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Thanks for the information. Looking forward to seeing the restore. Goodwill.
My rep. called the security group and was advised that the escrow markers were exchanged for the new shares. It has seemed to me that the escrows stood for a position in the waterfall like the piers only further down the stream. Your reps answer sounds better.
Yes, the rep. was with Schwab.
Just talked with brokerage rep. about escrows being removed with the appearance of new shares. The rep. thought that the receipt of shares ended need for the escrow markers. I asked to be called in the morning by someone else in a different capacity.
The new shares are in my account but the escrow shares have been removed. This was unexpected. Anyone else with same ?
The full treasures are still lurking / I believe. I blame no one. FAITH the subtance of things hoped for, the evidence of things not seen.
Really cruel to dash the hopes of the fallen so completely. All told why were the parties of POR-6 happily content with so little of the treasure ? I BELIEVE there is still treasures to be revealed going forward.
Kohlberg Kravis Roberts & Co. KKR, +0.13% will pay $30 million in fines to the U.S. Securities and Exchange Commission, including a $10 million penalty, for misallocating more than $17 million in so-called “broken deal” expenses in its private equity funds. KKR is a publicly traded private equity firm that specializes in buyouts and other merger and acquisition transactions. Its executives advise and manage its main or “flagship” private equity funds along with co-investment vehicles and other accounts that invest with these funds.
During a six-year period ending in 2011, KKR paid $338 million of expenses related to unsuccessful buyout opportunities and similar types of expenses. KKR did absorb 20% of all broken deal expenses but did not allocate those expenses to its co-investors, including KKR executives, who participated in the firm’s private equity transactions and benefited from the firm’s deal sourcing efforts, the SEC said. KKR did not disclose this non-sharing in the limited partnership agreement or the related offering documents that investors rely on, the SEC said. The SEC says that KKR breached its fiduciary duty to investors in these funds.
WAMU was taken by "good old boys" just like these. -= Please set aside the time to watch this in full with your friends and family – you won’t be disappointed!
(3:27:56)
@
Citi article -
Zero Hedge published this, which calls our preconceptions about Citi’s stupidity into question: Is Citi the next AIG?
This fascinating piece of investigative journalism is too long and complex to excerpt here. You have to read the whole thing because every paragraph and every chart is a new bit of damning evidence. But for those who refuse to read it (though seriously, you should) I’ll summarize the high points:
In the third quarter, the part of Citi that is insured by taxpayers went on a derivatives writing binge, taking its total exposure to $70 trillion (with a “t”). Then it wrote a draft of new legislation that would delete part of an old law forbidding the government from bailing out banks’ derivatives positions. Then it lobbied successfully to get its language written into the latest banking bill. Then it revealed its new derivatives portfolio to the world.
In asking if Citi is the next AIG, Zero Hedge is referring to the previously-obscure insurance company that had somehow become one of the world’s biggest derivatives players just in time for that market to blow up in 2008. Had it not been bailed out with several trillion dollars of taxpayer cash it would have taken down Goldman Sachs (NYSE:GS), Citi, JP Morgan Chase (NYSE:JPM) and pretty much the entire rest of the global financial system. Zero Hedge then goes on to speculate that Citi might be covering up some kind of company-threatening position that will, in the near future, require the aforementioned taxpayer bailout.
If all this is true, then Citi deserves serious props for adaptability. They screw up, and instead of immediately melting down they hatch an imaginative plan to hijack what’s left of the federal government, implement it over the public objections of high-profile senators, and then kind of brag about it by announcing their new status as America’s biggest derivatives player.
Have to admit it, this is the behavior of a highly intelligent entity. Evil, yes, but smart.
A post from Yahoo board dealing with LBO.The power of the leveraged buy out (LBO)
Troy Racki contributor
Author’s reply » Don't underestimate the power of the leveraged buy out (LBO). If $647M is 20% down on a company ($3.2B) doing a pre-LBO PE of 14 (231M) the NOLs would supercharge the the earnings to 355M. Let's say the interest is 5% ($128M) and its interest only payments so earnings is now 227M so the NOLs would be used up in 26 years.
However in 3 years of 227M earnings, the company now has 681M of cash available. It does another LBO and gets a company ($3.4B) doing a pre-LBO PE of 14 ($243M). Let's say the interest is 5%, so earnings is now $238M. So now the company is doing $227M and $238M or $465M a year from its two subsidiaries.
