Congrats, 1440, Key words, Buffett
– True
– Hard to get all these into investing posts
– It was only a matter of time before the next round of guessing games
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Wednesday’s Links
Congrats, 1440, Key words, Buffett
– True
– Hard to get all these into investing posts
– It was only a matter of time before the next round of guessing games
Visit the ValuePlays Bookstore for Great Investing Books
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Wednesday's Upgrades and Downgrades
Upgrades
Inter Parfums (IPAR)- Caris & Company Above Average » Buy
Schnitzer Steel (SCHN)- Longbow Neutral » Buy
Genesis Energy, L.P. (GEL)- Morgan Keegan Mkt Perform » Outperform
UPS (UPS)- Stifel Nicolaus Hold » Buy
United Dominion (UDR)- Stifel Nicolaus Hold » Buy
Equity Res (EQR)- Stifel Nicolaus Hold » Buy
UnionBanCal (UB)- BMO Capital Markets Underperform » Market Perform
Bankrate (RATE)- RBC Capital Mkts Sector Perform » Outperform
Medivation (MDVN)- Rodman & Renshaw Mkt Perform » Mkt Outperform
ACE Limited (ACE)- Wachovia Mkt Perform » Outperform
NCR Corp (NCR)- Robert W. Baird Neutral » Outperform
Fulton Fincl (FULT)- Keefe Bruyette Underperform » Mkt Perform
Valley National (VLY)- Keefe Bruyette Underperform » Mkt Perform
WD-40 Company (WDFC)- JP Morgan Underweight » Neutral
Capital Trust (CT)- UBS Sell » Neutral
Marsh McLennan (MMC)- Citigroup Hold » Buy
ACADIA Pharmaceuticals (ACAD)- Banc of America Sec Sell » Neutral
Downgrades
Children’s Place (PLCE)- Sterne Agee Buy » Hold
Wyeth (WYE)- Caris & Company Above Average » Average
Bankrate (RATE)- Sun Trust Rbsn Humphrey Buy » Neutral
Kimco Realty (KIM)- Credit Suisse Outperform » Neutral
Tween Brands (TWB)- Friedman Billings Outperform » Mkt Perform
Gymboree (GYMB)- Friedman Billings Outperform » Mkt Perform
Asset Acceptance Capital (AACC)- Jefferies & Co Hold » Underperform
Skyepharma plc (SKYE)- Jefferies & Co Hold » Underperform
Synovus (SNV)- Morgan Keegan Outperform » Mkt Perform
Tronox (TRX)- Lehman Brothers Equal-Weight » Underweight
Teva Pharm (TEVA)- Deutsche Securities Buy » Hold $55 » $47
Downey Fincl (DSL)- Lehman Brothers Overweight » Equal-Weight
Omnicom (OMC)- Bernstein Outperform » Mkt Perform
Willis Group (WSH)- Citigroup Buy » Hold
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Wednesday’s Upgrades and Downgrades
Upgrades
Inter Parfums (IPAR)- Caris & Company Above Average » Buy
Schnitzer Steel (SCHN)- Longbow Neutral » Buy
Genesis Energy, L.P. (GEL)- Morgan Keegan Mkt Perform » Outperform
UPS (UPS)- Stifel Nicolaus Hold » Buy
United Dominion (UDR)- Stifel Nicolaus Hold » Buy
Equity Res (EQR)- Stifel Nicolaus Hold » Buy
UnionBanCal (UB)- BMO Capital Markets Underperform » Market Perform
Bankrate (RATE)- RBC Capital Mkts Sector Perform » Outperform
Medivation (MDVN)- Rodman & Renshaw Mkt Perform » Mkt Outperform
ACE Limited (ACE)- Wachovia Mkt Perform » Outperform
NCR Corp (NCR)- Robert W. Baird Neutral » Outperform
Fulton Fincl (FULT)- Keefe Bruyette Underperform » Mkt Perform
Valley National (VLY)- Keefe Bruyette Underperform » Mkt Perform
WD-40 Company (WDFC)- JP Morgan Underweight » Neutral
Capital Trust (CT)- UBS Sell » Neutral
Marsh McLennan (MMC)- Citigroup Hold » Buy
ACADIA Pharmaceuticals (ACAD)- Banc of America Sec Sell » Neutral
Downgrades
Children’s Place (PLCE)- Sterne Agee Buy » Hold
Wyeth (WYE)- Caris & Company Above Average » Average
Bankrate (RATE)- Sun Trust Rbsn Humphrey Buy » Neutral
Kimco Realty (KIM)- Credit Suisse Outperform » Neutral
Tween Brands (TWB)- Friedman Billings Outperform » Mkt Perform
Gymboree (GYMB)- Friedman Billings Outperform » Mkt Perform
