Pershing’s Bill Ackman talks about Target (TGT), Ambac (ABK), Goldman Sachs (GS), sort selling and CDO’s. This is good stuff…
Disclosure (“none” means no position):None
Author: ToddSullivan
Categories
Circuit City Finally Admits it’s Failing
Circuit City (CC) CEO Phil “The Shill” Schoonover must be looking at sales numbers for the current quarter.
Schoonover has finally decided to open the books for Blockbuster (BBI) and billionaire Carl Icahn. A new letter to Blockbuster that was given to Circuit City from Icahn states that, “subject to him being satisfied with his due diligence review of Circuit City to be conducted concurrently with Blockbuster, Mr. Icahn and/or entities affiliated with him stand ready to purchase Circuit City if Blockbuster were unable to receive financing or required shareholder approval to do so after satisfactory due diligence, and assuming that required regulatory approvals are obtained.”
In an April 24th letter to Schoonover, Blockbuster CEO Jim Keyes said “We need to bring closure to this process. If we have not been provided the opportunity to begin due diligence by the close of business on April 28, 2008, we plan to announce that we are withdrawing our proposal to acquire Circuit City in light of your refusal to provide us access despite repeated efforts on our part to satisfy your concerns.”
Schoonover, at least smart enough to know this was his only option, relented.
Said Schoonover, “While the Circuit City board has confidence in the company’s ability to successfully implement its turnaround plan and generate shareholder value, we believe that we can best serve the interests of our shareholders by exploring all possible alternatives to enhance shareholder value. Let me be clear that our decision to allow Blockbuster and Carl Icahn to conduct due diligence should not be taken as an indication that the board has completed its review of the Blockbuster proposal, that the board has taken a position on the company’s value or that it has settled upon a particular strategic course of action.”
Translation? CC is in trouble and a purchase by either Blockbuster or Icahn are the only thing out there now that will save them and shareholders from destruction.
CC has been looking into a sale for quit some time now. Back in March I posted that they had retained Goldman Sachs (GS) as an “adviser” and speculated it was for a sale. It appears it was.
So, should we go buy shares anticipating a sale? No. There is no guarantee that CC management will be reasonable and get a deal done and Icahn, who is smarter than Schoonover in his sleep, will not pay more than he wants for the company.
Disclosure (“none” means no position):Long GS, None
Categories
Circuit City Finally Admits it's Failing
Circuit City (CC) CEO Phil “The Shill” Schoonover must be looking at sales numbers for the current quarter.
Schoonover has finally decided to open the books for Blockbuster (BBI) and billionaire Carl Icahn. A new letter to Blockbuster that was given to Circuit City from Icahn states that, “subject to him being satisfied with his due diligence review of Circuit City to be conducted concurrently with Blockbuster, Mr. Icahn and/or entities affiliated with him stand ready to purchase Circuit City if Blockbuster were unable to receive financing or required shareholder approval to do so after satisfactory due diligence, and assuming that required regulatory approvals are obtained.”
In an April 24th letter to Schoonover, Blockbuster CEO Jim Keyes said “We need to bring closure to this process. If we have not been provided the opportunity to begin due diligence by the close of business on April 28, 2008, we plan to announce that we are withdrawing our proposal to acquire Circuit City in light of your refusal to provide us access despite repeated efforts on our part to satisfy your concerns.”
Schoonover, at least smart enough to know this was his only option, relented.
Said Schoonover, “While the Circuit City board has confidence in the company’s ability to successfully implement its turnaround plan and generate shareholder value, we believe that we can best serve the interests of our shareholders by exploring all possible alternatives to enhance shareholder value. Let me be clear that our decision to allow Blockbuster and Carl Icahn to conduct due diligence should not be taken as an indication that the board has completed its review of the Blockbuster proposal, that the board has taken a position on the company’s value or that it has settled upon a particular strategic course of action.”
Translation? CC is in trouble and a purchase by either Blockbuster or Icahn are the only thing out there now that will save them and shareholders from destruction.
