Why General Growth Should Accept Simon Property Group's Offer [View article]
Wow another management team stands up for its interests over shareholders. The only difference this time is stupid investors who actually think they are getting a better deal with Brookfield.
Why General Growth Should Accept Simon Property Group's Offer [View article]
You can call my math too simple, but if you break down Pershing Square's implied equity values using a 7.21% cap rate for the worst case scenario and 6.21% cap rate for the best case scenario, you will see that I am right. Using Ackman's best case scenario, the implied equity value is $13,298 for 319.6 mm shares ($41.61/share) + GGMI value ($.95/share) = $42.56. However, Brookfield/Pershing Square/Fairholme will buy 75% of the company at $15/share, which implies an equity value of $21.73/share. How do any of you fools argue that SPG is taking advantage of GGP's equity value and not understand Brookfield's offer is worse?!? SPG is now offering $20/share, which should be even higher since the equity value of SPG should jump drastically if this deal is completed. Obviously GGP management needs to work out the details with SPG (backstop for GGO at $5/share), but using Pershing Square's best case scenario yields a value of ~$22/share, which is not significantly more than SGP's $20/share. If GGP management plays its cards properly, they should be able to get another $1 to $2 in stock from SGP.
I understand SGP is getting a great deal, but Brookfield/Fairholme/P... are taking control of the company and paying $15/share to receive ~$22/share in value. There are Ackman's numbers, not mine, but for some stupid reason you guys think Brookfield is offering a better deal.
Assured Guaranty: An Incredible Opportunity [View article]
I am pretty sure AGO has already reserved for losses related to the Harrisburg incinerator deal. Also, I remember AGO management saying that Harrisburg is not insolvent and could easily sell assets to repay debt. They could also raise taxes, but don't want too because they think taxes are already too high. Filing Chapter 9 will take a long time and the case can probably go either way.
Why Dick Bove Is Wrong About Citigroup [View article]
While I have disagreed with Bove on nearly everything in the recent future, he was 100% correct on his last Citi call. Dilution of shareholders at this magnitude was the worst thing Pandit could have done for shareholders and he should be fired for such a poor decision. This company is run for the employees to become rich and shareholders to receive nothing. How this author argues that Citi did the right thing for shareholders is mind boggling at best.
PNC CEO said on CNBC this week that they would not repay TARP this year because they do not want to dilute shareholders and TARP is not effecting their business at all. While I think Wells Fargo and Bank of America are great long-term investments, their CEOs, along with Pandit, should be ashamed of their decision to dilute shareholders for no good reason. Wells CEO John Stumpf said TARP has not effected their business operations at all, so why dilute shareholders when you can wait one year to repay TARP and have no need to raise more equity capital?
BofA only paid back TARP because that was Ken Lewis' dream - to pay back TARP before he retired. Terrible long-term decision for shareholders.
For banks who are in the business of advising on M&A and capital structure, they should learn a thing or two about what is in the best interest of their shareholders.
Wells Fargo, JPMorgan and Bank of America: Stock Prices Can Double [View article]
You are wrong - intrinsic value should not be measured solely on tangible book value for financial companies, but rather on earnings power. TBV is a backward looking valuation tool and does not look forward at all. Based on your analysis, Wells Fargo should issue billions of dollars of shares today, which would increase tangible book value and therefore, increase stock price.
If tangible book value is now the most accurate way of calculating intrinsic value, why don't all these banks that trade at a multiple of tangible book value keep issuing trillions of dollars in shares. Because the EARNINGS POWER is what matters. Tangible book value is useful only to the extent that banks are holding enough capital, which they are.
While Bank of America's stock price is going up on the new capital raise, this is not a good long-term deal for shareholders. They are being substantially diluted at a higher cost of capital than TARP, only to get the government out of the company. I hope Wells Fargo is not forced to do a similar deal as it is clearly not in the best interest of shareholders long-term.
Optimistic Wells Fargo Estimates from Top Wall Street Analysts [View article]
<IMG class=authors_reply src="static.seekingalpha.co..."> No I've owned WFC, BAC, JPM since January 2009 and continued to add to my position until May. I plan to hold for several more years so this is a very long-term holding for me.
