BoneYard

CIT: The Fleecing Continues

Shares are not worthless - yet. The company is preparing for the bankruptcy filing - then they will be worthless.


On Oct 30 03:51 PM JRScott wrote:

> So if I currently hold shares of CIT are they now worthless? If
> not, should I just hang on for a year and hope for the best?

GMAC's Deal with Sheila Bair

Add the FDIC article to your article on the GMAC bottomless pit and you can see the depth of our analytical government. And yet CIT qualifies for nothing although it is, potentially, more important (difference is it doesn't directly support USA Motors).

Also, interesting how Ally does not say a GMAC subsidiary. Deceptive? Who is the largest shareholder. Hmmmm.

GMAC's Deal with Sheila Bair

GMAC bonds are compelling as the exchange is behind it. The government has shown its willingness to abandon business models and give money to some of the least deserving companies in order to support their investments (read GM and Chrysler). The baby bonds ($25 par) are often cheaper than the institutional ($1000 par) equivalent, they are exchange traded and you can throw a stop on for good measure.


On Oct 29 02:07 PM user396040 wrote:

> Anyone have any thoughts on GMAC bonds - they are still selling at
> a big discount and have a huge yield. Is there a case to be made
> that the government will simply not let GMAC go under and that therefore
> the bonds are underpriced? I try to be non-ideological when I have
> my investor's hat on, so I am more interested in whether it is safe
> to rely on the government support of GMAC as opposed to the philosophical
> (and admittedly interesting) question of whether government support
> of GMAC is a good idea from a public policy perspective.

Goldman Sachs: Now a Financial Holding Company

Being long does not mean blindly following. Depending on your mandate and its constraints, you can be long for reasons other than being enamored. As well, I am not badmouthing GS, just laying it out there and calling a spade a spade.


On Aug 20 04:15 PM DonFurio wrote:

> Who cares, GS navigated correctly through the crises, and so now
> they no longer need the classification.
>
> To the author, if you're long the debt and preferreds, why are you
> badmouthing GS? I know you're opinion doesn't matter, but why create
> and even more bad publicity for GS?

BB&T-Colonial Deal Illustrates It's the Big Bank Chiefs Who Win Again

As Colonial Bank was the lions share of assets of BankGroup, Colonial BankGroup will ultimately file for bankruptcy (see WaMu for the playbook). Equity = $0. The loss share is interesting as 80% of the losses are eaten by the FDIC (read the US Taxpayer) up to $5B and 95% of the losses are eaten by the FDIC on the next $10B. BBT's share of the loss is estimated at less than $500MM, this deal will be accretive. The conditions being placed on BB&T for mortgage mods are more interesting. Dance with the devil and so on.

CIT Averts Bankruptcy

Interesting how the bondholders who loaned the company $3B (loan is actually a much friendlier term than might be used, loansharking laws being what they are) has already tendered 58% of the August maturity and couldn't pull their tenders (hence the increase in price). Now if only they could come up with a new reason for the holders of the $300MM 11/1/09 and $500MM 11/3/09 maturity to tender below par.

Are Airlines Going Bankrupt Again?

Utility, phone and water aren't profitable? Perhaps a little investigation/analysis would help your argument. And flag carriers/nationalized airlines? What country exactly has that worked in? Capacity has been/is/will be the determinant of profitability. The States have too many airlines, restructuring will never succeed unless there is liquidation. Another problem is the ability to park the aircraft and have the associated costs flow to the bottom line - encumbered fleets have significant costs in the air or on the ground. The industry model is broken and all the governments horses and government men (even Ratner) can't put the airlines together again.


On Jul 05 11:29 AM HomeGamer wrote:

> Lots of chatter about easily the simplest yet least understood industries
> in America.
> Re-regulate and re-subsidize.
> Network nationwide inexpensive air travel is an essential and indispensable
> public utility, like universal mail service and universal electric
> service.
> However, expecting this public utility to be both inexpensive, universally
> available and PROFITABLE is absurd. We don't expect mail delivery
> to turn a profit--by definition we want all our essential public
> services (electricity, basic phone, drinkable tap water etc) to be
> provided as INEXPENSIVELY as possible. And that's inevitably opposed
> to PROFITABILITY.
>
> Darwinian musical chairs does not work in the public-utility model,
> and can never work. That's been tried since 1979 and failed miserably.
> Government is strangely slow to grasp that, and airline CEOs, never
> best of breed, can articulate the problem but can't seem to take
> the obvious logical step of volunteering to be nationalized.
> Until that happens, there will be much more erosion of air service
> and easy money to be made betting on the next turn of musical chairs.