CC has been looking into a sale for quit some time now. Back in March I posted that they had retained Goldman Sachs (GS) as an “adviser” and speculated it was for a sale. It appears it was.
So, should we go buy shares anticipating a sale? No. There is no guarantee that CC management will be reasonable and get a deal done and Icahn, who is smarter than Schoonover in his sleep, will not pay more than he wants for the company.
Disclosure (“none” means no position):Long GS, None
Categories
AIG: New Math?
Am I the only one who just cannot reconcile this?
AIG (AIG) reported for the 2007 first quarter, AIG reported net income of $4.13 billion or $1.58 per diluted share. First quarter 2008 adjusted net loss, was $3.56 billion or $1.41 per diluted share, compared to adjusted net income of $4.39 billion or $1.68 per diluted share for the first quarter of 2007.
AIG also announced a plan to raise approximately $12.5 billion in capital to fortify its balance sheet and provide increased financial flexibility. The capital is to be raised through a common stock offering and an equity-linked offering for an aggregate of approximately $7.5 billion. At a later date AIG also expects to issue high equity content fixed income securities. These offerings are designed to further strengthen AIG’s significant financial resources and will enhance its ability to grow while maintaining the strength to withstand potential short-term market volatility.
Commenting on first quarter 2008 results, AIG President and Chief Executive Officer Martin J. Sullivan said, “AIG’s results do not reflect the underlying strengths and potential of AIG; rather they reflect the extremely adverse external conditions affecting the spectrum of companies exposed to the U.S. residential housing, credit and capital markets. The sizable unrealized losses and decline in partnership income were among the key drivers impairing our overall net performance. With that said, it is important to underscore that our operating strategies are working well in our core insurance businesses. We believe that our businesses provide an attractive foundation for growth for AIG over the long-term. As part of this effort, we are taking appropriate strategic actions to ensure our businesses are well positioned to capitalize on opportunities provided by the current environment.
“While we anticipated a difficult trading environment, the severity of the unrealized valuation losses and decline in value of our investments were beyond our expectations. Current market conditions also contributed to a significant decline in partnership income compared to a record level in the first quarter of 2007, as well as to declines in mutual fund income. However, the underlying fundamentals of our core businesses remain solid, and several performed quite well in the quarter, despite the challenging environment many faced.”
Now, of course the “underlying fundamentals of the business” are strong. You are an insurer and last I checked the insurance business was still ok. It is your performance in that business that was horrible and does not look to improve soon. Contrast this to Owens Corning’s (OC) results earlier this week that were very good in a industry that is current depressed. Given a choice between the two, I will take the latter.
Here is where it gets weird. Why is AIG announcing a 10% increase in the dividend? Why? This will cost $2.2 billion a year, an increase if $200 million. Not that much, but with a 6.8% dilution of shares coming up due to the offering, that amount will jump to $2.35 billion a year (not including whatever interest will be paid on the new convertible to be issued).
Now, if you need to raise $12 billion (10% of your market cap), you cannot also increase the dividend. How about keeping it and diluting shareholders less? They are going to be paying 6% to 8% on whatever is issued so the additional $200 million a year borrowed will cost another $12 to $16 million a year in interest to shareholders. The stock only yields 2% so it is not like we are talking big bucks for shareholders. Cutting it 10% would have saved $200 million.
This is just a sadly transparent attempt to pacify shareholders into thinking things are much better than the numbers would appear to prove.
Disclosure (“none” means no position):None
Categories
Wesco (WSC) Meeting Notes
Charlie Munger, Warren Buffett’s alter ego at Berkshire (BRK.A), is a great talker. Currently I prefer him to Warren if for no other reason Warren is simply overexposed currently and offers nothing new for us when he talks. Munger on the other hand is great and pulls no punches
Shai Dardashti documents the meeting:
Disclosure (“none” means no position):None
Categories
Greenspan Talks, No One Listens
After the better part of two years of incorrect predictions and an autopsy of what lead to the current credit environment, and his flaccid defense of his termAlan Greenspan’s statements no longer effect markets……thank god.
