11 replies to this topic

[arbman]

Something about the SemGroup: this company is supposed to be a hedger. They are a distribution company, so they are supposed to be hedging against falling prices since they have the supply. So, they were short. Now, what I don't understand here is how they could loose money if the prices went up since they do have the actual supply. They were simply supposed to be market neutral, yet they got squeezed out of their positions instead. There is something substantially speculative going on, these firms are not supposed to be "squeezed out" of their positions. There is something at the trading desk of SemGroup that they are not telling, it appears they had more short positions than they had actually in their supply. The house usually takes the speculators' money, I am not defending GS here and their unethical practices. However, if there was some speculative positions held by SemGroup at the time, SemGroup should've known that they were up against the other large trading firms, if it wasn't GS, it could've been another floor firm squeezing them out and apparently they got squeezed out by more than one firm at the same time, a very typical squeeze. It is a place that SemGroup was not supposed to be as a hedger, or a speculative trader in one of the most manipulated markets... Something to think about. I could've made a better argument, if I had the trades in front of me though.

Edited by arbman, 27 March 2009 - 10:25 AM.

[Rogerdodger]

Gokhan, I think there are lots of snakes in this barrel.