Cramer's Lightning Round - Jamie Dimon Is the Next Warren Buffett (5/4/09) 9 comments
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Stocks discussed on the lightning round session of Jim Cramer's Mad Money TV Program, Monday May 4.
Bullish Calls:
JP Morgan (JPM): "Jamie Dimon is the new Warren Buffett...why not buy JPM?"
Dominion (D), Con Edison (ED): "D has a yield of 5.5%, ED monster yield 6%"
BE Aerospace (BEAV): "Is part of a cohort I am thinking of upgrading on my show...next year is going to be huge for aerospace."
Las Vegas Sands (LVS), Wynn Resorts (WYN): "LVS is good. I like WYNN which is still best in show."
Clean Energy (CLNE): "This is one of my absolute favorite as natural gas stays low...I still like the speculative situation"
Bearish Calls:
MBIA (MBI): "That is speculative...I can't trash it...too much bullish sentiment...why not buy JPM?"
Aqua America (WTR): "not that great growth or yield."
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This article has 9 comments:
What an incredibly stupid thing to say.
I hear that Christiane Amanpour is the new Jim Cramer.
Cramer is a carney at the sideshow. The Chrysler Town & Country minivan (on eof the world's worst vehicles) is the new Cramer. Bring back the Yugo, the Edsel and the K car; we need some competition for all the lemons being sold out there. Jim will be snapping up the new franchises to sell to you each night. Come on down!!!
On May 05 09:07 AM Michael Delaney wrote:
> Who's Christiane Armanpour?
DETROIT (Reuters) - General Motors Corp (NYSE:GM - News) on Tuesday detailed plans to all but wipe out the holdings of remaining shareholders by issuing up to 60 billion new shares in a bid to pay off debt to the U.S. government, bondholders and the United Auto Workers
The unusual plan, which was detailed in a filing with U.S. securities regulators, would only need the approval of the U.S. Treasury to proceed since the U.S. government would be the majority shareholder of a new GM, the company said.
The flood of new stock issuance that could be unleashed has been widely expected by analysts who have long warned that GM's shares could be worthless whether the company restructures out of court or in bankruptcy.
The debt-for-equity exchanges detailed in the filing with the Securities and Exchange Commission would leave GM's stock investors with just 1 percent of the equity in a restructured automaker, ending a long run when the Dow component was seen as a bellwether for the strength of the broader U.S. economy.
GM shares closed on Tuesday at $1.85 on the New York Stock Exchange. The stock would be worth just over 1 cent if the first phase of GM's restructuring moves forward as described.
Once GM has issued new shares to pay off its debt to the U.S. government, bondholders and its major union, it said it would then undertake a 1-for-100 reverse stock split.
Such a move would take the nominal value of the stock back to near where it had been before the flood of new shares. But in the process, GM's existing shareholders would see their stake in the 100-year-old automaker all but wiped out.
Read this folks...LOL
BofA to need $34 billion in capital: source
On Tuesday May 5, 2009, 9:54 pm EDT
Bank of America Corporation
WASHINGTON (Reuters) - Bank of America (NYSE:BAC - News) has been deemed to need an additional $34 billion in capital, according to the results of a government stress test, a source familiar with the results said on Tuesday.
Reuters - People walk past a branch of Bank of America in New York's financial district April 28, 2009. REUTERS/Brendan ...
Related Quotes
Symbol Price Change
BAC 10.84 +0.46
A Bank of America spokesman declined comment.
(Reporting by Karey Wutkowski; Editing Bernard Orr)
China Construction Falls as Bank of America May Sell (Update1)
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By John Liu
May 6 (Bloomberg) -- China Construction Bank Corp., the world’s second-largest lender by market value, dropped in Hong Kong on concern that Bank of America Corp. may sell part of its holding when a lockup on the stake expires tomorrow.
Bank of America can sell as many as 13.5 billion shares of China Construction, or 6 percent of the Chinese lender’s outstanding shares traded in Hong Kong, on May 7, according to an earlier agreement. The U.S. bank may begin seeking bids from investors, two fund managers who have been approached by investment banks seeking to arrange the sale said on May 4.
China Construction dropped 1.7 percent to HK$4.69 in Hong Kong as of 10:53 a.m., after the Financial Times said Bank of America is considering selling part of its stake. The stock has gained 8.7 percent this year, the second-worst performer among China’s six banks traded in Hong Kong.
China Construction’s Beijing-based spokesman Yu Baoyue said the bank hasn’t received any notice from Bank of America about a possible sale.
U.S. and European financial companies have been selling shares in Chinese banks to replenish capital eroded by the global credit crisis. Allianz SE and American Express Co. sold a combined $1.9 billion of shares in Industrial & Commercial Bank of China Ltd. last week.
U.S. regulators have determined that Bank of America has the largest need for new capital among 19 biggest U.S. banks subjected to stress tests, according to people familiar with the matter. Bank of America already raised $2.8 billion selling China Construction shares in January.