In a NY speach Greenspan said that the worst of the credit crunch was over. Now, this simply follows statements from Merrill Lynch’s (MER) John Thain, JP Morgan’s (JPM) Jamie Dimon, Berkshire’s (BRK.A) Warren Buffett and Treasury Secretary Hank Paulson saying the exact same thing.
The difference this time is that back in early 2007 when Greenspan was predicting a recession that has not developed, his words moved the market. Anything at the time out of the former Fed Head’s mouth was run on CNBC and front page news in the papers.
Now thankfully it merits little more than a 200 word article on the web.
It is funny how history judges us based on the results of our actions. Greenspan’s legacy was tarnished when years of virtually free money finally caught up to homeowners and his actions and statements since leaving the Fed have only hurt it more.
Has he just kept quiet after leaving, the current situation would have dissipated and his legacy may have remained in tact. But, by involving himself in it now and in effect hindering the efforts of his successor, Greenspan just may have permanently harm it….
Patriot fans say “everyone does it”. Ok. but if you are so dumb to be the only one to get caught, twice? How about the loyalty Belichik & Crew inspire? They should lose the entire 2009 daft.
It looks like the New England Patriots spied on more of their opponents than previously thought, including the Buffalo Bills.
ESPN.com reports, former Patriots employee Matt Walsh has turned over videos requested by the National Football League.
Those include video showing play-calling signals of five opponents, including the Bills, between 2000 and 2002.
The Patriots were previously fined 750,000 dollars and lost a first round draft choice for taping the New York Jets.
Categories
Friday’s Links
Gas, Inflation, Credit, Target (TGT) and Wal-Mart (WMT)
– Stop whining and recognize it could be so much worse
– Another one, things are just not that bad
– You mean, the world is not ending?
– If we would just let the market decide medical prices, things would so much cheaper
Visit the ValuePlays Bookstore for Great Investing Books
This work is licensed under a Creative Commons Attribution 2.5 License.
Categories
Friday's Links
Gas, Inflation, Credit, Target (TGT) and Wal-Mart (WMT)
– Stop whining and recognize it could be so much worse
– Another one, things are just not that bad
– You mean, the world is not ending?
– If we would just let the market decide medical prices, things would so much cheaper
Visit the ValuePlays Bookstore for Great Investing Books
This work is licensed under a Creative Commons Attribution 2.5 License.
Looks like another CEO who made a promise that was not kept is paying a price. span class=”fullpost”>
Wachovia (WB) has stripped Chief Executive Ken Thompson of his chairman role. The move separates the top management position from the top oversight role and is long overdue.
Wachovia named its lead independent director, Lanty Smith, to the position of nonexecutive chairman.
Thompson ought not get comfortable, why?
* The 2006 acquisition of California-based Golden West Financial Corp., a $25 billion deal whose timing, Thompson has acknowledged, “was not the best.”
* In April, Wachovia reported a first-quarter loss of $393 million and announced a 41 percent cut to its dividend.
* This week, that nearly doubled that number to $708 million, or 36 cents per share, after reviewing its portfolio of bank-owned life insurance.
* Last week, they said they may take an after-tax charge of between $800 million and $1 billion in the second quarter tied to past leasing transactions.
* A month ago, Wachovia agreed to pay $144 million to settle federal allegations that it failed to stop telemarketers who took advantage of thousands of elderly consumers.
* Rumors abound that federal prosecutors are investigating Wachovia in a probe into alleged laundering of drug proceeds by Colombian and Mexican money-transfer companies.
Far from getting comfortable, the move may be a precursor to letting Thompson “pursue other opportunities”. At this point, one can probably here former Citi (C) CEO Chuck Prince saying “how the hell does he still have a job”? You know what? He actually has a point. Thompson has hit a bad patch not seen in banking in a long time.
Even if we let go the loan write downs because no one has escaped that. In all reality, others have fared worse so Thompson should not be let go because of it. It is all the other stuff that really has no excuse.
When the Feds are snooping around for multiple reasons, it becomes apparent that there just may need to be a change at the top.