Two years later the company now has $930M of cash (has not paid any debt just interest only) and does another LBO. All the same above factors. $325M earnings. So now the company is doing $227M, $238M, and $325M with the three subsidiaries or $790M a year.
Two years later the company now has $1.58B and does another LBO. $552M earnings. So now four subsidiaries doing $227M, $238M, $325M, and $552M or $1.34B a year.
•NOLs Rolling Usage:
Year 1: 227M
Year 2: 454M
Year 3: 681M
Year 4: 1146M (4*227+238M)
Year 5: 1611M (5*227+2*238M)
Year 6: 2401M (6*227+3*238M+325M)
Year 7: 3191M (7*227+4*238M+2*325M)
Year 8: 4533M (8*227+5*238M+3*325M+5...
Year 9: 5875M (9*227+6*238M+4*325M+2...
So in 9 years and 1 quarter the NOLs will be used up.
Now I used conservative numbers. If the LBO is only 10% down, it buys a company doing a PE of 13, it gets debt at 3%, any of these factors being more "aggressive" means the above schedule would go faster.
The series B is 3%. Does that mean that WMIH is going to be able to borrow debt at 3%? Then that means faster earnings. If 10% down that means twice the size of a company so twice the earnings so twice the speed.
•
?647M * 10 = $6.74B company with PE of 13 would be $518M post-tax earnings. So it would be $797M pre-tax. Minus $182M of 3% interest is $615M a year of taxable income or $615M a year in direct earnings after NOLs use. So a single company LBO with these factors would use up the NOLs in 10 years. However, after getting $615M for two years the company would have $1.23B in cash and could do another LBO and buy a $12.3B doing $946M post-tax, $1.45B pre-tax, or $1.1B after interest expense. So now its doing $1.7B a year in earnings tax free. So in 5 years the NOL would be gone (2 years at 615M, 3 years at $1.7B).
I think 10% down, 13 PE, and 3% interest are all too aggressive but in this low interest environment with the right partners finding the right undervalued targets, anything is possible. KKR is the king of LBO. I doubt they are going to waste much time on using up the NOLs. If KKR does all the money loaning they could just buy out WMIH in 5 years like they bought out KFN and retire the debt in the buy out.
WMIH is going to go on a target spree. No where does it say they can only buy one company in 61 years. KKR and C know what they are doing.
A New Years eve challenge for the SNH's of POR #6. Come forward and tell this board the details of what was so valuable within the WAMU remains ?
Potential = a store of value [ NOL ~ 5.5 - 6 x 10 to the tenth power x 35% ---> 2.1 x 10 to the tenth power ] divided by current shares [ 234 mil ] ---> $8.97 as a minimum . A prudent person observing these numbers and the current share price of $1.83 would be buying with both hands and calling their family and friends.
A formerly posted estimate from IHUB -As an example based on a $10B recovery for WMILT to Equity classes, the per share recovery would be approximately:
WAMPQ $1,058.00
WAMKQ $26.40
WAMUQ $2.44
SHNs probably had the goods on "jpmc" as far as illegal activity ,criminal activity and even treasonous actions involving federal minions of the king makers. It would be really wonderful if someone with proof from the ranks of the SNHs suddenly got sufficient GRACE and be able to name , number and market the info for the benefit of the WM liquidating trust.
LG the underwriters acceptance of $1.4M shares of the then $0.50 stock in place of $72M bird in hand would calculate to an expected future share value of @ $25.00. This value would be GREAT!
The Stooge "rosen" was in the mix of discussions when "jpmc" and the "snhs" decided about division of value. Is "rosen" a share holder of preferred p or k ? Maybe a future case of insider trading!
Another data point about jpmc's way of doing business - http://news.goldseek.com/GoldSeek/1303221043.php
What was the WORTH in the estimate of j.d.? A offer of $8.00 a share was made. Since j.d. never makes a fair offer - then $12.00 was probably more in line with WORTH at the time. A share count @ 1.8b would mean WORTH of @ 22b not allowing for 4b deposit.
Having Hedge Funds as holders of escrow shares is like insurance. There is no way if $$$s are available that the Funds would lose sight of payout.
Blackstone Group LP, KKR & Co. and TPG agreed to pay a combined $325 million to settle a lawsuit alleging that a number of private-equity firms colluded to keep down the prices they paid for companies during the debt-fueled takeover frenzy preceding the financial crisis, people familiar with the matter said.
