president, Mauricio Macri, in favour of the populist Alberto Fernández and his running mate, the former president Cristina de Kirchner, triggered a flight of investors, a run on the currency and sent the interest rate on the country’s publicly traded debts soaring“, more important, under that change the entire case which would have been part of the $56 billion ‘donation’ that we see through “Argentina agreed to reduce its fiscal deficit to 1.3% of GDP this year, down from 2.2% previously and a balanced budget next year“, especially when we see the required drop of 0.9% deficit, I cannot remember any elected official making that part of their campaign, it tends to leave them unelected at the polls, so in all this, not only does the JDC have a point, we see that Sarah-Jayne Clifton, director of Jubilee Debt Campaign should be considered to be a lot more serious and is in my personal view entitled to massive dose of limelight from the global media, so that she can ask the questions that the IMF would have to explain in a clear and transparent way, would you like to take a bet on the chance of that actually happening?

I believe that people like Paul Singer will set that bet to an estimated 250:1 chance (of it not happening), and as he personally was able to acquire $3.5 billion, I am not putting my hopes on high here. I merely wonder if the people in Argentina have any decent level of Christmas to look forward to this year and the many years that follow.

 

 

 

 

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Drop the Mike, Ashley!

Welcome to the issues on a man that I do not know. This is not the most straight-forward of starts, yet the man who has been valued more than once and that verdict is several thousand stacks of £1,000,000. The man who owns Newcastle United, which means he gets the swanky seat in the stadium. Now, we can understand that this man founded Sports Direct. When you get enthusiastic about sports, you can bet that it will be part of your life. There is no denying it and as it became a good success, I would state ‘good for him’. Yet, the focus on him started in an entirely different way. It started with him getting in on the videogame action by getting a near 26% stake in the franchise ‘Game‘. That brand did not go well here in Australia, yet I always found it to be a decent store and the people working there knew their games and consoles. I have seen them in the UK as well and a similar feeling remained on that experience. Here it did not go well as they were up against EB Games (who grew aggressively at that time) and JB Hifi that was an established chain of quality stores, so they had a murder competition, they did not make it (for the most). Yet all this is now in play when I read “Mike Ashley swoops on video games retailer after profit warning forced by shortage of Nintendo Switch consoles“, this is a weird issue. We get ‘profit warning‘ in regards to a situation of shortage. Basically the story becomes, we are short on revenue/profit because we can’t get any more consoles, they are sold out, and everyone wants one! Which at present is pretty much the truth of the desire of people and their need for the Nintendo Switch, it is actually THAT amazing.

The result was “Game shares rose by more than 15% to 28p on the news, and later traded at 26.5p (up 9.3%), giving it a market value of £47m“, apart from the 28p not sounding like that impressive, it is the end result of +9.3% that is staggering. You see, I have issues with the entire part where ‘profit warnings‘ are labelled in the way they were. You see, the entire mess (as reported) gives no clue on the actual situation (well, the one as I personally see it), I do not care how people quantify one way or the other; it is the addressing of profit warnings.