Disclosure (“none” means no position):Long WB, C
Looks like another CEO who made a promise that was not kept is paying a price. span class=”fullpost”>
Wachovia (WB) has stripped Chief Executive Ken Thompson of his chairman role. The move separates the top management position from the top oversight role and is long overdue.
Wachovia named its lead independent director, Lanty Smith, to the position of nonexecutive chairman.
Thompson ought not get comfortable, why?
* The 2006 acquisition of California-based Golden West Financial Corp., a $25 billion deal whose timing, Thompson has acknowledged, “was not the best.”
* In April, Wachovia reported a first-quarter loss of $393 million and announced a 41 percent cut to its dividend.
* This week, that nearly doubled that number to $708 million, or 36 cents per share, after reviewing its portfolio of bank-owned life insurance.
* Last week, they said they may take an after-tax charge of between $800 million and $1 billion in the second quarter tied to past leasing transactions.
* A month ago, Wachovia agreed to pay $144 million to settle federal allegations that it failed to stop telemarketers who took advantage of thousands of elderly consumers.
* Rumors abound that federal prosecutors are investigating Wachovia in a probe into alleged laundering of drug proceeds by Colombian and Mexican money-transfer companies.
Far from getting comfortable, the move may be a precursor to letting Thompson “pursue other opportunities”. At this point, one can probably here former Citi (C) CEO Chuck Prince saying “how the hell does he still have a job”? You know what? He actually has a point. Thompson has hit a bad patch not seen in banking in a long time.
Even if we let go the loan write downs because no one has escaped that. In all reality, others have fared worse so Thompson should not be let go because of it. It is all the other stuff that really has no excuse.
When the Feds are snooping around for multiple reasons, it becomes apparent that there just may need to be a change at the top.
Disclosure (“none” means no position):Long WB, C
After years of denying McDonalds (MCD) and Dunkin Donuts were the competition, Starbucks, (SBUX) in an SEC filing finally admitted they were.
The Seattle Times Reports:
“Starbucks’ former chief executive, Jim Donald, agreed not to work for McDonald’s or Dunkin’ Donuts as part of a noncompetition agreement he signed after being pushed out of the coffee company in January.
He can work for a grocery chain and other fast-food chains, including Wendy’s and Burger King, according to a securities filing by Starbucks today. But McDonald’s and Dunkin’ Donuts “directly compete with Starbucks field of business.”
In return for signing the noncompetition and confidentiality agreements, Donald will receive $1.25 million this year, an amount that Starbucks made public in January.”
He also has to be nice and not say bad things about Starbucks.
This is stunning. First you have CEO Howard Schultz denying the above companies are the competition, Donald himself denied it when he was CEO and now the finally admit it in an SEC filing. For how long have I been saying they just are not honest with shareholders?
I guess this is the question that needs to be asked. What makes Starbucks think either McDonalds or Dunkin would even want him? I mean really. They spent two years kicking him in the teeth to the point they got him fired, now they want him? Why?
This just goes to show the arrogance in Seattle. To actually think either company would be beating down his door just because he was their CEO is absurd. If anything, folks in Seattle ought to be trying to poach the management ranks of MCD or Dunkin.
Since they have officially put it in writing, we can now stop the “competition” games and just perhaps folks in Seattle can actually get down to improving the customer experience rather than just preaching it?
Alas, seeing as how this was slipped in the filing rather than just disclosed, it sadly appears to be more of the same.
Pathetic……….
Disclosure (“none” means no position): Long MCD, None
After years of denying McDonalds (MCD) and Dunkin Donuts were the competition, Starbucks, (SBUX) in an SEC filing finally admitted they were.
The Seattle Times Reports:
“Starbucks’ former chief executive, Jim Donald, agreed not to work for McDonald’s or Dunkin’ Donuts as part of a noncompetition agreement he signed after being pushed out of the coffee company in January.
He can work for a grocery chain and other fast-food chains, including Wendy’s and Burger King, according to a securities filing by Starbucks today. But McDonald’s and Dunkin’ Donuts “directly compete with Starbucks field of business.”
In return for signing the noncompetition and confidentiality agreements, Donald will receive $1.25 million this year, an amount that Starbucks made public in January.”
