For those not keeping score, AutoNation’s (AN) stock has almost doubles the past month. Jackson makes a good point that banks were bailed out and are now sitting on that money causing the auto crisis. It is a hard argument to dispute as there are buyers, they just cannot get loans for the cars..
Yesterday on FOX
Today on Bloomberg:
Disclosure (“none” means no position):Long AN
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Is it just me or does Rick win this hands down?
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OJ, Commodities, Self-control, Cars
– “At least I didn’t kill no one this time“
– No one buying
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What is the plan here? We know General Growth (GGP) is in a tight spot. But, with Citi (C) taking a 5% stake, the debt is all but assured to be refinanced. Some thoughts at the end, does it have to do with Target?
Hedge fund manager William Ackman’s Pershing Square Capital Management LP disclosed that it owns a 7.5 percent stake in General Growth Properties. Pershing Square directly owns a total of 20 million shares in the REIT.
The company also said it owned 48.5 million shares through total return swaps, bringing its economic interest in the company to 68.6 million shares (over 18%).
SEC Filing
“The Subject Shares are beneficially owned by the Reporting Persons. Furthermore, the Reporting Persons entered into Swaps for the benefit of Pershing Square, L.P. (the “PSLP Swaps”), Pershing Square II, L.P. (the “PSII Swaps”) and Pershing Square International, Ltd (the “PSIL Swaps”, collectively with the PSLP Swaps and PSII Swaps, the “Pershing Square Swaps”) on the dates described on Exhibit 99.1. The Pershing Square Swaps constitute economic exposure to approximately 18.1% notional outstanding Common Shares in the aggregate, have reference prices ranging from $0.49 to $1.58 and expire on the dates described on Exhibit 99.1.
Under the terms of the Pershing Square Swaps (i) the applicable Pershing Square Fund will be obligated to pay to the counterparty any negative price performance of the notional number of Common Shares subject to the applicable Pershing Square Swap as of the expiration date of such Swap, plus interest at the rates set forth in the applicable contracts, and (ii) the counterparty will be obligated to pay to the applicable Pershing Square Fund any positive price performance of the notional number of Common Shares subject to the applicable Pershing Square Swap as of the expiration date of the Swaps. With regard to the Pershing Square Swaps, any dividends received by the counterparty on such notional Common Shares will be paid to the applicable Pershing Square Fund during the term of the Swap. All balances will be cash settled at the expiration date of the Swaps. The Pershing Square Funds’ third party counterparties for the Pershing Square Swaps include entities related to BNP Paribas, Citibank, Morgan Stanley and UBS. “
Here is the trading data:
Now, if we really want to go further with this we could look at Target (TGT). The buying here coincided with Target’s lukewarm response to Ackman’s Target REIT plan. It picked up heavily after his second proposal to the company.
After Target dismissed it, Ackman added over 25 million share directly and another 30 million through the swaps. I rarely find too much pure coincidence in timing like this.
What then? Perhaps he could offer up GGP to Target (TIP REIT) to expand it presence? Perhaps off to have GGP run TIP REIT to take the burden of running it off Target execs hands? After all, it was one of the objections Target put forward, albeit a very weak one.
Perhaps placing them into a JV to share the running and vastly expand the footprint of them…it would also give Target access to cheap land to expand.
Who knows…….something is up though…
Disclosure (“none” means no position):None
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After heaping piles of BS on shareholders for most of the year, John Thain wants to kick them in the chops one more time.
Here is the news:
Merrill Lynch (MER) CEO John Thain has suggested to directors that he get a 2008 bonus of as much as $10 million, but the firm’s compensation committee is resisting his request. The committee and full board are scheduled to meet later Monday to hear Thain’s formal bonus recommendations for himself and other senior executives, the report said. It isn’t known what Thain will recommend, but the compensation committee is leaning toward denying the executives bonuses for this year, the report said. Merrill Lynch has been acquired by Bank of America (BAC) .
Remember when in April and then again in May Thain said Merrill was just fine and would not need more capital?
Then, in order to not raise capital, Thain instead sold assets and said he meant “through equity offerings” in his previous statements.
If that was not bad enough we get news that the assets they sold were essentially sold by them through non-recourse financing. Thain essentially paid folks to take the junk off their books.
Finally he gave up, threw in the towel and sold out to Bank of America…
I guess he is right, sounds like it is worth at least $10 million…Imagine what he would have got if he actually did a decent job?
Disclosure (“none” means no position):none
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If everyone calls a bottom, does it matter?
Here are some recent calls:
Reuters had this article that carried the following:
“Bill Miller said that all long-term investors believe that stocks today are cheap, but credit markets must regain health before equity markets can rally. It “looks as if the bottom has been made” in U.S. stocks, said Miller, who runs Legg Mason’s $7.6 billion Value Trust fund.”
“”We are in a bottoming process in the markets, but that doesn’t mean we are now entering a bull-market phase,” said Brian Gendreau, an investment strategist in New York for ING Investment Management Americas. “Things take time to work itself out.””
