The Hunch, the Pounce and the Kill
How Boaz Weinstein and Hedge Funds Outsmarted JPMorgan
Published: May 26, 2012

BOAZ WEINSTEIN didn’t know it, but he had just hooked the London Whale.

It was last November, and Mr. Weinstein, a wunderkind of the New York hedge fund world, had spied something strange across the Atlantic. In an obscure corner of the financial markets, prices seemed out of whack. It didn’t make sense.

Mr. Weinstein pounced.

As the financial world now knows, what was out of whack was JPMorgan Chase & Company. One its traders, Bruno Iksil, the man later nicknamed the London Whale for his outsize trades, was about to blow a multibillion-dollar hole in the mighty House of Morgan.

But the resulting uproar, in Washington and on Wall Street, has largely obscured a simple truth of the marketplace. Yes, Morgan lost big — but, as Mitt Romney has pointed out, someone else won. And that someone or, rather, those someones, turn out to be Boaz Weinstein and a wolf pack of like-minded hedge fund managers.

In the London Whale, these traders saw a rich opportunity, and they seized it with both hands. That, after all, is the way hedge funds roll. His cool calculus has made Mr. Weinstein a very rich man: he is in talks to buy the Fifth Avenue co-op of a reclusive heiress, Huguette Clark, for $24 million.

It might seem remarkable that someone like Mr. Weinstein, a man virtually unknown outside of financial circles, could deal such a stinging blow to one of the world’s largest, most respected banks. Jamie Dimon, the chairman and chief executive of JPMorgan and a face of the banking establishment, is struggling to contain the damage from what he has called a “terrible, egregious mistake.” The loss — JPMorgan put it at $2 billion, but it may turn out to be $3 billion or more — has renewed calls for stronger financial regulation.

Full article here.

Brand New Details On The Cardplaying Chessmaster Who Bagged JPMorgan’s London Whale
Sam Ro|May 27, 2012, 10:38 AM

The New York Times Azam Ahmed offers a lot of details on Weinstein’s personal life and professional career. Some of which we knew; some we didn’t.

Here’s a round up of what was written about him:

  • He grew up in Manhattan’s Upper West Side.
  • He earned the title of chess master when he was 16. At a recent auction, he paid $10,500 to play chess with legend Garry Kasparov. He plays online games with Silicon Valley venture capitalist Peter Thiel.
  • He won a stock-picking competition as a student in New York’s prestigious Stuyvesant High School.
  • When he was 18, he failed to land a job at Goldman Sachs. But then he was able to get more interviews after playing chess with a senior partner, whom he ran into at a bathroom.
  • He studied philosophy at the University of Michigan.
  • As a credit trader at Deutsche Bank, Weinstein booked profits in 10 out of 11 years
  • In his heyday, he booked around $40 million in profits each year.
  • He earned the title of managing director at age 27. At the time, he was the youngest MD in Deutsche Bank history.
  • During the height of the financial crisis, his team had lost around $2 billion.
  • In 2005, he won a Maserarti at a poker tournament sponsored by a unit of Berkshire Hathaway. He still drives it.
  • He’s banned from Las Vegas’ Bellagio casino for counting cards at blackjack.
  • His hedge fund Saba Capital, has $5.5 billion under management and his offices are located on the 58th floor of New York City’s Chrysler Building.
  • His wife, Tali Farhadian Weinstein, is a lawyer with the Justice Department.
  • In the hedge fund industry, Weinstein is known as a ‘monster,’ an unusually aggressive trader.
  • He’s currently in talks to buy a $24 million apartment on Fifth Avenue.

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