The Full Aleynikov Transcript

"I believe, Your Honor, that the financial institution, I think the position here is that whatever steps the financial institution can take, the financial institution essentially has no way to effectively protect itself against the loss of this program. Once it is out there, anybody will be able to use this. And fair market share would be adversely affected."

Translation: The program could be used against the "financial institution" the same way they use it against others. Wouldn't want to eat up TARP money now would we?

I Was Wrong About GM Bankruptcy

Okay, GM has not left bankruptcy, nor will it for years. They will soon consumate a 363 sale of assets to NGMCO. This is not exiting bankruptcy - unsecured's, see how long it takes to get your equity. While the 363 sale is a valuable part of bankruptcy law, it is being twisted and contorted beyond recognition by this administration and the court (jesters).

This company will not be EBIT breakeven at 10MM SAAR unless the contribution margin stays at 30% (which even Ratner, with his impressive auto background says it wont be 30%) and they lose no further share.

As far as GM being politicized, look at the share owned by the UAW relative to their claim - is this not a policy driven result? Do you think the UAW will use their share to help further the ends of the company or the union?

Realty Income: Excellent Dividend Growth REIT

Couple things:
If you like the common for the divvie, consider the preferred (O E) with its current yield of 8.3% (it too pays monthly).

NNN is similar as they are a triple net player with a slightly more attractive valuation (9x FFO where O is 12x FFO), an 8.8% yield and dividends that are 75% of FFO (O's divs are 90+% of FFO). NNNs preferreds (NNN C) yield 10.1%.

NLY and CMO are mortgage REITs, hardly comparable to a CRE REIT (not saying better or worse, but when markets lock they bleed too - look at Thornburg as an example).


Disclosure: Long O equity, preferred and bonds, NNN preferred and bonds

Fledgling Conflicts of Interest at Nouveau Rating Agencies

Realize that contrary to:
"This explains why companies such as Realpoint and DBRS were recently added to the roster of Nationally Recognized Statistical Rating Organizations [NRSROs]. "
DBRS has been an NRSRO since 2003. Not a defender of rating agencies (waiting for the lawsuits to start against them and Fair Issac) but they have not been the issue.

Ohio Attorney General Objects to GM Sale on Grounds 'Franchise Contract Changes Unlawful'

Look beyond GM on this one. The company is doing what they are told in order to ensure they meet/exceed what the administration has promised. Do you think they are doing this independent of the auto task force? It is just one more blatant example of the administration running roughshod on the law. Perhaps this time someone will be able to call them on it. Blaming the dealers is an interesting approach. While it is true that the domestic (used loosely) auto manufacturers are over-dealered, they did not create the network. There needs to be a dramatic reduction in the number of dealers, but it must be done within the framework of existing law. If not, what is any contract worth?

What's Wrong with ETFs?

Leveraged ETFs allow retail investors to blow up just like the big guys. Unfortunately, an investor can make a good macro call and execute using a leveraged ETF and get demolished. This is leverage - it works for and against you. Leveraged ETFs are trading vehicles, not investments. It is funny that a retail investor has to show they are worthy of trading options, but can go out and buy a 3x ETF without showing even a cursory understanding of how they function.

There Is More to Why Canada's Banks Are Better

Is it the banks or their market? These are not global banks, they are what could be considered super-regional banks whose influence is mainly limited to their domestic market. They did not get into "toxic" investments like CDOs... as they had no natural market to sell them into. They had some markets - ABCP ring a bell - but these were mostly contained as the investor base has a different approach. Sounds like the chicken and the egg dillema - is it the banks are more conservative or is it the investors?

When Bankruptcy Is A Boon To Some Bondholders

If you recall, there was a news article about a certain TARP recipient that held a CDS position in the AbitibiBowater as well as bonds. The same situation applies in GM (to a lesser extent) and might well be an influencing factor in the recent McClatchy exchange. Now there are two factors bondholders have to consider/worry about: bankruptcy rules being skirted and predetermination due to CDS. As if the general economy and levered companies weren't enough.