I believe financials are the most undervalued sector in the market today in addition to several consumer staples. The rest of the market is fairly valued so I wouldn't recommend investing tons of money in this market aside from financials and staples, such as Walmart, Kraft, Target.
Wells Fargo, JPMorgan and Bank of America: Stock Prices Can Double [View article]
Buffett's making money on Wells Fargo (average buy price is $22/share and he also has received dividend payments) and Paulson is making money on Bank of America. I agree they have more information than I do, which is why I feel comfortable investing alongside two of the smartest investors in history.
Wells Fargo, JPMorgan and Bank of America: Stock Prices Can Double [View article]
Too many dumb comments for me to respond. Buffett invests when he thinks companies are cheap, not to be an American patriot. Banks reserves for losses are high because the peak of the credit cycle will be in 2010. WFC and JPM took writedowns immediately upon acquiring Wachovia and Washington Mutual.
I would bet with Paulson and Buffett over any of you fools. The economy is growing (although at a slow pace), interest rates are at a record low, banks are making tons of money on the steep yield curve, and the credit cycle will pass sometime in 2011. With unemployment at 10.2%, interest rates are not going to increase anytime soon.
Also, credit cycles do eventually turn, the time to short financials was last year, shorting them now is just a complete stupidity. Wells Fargo's revenue is increasing in an environment where loan demand is down, which is very impressive.
I am extremely confident the fundamentals are improving, not deteriorating. Banks are retaining earnings at the fastest pace, provisions for credit losses are extremely high, real estate prices have bottomed.
Wells Fargo, JPMorgan and Bank of America: Stock Prices Can Double [View article]
I think the rally for the past eight months and the accuracy of investment calls over Paulson and Buffett's careers are proof that they understand their investment decisions well.
There was a great article out today on seekingalpha about how Whitney never turned bullish on the financials even though she claims to have.
Time will show that Buffett and Paulson are once again on the right side of the trade.
Wells Fargo, JPMorgan and Bank of America: Stock Prices Can Double [View article]
Agreed, but Wells Fargo has more than enough tangible book value. If you assume a higher TBV means a more valuable company, than Wells Fargo should issue enormous amounts of capital today to increase its TBV, but that would kill the common shareholder, therefore reducing the intrinsic value of the company.
Wells Fargo, JPMorgan and Bank of America: Stock Prices Can Double [View article]
Valuing financial stocks on tangible book value is incorrect. No one values Coca Cola or Amazon on TBV, but on earnings power. There is nothing wrong with banks trading at a multiple of TBV. Given that Wells Fargo's normalized earnings power is over $4/share, I would bet the stock price will be well above $40/share within a couple of years.
Wells Fargo's TBV, earnings power, and capital ratios are all higher than a year ago, but the stock price is lower. Given that the economy is now improving compared to deteriorating (last year), Wells Fargo should be much higher than it is today.
Wells Fargo Thinks It Doesn't Have to Reserve Against Bad Loans [View article]
Paulson's letter to his investors says he thinks Bank of America stock can double to over $30 by December 2011. Buffett's estimates show Wells Fargo can probably double within 2 to 3 years as well.
Fiscal stimulus and loose monetary policies create an incredibly profitable banking environment and I don't think Paulson or Buffett are thinking as short-term as you argue, unless you think Paulson is being disingenuous to his quarterly letter.
What is clear is that the Treasury and Federal Reserve realize a strong banking industry is critical to the health of the United States. They are not going to impose crazy restrictions that create even more problems for the banks (though I don't doubt Congress is crazy and would pursue stupid policies if they had complete power).
Large-cap banks are still one of the most undervalued sector in U.S. market and I would strongly recommend buying WFC, JPM, and BAC.
Wells Fargo Thinks It Doesn't Have to Reserve Against Bad Loans [View article]
So you think John Paulson, the man who made billions of dollars shorting the financials, and Warren Buffett, perhaps the greatest investor of all time, are now investing in banks without looking at any of the banks financial statements and projecting revenue and credit losses?
Why General Growth Should Accept Simon Property Group's Offer [View article]
Why General Growth Should Accept Simon Property Group's Offer [View article]
I understand SGP is getting a great deal, but Brookfield/Fairholme/P... are taking control of the company and paying $15/share to receive ~$22/share in value. There are Ackman's numbers, not mine, but for some stupid reason you guys think Brookfield is offering a better deal.