Bank of America is weighing an immediate sale of the China Construction stake versus one in a few weeks’ time, according to the Financial Times.
To contact the reporter on this story: John Liu in Shanghai at jliu42@bloomberg.net
“There are several ways to deal with this,” Mr. Alphin said. “The company is very healthy.”
www.nytimes.com/2009/0...
U.S. Says Bank of America Needs $33.9 Billion L. ANDREWS
Published: May 5, 2009
The government has told Bank of America it needs $33.9 billion in capital to withstand any worsening of the economic downturn, according to an executive at the bank, a determination that could make the United States the controlling shareholder in the bank.
Executives sparred with the government over the amount, which is higher than executives believed the bank needed. But J. Steele Alphin, the bank’s chief administrative officer, said Bank of America would have plenty of options to raise the capital on its own before it would have to convert any of taxpayer money into common stock, a move that would effectively increase the government’s holdings in the troubled bank.
“We’re not happy about it because it’s still a big number,” Mr. Alphin said. “We think it should be a bit less at the end of the day.”
Because Bank of America has already received $45 billion in federal assistance from the Treasury in exchange for preferred shares, it could satisfy regulators’ demands simply by converting the non-voting preferred shares to common stock.
Financial markets in Asia slumped 11 percent in early trading as investors questioned whether the results of the government’s stress tests of the nation’s 19 largest banks, whose assets represent about two-thirds of the nation’s financial system, would show more weakness in the financial system than hoped.
The Treasury Department declined to comment on Tuesday evening.
Under the arrangement worked out between the Treasury and Citigroup earlier this year, the Treasury will receive mandatory convertible preferred shares, meaning preferred shares that can be converted to voting shares of common stock at the will of the government.
If Bank of America relied on that conversion for the majority of the capital it needs to maintain, the govnerment wouildj become the nbakjn’s controlling shareholder.
Regulators have told the banks that the common shares would bolster their “tangible common equity,” a measure of capital that places greater emphasis on the resources that a bank has at its disposal than the more traditional measure of “Tier One” capital.
Citigroup, the largest and most deeply troubled of the banks, is expected to need to raise capital as insurance against any further downturn in the economy. The government told the bank it would need $50 to $55 billion in capital, a requirement that would force it to raise $5 billion to $10 billion in new capital, according to people briefed on the final results. Citigroup executives say the bank can easily cover any shortfall, and is considering several options to close that gap.
The Obama administration plans to publicize the results of stress tests on Thursday. The results are expected to reveal that a number of them need additional capital, and many banks have negotiated with the government on what the actual capital requirements should be since they learned of the preliminary findings last week.
The tests are also expected to show that several banks, including Bank of New York Mellon, Goldman Sachs and JPMorgan Chase, are healthy enough to repay TARP funds.
Mr. Alpin noted that the $34 billion figure is well below the $45 billion in capital that the government has already allocated to the bank, although he said the bank has plenty of options to raise the capital on its own.
“There are several ways to deal with this,” Mr. Alphin said. “The company is very healthy.”
Bank executives estimate that the company will generate $30 billion a year in income, once a normal environment returns.
The company has faced criticism over its acquisition of Merrill Lynch, the troubled investment bank, and last week, shareholders voted to strip the bank’s chief executive, Kenneth D. Lewis, of his title as chairman of the board. The board said last week that it still unanimously supports Mr. Lewis in his role as chief executive.
Mr. Alphin said since the government figure is less than the $45 billion provided to Bank of America, the bank will now start looking at ways of repaying the $11 billion difference over time to the government.
In the case of Citigroup, which has also received two taxpayer lifelines, executives say the bank can easily cover any shortfall, and is considering several options to close that gap.
Among them are efforts to accelerate the sales of several businesses within Citi Holdings, a holding tank for assets it plans to shed, or to expand its common stock conversion plans to a broader base of private investors who hold Citigroup preferred stock. Both measures would avoid an increase in the government’s expected 36 percent ownership stake.
Taxpayer-supported Banks have been eager to wean themselves from the government’s purvue, and many analysts have questioned how useful the stress tests will be in assessing their true health.
Also Tuesday, senior government officials said the Treasury Department is planning to require taxpayer-supported banks seeking to free themselves from the government’s grip to show that they can repay the lifelines without additional subsidies that have helped them survive the financial crisis.
Banks have had an indirect subsidy adopted by the government last fall that allows them to issue debt cheaply with the backing of the Federal Deposit Insurance Corporation. The Treasury is expected to announce as early as Wednesday that healthier banks must show that they can issue debt without the guarantees before they are allowed to exit the Troubled Asset Relief Program, or TARP.
The banks also must demonstrate that they will be able to sell stock to private investors and pass a government stress test to show that they are healthy enough to survive without the taxpayer aid.
The Obama administration plans to publicize the results of stress tests for the nation’s 19 largest banks on Thursday. The results are expected to reveal that some need additional capital.