Month: October 2008

Funny, Funny, Funny

After the past two week’s, some humor is needed

– A “bromance”?

– Joe the Plumber MBA

– Paulson

– Steve Jobs

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for those who have been depressed by Whitney Tilson for the past year (not that he hasn’t been correct), it seems as thought his tuned has decidedly changed.

Whitney is saying we are “close to a bottom”. He said the are “bargains galore out there”. Whitney is buying blue chips like Berkshire Hathaway (BRK.A), American Express (AXP), Johnson & Johnson (JNJ), Coke (KO), Wal-Mart (WMT). He is also buying energy names that have “puked out by hedge funds” during the recent forced selling. He is buying MLP’s as they are “toll road” companies like Contango (MCF).

Whitney did manage to slip a plug for in but hide his infatuation for Barack Obama.

Video:

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Not only has Yahoo’s (YHOO) Jerry Yang cost investors a small fortune by his rebuttle of Microsoft’s (MSFT) overtures, he he cost his own employees a bundle. They, like shareholders are less than pleased.

From the WSJ:

Now that Jerry Yang is planning to cut 10% of Yahoo’s work force, he might want to contemplate saving a bit more money by firing some of his advisers.
[Yahoo’s daily share price]

Not only did the Yahoo CEO end up turning down Microsoft’s $33-a-share offer for his company, a price that now feels like a distant memory, but he paid through the nose for advice on doing so.

Yahoo disclosed late Tuesday in its third-quarter earnings release that it spent $37 million on advisory fees in the third quarter — a million dollars more than it had spent on advice over the previous two quarters combined.

The amount was big enough to make a significant impact on Yahoo’s operating income, which fell 53% to $70 million in the quarter. Without the fees, Yahoo’s operating income would have been down only — yes, only — 28.6%.

I know a couple Yahoo employees who are, to put it nicely, disillusioned. News of layoffs now have them looking for other employment. This summer’s hopeful mood had gone by the wayside and turned into distrust.

Yang has lost any credibility he had with employees and they, en mass, are looking elsewhere. News that he paid people to help him lose them money and cost them jobs has many laughing is disgust. They now, too a person have lost faith in their leader to resurrect the company and its stock price.

Watch the brain drain begin…

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Wal-Mart’s CEO Lee Scott(WMT) ought to know.

If he is right, then the current drop ought to bode a bit better for the upcoming holiday season that a lot pf people are thinking.

Disclosure (“none” means no position):Long WMT
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Some notes from the National City (NCC) earnings call.

From the presentation, here is a look at the current credit portfolio performance:

Home Equity portfolio is remaining stable:

Non-Prime mortgage exposure has dropped dramatically:

Q&A Merger Talk:
Kevin St. Pierre – Sanford Bernstein Co.
“Peter, just to address some of the issues the last two callers asked from a different perspective, it looks like your stock is going to open down again today, market price of about $3 per share and a bit below and tangible book value of just over $6 so the market is clearly pricing in a non-zero probability that National City has to either fail or partner up in a take under.

With the performance improvement initiative and with deposits apparently stabilizing since the end of September, you don’t sound to me like a company in a panic mode or running to a partner to rescue you. Could you comment on that assessment?”

CEO Peter E. Raskind
“Well, I guess I’d say the following, first I would profess to comment on what the market is or is not thinking about with respect to pricing our stock. Secondly, we are doing what we think are all the right things to take this company forward in to the future as we have described this morning including the performance improvement initiative of course.

All that said, as we have always said and I’ll repeat again today, this will always be the case, we will always do what’s best for our shareholders. In any given point, if there’s a transaction that makes more sense for our shareholders than continuing on, of course our board will fulfill its obligations by considering that and acting upon it if appropriate. That has always been the case, it remains the case today.”

Nancy Bush – NAB Research, LLC
“My other question here would just go back to the previous question and obviously with your stock at $3 or whatever, there are concerns about viability and I would just reflect that at the time that Wachovia failed they were also telling us that they had adequate capital but the issue seemed to be debt downgrades and these silent runs by corporate customers.

Do you think that the environment has changed sufficiently now that a) the Moody’s indicated that they might downgrade your debt that the rating agencies will look at you differently and are you fairly sanquant that corporate customers are a little more comfortable now than they were a month ago?”

Peter E. Raskind
“Well, it’s hard to forecast what Moody’s will or won’t do. You’re quite right, they do have us in review for downgrade and we’re in very, very close contact with Moody’s and the other rating agencies on a regular basis as we have always been. As it relates to corporate customers, we’ve tried this morning to be as trans as we can be about what we’ve experienced over the last quarter.

We do think that the actions taken last week specifically the FDIC guarantee now of all transactions accounts without limit is a very powerful mechanism to calm corporate customers who may be concerned whether it’s for National City or any other institution in the country. As I think Tom mentioned in this remarks, I mean we have already seen in the early going a greater sense of calm on the part of our customer base whether they be corporate or consumer.