I offer in evidence the following pieces

Part 1, Sony (at http://www.playstationlifestyle.net/2017/01/03/uk-2016-sales-chart-2016-game-sales-down-13-infinite-warfare-the-2-best-selling-game-of-the-year/) gives us ‘UK Sales Chart: 2016 Game Sales Down 13%, Infinite Warfare the #2 Best-Selling Game of the Year‘. In this we see: “The major titles of 2016 also disappointed when compared to 2015’s, with Call of Duty: Infinite Warfare (the second biggest title of 2016) lagging 31.5% behind Call of Duty: Black Ops 3. In other comparisons, Watch Dogs 2 fell just short of the 500,000 copies Assassin’s Creed Syndicate sold in 2015, Steep performed worse than Rainbow Six Siege, Gears of War 4 couldn’t reach the heights of Halo 5, and Final Fantasy XV was outsold by Just Cause 3.” For those who do not talk games, let me boil it down to the first item is that overall less games were bought. In my personal view, the overall quality of games was not great. Even as Watchdogs 2 was a good step up from the previous game, yet many gamers felt too burned by the first game. I believe that the second game was good, it has online and offline options and people were not forced to go online here. Regarding the other title, I am not a fan of Call of Duty, I know many are. the fact that a game like that became ‘the’ game is not entirely on the fact on how good their Infinite Warfare was, it is more that the other games were way below the line. The fact that the last four larger releases this year alone could be bought for 50% down, including the special editions with figurines is also a changing trend. People are less willing to just shell out the cash for games, reviews are more competitive and even though there are really good reviewers, there are a lot more really bad reviewers and they tend to get plenty of exposure. Yet in the end, the games were for a larger extent not up to snuff. The reviewers ‘deserve’ extra attention as some are more and more about the larger players, whilst some of the true gems have been largely ignored by plenty of people. Nioh is perhaps one of the most visible ones. Like Infinite warfare it is a specific game. I actually like this game, but I loathe the challenge it contains at times (they are really hard games). Some saw that is was some Dark Souls games and plenty of people ran for the hills as this is a game for actual gamers, not for wannabe’s. In my view there are several similarities, yet the only thing that the game Nioh truly has in common with Dark Souls III was its graphical excellence.

So here we see two elements that would push any revenue down.

Part 2, Pushsquare. At http://www.pushsquare.com/news/2017/01/ps4_physical_game_sales_increase_as_uk_industry_suffers_blow, we see more confirmation: “Overall sales down 13.4 per cent“, the mere subtitle and the direct impact that matters, less sales overall, this is not entirely correct, but I will get to that in a moment. The next quote is, as I personally see it wrong, but still essential. With “Bethesda’s Dishonored 2, for example, couldn’t come close to matching the success of Fallout 4, while Square Enix’s Final Fantasy XV somehow failed to outsell Just Cause 3.” My issue is that no matter how you slice it, Dishonored 2 is a little bit of a niche game, more intent for those who love stealth gaming (me being one), it is graphically superb, the game is a little steampunk in a very good way, but for the most, it is highly original and exquisite in quality. It is not fair to compare it to a game that has millions of followers and has been revered since its original release (Xbox 360, PlayStation 3 and PC) on 11/11/11, the date that some will carry with them for all time. An established success that was bought on the console be new players as well as nearly everyone who had the previous version. The game is good for months of gameplay, so a game that sells itself due to 5 years of raving reports. The second is equally unfair. I myself was never a FF fan, but I have always admired the originality and scope of the stories and the near perfection each game brought. Even I am surprised that Just Cause 3 outsold it, perhaps merely because of the over the top explosions and things you can do with the game? I cannot tell what the exact reason is, yet the second part implies that the gamers are diversifying in different directions, changing the gaming requirement. It is almost like there is a new generation taking over the baton of gaming and it has different tastes.

Yet he best is left for last, in part 3 we see Retail Week

The mention (at https://www.retail-week.com/sectors/entertainment/game-issues-profit-warning-as-uk-sales-falter/7022184.article), where we see “The specialist retailer, which posted a slump in its interim profits in March, said anticipated supply in the UK of the latest Nintendo console had failed to meet expectations, negatively impacting overall sales“, is a first issue. In this the mention ‘anticipated supply‘ beckons the question, so did you order enough or not? As the experts, you should have seen the impact it would make. The E3 and other events clearly showed that Nintendo was blowing both others out of the water. In addition we see “alongside ongoing poor sales of Xbox and PlayStation devices“, now we can argue about Xbox for several reasons, so let’s take this out of the equation, the PlayStation part gives the issue. Overall sales of the PS4 and PS4pro are still up by a decent amount, so it now becomes a shifting focus, but I will get to that soon.

