The Ledger
Every statement that passed quotation and attribution checks. Mix any filter with any other: certainty 1/5, debate potential 5/5, or both at once.
why aren't all 19 resolved? a statement only gets an assessment when the public record can support or contradict it. opinions and what-ifs never can, and 0 checkable ones are still open, waiting for their date. predictions held up or didn't; assertions are supported or contradicted. on every card: ▮▮▮▮▮ certainty · ▮▮▮▮▮ debate potential. speakers are clickable
Jefferson: Shorting CDO assets only works if the whole market collapses
“I also looked at the value of the option in a CDO, and I said, if I short this, whatever it might be, mortgage bond, ABS bond, into this structure, And the structure never liquidates. I can't get out. And I kind of came to this conclusion that the only way thi…”
Every active TruPS dealer sourced market information directly from Hildene
“Look, I can say with full confidence that every dealer that's in the space right now, and there's a lot more than just two Got their information from us. A lot of our competitors got their information from us.”
Jefferson: Private equity funds will inject capital to save struggling CLO credits
“And the one thing I can guarantee you is, is that people who raise money will never give it back. They're just not going to give it back and say, I couldn't find anything. So they're going to find something to invest in. I think that's going to come to helping…”
Jefferson: Never haggle with brokers on deeply distressed structured credit
“If you're buying a bond at six, pay a guy a half a point. You're not buying at six because it's going to seven. You're buying at six because it's going somewhere a lot higher. And I made sure I was the first call from all those guys.”
Jefferson: Extreme distressed credit payouts completely disprove efficient market theory
“No, I'm not a big believer in the efficient market theory. When you buy a bond three times for a buck and a half and it ends up paying you a 140 points, that's not efficient markets.”
Jefferson bought a $27M CDO tranche for less than a nice dinner
“I convinced him to sell me all twenty seven million dollars of that tranche. I paid less than what I probably pay for a nice bottle of wine when I go to a nice dinner.”
Jefferson returned $1B to investors, deliberately shrinking Hildene's AUM by 40%
“I sold a billion dollars and I gave back. I went from a 2.4 billion dollar firm to a 1.4 billion dollar firm.”
Jefferson: Quantifying credit risk statistically has never worked and never will
“Trying to quantify credit is something which has never worked and I don't think ever will, because you're basically saying, okay, these guys at the rating agencies, they did it right, or I'm missing the motivations of the underlying leverage.”
Jefferson: Wall Street shouldn't sell leveraged, slow-settling OTC products to retail
“You should not be selling over-the-counter products with leverage that take 10 days to settle like a leverage loan to retail and acting like, yeah, it's all going to be fine, but it's not.”
Jefferson: Structured credit requires a bazaar mindset instead of a mall mindset
“If you're dealing in equities, you're dealing in high yield bonds where you can just go and buy a bond. I call it like shopping at the mall. You go to the mall, you know what you're going to buy. What we do is like going to the Turkish Bazaar and you show up w…”
Jefferson: Strong option protections let distressed credit survive zero-price drops
“And one of the interesting things about if you have a deal and the value of the option is very, very strong, you can have assets that trade down to zero, trade back up. As long as that option can't be exercised, then you're okay.”
Hildene occasionally misidentified underlying banks in early TruPS portfolios
“There was a time for a while where we did not have a hundred percent of the actual banks. And I'm going to tell you that there's a lot of first national banks in this country. There's a lot of first Cherokees. There's a lot of bank ones. I mean, there's 8000 b…”
The $750B CLO market requires big data analytics over manual spreadsheets
“This is a seven hundred and fifty billion dollar market where there's 125 different managers where there's about a thousand deals with 3000 different underlines. So this has gone from something that you can do yourself to big data.”
Jefferson: Roughly 40% of CBOs and CLOs held telecom bonds
“There was also this problem in the high yield market and the telecom sector, and about 40% of all CBOs or CLOs had telecom bonds, and that was just the largest issuer there.”
Hildene evaluates structured credit via asset, structure, and option value
“So I came up with this methodology, which we still use today, and it was basically the value of the assets, the value of the structure, the value of the option.”
Bank TruPS allowed five-year interest deferrals without triggering contractual default
“The one caveat which the regulators made them put into these securitizations was that you had to be allowed to defer for up to five years before you went into default.”
Bank TruPS was a $35B niche versus the $1T+ non-agency market
“It wasn't a big market, it was a thirty-five billion dollar market, so it didn't make sense for a lot of folks to get into it. Like, let's just say the non-agency market, which was Over a trillion dollars.”