Now, I do not for a second condone trading like this, but, this is still very interesting…more history
This is a classic…
From the FT:
Click here for music to go along with words
A long, long time ago,
I can still remember,
How much wealth there was in the Square Mile,
And I knew that if I had my chance,
I could make it in finance,
And maybe I’d have money for a while.
But subprime assets made me shiver,
With every product I’d deliver,
Bad news in the press(es),
Just look at those CDSs.
I can’t remember if I cried,
When my salary was pushed aside,
But something resounded worldwide,
The week the IB died.
So bye, bye, Lehman Brothers (LEH) and I,
Needed credit to get better but the credit was dry,
Hank Paulson’s Fed had carved up the pie,
Saying, AIG’s (AIG) too big to die,
AIG is too big to die.
Why’d Fuld wait, put all at stake,
Did he think he’d make more at a later date?
Greedy finance tycoons,
Now Barclay’s buying, let’s be frank,
A pretty cheap investment bank,
Can you hire me, real soon?
Well, I know that it’s a lot to ask,
When Einhorn’s taken us to task,
Using our balance sheet to guise,
Our level 3 assets’ demise.
Now Morgan Stanley’s (MS) feeling short,
And BofA’s (BAC) Merrill’s (MER) last resort,
The banking system’s pretty morte,
The week the IB died.
I was saying,
Bye, bye, Lehman Brothers and I,
Needed credit to get better but the credit was dry,
Hank Paulson’s Fed had carved up the pie,
Saying, AIG’s too big to die,
AIG is too big to die.
Now for four years we’d been on the phone,
Selling mezzanine CDOs,
But that’s not how it used to be,
When Dick came in, we just did bonds,
Good thing he helped us right that wrong,
By buying Aurora Loan LLC,
Oh, and while the Fed was looking ‘round,
They thought they’d try and shoot us down,
The market was all broken,
Bank lending was a croakin’,
And while we unwind our trading book,
The head hunters all have a look,
The hedge funds are put on the hook,
The week the IB died,
I was saying,
Bye, bye, Lehman Brothers and I,
Needed credit to get better but the credit was dry,
Hank Paulson’s Fed had carved up the pie,
Saying, AIG’s too big to die,
AIG is too big to die…
Here is the original post
Disclosure (“none” means no position):None
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Doug Kass must annoy those who attack short sellers. He uses these annoying things like facts to prove them wrong.
Kass discusses Lehman (LEH), Merrill (MER), Morgan Stanley (MS)
Disclosure (“none” means no position):None
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Here is an interview by Charlie Rose with Levitt and Dubner, Co-authors of Freakonomics.
John Bogle put this week in perspective. “If you think the intrinsic value of US business rose and fell by a trillion dollars this week, you are nuts”. Amen..
Disclosure (“none” means no position):
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Here are the top stories for the week at Value investing News
When investors purchase their initial position in a stock, it is usually after their most rigorous research. Once a stock is in their portfolio, some investors relax on the research for subsequent purchases. Each and every time you purchase a stock, you should run it through the same process as if you were buying it for the first time.
Colgate-Palmolive Company (Colgate) is a consumer products company, whose products are marketed throughout the world. Colgate’s Oral Care products include toothpaste, toothbrushes, oral rinses, dental floss and pharmaceutical products. Linked here is a detailed stock analysis and commentary.
Since cars are big-ticket items, a drop in spending has manifested itself with utmost clarity in the auto retail space. US motor vehicle sales were down some 18% in June year over year. As a result, many car retailers have been punished in the market.
Some are once again questioning Warren Buffett’s current investments, but Whitney Tilson comes continues to defend him.
I guess if you read as many annual reports as Saj and I have in the past few months you get hungry for some excitement! So to quench this desire, I decided to skip directly to the note disclosure on goodwill and intangibles! The interesting part between these items ended up residing with the disclosure on intangibles.
Nokia is an international dividend achiever. From the end of 1999 up until September 2008 this dividend stock has delivered an annual average total return of 5.00 % to its shareholders. Nokia’s share price has not recovered yet form its all time highs in the early 2000. The stock has lost over 45% of its value so far in 2008.
