ValuePlays

Wilbur Ross on Sunday talking Lehman (LEH), Merrill (MER) and Bank of America (BAC).

Disclosure (“none” means no position):None
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Not sure I get this one. When Bank of America CEO Ken Lewis bought Countrywide (CFC) earlier this year, he essentially doubled down on a bet he made last year when he invested $2 billion in the mortgage lender at prices double his eventual takeover price. Now, Merrill Lynch (MER).

After last night’s failure of Lehman Brother’s (LEH), I don’t think anyone can argue Merrill Lynch (MER) was not the next domino to fall. That being said, to buy them now, for a premium to it current valuation, smacks of deja vue of Lewis’s initial Countrywide investment.

While Merril is a premium name and we all know Bank of America wanted to expand into Merrill’s domain, one can’t help but wonder about the price being paid. Going into the weekend the future of Lehman was in doubt and patience on the part of Lewis could have saved shareholders billions.

After watching both Bear Sterns and Lehman, options for Merrill were minimal at best for this upcoming week. Even had Lehman got its lifeline, its effect on Merrill would have been minimal as it still would have been the next institution in the cross-hairs.

All in all the deal is a good one for Bank of America from an operational standpoint, it was just done a way too high a price…

Disclosure (“none” means no position):None
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Last night, the Fed announced the following move in the wake of the Lehman (LEH) bankruptcy and Bank of America’s (BAC) takeover of Merrill Lynch (MER).

Here is the Fed move:

The Federal Reserve Board on Sunday announced several initiatives to provide additional support to financial markets, including enhancements to its existing liquidity facilities.

“In close collaboration with the Treasury and the Securities and Exchange Commission, we have been in ongoing discussions with market participants, including through the weekend, to identify potential market vulnerabilities in the wake of an unwinding of a major financial institution and to consider appropriate official sector and private sector responses,” said Federal Reserve Board Chairman Ben S. Bernanke. “The steps we are announcing today, along with significant commitments from the private sector, are intended to mitigate the potential risks and disruptions to markets.”

“We have been and remain in close contact with other U.S. and international regulators, supervisory authorities, and central banks to monitor and share information on conditions in financial markets and firms around the world,” Chairman Bernanke said.

The collateral eligible to be pledged at the Primary Dealer Credit Facility (PDCF) has been broadened to closely match the types of collateral that can be pledged in the tri-party repo systems of the two major clearing banks. Previously, PDCF collateral had been limited to investment-grade debt securities.

The collateral for the Term Securities Lending Facility (TSLF) also has been expanded; eligible collateral for Schedule 2 auctions will now include all investment-grade debt securities. Previously, only Treasury securities, agency securities, and AAA-rated mortgage-backed and asset-backed securities could be pledged.

These changes represent a significant broadening in the collateral accepted under both programs and should enhance the effectiveness of these facilities in supporting the liquidity of primary dealers and financial markets more generally.

Also, Schedule 2 TSLF auctions will be conducted each week; previously, Schedule 2 auctions had been conducted every two weeks. In addition, the amounts offered under Schedule 2 auctions will be increased to a total of $150 billion, from a total of $125 billion. Amounts offered in Schedule 1 auctions will remain at a total of $50 billion. Thus, the total amount offered in the TSLF program will rise to $200 billion from $175 billion.

The Board also adopted an interim final rule that provides a temporary exception to the limitations in section 23A of the Federal Reserve Act. It allows all insured depository institutions to provide liquidity to their affiliates for assets typically funded in the tri-party repo market. This exception expires on January 30, 2009, unless extended by the Board, and is subject to various conditions to promote safety and soundness.

Disclosure (“none” means no position):none
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This hour long video from 2007 is just a classic. Third Avenue Value’s (TAVFX) leader talks about Graham and Dodd investing.

Disclosure (“none” means no position):Long TAVFX
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Dividend, Gphone, Driving, Gumshoe

– Want a 5% and growing yield?

– I can’t wait to see this, not that I’ll buy one, I just am curious as to features

– This is sooo true

– I actually had not seen this one yet

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Monopoly?, biodiesel, Taxes, Speeches

– Is anyone surprise by this?

– Sick of gas? Run it on used kitchen oil.

– Will he or won’t he raise them, does he know?

– This is really cool, see what the speeches really focused on

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Just got this emailed to me………..sent chills down my spine. It is amazing how this bring everything you felt that day right back to the surface

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