He also has to be nice and not say bad things about Starbucks.
This is stunning. First you have CEO Howard Schultz denying the above companies are the competition, Donald himself denied it when he was CEO and now the finally admit it in an SEC filing. For how long have I been saying they just are not honest with shareholders?
I guess this is the question that needs to be asked. What makes Starbucks think either McDonalds or Dunkin would even want him? I mean really. They spent two years kicking him in the teeth to the point they got him fired, now they want him? Why?
This just goes to show the arrogance in Seattle. To actually think either company would be beating down his door just because he was their CEO is absurd. If anything, folks in Seattle ought to be trying to poach the management ranks of MCD or Dunkin.
Since they have officially put it in writing, we can now stop the “competition” games and just perhaps folks in Seattle can actually get down to improving the customer experience rather than just preaching it?
Alas, seeing as how this was slipped in the filing rather than just disclosed, it sadly appears to be more of the same.
Pathetic……….
Disclosure (“none” means no position): Long MCD, None
Categories
Friday's Upgrades and Downgrades
Upgrades
Trans World (TWMC)- B. Riley & Co Neutral » Buy
Viacom (VIA)- BMO Capital Markets Market Perform » Outperform
Old Second Bancorp Inc. (OSBC)- Sandler O’Neill Sell » Hold
Capital Bank Corporation (CBKN)- FTN Midwest Neutral » Buy
ON Semiconductor (ONNN)- Canaccord Adams Hold » Buy
Wachovia (WB)- Credit Suisse Underperform » Neutral
F5 Networks (FFIV)- RBC Capital Mkts Sector Perform » Outperform
Allied Capital (ALD)- BB&T Capital Mkts Hold » Buy
Blackbaud (BLKB)- Jefferies & Co Underperform » Hold
Brandywine Realty (BDN)- RBC Capital Mkts Underperform » Sector Perform
Einstein Noah (BAGL)- Piper Jaffray Neutral » Buy
National Financial Partners (NFP)- Citigroup Hold » Buy
Anworth Mortgage (ANH)- Keefe Bruyette Mkt Perform » Outperform
Downgrades
MacQuarie Infrastructure (MIC)- BMO Capital Markets Outperform » Market Perform
DRS Tech (DRS)- Morgan Joseph Buy » Hold
Momenta Pharma (MNTA)- Bear Stearns Outperform » Peer Perform
Quicksilver Resrcs (KWK)- CapitalOne southcoast Add » Neutral
InterNAP (INAP)- Stanford Research Buy » Hold
Credicorp LTD (BAP)- JP Morgan Overweight » Neutral
YRC Worldwide (YRCW)- Stifel Nicolaus Hold » Sell
Transocean (RIG)- Stifel Nicolaus Buy » Hold
Arkansas Best (ABFS)- Stifel Nicolaus Buy » Hold
Neustar (NSR)- Credit Suisse Outperform » Neutral
InterNAP (INAP)- Cowen & Co Outperform » Neutral
Jefferies Group (JEF)- Wachovia Mkt Perform » Underperform
Boston Beer Co (SAM)- HSBC Securities Overweight » Neutral
Fedrl Rlty Inv Trst (FRT)- Cantor Fitzgerald Buy » Hold
Weingarten Realty (WRI)- Cantor Fitzgerald Hold » Sell
SoundBite Communications (SDBT)- Cantor Fitzgerald Buy » Hold
InterNAP (INAP)- Roth Capital Buy » Hold
Pacific Capital Bancorp (PCBC)- RBC Capital Mkts Sector Perform » Underperform
LifeCell (LIFC)- Wachovia Outperform » Mkt Perform
Alesco (AFN)- RBC Capital Mkts Sector Perform » Underperform
Sprint Nextel (S)- Soleil Overweight » Equal Weight
Orbitz (OWW)- Piper Jaffray Buy » Neutral
Macrovision (MVSN)- Deutsche Securities Buy » Hold
Chelsea Therapeutics (CHTP)- Oppenheimer Outperform » Perform
Eagle Bulk Shipping (EGLE)- Bear Stearns Outperform » Peer Perform
Tenaris (TS)- Citigroup Buy » Hold
Smith & Nephew (SNN)- Citigroup Buy » Hold
Dayton Superior (DSUP)- Robert W. Baird Outperform » Neutral
Clearwire (CLWR)- Citigroup Hold » Sell
Weingarten Realty (WRI)- Citigroup Hold » Sell
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This work is licensed under a Creative Commons Attribution 2.5 License.