Walter J Schloss answers questions at the Ben Graham Center for Value Investing February 12, 2008.
The DIV-Net’s Investing Carnival #13 with posts on dividends, value investing, stock analysis, general market commentary and real estate
Archer Daniels Midland is a dividend aristocrat as well as a component of the S&P 500 index. It has been increasing its dividends for the past 33 consecutive years. From the end of 1999 up until September 2008 this dividend stock has delivered an annual average total return of 6.50 % to its shareholders. The stock has lost over half its value so far in 2008.
Summary of the Lehman Brothers bankruptcy coverage including a link to the official Lehman Brothers’ press release.
Todd Sullivan comments on Bank of America CEO Ken Lewis’ decision to takeover Merrill Lynch.
People have been asking all day what it is called…I’ve got it
The “Securitization & Housing Investment Trust” or SHIT for short
I am on a history kick after reading “Once in Golconda”. Here are eyewitness accounts to 1929 and the aftermath. As you watch it, you’ll be struck by the similarities..
Here is the book:
Here is a book about Jessie Livermore
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Ambac (ABK) has been placed on review from Moody’s for a possible downgrade
From the SEC filing
On September 18, 2008, Moody’s Investors Service (“Moody’s”) announced that it was placing the ratings of Ambac Financial Group, Inc. (“Ambac”) and its subsidiaries on review for downgrade. Ambac expects to continue to work with Moody’s as the rating agency seeks to apply its most recent mortgage-related assumptions to unique attributes of the individual transactions in Ambac’s portfolio. Moody’s stated that because Ambac is meaningfully exposed to the risk of US subprime mortgages and other residential mortgage products, the revised assumptions are expected to have a significant impact on Ambac’s capital position and multi-notch downgrades are possible.
Now, this would be a legitimate reason to short this stock……but you can’t now.
Disclosure (“none” means no position):none
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Yes, stock will rise but it is a bit like celebrating a touchdown when the other team is not allowed to play defense.
The SEC has banned short sales in 799 institutions from midnight Friday, until Oct. 2nd (unless extended).
Said the order:
As a result of these recent developments, the Commission has concluded that there continues to exist the potential of sudden and excessive fluctuations of securities prices generally and disruption in the functioning of the securities markets that could threaten fair and orderly markets. Based on this conclusion, the Commission is exercising its powers under Section 12(k)(2) of the Act.2 Pursuant to Section 12(k)(2), in appropriate circumstances the Commission may issue summarily an order to alter, supplement, suspend, or impose requirements or restrictions with respect to matters or actions subject to regulation by the Commission if the Commission determines such an order is necessary in the public interest and for the protection of investors to maintain or restore fair and orderly securities markets.
In these unusual and extraordinary circumstances, we have concluded that, to prevent substantial disruption in the securities markets, temporarily prohibiting any person from effecting a short sale in the publicly traded securities of certain financial firms, which entities are identified in Appendix A (“Included Financial Firms”), is in the public interest and for the protection of investors to maintain or restore fair and orderly securities markets.
Also, short sellers will have to now disclose their short positions. This is the same as if they were long a stock or security. This, is as it should be..
Now, the banning of short sales is just ridiculous. Short selling is not illegal, naked shorting is. Had the SEC done ANYTHING about naked shorting in the last few years, this would not be an issue. One could argue we would not be in the predicament we are in had the SEC done ANYTHING about naked shorting, ANYTHING.
Rather than issuing a string of memos and holding hearings about it, perhaps an action or two against those guilty of naked shorting would have actually curbed those guilty of the practice? Had we not had naked shorts in the market the oast 6 months, you could easily make the argument Lehman (LEH) would still be here and Merrill (MER) would not have had to sell.
It isn’t the act of shorting that is wrong, it is the abuse of it that is. SEC Commish Chris Cox and the SEC STILL have not done ANYTHING to actually eliminate the practice. All they have done is out it on hold for a couple weeks.
Disclosure (“none” means no position):
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HOG, Mack, Recession, Dodge ball
– Has held up great during the recent panic and yields 3.3%.
– OK, copying the Dick Fuld has to be the days worst idea
– Finally some sanity
– One of the funniest movies of all time……..
