June 2015


Greece. I have no idea what will finally eventuate, but you have to think that the country continues to exist in some form and that its productive businesses continue. So you buy Greece now, while the blood is in the street.

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In the midst of the Greek thing some stocks will likely get [much] cheaper. This stock is worth a look with a 5% dividend and boring line of business, nice solid addition to a portfolio.

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However, counterfeit is also a medium of exchange. Therefore, a more precise definition of both money and counterfeit are required. Money mediates the exchange of full value for full value. Counterfeit represents the exchange of fractional value (or no value at all) for the exchange of full value. Money, therefore, represents productive work and counterfeit represents theft from productive work.



Greece lost a full 25 per cent of its GDP since 2009. No other European country ever faced such a manmade catastrophe in peacetime. Six years after adjustment policies came into place, the unemployment rate in Greece is 26 per cent and poverty has taken grip of large parts of the population. Unemployment has recently started to decrease somewhat, but not because growth prospects improve, but because many give up on the search for employment. At this moment of time there is no perspective for a recovery in the near future. Adjustment policies are necessarily painful, opined the German Finance minister in Davos. But what is their plan? Do they want Greece to go through another great depressions in the name of competitiveness? In view of what we heard after the election in the German media and from German politicians, it is not clear what the worst attribute of German politics at the moment might be, sheer stupidity or cold callousness …


What has changed though is the increased dollars managed by these funds [now > $3.5T] and the concentration, of these dollars, at the twenty largest funds [top heavy for sure]. What has also considerably changed is the cost of money…aka leverage. It is just so much cheaper…and, of course, is still being liberally applied but, to reiterate, in fewer hands.

Are these “hands” any steadier than they were ten years ago? I suppose that is debate-able but my bet is that they are not. They are still relying on regression-ed and stress tested data from the past [albeit with faster computers & more data]. They may even argue that their models are stronger due to the high volatility markets of ’08/’09 that they were able to survive and subsequently measure, test and integrate into their current “Black Boxes”…further strengthening their convictions…which is the most dangerous aspect of all.

Because…Strong Conviction + Low Volatility + High Levels/Low Costs of Leverage [irrespective of Dodd-Frank] + More Absolute Capital at Risk + Increased Concentration of “At Risk” Capital + “Doing the Same Thing”…adds up to a combustible market cocktail.


Looks like the beginning of a bank run in Greece.




No legal issues with HCLP

Legal Proceedings
In addition to the matters described below, we are subject to various legal proceedings, claims, and governmental inspections, audits or investigations arising out of our business which cover matters such as general commercial, governmental regulations, environmental, employment and other actions. Although the outcomes of these routine claims cannot be predicted with certainty, in the opinion of management, the ultimate resolution of these matters will not have a material adverse effect on our financial position or results of operations.
Following the Partnership’s November 2012 announcement that Hi-Crush Operating LLC had formally terminated its supply agreement with Baker Hughes in response to the repudiation of the agreement by Baker Hughes, the Partnership, our general partner, certain of its officers and directors and its underwriters were named as defendants in purported securities class action lawsuits brought by the Partnership’s unitholders in the United States District Court for the Southern District of New York. On February 11, 2013, the lawsuits were consolidated into one lawsuit, styled In re: Hi-Crush Partners L.P. Securities Litigation, No. 12-Civ-8557 (CM). A consolidated amended complaint was filed on February 15, 2013. That complaint asserted claims under sections 11, 12(a)(2), and 15 of the Securities Act of 1933, as amended, or the Securities Act, and sections 10(b) and 20(a) of the Exchange Act in connection with the Partnership’s Registration Statement and a subsequent presentation. Among other things, the consolidated amended complaint alleges that defendants failed to disclose to the market certain alleged information relating to Baker Hughes’ repudiation of the supply agreement. On March 22, 2013, the Partnership filed a motion to dismiss the complaint. On December 2, 2013, the court issued an order dismissing the claims relating to the Partnership’s Registration Statement, but did not dismiss the claims relating to alleged misrepresentations concerning the Partnership’s relationship with Baker Hughes after the IPO. On September 12, 2014, the parties entered into a Stipulation of Settlement (the “Settlement”) providing for the settlement of the consolidated action and release of all claims for $3.8 million, subject to the court’s approval. On January 5, 2015, the court issued a final Approval Order approving the proposed Settlement and dismissing with prejudice the complaints contained in the consolidated action.
On December 20, 2013, Stephen Bushansky, a purported unitholder of the Partnership, filed a lawsuit, derivatively on behalf of the Partnership, against our general partner and certain of its officers and directors, in an action styled Bushansky v. Hi-Crush GP LLC, Cause No. 2013-76463, in the 215th Judicial District Court, Harris County, Texas. The lawsuit alleged that by failing to disclose Baker Hughes’ attempted repudiation of its supply agreement with Hi-Crush Operating LLC prior to the Partnership’s November 2012 announcement terminating the agreement, defendants failed to design and implement an effective system of internal controls to prevent the Partnership from violating federal securities laws. Plaintiff asserted a claim for breach of fiduciary duties of good faith, care, loyalty, reasonable inquiry, oversight and supervision. Plaintiff also asserted that the defendants aided and abetted in one another’s breaches of fiduciary duties and seeks relief from defendants on the theory of indemnity for all damages that occurred as a result of defendants’ alleged violations. On January 29, 2014, defendants filed a motion to dismiss, plea to the jurisdiction, or in the alternative, motion to stay based on the mandatory contractual forum selection clause in our partnership agreement. On March 7, 2014, the court granted defendants’ action to dismiss without prejudice.


