Month: April 2008

Who will be right?, Greenspan, Tiger, Movies

– This is important. Both companies look at the same information but have polar opposite expectations.

– This is good….although I think I liked Don better in overhauls…purer

– Just hard work…

– A great list from Disney

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Who will be right?, Greenspan, Tiger, Movies

– This is important. Both companies look at the same information but have polar opposite expectations.

– This is good….although I think I liked Don better in overhauls…purer

– Just hard work…

– A great list from Disney

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In the Q&A following his speech today Bernanke said mark to market accounting caused additional stress as it “forced sales into very illiquid markets lead to reductions in prices of assets which lead to more write-downs which then lead to more fire sales”

Mark to market accounting he said requires “assets to be valued at their market price in orderly markets”.. he went on to say that mark to market accounting did not envision situations where otherwise normally marketable assets would not have markets or that the only sales would be under very extreme or distressed conditions”.

Although he said a return to the previous method would not happen he did say that he envisioned changed to the current mark to market method to compensate for situations like the one we are in.

No kidding

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If you are an employer in NY, MA or CT looking for someone to hire, I have a highly endorsed candidate for you.

Recent Work History:

Welch Allyn Inc

1989-1998 – Positions: Procurement Analyst, Sr. Procurement Analyst, Procurement Manager for Data Collections Division (now Hand Held Products). Departmental budgeting, team management, supplier sourcing, cost reduction, inventory turns, lead time reduction, Sub contractor selection and management, new product support, MRP

PPC Production Products

1998-2000 – Procurement Manager: sourcing, cost reduction, lead time reduction, team management, supply chain development.

Current

2000- Present – Manage people and processes related to delivery of hardware and services to the clients. These areas have included Receiving, Order entry, Desktop Delivery/Support, Service Level Agreement reporting, and Workflow. Active role in transition of additional sites into the contract. Participated in consolidation of several areas to provide both cost savings to compnay and improved, uniform services to clients. Familiar with both ACE, Six Sigma and ITL quality approaches.

Education: Syracuse University BS Business Administration 1993

This person has extensive experience telecommuting and will do contract work for those interested in that.

Please email me if interested and I will provide contact information.

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Thursday’s Picks
Jeff Macke likes Boeing (BA) $78.6.

Guy Adami recommends AMR Corp. (AMR) $9.17 for a short covering rally.

Pete Najarian thinks investors should buy puts in Pilgrim’s Pride (PPC) $19.4

Tim Seymour prefers shorting Mechel (MTL) $142.88 and buying it back at $130.

Wednesday’s Results
Guy Adami recommends US Bancorp (USB) $32.79 Close $32.45 LOSS

Pete Najarian prefers Myriad Genetics (MYGN) $41.0 Close $40.35 LOSS

Both Jeff Macke and Karen Finerman think the Financial Select Sector SPDR (XLF) $26.22 is a buy. Close $25.78 LOSS

2008 Records:
Brian Schaeffer= 0-1
Carter Worth= 0-1
Jon Najarian= 4-1
Jeff Macke= 25-19-1
Tim Seymore= 14-8
Guy Adami= 24-23
Pete Najarian= 27-21
Karen Finerman= 20-24-1
Joe Terrenova= 1-1

2007 Results (Since 6/21):
Guy Adami= 58-46 = 56%
Jeff Macke= 60-40 = 60%
Pete Najarian= 49-41 = 54%

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“Save your frightened song for when there is really something wrong! Don’t cry ‘wolf’ when there is NO wolf!” The Boy Who Cried Wolf , Aesop’s Fables

Another year has gone by and the latest hurricane forecast is out. It is great because it is an easy post. I get to cut and past last years hurricane post because the outlook is the same as it has been since the turn of the century.

Current forecast from Colorado Sate: “We foresee a well above-average Atlantic basin tropical cyclone season in 2008. We have increased our seasonal forecast from our initial early December prediction. We anticipate an above-average probability of United States major hurricane landfall.” also “We estimate that 2008 will have about 8 hurricanes (average is 5.9), 15 named storms (average is 9.6), 80 named storm days (average is 49.1), 40 hurricane days (average is 24.5), 4 intense (Category 3-4-5) hurricanes (average is 2.3) and 9 intense hurricane days (average is 5.0). The probability of U.S. major hurricane landfall is estimated to be about 135 percent of the long-period average.”

Why do they do this? We all know it is guess work…

Last years post:
In case you missed it today and I think you would have had to have had no contact with the outside world in order to, researchers once again predicted an above normal hurricane season. Excuse me while I yawn at this one. In order to fully understand the true depth of my ambivalence, one must take a walk down memory lane and look at past hurricane forecasts. I am only going to go back the last 5 seasons here just to make a point:

• April 3, 2007: The 2007 Atlantic U.S. hurricane season will be “much more active” than average, with nine hurricanes – five of them reaching Category 3, 4 or 5 – and 17 named storms, according to a forecast Tuesday from Colorado State University researchers.The researchers lifted their forecast from early December because of the “rapid dissipation” of El Niño over the past few months. “Tropical and North Atlantic sea surface temperatures remain well above their long-period averages,” a trend commonly associated with an active Atlantic basin hurricane season and lower-than-normal sea level pressures, wrote researchers Philip Klotzbach and William Gray. “We expect the 2007 hurricane season to be very active.”
• May 22, 2006 — NOAA today announced to America and its neighbors throughout the north Atlantic region that a very active hurricane season is looming, and encouraged individuals to make preparations to better protect their lives and livelihoods. “For the 2006 north Atlantic hurricane season, NOAA is predicting 13 to 16 named storms, with eight to 10 becoming hurricanes, of which four to six could become ‘major’ hurricanes of Category 3 strength or higher,”
• May 16, 2005 — NOAA hurricane forecasters are predicting another above-normal hurricane season on the heels of last year’s destructive and historic hurricane season. “NOAA’s prediction for the 2005 Atlantic hurricane season is for 12 to15 tropical storms, with seven to nine becoming hurricanes, of which three to five could become major hurricanes,”
• NOAA’s 2004 Atlantic hurricane season outlook indicates a 50% probability of an above-normal hurricane season, a 40% probability of a near-normal season, and a 10% chance of a below-normal season, according to a consensus of scientists at the National Oceanic and Atmospheric Administration’s (NOAA) Climate Prediction Center (CPC), the Hurricane Research Division (HRD), and the National Hurricane Center (NHC). See NOAA’s definitions of above-, near-, and below-normal seasons. The outlook calls for 12-15 tropical storms, with 6-8 becoming hurricanes, and 2-4 of these becoming major hurricanes. These numbers reflect a predicted ACE index in the range of 100%-160% of the median, and indicate a likely continuation of above-normal activity that began in 1995.
• NOAA’s 2003 Atlantic hurricane season outlook indicates a 55% probability of an above-normal Atlantic hurricane season in 2003, a 35% probability of a near-normal season, and only a 10% chance of a below-normal season, according to a consensus of scientists at the National Oceanic and Atmospheric Administration’s (NOAA) Climate Prediction Center (CPC), the Hurricane Research Division (HRD), and the National Hurricane Center (NHC). See NOAA’s definitions of above-, near-, and below-normal seasons. The 2003 outlook calls for 11-15 tropical storms, with 6-9 becoming hurricanes, and 2-4 becoming major hurricanes.

The real question here the talking heads on TV ought to be asking is: “when haven’t they predicted an active season”? The answer? I do not know because the NOAA archives only go back to 1999 and only 2001 predicted a benign forecast of “normal to slightly above normal” hurricane activity. Every other year has featured an apocalyptic forecast. What do we as investors do then? This answer is easy, nothing. Meteorologists cannot even tell me with any significant accuracy if it is going to rain or not this weekend yet we are supposed to believe they can now predict a certain number of storms are going to form off the coast of Africa over 3,000 miles away and hit the states during the next 6 months? No way…..It is a fools bet. One also has to notice as they read the forecasts: “Why are they all basically the same?” 12-15 storms, 6-8 hurricanes, 2-4 majors. If every forecast is for the same number of storms, isn’t that then, “normal”?

The bottom line is that it has become painfully apparent we are always going to get a forecast that is for “above normal” hurricane activity. Worrying about it or trying to adjust your portfolio for this presumed alleged event in April is a colossal waste of time.

The phrase “to cry wolf“, derived from the fable, refers to the act of persistently raising the alarm about a non-existent threat, with the implication that the person who cried wolf would not be taken seriously should a real emergency take place. It can also be used to describe an alarm system that regularly goes off falsely, causing it not to be believed when a real emergency occurs.

Forecasters beware…

Disclosure (“none” means no position):

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The story here isn’t the fact Citi (C) is selling $12 billion of loans and what effect that has on its balance sheet and earnings. The story is that there actually is a buyer.

Citigroup had $43 billion worth of leveraged loans on its books at the end of the fourth quarter and is allegedly selling $12 billion of that to private-equity firms Apollo Management, TPG and Blackstone Group (BX).

This comes on the heals of a proposed plan at UBS (UBS) that would also either sell loans to investors or place them in a subsidiary to then spin.

The news here isn’t what the loans sold for (90 cents on the dollar) or what that might mean for the current quarter in term of write-offs to earnings. The news is that for the first time, someone is actually willing to buy the stuff. It was only a few months ago Citigroup issued dilutive preferred equity (See Washington Mutual for the latest round (WMU)) at near double digit interest rates to accomplish the same thing, restore liquidity to the balance sheet.

There were at that time no buyers for the loans as there seemed no bottom in sight to the write-downs.

If nothing else, we can now surmise that the values of these assets are now to the point that they are going to now have a market value to them based on what is now actually selling rather than the “model based” valuations we have been seeing. This will give the market some confidence as to how to value what is left.

Disclosure (“none” means no position):Long C, None

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The story here isn’t the fact Citi (C) is selling $12 billion of loans and what effect that has on its balance sheet and earnings. The story is that there actually is a buyer.

Citigroup had $43 billion worth of leveraged loans on its books at the end of the fourth quarter and is allegedly selling $12 billion of that to private-equity firms Apollo Management, TPG and Blackstone Group (BX).

This comes on the heals of a proposed plan at UBS (UBS) that would also either sell loans to investors or place them in a subsidiary to then spin.

The news here isn’t what the loans sold for (90 cents on the dollar) or what that might mean for the current quarter in term of write-offs to earnings. The news is that for the first time, someone is actually willing to buy the stuff. It was only a few months ago Citigroup issued dilutive preferred equity (See Washington Mutual for the latest round (WMU)) at near double digit interest rates to accomplish the same thing, restore liquidity to the balance sheet.

There were at that time no buyers for the loans as there seemed no bottom in sight to the write-downs.

If nothing else, we can now surmise that the values of these assets are now to the point that they are going to now have a market value to them based on what is now actually selling rather than the “model based” valuations we have been seeing. This will give the market some confidence as to how to value what is left.

Disclosure (“none” means no position):Long C, None

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Whitney Tilson of T2 Partners discusses housing…..

Here is the link, you need to sign up but it is painless and there is no spamming from the registration.

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