I was having a few beers with an old Agora colleague last week, someone outside of Taipan, and the subject of the Taipan Daily e-letter came up.

Is that Cash McDash guy for real?" he asked me. I was taken aback by the question.

"Of course he's real," I told him.

"You think anyone who wasn't actually hip deep in the new issues market day in and day out could dig up all that killer dirt, know all those names inside and out, and have such a strong roster of winning trading ideas week after week? Faking that level of expertise would be impossible. It'd be like pretending to be a PGA golfer or a five-star chef... The proof is right there in the pudding."

Believe me, the trader behind Cash McDash is very real. And as Cash reveals this week, part of the secret to his information flow is "playing the game" -- scratching the backs of his i-banker contacts so that they regularly scratch his back in return. The game can be rough at times, but the rewards are worth it... and you and I benefit by getting to ride shotgun on Cash's info and expertise.

So without further ado, read on for this week's peek into Cash's world...

Warm Regards,

JL

JL: So, ready to get back to the action after that long holiday weekend?

CASH: You bet. Last week was pretty sobering, though... not only because of how the broad averages traded, but more specifically because of how the new issues market turned south.

JL: Right, you mentioned that late last week -- the trouble brewing in IPO land. That discussion wasn't on the record, though, so how about filling in the blanks for our readers?

CASH: Sure. To start with, our last on-the-record chat covered the shippers, and how the entire shipping sector had experienced broad strength. TBSI was poised to offer more stock to the public in order to raise capital, but there was some concern (from yours truly) about the shippers as a group being overextended and due for a pullback.

JL: And it looks like your concerns were validated.

CASH: Yup. That pullback in the shippers happened in a major way last week. It's not surprising to see a white-hot sector give up some ground, but it was a bit surprising how fast it happened.

JL: So what type of exposure did you end up having? Hopefully you didn't give up all of last week's gains. I know you were pretty pumped about still making money despite all these curveballs being thrown at you.

CASH: Good risk management is a trader's lifeblood over the long term, and I've had enough hard lessons to know to keep out of trouble. But yes, I did give up a little bit of ground. It put me slightly down on the week but a far sight better than what the S&P lost.

JL: So was TBSI a big part of the equation?

CASH: No, actually it was another shipper that got under my skin and stuck me with some red ink. This is a name that I had previously traded in and out of for a handsome profit. Picture a mature company, with an established business plan, that traded from below $50 to above $80 over the course of about eight weeks.

JL: Sounds like a nice move. What was the company?

CASH: Genco Shipping (GNK). The first time around was a nice win for me, but about two weeks ago I closed the position as the stock seemed to be getting ahead of itself.

JL: If you left the party early you must have booked some profit. How did you end up involved again this week?

CASH: Well, as you could probably guess, Genco issued more stock in a secondary, and I ended up getting a slug of it from my guy Marty at Morgan Stanley. (Marty not being his real name, of course. I always change the name -- not to protect Marty, but to protect me.)

JL: Understood. So why did you take the stock from Marty? Or maybe I should ask first how much stock you took from Marty.

CASH: Well, I?m not going to give you specific numbers -- just in case Marty or one of his friends read Taipan Daily -- but I'll tell you it was less than the number of Visa IPO shares he got me. Marty has a huge book of business, and because he generates a lot of commissions for Morgan Stanley, he often gets preferential treatment when it comes to getting good shares in hot demand.

JL: Sounds like a good guy to have on your team.

CASH: He certainly is. And he likes me. But one of the problems with having a big book of business is that he has a lot of clients begging him for the same deals that I want.

JL: Ah, competition. So you're in a position where you need to endear yourself to him -- stay in his good graces.

CASH: Exactly. There's got to be something different about me asking him for stock versus the other guys who may do just as much commission business. We're talking big leagues here. And the benefit of having this guy on my side is that I get thousands of shares of deals that are either unavailable to other traders, or else sometimes the info just happens to skip everyone but me and the one or two other institutions on Marty's VIP list.

JL: Interesting... but to reel you back in, what happened with Genco?

CASH: Sorry, my friend, just laying the groundwork. You wouldn't watch a thriller movie and fast-forward through the character development. If you did, you may totally miss the reason why the hero is running for his life, but also willing to risk his life...

