NakedShorts' InvestorLetters

Letters you’re glad you didn’t get

From the keyboard of Scammy Bayou:

...it is my intention to spend some time relaxing and enjoying my children and focusing on rebuilding my personal life. I will continue to trade my own and Dan's personal funds; keeping my to in the business which I love too much to give up entirely...

To: Bayou Family of Funds Members
Jul. 27 2005

...We will do our best to expedite the process as much as possible...The audit has already begun and confirmation letters regarding activities for the period January through the end of July will be going out next week...

To: Bayou Family of Funds Members
Jul. 29 2005

...We are trying to make arrangements, with the auditor's approval, to send out the 90% balance by next week...To date, there have been no indications than any adjustments will be proposed by the auditor and we don't anticipate any...

To: Bayou Family of Funds Members
Aug. 11 2005

Whittier's private Idaho

Client presentation, dated 2004, for
John Whittier's Wood River Partners LP
[Originally posted to NakedShorts, Oct. 10, 2005.]

Investor Letter, dated Mar. 22 2005.
[Originally posted to NakedShorts, Oct. 9, 2005.]

Mortgage-backed securities: A primer

And then we make up the prices

The following is offered purely for historical reference purposes now that it has disappeared from the publicly-accessible website where it once resided.

Jack Barry, president of Beacon Hill Asset Management, invests primarily in the more complex, higher-yield classes of CMOs that absorb the initial prepayments. Barry hedges against this prepayment risk by buying options on Treasury bonds, which lock in a future purchase price. Should interest rates fall and prepayments proliferate (as homeowners refinance to get a lower mortgage rate), Barry can sell the option, which is now trading at a higher price because of the decline in interest rates, and offset the effects of the prepayment.

Jack Barry, president of Beacon Hill Asset Management, invests primarily in the more complex, higher-yield classes of CMOs that absorb the initial prepayments. Barry hedges against this prepayment risk by buying options on Treasury bonds, which lock in a future purchase price. Should interest rates fall and prepayments proliferate (as homeowners refinance to get a lower mortgage rate), Barry can sell the option, which is now trading at a higher price because of the decline in interest rates, and offset the effects of the prepayment.