Disclosure (“none” means no position):
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Looks like Wilbur Ross is going for a bigger slice..
Market Watch Reports:
Assured Guarantee (AGO) said late Thursday that it has provided a waiver allowing investment funds managed by WL Ross to purchase up to 5 million additional common shares of Assured Guaranty. The shares purchased by the WL Ross Funds will be from current shareholders and as a result will not result in an increase in shareholders’ equity. If WL Ross buys all 5 million shares, it would beneficially own 17.2 million shares or about 18.9% of Assured’s outstanding common shares as of June 3
Ross built his initial stake following a $250 million private placement with the company back in May.
Disclosure (“none” means no position):none
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Finally, somebody takes the ratings agencies to task publicly.
Yeah, 1997 was the last time you could have bought shares of GE (GE) at $23. The difference? Now that price comes with a 5.3% yield and shares trade at 10 times earnings, not the 24 times they traded at then.
In the latest quarter, global revenues growth was +24% (emerging markets +20%, developed (ex. U.S.) +26%, U.S. (2)%).
What’s the problem? Fears over GE Financial Services. In Q2, Commercial Finance earnings grew 7%, GE Money fell 9%.
The fears at GE Money are overblown. GE Money encompasses roughly 13% of profits at GE. Let’s assume earnings for the year, about $4 billion are wiped out. It won’t, because GE Money is not structured in the “borrow long, lend short” model that is currently crippling financial institutions. They underwrite to hold. In consumer mortgages (UK), they are self funded and have a mortgage LTV of 70%, meaning mortgage holders on average have 30% equity. In consumer credit, the current delinquency rate is 5%, not bad. But, for arguments sake, let’s say earnings are gone. That would still leave GE with approx. $20 billion in earnings of $1.97 a share. That still leaves GE trading at 11.6 times earnings and yielding 5%.
GE is saying Commercial Finance earnings ought to decline in Q3 10% to 15% and GE Money ought to grow 0% to 5%. Hardly the desperate scenario the markets are currently pricing into the stock price. What is of interest is that revenue growth at both divisions ought to grow 5% to 10%.
GE, during the Q2 results presentation forecast 3Q’08 continuing EPS outlook of $.50-.54, (0-8% growth)and said they were on track for 2008 guidance, $2.20-2.30, (0-5% growth).
Now CEO Jeff Immelt got himself in hot water when in the spring he stated 15% EPS growth for this year was “in the bag”. Because of that there is now a slight cloud of skepticism over him and the company. The only way to erase it is to perform and show it to be an aberration. That, will take time. Coming through the current relatively unscathed would be a huge first step.
Ge is currently being price not as the conglomerate it is, but as a financial service company. That, has created a great buying opportunity….
I think I just may bite soon..
Here is a recent WSJ article on the subject
Disclosure (“none” means no position):
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Some thoughts on the “candy” Wells Fargo (WFC) may be after..
Reuters Reports:
The chairman of the No. 2 U.S. mortgage bank said on Wednesday that his company was “buying with both hands” and, given the distressed state of financial assets, he felt “like a kid in a candy store.”
Wells Fargo (WFC) Chairman Richard Kovacevich declined to comment to Reuters at a conference in Beverly Hills, California, on whether the company is interested in buying Washington Mutual Inc (WM) or Wachovia Corp (WB) but indicated he was interested in buying other banks in distress.
“Wells Fargo often buys fixer uppers,” companies that have had some hard knocks and can be rehabilitated in two or three years, he said in a speech at the Association of Corporate Growth 2008 conference. “Given the financial conditions today I feel like a kid in a candy store. There is a lot out there today.”
“We are buying with both hands right now, as we have done for the past year,” Kovacevich said, describing himself as a “confessed serial acquirer.”
Well, we know they are buying insurance operations around the country. Banking? CEO John Stumpf recently said a “large transformational deal was unlikely”.
Does that rule out WB or WM? I think it it means they pick up branches, rather than the whole thing. Or, it means maybe that as Wells looks at the books of the most mentioned two banks, things are not really as bad there as people currently think vs the price they can be had at.
I would be very surprised at an outright buy…..pieces? Yes.
Disclosure (“none” means no position):Long WB,WFC, none
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