Rail traffic is a pretty accurate [as accurate as anything else] indicator of economic activity. Rather resembles the chart of the S&P500



People are freaking out about Apple’s new ad blocking technology. The company plans to let iPhone users who update to iOS 9 (the new iPhone operating system) block all ads seen through the phone’s Safari web browser.

One Wall Street analyst wrote yesterday, “In a worst case scenario, this is Apple against the entire mobile publisher and advertiser ecosystem.”

At the AppNexus Thinktech conference in London yesterday, it was all everyone was talking about.

AppNexus is the giant, New York-based adtech company, and ThinkTech is the private conference it holds annually where media buyers and tech people talk off the record about their problems. I chaired a discussion between WPP CEO Sir Martin Sorrell, Guardian deputy CEO David Pemsel and AppNexus CEO Brian O’Kelley: We debated Apple’s new plan, but the talk was off the record so I can’t tell you much about it, except to say people are very concerned about what Apple is trying to do.

Sorrell, you might remember, led the resistance to Microsoft’s plan in 2012 to end ad tracking in Internet Explorer. (Ultimately, Microsoft abandoned the ad business completely — and do not track in Explorer is now widely regarded as a failure.)

However, this isn’t Microsoft. This is Apple. And Apple tends not to launch products unless it is sure they will succeed.

Its Safari browser has a 25% share of all mobile web browsing, by some estimates.

The fear here is that if Apple shuts off 25% of all ads on the web, then some web publishers — and the adtech companies that serve them — will be driven out of business. Google is already losing 10% of its annual revenue to adblockers, according to PageFair, which monitors online ads. You may not like advertising, adtech people say, but if you like seeing free news and videos on the web then you have to tolerate it — because advertising foots that bill.

The funniest reaction to Apple’s plan comes from Eyeo, the maker of Adblock Plus. The background: Adblock Plus has 50 million users and it forces companies like Google and Microsoft to pay a fee to make sure Adblock doesn’t block their ads. Google has lost $US6.6 billion in revenue because so many people use Adblock Plus and the like.

Here is Eyeo head of operations Ben Williams, talking about iOS 9:

“So far very little is known about content blocking extensions, available in Safari 9 and iOS 9,” said Adblock Plus head of operations Ben Williams from developer Eyeo. “We look nervously at how powerful their block lists will be.”

Williams is nervous because if iPhone users can switch off all ads across the web simply by changing the settings on their phone, then a huge portion of Adblock’s customers will be wasting their time with Adblock.

He is not the only one who is nervous. Some people think Apple is trying to undermine the entire web — by making it harder for publishers who pay for their sites with advertising — in order to make apps more attractive. Apple has a lot of control over the app world because there are only two sources for apps: Apple’s App Store and Google Play. Apple makes money when people get their digital stuff from the App Store. It makes almost no money from the web.

This is how Wired put it:

APPLE IS COMING for ads. It’s coming for publishers. And, in the process, it may be gunning for the web.

The Apple ad block announcement already appears to have wiped 7% off the value of stock in Criteo, one of the major web advertising providers, according to Fortune.

The only person not freaking out is Brian Pitz, an analyst at Jefferies. He wrote this note to investors in Criteo, suggesting that everyone calm the heck down:

This will not be all-out ad blocking on Apple devices. First, the user has to be using Safari on an Apple device. Second, the user has to opt-out of ads. Third, the opt-out process will likely be granular, with individual settings to block specific types of ad formats like pop-ups, pre-rolls, and so forth. In a worst case scenario, this is Apple against the entire mobile publisher and advertiser ecosystem; not Criteo itself. If browsers start negatively impacting publishers’ abilities to monetise their mobile content, it may trigger a backlash where certain sites are “not optimised for use with Safari.”

There are two key lines there. The first is, “In a worst case scenario, this is Apple against the entire mobile publisher and advertiser ecosystem.” Which sounds pretty bad, admittedly.

But the second is, “it may trigger a backlash where certain sites are ‘not optimised for use with Safari.’”

People forget that if Apple makes too many enemies, then companies will start hobbling the web experience for Apple users. And as Apple always promises the best experience for every user, that threat might be real.

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