Mad Hedge Fund Trader

20 Companies Most Likely to Go Bankrupt in Next Year

cnc Fear of law suits prevents most analysts from publishing lists of short selling targets. But the Audit Integrity Co., a forensic accounting firm, regularly posts lists of public companies they believe may go bankrupt (see www.auditintegrity.com). Many of their picks reflect the accelerating shift from the old economy to the new economy. With offices in New York and Los Angeles, they look at leverage, market position, debt, and their own proprietary indicators. Another red flag are the legal shenanigans that companies resort to when coming out of a recession, like writing off large amounts of good will. In the media space CBS (CBS), Sirius XM Radio (SIRI), and Hertz Global (HTZ) are at risk. In the consumer field, Rite Aid (RAD), Macy’s (M), and Las Vegas Sands (LVS) made the list. Advanced Micro Devices (AMD) is the largest tech company to warrant scrutiny. Airlines, always a favorite of bankruptcy mavens, include American Airlines (AMR), and Continental (CAL). Sprint Nextel (S) tops the list of telecom companies. Better take that portfolio out and give it a good scrubbing.

Home Price Declines: How Much Further Do We Have to Go?

More than people think. Anyone who thinks that we have hit bottom in real estate should start smoking something else. The S&P Case-Shiller National Home Price Index fell 19.1% in Q1, the sharpest drop in history. Charlotte, NC did best, rising 0.3% while Detroit, where prices have fallen to 1995 levels, did the worst at -4.9%. San Francisco came in at -2.2%. Most disturbing is that the disease is metastasizing from the West coast and the Sunbelt to infect the entire nation. Home prices are now back to the 2000 level, meaning that we have given back the century to date. Foreclosures are accounting for up to 70% in some local markets, and while they are boosting sales volumes, they are also accelerating the downward march in prices. Today’s data shows that the downward spiral is continuing, so most Americans are probably looking at another $100,000-$200,000 fall in home values. Not exactly a springboard for an economic recovery.

Fundamentals Weaken for U.S. Apartment Building REITs

The rot is spreading. The Manhattan residential market is now in free fall, after holding up better than every major market in the country for years. Rents have fallen up to 25% since the Lehman bankruptcy in September, dragging down condominium and co-op prices almost as fast. Hardest hit have been units priced in the $1-$2 million range that appealed to up and coming Wall Street traders. This class of newly unemployed former owners is now fleeing the Big Apple en masse. The stratospheric end of the market, the mega mansions and penthouses with those fabulous Central Park views and live-in nanny suites in the $30 million on up range, are still holding up. With industry job losses this year expected to exceed 100,000, expect this downtrend to continue.

S&P 500 Buy and Sell Ratings

Er &g There is some fascinating action going on the options market right now. There is some massive buying of short dated puts in Wells Fargo (WFC) and JP Morgan (JPM), while buying of longer dated puts has weirdly almost vaporized. These are the only two high priced big bank stocks left. It is not happening in Citibank (C) or Bank of America (BAC) where there is so little meat left on the bone that buyers don’t want to feel like they are the last man at an all you can eat buffet. Brace yourself. This is good news. It means that traders expect to see some short term volatility in these names. After that Obama’s bank bailout, stimulus program, and new budget will start to kick in and come to the rescue of the sector. Call me the “options whisperer.” I stroke these things, and they speak to me.