Doug Kass: The Return Of Boca Biff!


Here’s a classic from and Seabreeze Capital’s Doug Kass, originally penned Wednesday (9/23) morning:

He’s back!  Yep, the ultimate plunger, that paragon of speculation, Boca Biff, is back.

I first introduced ultimate daytrader Boca Biff to readers of The Edge, my exclusive trading diary on RealMoney Silver, back in January 2004.  And on Monday, as I was minding my own business, he called.

I haven’t spoken to Boca Biff in a while as he had fallen on bad times and I think he was embarrassed to call me.  He had been licking his wounds, which included unprofitable forays in the stock market, large losses in speculating on homes in South Florida, a collapse in his window and door business and all this after a failed marriage.

As Boca Biff related in our telephone conversation yesterday, he got remarried one and a half years ago to a woman with a reasonably large divorce settlement.  Biff went on to say that 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!  With accumulated losses of roughly $15 million over the course of the last decade, Boca Biff is back at it.

I asked, “Why now?”

He responded, “Don’t be a moron, Dougie.  It’s global liquidity.  Don’t you get it?  Moreover, I am getting 11 basis points currently in my cash reserves at my brokerage account with Baron Von Broker.”  He went on.  “Importantly, I have remarried and my new wife not only comes with some money but she has no clue regarding my investing mistakes of the past.  I managed to keep my Mizner home in Boca, she loves it here, and she adores me.”

His favorite stock? American International Group.

“Why?” I asked

“Are you nuts?” he replied.  “I heard from my new brokerage firm, Kennedy, Fitzpatrick and Gould [a Boca Raton-based brokerage named after the first three commissioners of the SEC] that AIG has normalized earnings power of $40 a share. And FMG (my brokers) tell me the government will be forced by Hank Greenberg (who is coming back to the board of directors) to help renegotiate their debt with the company.”

“What qualifies them to make that analysis?” I asked.

“I’ll tell you what, dope, two of the guys still have their Ferraris, so they’ve gotta be smart.  And they have tripled my accountant’s brokerage account with them in the last three months after buying the private mortgage insurers, PMI Group and MGIC Investment — that’s why!  Oh, they had been out of business until seven months ago; they had a little problem with the authorities and were barred from doing brokerage business for a couple of years, so they are hungry and aggressive and need to make their new clients some ca-ching.  I forgot to tell you that they are so confident that they will make me money that they didn’t even charge me commissions for the trades; they said all they wanted was 10% of the profits.”

I told Biff that was illegal.  His response?  “Whatever, loser.  They’ve gotta live.”

“What else?”

“Fannie Mae, Freddie Mac and CIT Group are going to double digits on the heels of a ‘V’ recovery in housing.  And they have huge short positions.  The government is saving everybody.  You can’t lose.”

“Anything else?”

“Yeah,” said Boca Biff, “but my brokers told me they would break my legs if I mentioned them.  They haven’t finished buying yet.”

“Come on, Biff,” I said, “Give at least one name up.”

“There’s one, Kennedy bought me 400,000 shares at $1.12 last week.  He has a lot of confidence in it. I think he put nearly one-half of my account in it.  It’s run by Kennedy’s niece, she’s young — I think 28 or 29 — but she was a really big mortgage broker in Delray Beach in the day, and the company she runs is now buying subprime mortgages from a bunch of banks in South Florida.  After the housing markets blew up, she went to Nova Southeastern University in Ft. Lauderdale and got an associates’ degree in real estate in May.  She’s a smart one, I tell you.”

“What’s the name of the company and the symbol?” I asked.

“It’s called Boca Industries, I don’t know the symbol.  It’s on the pink sheets or something.  I can only get a quote from Kennedy, my broker.  I think his firm owns most of the float, so he has to know something.”

Our conversation continued for a while, and when I have time, I’ll do my best to share the rest of it with you. You get the gist, though.

I don’t know about you, but after recounting our discussion and now reading it over again, I think that I have located the proximate cause for the market’s remarkable reversal; it’s the return of Boca Biff!

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