Tricks, FSA, China, Whitman
– A funny bar trick to get a phone number
– More bonus “threats” from the government
– Marty has a great track record. Anything he says bears reading/listening to
Disclosure (“none” means no position):
Tricks, FSA, China, Whitman
– A funny bar trick to get a phone number
– More bonus “threats” from the government
– Marty has a great track record. Anything he says bears reading/listening to
Disclosure (“none” means no position):
I’ve said it before and i’ll say it again……financials earnings are not to be taken at face value…..Until access to capital is normalized they are essentially making money off cheap gov’t funds. Because of that, saying this was a good/great quarter isn’t totally true. For what it is worth, the same can be said of every other bank also, this is not unique to Wells.
Here is the Wells Fargo (WFC) press release:
WFC Q2 2009
The stock is selling off because of the build in reserves. The expectation from WFC is that the current levels will cover losses there for the next 12-24 months. It is a guess, nothing more. We are in times that none of the managers there have gone through (or at any other banking institution) so to say “we have enough for “x” time frame” is an educated guess, nothing more.
I am still holding WFC shares (down about 10%) because I still think two years from now, there will be essentially three banks left, WFC, Bank of America (BAC) and JP Morgan (JPM) along with thousands of players dwarfed by those three.
Why WFC? If/when Congress decides these institutions are now “to big to fail” and decides to pass legislation to make them less so, my guess is that the investment bank divisions will be the ones separated from the depository institutions. If that happens BAC and JPM will be much more adversely affected than WFC which has made a huge push into insurance services over the last year and whose recent results are less dependent on those operations.
Disclosure (“none” means no position):Long WFC
The details of this are great…..for Baupost and Klarman..
HedgeFund.net reports:
A Boston hedge fund is taking part in the multibillion-dollar bailout of CIT Group.
The hedge fund, Baupost Group, has agreed to pitch in for the $2 billion bridge loan Barclays Capital put together for the commercial finance company. Century-old CIT Group is facing bankruptcy after the government rejected its request for a second bailout.
Baupost Group is a bondholder in CIT Group. In addition to the hedge fund, the $2 billion loan is comprised of private equity capital. Centerbridge, Oaktree Capital Management and Silver Point Capital Management are contributing a chunk of the financing.
Pacific Investment Management Co., headed by bond king Bill Gross, is the largest bondholder in CIT Group, followed by mutual fund company Capital Research & Management.
CIT Group is expecting to raise an additional billion. The New York company has lost $3 billion since 2008, and was granted a $2.4 billion rescue in December. CIT Group has a $75 billion asset base.
Baupost Group is run by value investor Seth Klarman, who joined the company at 25 after graduating from Harvard Business School. He has published a book on investing, and in May bought a piece of professional baseball franchise the Boston Red Sox.
Baupost Group has $16 billion in capital.
The terms are for a $3B cash injection secured by $30B in assets. The loans pay a 13% initial interest rate (10% above LIBOR with a 3% floor).
Not a bad deal at all…..
Disclosure (“none” means no position):
Great line:
Warren Buffett once wrote that the concept of value investing is like an inoculation- — it either takes or it doesn’t — and when you explain to somebody what it is and how it works and why it works and show them the returns, either they get it or they don’t. Ultimately, it needs to fit your character. If you have a need for action, if you want to be involved in the new and exciting technological breakthroughs of our time, that’s great, but you’re not a value investor and you shouldn’t be one. If you are predisposed to be patient and disciplined, and you psychologically like the idea of buying bargains, then you’re likely to be good at it.
Seth Klarman – IIMagazine -2008
Disclosure (“none” means no position):
Transparency, Short, Housing, Kindle
– This is the problem when you promise the world and people buy it hook line a sinker……you have to deliver or they turn fast..
– Before we get too carried away on the rally, here is a logical reason not to be
– Then again, here is a reason housing may have bottomed and if that is true, the rally may be for real
– Amazon needs to get out in front of the Kindle press. From glowing last year to “bitchy” this year (for lack of a better word), if folks are going to pony up hundreds for it, the press needs to be glowing..