Asset Acceptance Capital (AACC)- Jefferies & Co Hold » Underperform
Skyepharma plc (SKYE)- Jefferies & Co Hold » Underperform
Synovus (SNV)- Morgan Keegan Outperform » Mkt Perform
Tronox (TRX)- Lehman Brothers Equal-Weight » Underweight
Teva Pharm (TEVA)- Deutsche Securities Buy » Hold $55 » $47
Downey Fincl (DSL)- Lehman Brothers Overweight » Equal-Weight
Omnicom (OMC)- Bernstein Outperform » Mkt Perform
Willis Group (WSH)- Citigroup Buy » Hold
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Boone Pickens Energy Plan
Ya’ know what, this is what it will take, the market solving the problem..
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Fooling Some of The People…..A Review
So, finished David Einhorn’s book over vacation. Pissed me off…
Let’s just put aside the whole “short seller” argument. Like I have said before, I do not care how folks make money, short, long, whatever. Short sellers, when wrong, get creamed and can make longs tons of cash in a very sort time when the shorts cover en mass.
Now, Einhorn was right about Allied. What pissed me of was the “regulators”. Far from being asleep at the wheel, it is their abject ambivalence at the Allied situation that ought to infuriate people. They just did not care. Both the SEC, SBA and Congress (surprise!!) are to blame here. Einhorn painstakingly details his efforts to bring the Allied fraud to regulators who just did not care…..
Now we are talking about further regulating capital markets? Why bother? We do not even enforce the regulations we have now!! Why add more regulations that can be ignored by the very folks who are supposed to enforce them? Why?
Do not feel bad for David though, the publicity he has gotten has vaulted him to “famed” status and now his picks and thoughts are sought after. Shorting a stock successfully just became far easier for him now that millions believe in him. Now, this is warranted given his 20% plus annual returns at Greenlight, it is just that a whole lot more folks are listening to him now.
Too bad Lehman’s (LEH) Erin Callahan was not one of them…
Read Einhorn’s book. It is an eye opening and sobering experience.
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Buffett Talks About "Mistakes" (video)
This is interesting coming off Bill Miller’s recent interview.
From the inteveiw with Berkshire’s (BRK.A) Chairman,
“What is the biggest miss that you didn’t get in on that you wish you had?”
Warren responded, “Fannie Mae (FNE) early 1980s, Walmart (WMT) mid 1990s both of those deals could have made us as much as $10B”.
Disclosure (“none” means no position):None
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Ambac Files 8-K
Ambac (ABK) just filed an 8-K with the SEC.
On July 7, 2008, Ambac Financial Group, Inc. (“Ambac”) issued a press release announcing that it has had positive discussions with the Office of the Commissioner of Insurance for the State of Wisconsin (OCI) regarding a plan to capitalize its Connie Lee subsidiary with an $850 million contribution of capital by Ambac Assurance Corporation (AAC).
Ambac intends to seek formal approval from the OCI for capitalization of Connie Lee and believes that it will obtain OCI’s approval of the plan. A contribution of capital of $850 million to Connie Lee would bring Connie Lee’s total capital to slightly over $1.0 billion. The new capital will support the claims paying resources for Connie Lee’s financial guarantee business, which will focus solely on U.S. public finance and global infrastructure transactions. Ambac has been in communication with Moody’s and Standard & Poor’s in pursuit of Aaa/AAA ratings for Connie Lee.