Documents are expected to be filed with the U.S. District Court in Boston as soon as Thursday outlining the settlement and asking a judge to approve it, one of the people said.
KKR KKR -0.87% in a regulatory filing Thursday said it agreed to settle the suit on July 28 without admitting wrongdoing. Blackstone BX -0.28% and TPG also reached the agreement in recent weeks and are likely to not admit wrongdoing as part of the settlement, the people familiar with the matter said.
The case was brought by lawyers for investors who sold their shares in 27 companies to a number of private-equity firms as part of several boom-era buyouts. At issue is whether the buyout firms, which had a tendency around that time to team up to acquire multibillion-dollar companies in what are known as club deals, had agreements to not compete with each other on certain deals, thus driving down prices paid to shareholders.
Blackstone, KKR, TPG to pay combined $325 million to settle ‘club deals’ suit.
Two Known Mysteries [(1)Content of discussion and papers during closed door session with THJMW and selected counsels(2)Values known or believed in WAMU worth the insider trading coloring by the smart money] which warrant being a happy holder of escrow shares.
KKR may be awaiting a healthy pull back in market averages for better pricings of M/A .
Postings from former EC member Joyce.
•
JMP
, contributor
Comments (6)
Thanks for staying on top of all this for us Troy. Joyce
24 Mar, 03:35 PMReply! Report AbuseLike4
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Troy Racki
, contributor
Comments (63)
Author’s reply » Thanks for all of your hard work Joyce in getting the equity committee formed. If it was not for your efforts equity may have gotten nothing at all out of the reorganization.
24 Mar, 08:19 PMReply! Report AbuseLike5
•
JMP
, contributor
Comments (6)
May? LOL guarantee, even though we got the shaft there would not have been a dime for shareholders...what I never will understand though is people's reticence to get attys to rep them, so many ppl fought the EC, I could not believe it, unless it was the Hedgies posing as concerned shareholders, which is a real possibility given the games that were going on...I don't understand people's apathy as well--I talked to people every day who lost sometimes hundreds of thousands, but did not want to fight or lift a finger to help...it was truly a life lesson and taught me a lot about why this country is in such miserable shape. People just don't want to stand up or fight for themselves. Wish I wasn't on the EC when P's hit the 80+ high LOL...I actually would have made money. I almost broke even, except for costs out of pocket for cell phone bills, and 1K+ to go to Delaware, and some other minor expenses ...but I never expected an $800 cell phone bill from talking to distressed shareholders... Oh well, doing the right thing counts for something, right? The reward is in knowing you did everything you could. I'll never make it all back I guess. You should know Troy...you take a lot of time and energy to let us all know what is going on while I have taken to my easy chair and the only reward is knowing you are helping others. One thing I did learn is that I will never do it again LOL Entirely too much work with very little reward and I don't mean $...Would you believe I had someone call me on cell last year to ask me what was going on? LOL I guess he just expected everyone else to babysit him & take care of his investment for him. I'm still waiting for the pittance of the H's, just missed the cut off by $20...maybe someday I'll get that back, but they sure are giving me a pain in the butt filing 1099's every year for interest earned that I may never see...I am disturbed their accountants are doing this, they should not be filing the interest until we actually get it, every year I have to explain that $11 to the IRS--cost me more in CPA charges than $11.00 --I assure you. Gives me concern that their CPA's may not be doing things the way they should be---or maybe they are just taking the EZ way out so they don't have to keep track of the numbers when they finally (if ever) pay us. Thanks to those who were smart enough to support me and the EC, the 7000 people's support made all the difference in getting the EC...If it were not for the EC and one brave shareholder, we'd have walked away with totally empty pockets....I still don't get why the DOJ never went after the Hedgies...they totally admitted guilt in their testimony. They should have been heavily fined at the least and that money added to the pie. But then there are a LOT of things that should have happened that didn't--like the subs should have been given back also, but we lost them due to a technicality in the law that said when all hell breaks loose, the govt can do what it pleases--Good 'ole Sheila.... Best wishes to all... Joyce
26 Mar, 08:00 PMReply! Report AbuseLike2
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oilman9
, contributor
Comments (4)
$4.30 seems way to conservative to me. Why would the new WMIH/KKR entity give up half of its assets (NOLs ?). KKR has so many units under management or ownership that have too many "unprotected" dollars of income, and they desperately need to "protect" them. WMIH is perfect. Ripe for the pickin'
25 Mar, 02:53 AMReply! Report AbuseLike1
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rex.ter
, contributor
Comment (1)
Troy, thank you for your continued coverage.
