Friends Don't Let Friends Buy Stocks - Look at State Street

 

Wow, total panic out there. State Street (STT) is supposed to be a safe asset manager type of financial institution - it's down 40% - oh wait, it's rebounded to only down 30%. Now S&P can downgrade its debt, credit spreads can widen and we can take it to $0. Yippee. People were flocking into these type of financials as a port in the storm.

• Shares of trust bank and asset manager State Street Corp (STT) slumped as much as 22.5 percent on Thursday on concerns of losses in its investment portfolio. (that was written at 11:48 AM - this market moves fast, it doubled that loss within 90 minutes)
• "With the disruption in capital markets that we are seeing, there's a concern that State Street's investment portfolio may have greater mark-to-market issues than earlier anticipated," said Gerard Cassidy, analyst at RBC Capital.
• "Additionally, there's going to probably have to be 'other-than-temporarily-impaired' charges on their investment portfolio in the quarter. Investors are taking the approach that shoot first, ask questions later. That's the reason the stock is off as much as it is today," Cassidy said.

This is Russian Roulette right now. Unless you are Wells Fargo (WFC) which apparently every mutual fund in America is buying hand over fist since it's impossible to make it fall.

Wait, as I type this now it is only down 15%... company statement

• In response to questions received today from media and other sources, State Street Corporation (NYSE: STT - News) confirms that, as previously disclosed, it does not believe consolidation of its conduits is required. State Street confirms that even if it had to consolidate its conduits, it would remain well capitalized with ample sources of liquidity. The company raised $2.8 billion in equity capital in early June 2008 and does not currently have any plans to raise additional equity.
• The net asset value (NAV) of State Street Global Advisors’ money market funds has never declined below $1, including in its Short Term Investment Fund, Government Short Term Investment Fund and the Navigator Securities Lending Trust, a registered fund that is used in connection with collateral management for State Street securities lending program. These funds do not have any unsecured exposure to AIG, Lehman, Washington Mutual, Wachovia, Merrill Lynch or Morgan Stanley.
• State Street for its own account does not hold any equity positions in unaffiliated financial institutions. The company is often reported to be an owner of many issuers because of its position as a large custodian and a large index fund manager.

I think denials and clarifications mean nothing in this market. People will say they are lying and it's obviously going to $0 as the credit default swaps are widening. It's a sick world.

Position: Do not let the women and children near this stock market. Or the men.

Comments

[captainccs:]

If you are not the panicky type, you could have doubled your money on STT today. The low was 29 and the close 59.

2008 Sep 18 10:12 PM

[Blah, blah,...:]

This was panic on a false rumor that STT was a major holder of the 'bad stocks,' when in fact they are a custodian bank, and so appear near the top of unsophisticated lists of major holders despite that they hold these securities on behalf of funds and institutions. As stated above, in the release, "The company is often reported to be an owner of many issuers because of its position as a large custodian and a large index fund manager."

2008 Sep 19 03:10 PM