Also:
On July 7, 2008, Ambac issued a press release providing financial details regarding the collateral requirements of its investment agreement business.
Rating agency actions affecting Ambac Assurance Corporation (AAC) during June 2008 resulted in $506 million of increased collateral posting requirements in the investment agreement business and investment agreement terminations of $270 million:
•
The downgrade of AAC by Standard & Poor’s to AA on June 5, 2008, resulted in an incremental collateral posting requirement of approximately $76 million.
•
Moody’s downgrade of AAC to Aa3 on June 19, 2008, resulted in an incremental collateral posting requirement of approximately $70 million and investment agreement terminations of approximately $270 million.
•
The action by Fitch to withdraw the ratings of AAC on June 26, 2008, resulted in an incremental collateral posting requirement of approximately $360 million.
The current collateral and termination obligations have been adequately covered by the investment agreement asset portfolio.
Aggregate collateral requirements and terminations for the investment agreement business at various AAC rating levels, starting with the lower of AAC’s two current ratings (currently Moody’s at Aa3), are as follows:
The book value of investment agreement liabilities at May 31, 2008, amounted to $6.9 billion (down from $7.7 billion at December 31, 2007). The market value of the investment agreement asset portfolio, including cash of approximately $400 million, as of May 31, 2008, is approximately $5.6 billion. In addition, the market value of interest rate derivative contracts held by the investment agreement business is positive $160 million.
Based on May 31, 2008 investment agreement asset portfolio market values:
•
Upon a downgrade of AAC to A+ or A1, which Ambac believes is unlikely, Ambac estimates that the investment agreement asset portfolio has sufficient value to meet projected cumulative collateral requirements and terminations.
•
Upon a downgrade to A or A2, which Ambac believes is unlikely, Ambac estimates that the investment agreement asset portfolio is insufficient to cover the projected cumulative collateral requirement and terminations by approximately $1.0 billion.
•
Upon a downgrade to A- or A3, which Ambac believes is unlikely, Ambac estimates that the investment agreement asset portfolio is insufficient to cover the projected cumulative collateral requirement and terminations by approximately $1.1 billion.
In the event of cash and/or security shortfalls in the investment agreement business, management anticipates utilizing the resources of AAC (through inter-company transactions). Utilizing the resources of AAC would allow time for the assets in the investment agreement asset portfolio to recover in value and would preempt claims on insurance policies issued by AAC and prevent the realization of losses in the investment agreement asset portfolio. Ambac is in discussions with the Office of the Commissioner of Insurance of the State of Wisconsin (OCI) with respect to its strategies for managing the collateral posting and termination obligations of the investment agreement business. These discussions have been positive.
Ambac believes that it will obtain OCI’s approval of its plans to address the collateral posting and termination obligations of the investment agreement business in the event of downgrades to the A/A2 rating level. AAC’s investment portfolio is valued at approximately $12 billion with over $1 billion in cash and short-term securities at May 31, 2008. At the A/A2 rating level, Ambac management would evaluate its various resources and utilize those considered most appropriate to satisfy the contractual obligations of the investment agreement business.
Management continues to closely monitor the cash requirements of the investment agreement portfolio and manages the related cash and securities portfolio accordingly.
Full filing
Disclosure (“none” means no position):none
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Best line? “There is a difference between buying a house and buying a house on fire”, Dimon.
Disclosure (“none” means no position):None
Visit the ValuePlays Bookstore for Great Investing Books
Best line? “There is a difference between buying a house and buying a house on fire”, Dimon.
Disclosure (“none” means no position):None
Visit the ValuePlays Bookstore for Great Investing Books
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Bits and Pieces From the Week Away
Some tidbits…
– Starbucks finally decided to close some locations, 600 of them. Back in Feb. I said about the then announced plans, “100 US store closing just are not even the beginning of what is necessary”. Sorry folks….600…still not enough.