25 Mar, 03:18 AMReply! Report AbuseLike1
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Pfandbrief@gmail.com
, contributor
Comments (3)
My dear Mr. Racki, are you aware that after "equity offerings up to 1B", there will be more shares around? I mean, thats what an equity offering is all about. To pretend that the 1B is any indication for the "value" is tough enough. After all, it also says "up to". But to then divide it by the current number of shares, or even the number after warrants dilution tops everything.
By the way, nobody says that only KKR will buy the new shares. Thats why the 42.5 % is no cap on possible dilution either. You should probably rather ask yourself whether the price of the equity offerings will rather be in a sensible range (like the one indicated by KKRs initial purchase at $1.10 and the option strikes up to $1.42, which is still a huge premium over equity per share) or in the range of the currently sky-high OTC prices.
25 Mar, 03:18 AMReply! Report AbuseLike0
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ar3582
, contributor
Comments (4)
Nice article Troy! Reading about unique stocks trying to come back is interesting. Over the years I have seen many companies trying to come back create a new stock symbol and leave their old symbol by the wayside. To me that shows little respect for their old shareholders. Troy it would be great to read some more articles on down and out companies with respect to their potential return.
25 Mar, 10:10 AMReply! Report AbuseLike0
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much.faster
, contributor
Comments (58)
" ... $5.97B NOL assets with 273M shares. ..."
wrong, read the plan of reorganisation.
it's a minimum 5.970 mio, but could rise up to 12,000 mio and more.
but it's a nice try to get some wmih shares at 4.3 usd )
25 Mar, 02:13 PMReply! Report AbuseLike0
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HEARTSFORLOVE
, contributor
Comments (16)
HEARTSFORLOVE
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Company President. I beleive this country had printed too much fiat money. It has been crushed by a self serving wall street. Most reporting journalists do not have time to do enough due diligence and hence one can not believe a lot of what is written in the press. America is dominated by... More
?Blog: WWW.HEARTSFORLOVE.COM
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Heres an opportunity to say a huge thank you not only to Troy but especially to Joyce. You don't know me and i have never posted on the blog boards . I am simply not upto speed enough to throw in a good analytical offering.
I do however deeply appreciate everything you did Joyce and have been holding on for 4 or 5 years.
It would be great if one day someone did a movie on this whole fiasco. Ever since politicians needed heavy funding to get elected the money machine has been marching forward to allow this kind of corrupt eventuality to develop on a massive and repetitive scale.
Your exceptionally noble actions Joyce temporarily, greatly lessened the forces of corruption. When i do finally sell and if i know your address. I would be delighted to pay your phone bill one day. Until then this is really the only big deal i have going on.
So suffice it to say that for now i and many others are deeply grateful for your testimony on your day in court.
27 Mar, 12:23 PMReply! Report AbuseLike1
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JMP
, contributor
Comments (6)
We did have someone interested in a movie (documentary) long ago, while all this was going on--they backed out...It would make a good movie. But the Hedgies sure don't want that and they are more powerful than many think . I don't know what scared them off, maybe it was all too complex for them to follow, or something else happened. I don't know. Kind of you to offer to help pay the $ I am still out due to this--you have seeking alpha mail. I don't think others realized that a few of us put some of our own money into keeping things rolling, as we did not want to ruin our credibility by continually asking for $ to support the thing. No one got reimbursed for the trip to Delaware to form the EC--so anyone who went took that money out of pocket. All the money we collected from shareholders went into PR releases to get people to send letter to the DOJ...which worked, but a few of those releases were quite costly, so the $ went all too quickly. Had shareholders not donated generously for that, we would have never gotten anywhere as those PR's were what helped to get enough signatures to get the DOJ to approve/appoint an EC......and those who were on the equity committee lost the opportunity to make it back when things did hit highs such as the P's shooting up so crazily. I lot of folks took their money and ran at that point, and wisely so. Cannot say that I blame them at all, it was just good business sense. I know several who made a quick 100K and got out at that point. I wish I could have bought and sold at that time, but that would have gotten EC disbanded and probably me with hefty fines or worse. Anyway whoever was on EC lost opportunities that others had to actually make $, although most of the pre-seizures did not have the extra $ on hand to do that. Many of them were retired folks who depended on their brokers to keep them informed, which they did not, and it was their retirement money--gone in a flash. Those poor people lost it all I am afraid. Especially since many of them were not puter savy enough to keep track of what was happening, so the people I wanted to protect the most still got the shaft . Thx for the appreciation and offer, that means a lot. Fingers still crossed here that eventually we'll see some kind of decent profits--I don't hold much anymore but I still hold some--still waiting for $ from the H's--I had no clue it would take so long for them to pay us off for those. ...but I have a feeling success with this company is going to take a while, which we all knew given the nature of the NOLS and the strict rules about how they can be used. I don't keep up on this stock anymore, and depend on Troy to keep us informed, and I so appreciate his time in doing that. After 3 years I was so burned out and anxiety ridden, I just could not pay attention anymore...it took a few years off my life, but at least the death threats stopped a few years back . I suspect that was Hedgie folks also...but I don't scare easily and figured them for the bluster they turned out to be...Take care all. Best of luck to you all.