For now I will end with the quote “The group continues to actively implement its UK action plan, encompassing improved supplier arrangements, enhancements to the customer experience, further operational progress including cost reduction programmes and disciplined cash management“, yet will not address it yet. Let’s take a look at three more elements.

The first is from the Business Insider which gives us “Sony sold 10 million PlayStation 4 consoles between early May 2016 and December 6, 2016. That puts sales in the neighbourhood of over 1 million sold every month, which keeps it locked in as the fastest-selling PlayStation console of all-time

The second is again from PlayStation Lifestyle with “Taking a deeper look at software last year in the UK, Games Industry points out that nearly 80% of all boxed games sold last year were either on PS4 or Xbox One (up from 66% in 2015)

The last is G24/7 where we see (at https://www.vg247.com/2016/11/14/ps4-console-sales-have-tripled-in-the-uk-following-the-launch-of-the-ps4-pro/) “Sony’s PS4 Pro launched at the end of last week and has had quite the impact on PS4 console sales. According to MCVUK, PS4 sales for the week ending Saturday, November 12, were up 204%. 65% of the total PS4 sales last week were for the PS4 Pro, while the final sales figure for all PS4 consoles was 44% higher than those for the Xbox One.

Now we put the whole together!

We know that sales were massive end of year 2016, especially with a new console and Christmas coming up, all that makes sense. We can also clearly see that overall, the consoles represent the bulk of all game sales. This partially makes sense because that is what we see as flagships in pretty much any gaming store, PC owners have a lot more options to buy in other places and at times a lot cheaper and there is Steam to consider, so that part remains an unknown and as such a much lesser impact to these stores (apart from the selling of steam credit). The fact that the PS4 is surpassing the previous consoles, is debatable (PS2 sold over three times the amount in its life time), yet the overall market trend is that games should be on par and were up by a fair bit last year. So when we go back to the initial start with “Video game retailers have been particularly badly affected by the broader shift away from the high street in recent years, with developers moving to increase their own profit margins selling games as direct downloads“, which we get from the Financial Times (at https://www.ft.com/content/172c3ba1-e880-35e8-9273-957e325cd7f4?mhq5j=e3).

In this there is debate, yet he part no one touches on is how the expectations were set, what they were weighed on and on the given image that sales were down, which had been an upcoming known for close to 2 quarters of a year. The part that the Financial Times gives us is that direct downloads are playing more of a role nowadays. It actually impacts the industry in 2 ways. Apart from buying directly, the additional issue is that consoles have a premium service; most gamers take that because of online gaming and the fact that both systems offer at least 2 free games a month. Microsoft was initially really bad with that (lousy games or games everyone had), they are still not great, yet this month it includes Lego pirates of the Caribbean, which is actually a nice and decent game (and not a large download in console terms). Sony beats Microsoft here hands down with titles like Until Dawn and Life is Strange. In all this both offer decent free games, with a bonus for Sony people as their account will also enable them to get free games for their Vita handheld, all that for around £50 per year, the premium service sells itself to both consoles without any difficulty. All elements that shows the impact of a bad year of games, not consoles, the overall quality of games gives rise to people deciding to just download an average game instead. The interesting part that even as Ubisoft lagged in a few ways, the one game what was awesome in many ways, ‘For Honor’ actually did not do that well, which is a mixed signal that multiplayer games are wanted, yet without a strong one player side, it tends to not make the cut in a top 10, which would be unfairly devastating on the makers I think. All elements that the analysts in this case should have known and realised and as such, when we see ‘would not meet expectations‘, my question becomes: “the expectations of whom and on what foundations?” Now we get to the part I skipped.

With “The group continues to actively implement its UK action plan, encompassing improved supplier arrangements, enhancements to the customer experience, further operational progress including cost reduction programmes and disciplined cash management” I wonder what we are being served.

  • Did they call short because they did not keep an eye on running costs, what arrangements would be needed with suppliers? Were they not up to scrap?
  • Even more customer experience? Were the current settings and anticipations of the competitor not up to scrap?
  • Disciplined cash management? Is cash not managed correctly?