– Blockbuster (BBI) realized Circuit City (CC) sucks and 1 + 1 does not equal 3.
– Now that lead paint litigation is dying, Sherwin Williams (SHW) must look even more attractive to potential buyers.
– Berkshire Hathaway posted its worst first half in 18 years….has Buffett “lost it”? (please note sarcasm….)
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Shapiro Defends Six Flags (SIX)
Six Flags’ (SIX) Mark Shapiro has taken to the airwaves..
Here is a nut shell is Six Flags problem. In New England Shapiro competes against Lake Compounce, Story Land and Canobie Lake for family’s dollars. In a tightened spending environment, Six Flags by far is the lowest value for a dollar. With Six Flags, if you want to park within a mile or two of the park, the honor will cost you $25. For the other three, I can park by the front door for free. Once inside, the cost differentials continue. Even with his new ticket pricing he mentions in the video, he is far more expensive than the competition.
Shapiro can blame gas and the economy all he wants but the bottom line is Six Flags has been struggling with attendance for years. At least this excuse is better that last year when they blamed God. Yea, I know, Q1 attendance was up from last year but it was only because Easter came early this year.
Shapiro is upbeat in the appearance but one has to wonder, “when will the customer satisfaction surveys mentioned in every single release by the company actually going to show up as a profit?” Even a dramatic improvement such as a far lower loss would be good. Ideas? Anyone?
Last month I wondered if Six Flags was soon to be bankrupts. Now we have its debt ratings being lowered, a death at a park ans a director dumping shares.
Here is another opinion on the subject from Chicago.
One can now by three shares for less than the cost of a soda at the park….the soda is still a better deal
Disclosure (“none” means no position):None
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Tuesday's Links
Thank you, Thank you, Conspiracy, Gumshoe
– Thanks for the mention
– Thanks for reading
– Wondered when this stuff would come up
– This is great
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Tuesday’s Links
Thank you, Thank you, Conspiracy, Gumshoe
– Thanks for the mention
– Thanks for reading
– Wondered when this stuff would come up
– This is great
Visit the ValuePlays Bookstore for Great Investing Books
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Is the Dow Chemical (DOW) Rumor True?
So the latest Dow Chemical (DOW) rumor has yet another JV with Saudi Aramco. Could it be true? You betcha….
Let’s go back to last years announcement of the JV to build factories at Ras Tanura on Saudi Arabia’s Persian Gulf coast. The plants are going to have the capacity to produce as much as 8 million tons of chemicals and plastics a year, using raw materials from nearby oil and natural gas plants at a cost of 1/10th the current market rate for oil gas.
Now it is being reported that Saudi Aramco and Dow plan to build a $26 billion petrochemicals complex in Saudi Arabia to take advantage of the world’s biggest oil reserves and meet rising demand for plastics. Aramco and Dow aim to raise about $18 billion from loans and bonds starting next year to finance the project, said a banker, who declined to be identified because the plan is private. Royal Bank of Scotland (RBS) and Riyad Bank will help raise 70 percent of the project’s cost, said Abdulaziz al-Judaimi, Aramco’s vice president for new business, declining to provide an amount.
So, should we believe it?
If you remember my recent interview with CEO Andrew Liveris I asked if the most prudent use of the upcoming proceeds from the Kuwait sale wasn’t “more petrochemical JV’s, share repurchases and dividend increases”. His answer? A succinct, “Yes”.
Now, the final amounts of the project may differ from $26 billion but the deal is in the works. Liveris has made no bones about his desire to expand his petrochemical business. Here is the important point. Dow is the company of choice for nations rich in raw materials to do business with. Saudi Arabia, Kuwait, Singapore, China, Brazil and Russia are all working with Dow on various projects and what is even better for Dow shareholders is that the scale of the projects is growing exponentially larger and the cash outlays on the part of Dow to finance the deals is negligible.
Once active, the JV’s are self financing and Dow simply receives and equity payment for its interest. Nice..
Looks for details in the next 30 days. Whatever the final number, it will be big
Disclosure (“none” means no position):Long Dow
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