http://seekingalpha.com/article/2103953-wamu-seesaws-on-m-and-a-speculation
A question. Using chart from marketwatch the close shows 548,266 vol. @ 3.18. At 4:08 a volume of 546,379 and price of 3.21 is shown to end day in the stats header. What is the significance of the trade at 4:08 ? http://bigcharts.marketwatch.com/advchart/frames/frames.asp?show=&insttype=&symb=wmih&time=8&startdate=1%2F4%2F1999&enddate=3%2F13%2F2014&freq=1&compidx=aaaaa%3A0&comptemptext=&comp=none&ma=6&maval=9%2C20%2C50&uf=0&lf=268435456&lf2=32&lf3=4&type=4&style=320&size=4&timeFrameToggle=false&compareToToggle=false&indicatorsToggle=false&chartStyleToggle=false&state=8&x=36&y=12
WAMU was so much more than madoff's / jpmc action.
jpmc is a CRIMINAL ENTERPRISE
How I Know JPMorgan Was Complicit in the Biggest Ponzi Scheme Ever
by Shah Gilani
Dear Insights & Indictments Reader,
I've said it before, and even though I've been threatened, in not so subtle ways, and been warned not to piss off certain people in power, I'm going to keep on saying it:
JPMorgan is a criminal enterprise.
Today the mega enterprising bank is in talks to settle civil and criminal charges that it ignored signs its banking client Bernie Madoff was a Ponzi-running, lying, cheating crook. (Which he was.)
It looks like the brazen bank will pay $2 billion to get out of jail free; free, of course being a relative charge. But I call it free because JPM has been posting record profits, and another multi-billion-dollar fine is unlikely to change that.
So what that they've paid about $20 billion in settlement fines in the last 12 months? They're still in business. They're in the business of making insane amounts of money to pay insane fines for insane criminal activity.
I'll say it again... JPMorgan Chase is a criminal enterprise.
For this new payoff, I mean payment, to the government, JPM's criminal ways were nodded to and shunted aside in a deferred prosecution agreement with the feds. The tradeoff will be such that JPM will swear it will do no evil (just the evil they will list, not any of the other evils they do that they don't have to list) and promise to be good while they're being watched. And if they don't do any more Ponzi-schemer aiding and abetting in the probably five years they will be watched, the deferred prosecution agreement dissolves. After that, they have a Whale of a party, probably over in London, where they hide other stuff.
I'm going to keep this short. There's another reason, besides not wanting to repeat myself over and over, and I'll tell you the other reason on Thursday. So keeping this short, I'm just going to say one thing to explain JPMorgan's role in the biggest Ponzi scheme in history.
In my expert opinion, it's just not possible that JPMorgan (and plenty of other intermediaries and feeder funds) didn't know that Madoff was running a scheme.
I didn't know anything about Madoff. No one ever asked me about him or what he might be doing to generate the returns he was generating. But any back-of-the envelope calculation of numbers - based on what he said he was doing - would have come up with a giant "does not compute" answer.
Here's the deal.
Madoff said he was making the money in the options market. All anyone had to do was ask him how much he was managing (which he boasted about), then back into how much he'd have to make on his options strategy to get the steady 10% returns he claimed. And if you had a lick of knowledge about options, you'd ask yourself, "Holy cow, how many options contracts is he trading?"