“”All year, people have been so pessimistic that any kind of bad news and the market just goes down,” said Chris Orndorff, who helps oversee $50 billion at Payden & Rygel Investment Management in Los Angeles. “But when the market shrugs off bad news just as it did, investors are signaling that the worst is behind us.””
On CNBC Monday morning Blackrock’s (BLK) Bob Doll called what is happening a “bottoming process”
Pick any other video on CNBC talking about stocks and you’ll here the same thing recently.
Here is a Google (GOOG) search for “bottoming process” so you can find the other 26,000 plus articles on it.
So, what to think? Nothing actually. If you watch the clips or read the quotes, this is the essential translation. “The market should go up, but it might fall more from here too, but the long term trend is up”.
Basically they are not telling us anything. Do not start buying stocks in this market because of these calls. Buy individual or sell issues based on their specific pro’s or con’s and your time frame.
You could argue that at any level the market is in the act of a “bottoming process”. If the long term trend is positive, then by default all levels before higher ones must be a “bottoming process”, right?
“Bottoming Process” means nothing…..
Disclosure (“none” means no position):None
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Dow Chemical (DOW) updates is transformation progress and reiterated dividend will not be cut.
Another key point most folks are missing. The new Kuwait JV will lead to more profits for Dow with zero capex due to the new cost level for input costs. Rather than buying oil then processing it, Dow is going into business with the folks who own the oil, then selling the processed good at market prices. Liveris touches briefly on it.
Watch:
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Simoleon,
– Here is a neat linksite that focuses on value investing
–
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It just should not be this cheap….thinking about the (DXO). A followup to last weeks posts on oil. Both these interviews to follow are with Saudi Oil Minister Ali Naimi .
From 60 Minutes Tonight.
Watch CBS Videos Online
A CNBC Piece from 2005, Melissa Francis interviews Ali Naimi
No matter how many holes I try to punch in it, I just don’t see a scenario where oil is not much higher at the same time next year. If it isn’t, then the global slowdown has become far worse than anyone imagined and the price of crude is the least of our worries, unless….even despite a global severe recession it is still higher.
I also think the dollar is in for a major fall. Starting to look into a long oil, short dollar trade..
Disclosure (“none” means no position):Soon to be long oil..
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Obama’s speech writer gets caught with his hand..well..on the cookie jar?
How is this “change” from that administration? LOL
After DuPont (DD) reports job cutting and an expected Q4 loss, Dow Chemical’s (DOW) Liveris talks about his company’s plans. $$
Liveris:
“We are as strong as we have ever been going into a correction and we have plenty of cash”
“Global recession through 2009 and into 2010”
“The US is a black hole and Europe is not much better”
“This whole thing fell off the cliff in October”
“The weak will disappear”
Disclosure (“none” means no position):Long Dow, none
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Why is it that AutoNation’s (AN) Jackson is the only one talking about the necessary elimination of auto dealerships? Most of them would be Ford (F), GM (GM) and Chrysler dealers? $$
Disclosure (“none” means no position):Long AN, none
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Been a month and a half since the last transaction for Berkshire’s (BRK.A) Buffett.
Buffett sold puts on 2.23 million shares at a $75 strike price for $6.35 each. Burlington Northern (BNI) closed today at $74.68. The option strike date is Jan .30th, 2009.
Disclosure (“none” means no position):None
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Could this be a reason for the market to rally more Monday?
Mr. Fleckenstein Writes: (Sub required)
After considerable thought and deliberation I have decided to make a major change in my life: I am going to close my hedge fund. I have several reasons for no longer wishing to run a short-only fund as I have for the past 12 years. First, my original reason for starting the fund was because of developments I saw occurring in the late 1990s that I wanted no part of. I felt that Greenspan was fomenting an environment that would lead to disaster, as consultants, financial advisors, and the public at large were losing all respect for risk. Of course, the reckless behavior carried far higher and lasted much, much longer than I ever imagined it could. However, the recent carnage in the stock market, real estate market and the financial system (as well as the job losses) has washed away those excesses to a large degree and it has violently demonstrated the risks associated with investing.
A future goal of mine, when I set up the fund in 1996 — as I attempted to step aside from the madness — was to return to the long side of the business at some point in time when I felt that investors had become more rational regarding risk and stocks offered a more favorable risk/reward proposition. I considered this option very briefly in 2002 after the stock bubble imploded, but the cleansing process was postponed due to the burgeoning real-estate bubble.
Second, though I think that the stock market still has unfinished business on the downside, I believe that 2009 is the year to prepare for a return to managing money in a more balanced fashion, with longs (and some shorts), as there are currently plenty of interesting ideas that appear to offer a margin of safety. On the flipside, compelling opportunities on the short side are not as abundant as they were just a few months ago (though there still are plenty.)
Disclosure (“none” means no position):none
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with Ford (F), GM (GM) and Chrysler on the hill begging for $39 billion, Wilbur most likely has the best solution $$
Disclosure (“none” means no position):None
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