Categories
Friday’s Upgrades and Downgrades
Upgrades
Trans World (TWMC)- B. Riley & Co Neutral » Buy
Viacom (VIA)- BMO Capital Markets Market Perform » Outperform
Old Second Bancorp Inc. (OSBC)- Sandler O’Neill Sell » Hold
Capital Bank Corporation (CBKN)- FTN Midwest Neutral » Buy
ON Semiconductor (ONNN)- Canaccord Adams Hold » Buy
Wachovia (WB)- Credit Suisse Underperform » Neutral
F5 Networks (FFIV)- RBC Capital Mkts Sector Perform » Outperform
Allied Capital (ALD)- BB&T Capital Mkts Hold » Buy
Blackbaud (BLKB)- Jefferies & Co Underperform » Hold
Brandywine Realty (BDN)- RBC Capital Mkts Underperform » Sector Perform
Einstein Noah (BAGL)- Piper Jaffray Neutral » Buy
National Financial Partners (NFP)- Citigroup Hold » Buy
Anworth Mortgage (ANH)- Keefe Bruyette Mkt Perform » Outperform
Downgrades
MacQuarie Infrastructure (MIC)- BMO Capital Markets Outperform » Market Perform
DRS Tech (DRS)- Morgan Joseph Buy » Hold
Momenta Pharma (MNTA)- Bear Stearns Outperform » Peer Perform
Quicksilver Resrcs (KWK)- CapitalOne southcoast Add » Neutral
InterNAP (INAP)- Stanford Research Buy » Hold
Credicorp LTD (BAP)- JP Morgan Overweight » Neutral
YRC Worldwide (YRCW)- Stifel Nicolaus Hold » Sell
Transocean (RIG)- Stifel Nicolaus Buy » Hold
Arkansas Best (ABFS)- Stifel Nicolaus Buy » Hold
Neustar (NSR)- Credit Suisse Outperform » Neutral
InterNAP (INAP)- Cowen & Co Outperform » Neutral
Jefferies Group (JEF)- Wachovia Mkt Perform » Underperform
Boston Beer Co (SAM)- HSBC Securities Overweight » Neutral
Fedrl Rlty Inv Trst (FRT)- Cantor Fitzgerald Buy » Hold
Weingarten Realty (WRI)- Cantor Fitzgerald Hold » Sell
SoundBite Communications (SDBT)- Cantor Fitzgerald Buy » Hold
InterNAP (INAP)- Roth Capital Buy » Hold
Pacific Capital Bancorp (PCBC)- RBC Capital Mkts Sector Perform » Underperform
LifeCell (LIFC)- Wachovia Outperform » Mkt Perform
Alesco (AFN)- RBC Capital Mkts Sector Perform » Underperform
Sprint Nextel (S)- Soleil Overweight » Equal Weight
Orbitz (OWW)- Piper Jaffray Buy » Neutral
Macrovision (MVSN)- Deutsche Securities Buy » Hold
Chelsea Therapeutics (CHTP)- Oppenheimer Outperform » Perform
Eagle Bulk Shipping (EGLE)- Bear Stearns Outperform » Peer Perform
Tenaris (TS)- Citigroup Buy » Hold
Smith & Nephew (SNN)- Citigroup Buy » Hold
Dayton Superior (DSUP)- Robert W. Baird Outperform » Neutral
Clearwire (CLWR)- Citigroup Hold » Sell
Weingarten Realty (WRI)- Citigroup Hold » Sell
Visit the ValuePlays Bookstore for Great Investing Books
This work is licensed under a Creative Commons Attribution 2.5 License.