Disclosure (“none” means no position):
Transparency, Short, Housing, Kindle
– This is the problem when you promise the world and people buy it hook line a sinker……you have to deliver or they turn fast..
– Before we get too carried away on the rally, here is a logical reason not to be
– Then again, here is a reason housing may have bottomed and if that is true, the rally may be for real
– Amazon needs to get out in front of the Kindle press. From glowing last year to “bitchy” this year (for lack of a better word), if folks are going to pony up hundreds for it, the press needs to be glowing..
Disclosure (“none” means no position):
AutoNation (AN) is taking a unique tact….very unique.
AutoNation says:
Our strategy was to demystify the car buying experience through video. This video was created as a highlights clip to show what you can expect to see from car reviews to how to purchase the right vehicle. Stay tuned, we have more content being relased in the next few months.
Now admittedly the first video is a bit more like a commercial than informative car buying video but as more and more car buyers are part of the YouTube Generation, engaging them in their preferred medium is a great strategy. If the channel is done right and made informative, it becomes both a sales and consumer research channel and the brand loyalty that can be created from that is huge.
From a pure business standpoint it is a very cheap effort that has potentially huge upside if it is done right. If they muck it up the downside is minimal….
Disclosure (“none” means no position):Long AN
Simply put, this will be ” the largest introduction of a corn biotech seed product in the history of agriculture.”
From the release:
U.S. and Canadian farmers are one step closer to realizing the greater whole farm corn yield advantages of a new corn seed trait combination that will provide the most comprehensive insect and weed control and allow farmers to significantly reduce their refuge. These benefits will be realized through SmartStax™, which is the outcome of a cross licensing agreement and research and development collaboration signed in 2007 between Monsanto Company (NYSE: MON) and Dow AgroSciences LLC, a wholly owned subsidiary of The Dow Chemical Company (NYSE: DOW).
SmartStax, the agriculture industry’s most advanced, all-in-one corn trait platform, received registration from the U.S. Environmental Protection Agency (EPA) and regulatory authorization from the Canadian Food Inspection Agency (CFIA) and remains on track for a 2010 commercial launch. SmartStax combines each company’s industry-leading corn traits to provide farmers the absolute broadest spectrum of above- and below-ground protection available against insects and weeds versus any product in the market today.
Using multiple modes of action for insect control is the state-of-the-art proven means to reduce structured refuge and maintain long-term durability of corn trait technologies. SmartStax uniquely features a combination of insect control traits that significantly reduces the risk of resistance for both above- and below-ground pests. As a result, the decisions by the EPA and CFIA will allow reduction of the typical structured farm refuge from 20 percent to 5 percent for SmartStax in the U.S. Corn Belt and Canada, and from 50 percent to 20 percent in the U.S. Cotton Belt.
As part of today’s announcement, the companies noted that the new corn seed technology is expected to be offered to farmers on 3 million- to 4-million-plus acres in its first year of availability. The product’s launch would represent the largest introduction of a corn biotech seed product in the history of agriculture.
“Farmers are the real winners with SmartStax,” said Robb Fraley, Monsanto Chief Technology Officer and Executive Vice President. “The 5 percent refuge for SmartStax will give farmers a tremendous advantage to increase whole farm corn yield 5 to 10 percent. This is a key early step in our commitment to helping farmers sustainably double yields by 2030 to meet the increasing demands for grain for food, feed and fuel. This reduced refuge will be easier for farmers and will further reduce insecticide use while reducing grower risks and enhancing the long-term durability of the technology.”
If we haven’t talk enough here about the reasons for Dow NOT to sell Dow Ag, here is another. Let’s also not forget that Dow and Monsanto have a 10yr. agreement to develop more products by sharing each other seed lines. That means this is the first of more to come.
