Glen Bradford

Mark-to-Profit: Why I No Longer Hate Banks

Notice how I didn't recommend buying GGP. I actually believed that one was going under.

I'm still iffy on Citi. It's not one of my brightest ideas. My list of ideas: Note that the ones near the bottom might not be on my buy list, but could be on my watch list as potential turn-around plays. The closer you are to the top --- the safer you are.

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On Apr 21 11:48 PM Nathaniel C wrote:

> Just wait until commerical real estate collapses (GGP filed bankruptcy).
> The majority of banks carry their commerial real estate at 95 cents
> on the dollar. The only one that has taken appropriate marks is Goldman
> Sachs who has written down the value of their CRE to 60 cents.

Mark-to-Profit: Why I No Longer Hate Banks

I left out a couple things, I'll add them as I remember them. Another feeling of mine is that I've been looking through lots of insurance and bank financial statements closing out 2008. It seems to be a fairly large trend that they were writing off more than they had to. Looking at this from a game theory perspective, it makes sense. They may have wanted to close out a terrible year by writing off so much that they could avoid write-offs in 2009. Looking at things this way, and the adjustments of mark-to-market to mark-to-profit, I believe that these huge write-offs will slowly start factoring in over the next couple years as unrealized gains. I don't fully expect these institutions to bring them all back in 1 quarter. Analysts love good trends and when mark-to-market comes back, the companies are going to want to be able to continue posting profits. It's as if they all have a safety bank account now that they can start dipping into in order to normalize their future earnings. I have also been picking up HBAN. My disclaimer is that by diversifying across C, FITB, HBAN, AIG; you can land a couple big winners (400%+ in less than a year) and probably tank one. Overall, you'll outperform the market. That's why I fully recommend FAS.

Hope this helps.


On Apr 14 07:42 PM suttoda wrote:

> very nice

Mark-to-Profit: Why I No Longer Hate Banks

I also agree with your interpretation on the VIX. I noticed it as well. When the market is crashing and the VIX is stable, as it was these past 2 months... I turned super bullish. I don't really have an opinion on the VIX right now. My opinion is that Financials are still severly underpriced based on the EPS that they're going to put out this year (2009). I also believe that even though banks are going to be cheating their way into earnings by mark-to-profit and no interest rates --- they are a steal right now. I am a bank-hater at heart.

I think this week financials will run. The dumb money out there will see banks going up and buy in --- because they see an upward trend. The smart money has already bought in. There is 90% dumb money to smart money. Get ready to ride. These things are going to be blasting off. That's just my opinion.

I didn't mention FITB. I like that one too because all the day traders I know cant stop yelling about it. My disclaimer is that buying FAS is the for sure winner. The rest are all hypothetically gambles. Citigroup can't go under and will probably go x3 this week. Just wait till the mutual funds can get it at $5.

I base most of my analysis on discounted cash flows. In a situation like this, I look at historic cash flows and ask myself: "Will this company survive?"

Hope this helps.


On Apr 13 08:16 PM Steven Vincent wrote:

> Check out my piece: VIX Breakdown Forecasts Bear Panic
>
> seekingalpha.com/insta...
>
>
> There is panic buying after hours in Citigroup, now up to $4.20.
> Also BAC.
>
> Here is an addendum to my piece:
> Question from this posting on MarketOracle.com:
>
> VIX showing buying panic?
>
> Just wanted to ask about your interpretation of the VIX. When I saw
> the VIX break down below 40, I took it as a sign that we'll see less
> panic in general, on the long side and the short side. Options implied
> volatility works both ways. Why did you see it as a set up for panic
> buying?
>
> Reply:
>
> It's interesting that there are many divergent interpretations of
> this indicator that has become widely monitored.
>
> First, clearly historical volatility has not diminished in this bull
> phase...we all know that this is "the fastest rally since 1933."
>
>
> The VIX tends to move inversely to the market. Technically the index
> had reached a point that demanded resolution implying a sharp break
> in either direction. A break down from the 200 DMA and the triangle
> formation would imply a continuation of the bull trend in stocks...and
> a sharp one. A move away from the 200 DMA is a fundamental change
> of trend. It means something very important is happening. Bears had
> been expecting an upside resolution to the VIX, coinciding with a
> top in the "bear market rally". They have tried to short the market
> again at this level on the blanket assumption that the bear must
> return. The breakdown in the VIX in an indication (and a strong one)
> that they are probably wrong. It is possible that on Tuesday or Wednesday
> there may be a sharp pullback in the markets and the signal that
> the VIX has given may prove to be a bull trap (or bear trap from
> the perspective of the VIX chart). However that would need to happen
> in the next few days or the shorts will start to cover and sideline
> money will pile on driving the market to the 200 DMA on the SPX.
>

TARP Funds Fueling Global Buyouts, Not Lending

I'm bullish on BAC (Bank of America). It's too cheap. It's #1 in several categories and it's severly declined in stock price.

Last Thursday Was the Bottom - It's Time to Get Back in

So, the day after writing a "market bottoming article," the market drops 680 points. You can never predict the market. I thought it was bottoming around 9000 a month ago. I've learned just to give up predicting and wait for entry points where you know the market is operating below it's clearing potential.

Last Thursday Was the Bottom - It's Time to Get Back in

It's unfortunate that a lot of the comments on this article just state random opinions and facts and don't back them up with any evidence. I figure it's the least I can do.

BAC - First off, ignore the last 4 quarters (1 year) of figures. It's not really historically accurate. Ignoring the last year and looking at the 4 previous --- you have a company growing at at least 10% and last time I watched TV, it's making strategic acquisitions to spur growth in the next 5 years. It's priced to shrink earnings. This is not the case. Out of all banks, this is the only one that I've considered owning lately (Besides citigroup since it got saved).

C - Citigroup has been growing at at least 7% over the past 5 years under similar analysis and is priced to shrink faster than BAC.

That said, I've been staying away from banks for the last year since I saw and heard about this one coming... I think there are better deals out there, but the banks as you've seen are the first to rebound the hardest. Hopefully you were smart enough to buy C earlier this week (monday morning)

HERO - Priced to grow at 1.8%, it's been growing revenues significantly faster (80%) than that but the relationship between revenue growth and net income(-24%) has not been as strong lately... I like NOV and APA more.

DRYS - this one should recover from the fact that commidity prices are "bottoming" esp. if you are calling a market bottom. It's grown Net income at 82%. Can they keep this up? Well --- anyone who knows anything about the transpo business knows that there's no profitable way to transport people, but transporting goods is the way to go. My favorite transpo business distributes liquor (CEDC)

As for the bottom, you're 5 days late and everyone's screaming "bottom."
This could have been the bottom, look to global markets... there are strong indicators that it's the bottom. I think it's the bottom. But, I'm holding out a little bit, i've leveraged up 3 times at 9000, 8500, and 8000. I'm saving one more time to leverage up at 7000 in case the market is as unpredictable as I think it is. But I'm all in. I think that the DOW is worth about 10500, but would be surprised to see it reach that. If it does, it will overshoot to 11000+.

Hope this helps you guys!