The feedback we got from Game, directly below the image of a sort of smiley ‘Game CEO Martyn Gibbs on the merits of in-store gaming arenas‘ is one that leaves us with the thoughts that Game is going down because they are not on the ball of the game, and the game is passing them by? So in all this Mike Ashley merely flying in to pick up a bargain? In this he better realise fast that Game has an issue and more than one potential issue in play, he also needs to realise that the Games market is a shifty one and in the years before the publishers see clear to push a bigger load to online sales in the next 5 years (depending on where you live), we better consider that top games is a market in motion and it is likely to see a shift that Microsoft and Adobe made some time ago on PC’s, it is not a change that gamers are currently happy with, but it is one that the next generations of consoles will likely face, the game shop is seen as the middle man and they are trying to cut it out to maximise it for their own need to please whatever stakeholders they report on. It is early days now, but in 5 years it won’t be.

In the aftermath we actually need to look where I normally do not go. It is the Telegraph, in this case the business section, where (at http://www.telegraph.co.uk/business/2017/06/30/game-warns-profits-will-substantially-expectations/) we see the generic parts like “following its third profit warning“, we know that Christmas was weak (to some extent), yet in equality when you consider the previous information, the issue is not entirely just ‘weak Christmas‘, it is merely a much stronger competition to some extent and the fact that the cost of living in metropolitan UK seems to be ignored by analysts and those who speculate on how it would (read: should) be. The issue that is stronger is “The shares nosedived to just 21p on the back of the profit warning, valuing the business at £35.6m only two years after it was floated at 200p a share by US hedge fund Elliott Advisors” as well as “Elliott cashed in £101m at the time of Game’s stock market listing by selling a stake and made a further £59m by dumping a further 10pc of its stake just three months afterwards, despite agreeing to a lock-up period of six months” which now also implies that Game got played and not in such a nice way. Yet the bulk of all the sources do not give any clarity of the part that Elliott Advisors was playing, even the Financial Times steered clear of that part. In this, I am now also questioning the setting as given to Game and its senior management. Even as CNBC is giving the notion that Paul Singer, CEO of Elliott Management is just the best invention since Frozen Yoghurt (if we are to believe places like Forbes, CNBC and the Wall Street Journal), I wonder what price we can see the UK pay for getting played to the extent it is getting by the US Hedge market, in that regard should we allow for any US company coming in under false pretences and flood the market so that they can drain the profit quickly and walk away? It seems to me that they tried that in the Netherlands with Akzo Nobel, which had the great benefit of Elliott Management failing (for now), but it shows the extent that as a shareholder Elliott Management will go to get their profit, it seems to me that Game was not nearly as lucky and the fact that the different levels of publications left that side seemingly in the dark corners of ‘them not printing that part‘ is also upsetting (to me even more upsetting is the part that the Telegraph actually did get that info out). The fact that Game has been seemingly under exploitative attack does not diminish the issues as given by some of the publishers by the quotes, Game got caught out, which under the current size and the possible level of possible losses is a dangerous place to be in.

In all this, I am aware of things, but not as much as a person like Mike Ashley would be, so is this his triumph with Game, should we see this as a mere quick victory to see if he can get more out of this than Paul Singer’s place did, or is it an actual rescue and grow attempt? I am not implying one or the other, but as you see the presented evidence, there are a few issues with Game and I believe as such they were set up as the weak runt in the market, whether this will happen twice in a row is something I have no way of telling and I am not implying anything wrong, immoral or illegal. The entire mess is not completely shown by some players and that is what seems to be the actual issue. I remain in an attempt to be protective of the places that feed my need for gaming and there is a positive in having a diverse and competitive market. It guarantees to some degree I get the best games at the sharpest price, which is what every gamer wants, there is no exceptions to that rule.

 

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