Dec

7

He’s back! Last night, here I was, minding my own business on the cold linoleum floor, drinking cheap tequila, when the telephone rang. It was Boca Biff!

Boca Biff has been licking his wounds. When we last heard from him, Boca Biff’s largest trading position was long crude oil futures in August, 2005 — just in time to witness a $13 drop to below $60 per barrel by year’s end!

Though he also purchased Google (GOOG) (”It’s going to $500, Dougie”) at around $300 per share, last summer, his largest individual equity position at that time was in the (all too) common shares of Pulte Homes (PHM) (which he virtually top-ticked at $46 per share at the same time), and coupled with the disastrous crude oil futures trade, this left him without coin.

He promised his family — who apparently could no longer tolerate the ups and downs — that he wouldn’t again venture into the stock market. Nor would he speculate in homes and land. However, after casually responding to one of those spam emails to refinance his home from an eager mortgage broker that was about to go out of business (he’s got a beautiful old Mizner-style home in Boca!), he found himself, very soon thereafter (in early 2006), with about $1.5 million of loose change.

His wife forced him to give the proceeds of the refinancing cash out to a mutual friend, Baron von Broker, who dutifully put these monies in a money market account and far from the hands of Boca Biff. When the market bottomed in the spring, Baron Von Broker turned bullish and encouraged Boca Biff to buy oil and gold stocks (two sectors that he correctly felt had promise). True to his promise to his wife, Boca Biff demurred and kept his monies in the money market account.

As Boca Biff related in our telephone conversation last night, he watched and watched the market’s unrelenting rise through the summer and into the fall until he couldn’t take it any more and finally made the plunge last week … on margin! Stated simply, Boca Biff is trying to make back his accumulated $20 million+ (this is the truth!) by purchasing a package of out-of-the-money calls on a group of high beta stocks that recently have made a 52-week high, including Apple Computer (AAPL), Goldman Sachs (GS), Merrill Lynch (MER), Google, First Marblehead (FMD), Fairfax Financial (FFH), Research in Motion (RIMM), Allegheny Technologies (ATI), U.S. Steel (X), Baidu.com (BIDU) and Las Vegas Sands (LVS).

His Rationalization? Global Liquidity and a Tip From His Driver He tells me the notional value of his calls (if exercised) exceeds $30 million! When asked why now, Boca simply said, “Don’t be a moron, Dougie: It’s global liquidity. Don’t you get it?” And then he actually said to me that he heard from his driver that General Electric (GE) will receive a bid by a private equity sometime in the next six months. I should add that Boca Biff transferred all his money from the money market fund from Baron Von Broker (who being a conservative and intelligent fiduciary, refused to accept Buff’s aggressive strategy) and purchased the call positions from a newly formed, Boca Raton, Florida-based brokerage, Penny, Shark & Oakmont. I should also add that Boca Biff is currently being divorced by his wife.

Stay tuned.


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