Then you'd ask yourself, "Gee, I wonder how he's impacting the spreads of the options he's trading and how he manages to not impact his own returns himself!"
You'd be so struck by the whole strategy that you'd look at the options market volume and... your eyes would be wide open.
Based on the amount Madoff was supposed to be managing, he'd have to be trading more than all the options traded on the CBOE... everyday... and not impacting any of the spreads.
And no one in the business stopped to figure that out? No one who was a conduit or feeder who fed Madoff billions of dollars to trade - so they could collect their piece of the fee Madoff charged - stopped to figure out what he was doing so they could manage the money they were feeding him themselves... to keep all the fees themselves?
Of course they did. And they figured out it couldn't be done. But they also figured out they were getting paid and had plausible deniability if the scheme ever imploded.
So either JPMorgan Chase is a criminal enterprise... or they are the stupid to the nth degree... and we know that ain't true.
Shah
The only MYTH in this whole WAMU affair is that jd of jpmc believes he has gotten away with responsibility for murder (suicides of WAMU shareholders ),wreaking countless retirement accounts , and lying to main street and wall street. Payday will be a b^*c%.
Note the ! at beginning of the post. The claims made are those of the column author. I do very much like the proposed price target of $10.35 nonetheless !!
$10.35 target price !
The KKR deal provides WMIH with significant capital to acquire a big business. The NOL makes WMIH a very attractive acquisition target, assuming a suitor is interested in purchasing WMIH just for the NOLS. The value of the WMIH'S NOLS is the amount of tax payments they can shield. With a 35% Tax Rate in the US, the NOLS are worth $2.09 billion or $10.35 per share. With KKR now holding a large percentage of the outstanding shares of WMIH, they can help WMIH realize the total value of the company by using the NOLS,and making a blockbuster acquisition that they have done many times. We would think that before such an investment was made by KKR they already have the target in mind. We are getting into WMIH early in the game. These type of programs take a long time to carry out but we think your patience will be rewarded and the shares could appreciate 100% before 2014 is over and more in future years depending on how things unfold.
Technical Analysis by Harry Boxer (TheTechTrader.com)
Article on Nate Thoma
Written
By Matt Wirz
Published in WSJ
June 11, 2011
Link =http://online.wsj.com/news/articles/SB10001424052702304778304576377880810167382
Nate Thoma's story
•Here is NATE the great story written by WSJ... Read on..
By MATT WIRZ
Nate Thoma stood up in a Delaware bankruptcy court last December in a sharkskin suit and delivered a 24-minute argument that changed the course of one of the largest bankruptcies in U.S. history.
The 33-year-old Washington Mutual investor, with no legal experience, delivered what people in the courtroom called an unusually eloquent speech, helping persuade the judge to investigate trading by some of the nation's biggest hedge funds and to reject a plan for the bank's exit from bankruptcy.
Nate Thoma stood up in a Delaware bankruptcy court last December in a sharkskin suit and delivered a 24-minute argument that changed the course of one of the largest bankruptcies in U.S. history.
The 33-year-old Washington Mutual investor, with no legal experience, delivered what people in the courtroom called an unusually eloquent speech, helping persuade the judge to investigate trading by some of the nation's biggest hedge funds and to reject a plan for the bank's exit from bankruptcy.
The net result was a settlement between small investors and the hedge funds, which included Appaloosa Management and Centerbridge Partners. That deal has paved the way for the bank to exit from bankruptcy and gives the little guys a chance of recovering some of their losses.
Mr. Thoma's court appearance added new drama to an already contentious case, which began when the U.S. government seized the bank in September 2008. The court-ordered probe riled hedge-fund managers, who said they did nothing wrong, and made Mr. Thoma a folk hero among Washington Mutual's legions of small investors.
Mr. Thoma, who had traveled from Queens, N.Y., to lodge his objections in person, came across as "intense and smart," though "somewhat lacking in experience in the legal arena," says Edgar Sargent, a lawyer representing Washington Mutual's shareholder committee.
Sitting in a Greek tavern in Astoria, N.Y., on a recent afternoon, sporting a hipster-perfect scruffy beard and dressed in a plaid shirt and jeans, Mr. Thoma recalls thinking Judge Mary Walrath would cut him off after a few minutes.
"But halfway through, I noticed she was paying attention," he says. "I realized she was going to let me go on, and I went for broke."