It is also true that the significance of this is being ignored/not understood by the media and investors. We live in a time in which we are being told “buy farmland” because the world population is on a relentless surge and folks need to eat, inflationary pressures should the develop favor physical things and biofuels are here to stay and corn is their principle feedstock. So, we now have an item that has shown to boost yields 5%-10% and there is not much being said about it? For those not sure, a 10% yield boost to a farmer is simply massive…
Again, after the year Dow has had, it is safe to say people are in a “prove it” frame of mind before taking the plunge. Who can blame them. It does mean that when it is proven, piling in will occur and we know that leads to rapid share appreciation. So
be patient and hold on when it happens.
Disclosure (“none” means no position):Long Dow ,None
Simply put, this will be ” the largest introduction of a corn biotech seed product in the history of agriculture.”
From the release:
U.S. and Canadian farmers are one step closer to realizing the greater whole farm corn yield advantages of a new corn seed trait combination that will provide the most comprehensive insect and weed control and allow farmers to significantly reduce their refuge. These benefits will be realized through SmartStax™, which is the outcome of a cross licensing agreement and research and development collaboration signed in 2007 between Monsanto Company (NYSE: MON) and Dow AgroSciences LLC, a wholly owned subsidiary of The Dow Chemical Company (NYSE: DOW).
SmartStax, the agriculture industry’s most advanced, all-in-one corn trait platform, received registration from the U.S. Environmental Protection Agency (EPA) and regulatory authorization from the Canadian Food Inspection Agency (CFIA) and remains on track for a 2010 commercial launch. SmartStax combines each company’s industry-leading corn traits to provide farmers the absolute broadest spectrum of above- and below-ground protection available against insects and weeds versus any product in the market today.
Using multiple modes of action for insect control is the state-of-the-art proven means to reduce structured refuge and maintain long-term durability of corn trait technologies. SmartStax uniquely features a combination of insect control traits that significantly reduces the risk of resistance for both above- and below-ground pests. As a result, the decisions by the EPA and CFIA will allow reduction of the typical structured farm refuge from 20 percent to 5 percent for SmartStax in the U.S. Corn Belt and Canada, and from 50 percent to 20 percent in the U.S. Cotton Belt.
As part of today’s announcement, the companies noted that the new corn seed technology is expected to be offered to farmers on 3 million- to 4-million-plus acres in its first year of availability. The product’s launch would represent the largest introduction of a corn biotech seed product in the history of agriculture.
“Farmers are the real winners with SmartStax,” said Robb Fraley, Monsanto Chief Technology Officer and Executive Vice President. “The 5 percent refuge for SmartStax will give farmers a tremendous advantage to increase whole farm corn yield 5 to 10 percent. This is a key early step in our commitment to helping farmers sustainably double yields by 2030 to meet the increasing demands for grain for food, feed and fuel. This reduced refuge will be easier for farmers and will further reduce insecticide use while reducing grower risks and enhancing the long-term durability of the technology.”
If we haven’t talk enough here about the reasons for Dow NOT to sell Dow Ag, here is another. Let’s also not forget that Dow and Monsanto have a 10yr. agreement to develop more products by sharing each other seed lines. That means this is the first of more to come.
It is also true that the significance of this is being ignored/not understood by the media and investors. We live in a time in which we are being told “buy farmland” because the world population is on a relentless surge and folks need to eat, inflationary pressures should the develop favor physical things and biofuels are here to stay and corn is their principle feedstock. So, we now have an item that has shown to boost yields 5%-10% and there is not much being said about it? For those not sure, a 10% yield boost to a farmer is simply massive…
Again, after the year Dow has had, it is safe to say people are in a “prove it” frame of mind before taking the plunge. Who can blame them. It does mean that when it is proven, piling in will occur and we know that leads to rapid share appreciation. So
be patient and hold on when it happens.
Disclosure (“none” means no position):Long Dow ,None
It would appear that some bottom fishing may be happening in commercial real estate finance..