So, we’ll see how that plays out over time. I would remind you that while the share price is $3 as you point out, in terms of market cap, that translates to over $6 billion of market cap given our new share count after the conversion of the Series G preferred in September. Those are all the comments I would offer. We stand by our comments this morning.”

Full Transcript

Audio (MP3)

Full Presentation (PDF)

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Flip, Taleb, Crammer, under water

– Can’t wait to try this out..

– Doing well in a disaster

– This is cool

– 1 in 6

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This is good stuff….is there anyone better than Charlie?

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Just how big will the new Wells Fargo (WFC)be?

The Fed Commented tonight:

Based on data as of June 30, 2008, which represent the latest adjusted deposit data available from all insured depository institutions, the total amount of deposits of insured depository institutions in the United States was approximately $7.195 trillion. The data indicate that, on June 30, 2008, Wells Fargo controlled deposits
of approximately $298.2 billion, and Wachovia controlled deposits of approximately
$429.6 billion.

As of that date, the combined firm would have controlled approximately 10.116 percent of the total amount of deposits of insured depository institutions in the
United States on consummation of the proposal. Wells Fargo and Wachovia provided data on their respective adjusted deposit totals as of September 30, 2008. These data indicate that, on a combined basis, Wells Fargo would control approximately $731.1 billion in deposits on consummation of the proposal.

Deposit amounts for other insured depository organizations are not available because institutions are not required to file Call Reports for the third quarter until the end of October, and such data will not be available for review until later in November.

The prohibition in the BHC Act, by its terms, applies if “upon consummation of the acquisition (emphasis added)” the applicant would control more than 10 percent of the total amount of deposits of insured depository institutions in the United States. While the June 30, 2008, deposit data are the most recent data currently available on a uniform basis, the Board believes that other evidence indicates
that the June 30, 2008, data do not reflect the current situation nor would those data accurately reflect the deposit ratio at the time required by the statute, which is the time of consummation of the acquisition.

Other data sources indicate, for example, that the total amount of deposits
in the United States has significantly increased since June 30, 2008. Deposit data
collected by the Federal Reserve in its survey of domestically chartered commercial
banks and reported on the Board’s H.8 Release (Assets and Liabilities of Commercial
Banks) for September 2008 indicate that total deposits of insured commercial banks in
the United States increased by approximately 3.9 percent during the third quarter of 2008.

Estimated nationwide deposit growth in excess of 3 percent is corroborated by other
deposit data sources. If total deposits reported on June 30, 2008, are adjusted to
account for this level of growth, the combined deposits of Wells Fargo and Wachovia
as of September 30, 2008, would be below 10 percent of nationwide deposits. Indeed,
Wells Fargo’s percentage of total nationwide deposits would be less than 10 percent if adjusted deposits for all insured depository institutions in the United States grew by at least 1.62 percent since June 30, 2008, which would result in a total amount of adjusted deposits all for insured depository institutions of at least $7.311 trillion.

Based on all the information available to the Board, the Board concluded that the combined organization would not control an amount of deposits that would exceed the nationwide deposit cap on consummation of the proposal. To ensure compliance with the deposit limits on acquisitions, Wells Fargo has committed that, on consummation, the combined organization would not exceed the nationwide deposit cap based on the data reported by all depository institutions as of September 30, 2008. This commitment includes a commitment that Wells Fargo will reduce its deposits by any amount that exceeds the nationwide deposit cap based on Call Report data as of September 30, 2008, by no later than December 31, 2008.

More followed:

The Board has carefully considered the proposal under the financial factors. The proposed transaction is structured as a share exchange. The subsidiary depository institutions of Wells Fargo and Wachovia are well capitalized and would remain so on consummation of this proposal. Wells Fargo is well capitalized and has announced that it intends to raise additional capital. In light of its capital-raising efforts,
Wells Fargo would remain well capitalized after consummation of this proposal.

The Board has also considered the other financial factors noted above in light of information provided by Wells Fargo and Wachovia and supervisory information available to the Federal Reserve through its supervision of these companies and from the primary supervisors of the depository institution subsidiaries of these companies. Based on its review of the record, the Board finds that Wells Fargo has sufficient resources to effect the proposal.

Now, it is just me or does the Fed seem to be making some assumptions on deposits here to make sure Wells Fargo comes in under the 10%? I thought bank’s troubles were that people were taking out money? Wasn’t that what we were told? But according to the Fed, banks are being flooded with cash from depositors.

Here is the number to watch. If “deposits” have grown by less than 1.62% since June, then Wells is over the 10%. Anything more, they squeak under the limit.

Either way, shareholders for Wells ought to sleep better knowing we have such a massive deposit base to work off..

Full release

Disclosure (“none” means no position):Long WFC
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