Mr. Thoma, who gave up computer programming to become a trader in 2005, estimates he probably made 10 times his money in Washington Mutual, in part because he bought up cheap securities that will get a payout.
Mr. Thoma spent as many as 10 hours a day analyzing various pieces of the Washington Mutual case before appearing in court, and presented 33 pages of documents. In her written opinion, Judge Walrath cited Mr. Thoma's arguments six times, though she pointed out that much of his evidence was inadmissible.
"Some things were wide of the mark," concedes Mr. Thoma. "But it's my first bankruptcy."
No wrongdoing by the hedge funds was proved by the investigation ordered by Judge Walrath. Appaloosa and Centerbridge, as well as Aurelius Capital Management and Owl Creek Management, were ordered to divulge trading records and answer questions from lawyers for common shareholders.
The funds declined to comment, as did Washington Mutual's attorney.
While Mr. Thoma's impact on the case could inspire other small investors, they probably won't get as loud a voice. Judge Walrath was particularly attentive to smaller shareholders during the Washington Mutual case, in part because of the number of individuals hurt when the bank was seized, according to people involved in the case.
Soft-spoken and with about $500,000 in investments, Mr. Thoma is an unlikely agent for change in the halls of American finance and an even more unwelcome adversary for the hedge funds involved. His actions infuriated the likes of David Tepper, head of Appaloosa. They also served as a call to arms for small investors in the case, many of whom lavished him with accolades on Yahoo message boards.
When Appaloosa responded to Mr. Thoma's claims with demands for research, correspondence and trading records, shareholders, many of them from Europe, rallied to Mr. Thoma's defense, flooding the Delaware court with more than 150 objections. "Apparently, I'm big in Switzerland," he says.
Mr. Thoma, who didn't finish college, says he taught himself to trade, much like he taught himself computer programming. He is also following in the footsteps of his grandfather, who actively traded and retired early on his stock-market investments.
"When I was little, he would show me stock charts, but it didn't register," Mr. Thoma says. "Years later, it occurred to me, 'I can do this.'"
His transformation from small-time investor to activist shareholder began following the seizure of Washington Mutual. Mr. Thoma's shareholding in the bank was wiped out. He spent weeks in front of his Scottrade account, trying to figure out how to recoup money he had lost.
"I started looking at the capital structure, and I saw an opportunity to make back my investment," Mr. Thoma said. He bought trust preferred securities, a hybrid of debt and equity, which rank above common and preferred shares. That enabled him to essentially jump ahead in line for any money distributed from the bank's estate.
It also put him in the same pool as Appaloosa, Aurelius, Centerbridge and Owl Creek, which were snapping up the same securities.
Those securities were quoted at around one cent in November 2008, when Mr. Thoma first started buying—they are now at 16 cents—but they rarely traded and were hard to buy through his online brokerage account.
In the following months, Mr. Thoma bought in lots of 500 or 1,000 units. But he noticed other investors were occasionally able to buy them in much larger amounts, at one point as many as six million units in a day.
"I was envious," he said. "They were like whales passing in the night."
Mr. Thoma suspected the buying was being made by hedge funds, which already owned the bank's bonds. Owning large chunks of both classes of securities would help them control the bankruptcy's course, he figured. While this practice is standard in most bankruptcies, in the case of Washington Mutual, the hedge funds' strategies affected thousands of retail investors, who still owned the bank's securities.
In his December objection, Mr. Thoma said he thought it was unfair that hedge funds were able to eventually negotiate on behalf of trust preferred holders, seeing as they were also bondholders and involved in settlement talks. He questioned whether they were acting in all of the preferred holders' best interests.
Judge Walrath listened, and ordered the probe into the buying.
Mr. Thoma says he is still obsessed with the case, and his wife has banned Washington Mutual from household conversations.
But this battle is likely to be his last. He says that despite his success, his experience has left him disillusioned.
"The thrill is gone," he says. "It's such a big game, [individuals] just can't compete. I'm picking up freelance Web work again."
For a long time many herein have lived on HOPE - in the face of the spoiled jamie d's arrogance and greed , bought off public officials and countless setbacks. This board provides family like support where it is OK to ask " what do you think ". Believing is Seeing !
Some of this 11 billion should have been ( in a more just world )moving in the direction of WMIH and /or escrow ! http://www.businessweek.com/news/2013-09-25/jpmorgan-mortgage-talks-said-to-see-possible-11-billion-accord