Reuters Reports:
NEW YORK (Reuters) – Several large investment firms are creating new lending companies that plan to go public to raise billions of dollars to take advantage of the distress in the commercial real estate market, and more are on the horizon.
The planned IPOs, which include units of firms like Apollo Management APOLO.UL and Alliance Bernstein Holding LP, could be just the beginning of what some bankers expect to be a boom in Real Estate Investment Trusts (REITs) going public over the next few years.
The U.S. commercial real estate market has been reeling ever since a prime source of financing, the commercial mortgage-backed securities (CMBS) market, virtually closed and banks shut off their lending spigots in the past year.
“In the real estate world, the next few years will be defined by a lack of capital,” said Michael Knott, a senior analyst with Green Street Advisors.
According to a recent Deutsche Bank report, as much as $40 billion will be needed to salvage about $420 billion of CMBS mortgages maturing over the next 10 years.
More recently, the sector has grappled with falling rents and rising vacancies driven by the recession.
The dislocation in the real estate and CMBS markets has prompted several top investment firms to create REITS that will aim to buy up, manage and originate commercial real estate loans.
“As assets start to come on the market and distress in commercial real estate increases, REITs will be the buyer of choice, and they will get bigger and bigger,” said Brad Smith, managing director for equity capital markets at Bank of America Merrill Lynch.
With significant amounts of mortgages coming due in the next three years, there will be demand for loans that traditional players such as banks have been unable or unwilling to make.
In the past two months alone, eight REITs have filed for IPOs seeking to raise up to $3.9 billion, a larger pipeline than that of traditional IPOs, according to Thomson Reuters.
For instance, an affiliate of private equity firm Apollo Management last week filed for a $600 million IPO to take advantage of what it called a “void of several hundred-billion dollars” that must be filled by new mortgage lenders.
The newly formed companies were set up as REITs, a tax structure that exempts companies earning most of their revenue from either rent or mortgages from paying taxes on their taxable income if the company distributes 90 percent of that to shareholder
Now for REIT’s with large debt rollovers coming due, anything that begins to shake the market loose, now at a standstill will be very welcome. What remains to be seen is what investor appetite for these IPO’s ends up being.
It ends up making it feast or famine scenario. If the IPO’s get big interest, the simple sentiment boost would rally the market. Should they not, one can easily see despair setting in rather quickly.
Too soon to tell what the impact will be but one has to pay attention to it.
Disclosure (“none” means no position):
Data, Austrian, Sears, Bankruptcy
– I do not think it is purposely being manipulated, but I do think the calculations of them, especially CPI are flawed and that undermines confidence
– Much has been said/written about the “Austrian School” of economics. Here is a good explanation of it
– A good series of posts on Sears
– Bondholders can win big……really big
Disclosure (“none” means no position):
Data, Austrian, Sears, Bankruptcy
– I do not think it is purposely being manipulated, but I do think the calculations of them, especially CPI are flawed and that undermines confidence
– Much has been said/written about the “Austrian School” of economics. Here is a good explanation of it
– A good series of posts on Sears
– Bondholders can win big……really big
Disclosure (“none” means no position):
So we know the Fed missed the housing bubble and then underestimated its severity. Remember Greenspan’s (in)famous remark that “housing bubbles were local phenomena and present no risk to the greater economy”? We also know they underestimated the severity of job losses and the economic decline.
I guess the only question left after reading this is…..how can Bernanke be so sure of anything he is saying, especially when their recent track record at predicting future events has been stunningly more wrong than right? Shouldn’t he have a “Plan B”?
Disclosure (“none” means no position):
So we know the Fed missed the housing bubble and then underestimated its severity. Remember Greenspan’s (in)famous remark that “housing bubbles were local phenomena and present no risk to the greater economy”? We also know they underestimated the severity of job losses and the economic decline.
I guess the only question left after reading this is…..how can Bernanke be so sure of anything he is saying, especially when their recent track record at predicting future events has been stunningly more wrong than right? Shouldn’t he have a “Plan B”?
Disclosure (“none” means no position):