JL: Gotcha. So how does Marty fit into the plot?

CASH: Well, Marty got a block of Genco slammed down on his desk. The higher-ups at Morgan Stanley came to him and said something like this: "Hey Big Shot, You think you're hot stuff right? You're making a nice fat bonus this year, right? You're trying to get out of the office early this week to enjoy Memorial Day on your yacht, right? Well, if you're all that, then we need you to do one thing for the firm before you leave. Take this block of Genco and get it off our hands. The deal prices Thursday. We want a list of clients buying this howler by the end of the day or you can forget it next time you?re looking for hot IPO stock."

JL: Ouch. Isn't that a tad melodramatic, though? After all, if this guy is a top performer at the firm, wouldn't they treat him with a little more respect?

CASH: Wall Street is a funny animal. It may be one of the only industries where a subordinate can earn twice the income of his manager year after year. Marty fits that bill, and there?s probably no small amount of jealousy within the company. It also doesn't help that Marty often sneaks out early to take advantage of his third-row baseball season tickets, and is cozy with many celebrities who can blow six to seven figures on any investment ideas he gives them.

JL: No wonder they call him "hot shot."

CASH: Exactly. So Marty calls me up in his heavy Jersey accent and says, "I gotta piece a' this GNK with your name written all over it. You've been askin' for Visa and Potash and all that hot s*** and I know you want to stay in the game. Take 20,000 of this Genco to help take care of me now, and I'll make sure we keep takin' care of you later."

JL: So was that a promise or a threat?

CASH: I think it was both. Play the game and they keep you on the team. But check out when they need you and you're toast.

JL: But you've got your own clients to protect. I'm sure you don't want to drop a couple million dollars into this deal that has failure written all over it.

CASH: No way, buddy. But remember, we're just playing a game. The stakes are high, but it's still just a game. I can hedge, and I've got other contacts. I want Marty?s business for sure, but I don't need Marty to stay alive. The same is true for him when it comes to keeping my business.

JL: So it seems this was the opening salvo in a negotiation process.

CASH: Exactly. It's a bit like when you want to buy a house and you make an offer. If your first offer is accepted right away, then you know you paid too much. Marty's a smart guy, and he knew he had to ask for the moon with me in order to get to a meaningful place when the deal was reached.

JL: So how many shares did you end up taking?

CASH: Remember, no hard numbers, right? But we can say it was significantly less than 20,000 shares... and yet a bit more than the amount I really wanted to buy.

JL: Which was?

CASH: Well, I really wanted to buy ZERO shares.

JL: Of course. So what do we take away from the conversation and the events? Are the shippers now down for the count?

CASH: It?s still too early to tell. But if we were placing odds on the sector, my prediction would be much higher odds of failure today than when we talked last week. The whole group sold off in line with the markets this past week, and some of the names had very strong down volume, which indicates institutions liquidating big blocks.

JL: I see. So what do we watch for next?

CASH: Now we need to step back and see what the recovery -- if we get one -- looks like. It may be that a post-Memorial Day buying spree pushes them back up on equally strong volume (a positive). It also may be that the group takes some time trading flat on low volume (also a positive). However, if we get a weak push higher and volume is light, or if the sector fails to put in a rally at all, we'll start looking at shorting these names and make our money that way instead.

JL: You're sounding like a technician now.

CASH: One of my many hats. Speaking of which, I think it's about time to put my black hat on again and toss out some short ideas for the readers... but I've got to hop back to my screens here in a minute. So next week, let's take a couple of shorts that are worthwhile for the broader audience. You know there's only one thing more fun than making money...

JL: And that is?

CASH: Making money while others are losing money. We're likely in for more pain U.S. equities, so we'll just have to protect our portfolios and thrive in contrarian fashion by going short. So next week, we'll take a few strong short ideas into consideration, but these will be different than the specialty ideas I'm reserving for a more exclusive audience. These will have enough liquidity and popularity to make them quite recognizable. Who knows, they might even be lurking in some folks' portfolios.

JL: Sounds like a plan. Looking forward to those picks next week.