Assured Guaranty: An Incredible Opportunity [View article]
Assured Guaranty: An Incredible Opportunity [View article]
Why Dick Bove Is Wrong About Citigroup [View article]
PNC CEO said on CNBC this week that they would not repay TARP this year because they do not want to dilute shareholders and TARP is not effecting their business at all. While I think Wells Fargo and Bank of America are great long-term investments, their CEOs, along with Pandit, should be ashamed of their decision to dilute shareholders for no good reason. Wells CEO John Stumpf said TARP has not effected their business operations at all, so why dilute shareholders when you can wait one year to repay TARP and have no need to raise more equity capital?
BofA only paid back TARP because that was Ken Lewis' dream - to pay back TARP before he retired. Terrible long-term decision for shareholders.
For banks who are in the business of advising on M&A and capital structure, they should learn a thing or two about what is in the best interest of their shareholders.
Wells Fargo, JPMorgan and Bank of America: Stock Prices Can Double [View article]
If tangible book value is now the most accurate way of calculating intrinsic value, why don't all these banks that trade at a multiple of tangible book value keep issuing trillions of dollars in shares. Because the EARNINGS POWER is what matters. Tangible book value is useful only to the extent that banks are holding enough capital, which they are.
While Bank of America's stock price is going up on the new capital raise, this is not a good long-term deal for shareholders. They are being substantially diluted at a higher cost of capital than TARP, only to get the government out of the company. I hope Wells Fargo is not forced to do a similar deal as it is clearly not in the best interest of shareholders long-term.
Optimistic Wells Fargo Estimates from Top Wall Street Analysts [View article]
I believe financials are the most undervalued sector in the market today in addition to several consumer staples. The rest of the market is fairly valued so I wouldn't recommend investing tons of money in this market aside from financials and staples, such as Walmart, Kraft, Target.
Wells Fargo, JPMorgan and Bank of America: Stock Prices Can Double [View article]
Wells Fargo, JPMorgan and Bank of America: Stock Prices Can Double [View article]
I would bet with Paulson and Buffett over any of you fools. The economy is growing (although at a slow pace), interest rates are at a record low, banks are making tons of money on the steep yield curve, and the credit cycle will pass sometime in 2011. With unemployment at 10.2%, interest rates are not going to increase anytime soon.
Also, credit cycles do eventually turn, the time to short financials was last year, shorting them now is just a complete stupidity. Wells Fargo's revenue is increasing in an environment where loan demand is down, which is very impressive.
I am extremely confident the fundamentals are improving, not deteriorating. Banks are retaining earnings at the fastest pace, provisions for credit losses are extremely high, real estate prices have bottomed.
Wells Fargo, JPMorgan and Bank of America: Stock Prices Can Double [View article]
There was a great article out today on seekingalpha about how Whitney never turned bullish on the financials even though she claims to have.
Time will show that Buffett and Paulson are once again on the right side of the trade.
Wells Fargo, JPMorgan and Bank of America: Stock Prices Can Double [View article]
Wells Fargo, JPMorgan and Bank of America: Stock Prices Can Double [View article]
Wells Fargo's TBV, earnings power, and capital ratios are all higher than a year ago, but the stock price is lower. Given that the economy is now improving compared to deteriorating (last year), Wells Fargo should be much higher than it is today.
Wells Fargo Thinks It Doesn't Have to Reserve Against Bad Loans [View article]
Fiscal stimulus and loose monetary policies create an incredibly profitable banking environment and I don't think Paulson or Buffett are thinking as short-term as you argue, unless you think Paulson is being disingenuous to his quarterly letter.
What is clear is that the Treasury and Federal Reserve realize a strong banking industry is critical to the health of the United States. They are not going to impose crazy restrictions that create even more problems for the banks (though I don't doubt Congress is crazy and would pursue stupid policies if they had complete power).
Large-cap banks are still one of the most undervalued sector in U.S. market and I would strongly recommend buying WFC, JPM, and BAC.
Wells Fargo Thinks It Doesn't Have to Reserve Against Bad Loans [View article]
Wells Fargo Thinks It Doesn't Have to Reserve Against Bad Loans [View article]