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Pat Stout  

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  • Cliffs Natural Resources Is Near New Lows, Now What? [View article]

    In my opinion, it will be tough to see a short squeeze until the bonds improve in price. Holders of the mandatory convertible preferred (CLV) might be short common stock as a hedge, and bondholders may have done the same. The Feb 2016 conversion of CLV will result in more common shares with a reduction in dividend expense. This could improve the balance sheet.


    Nov 29, 2015. 08:47 AM | 1 Like Like |Link to Comment
  • Cliffs And ArcelorMittal Amend Empire Iron Ore Agreement [View article]
    <snip>It would make sense, like most integrated produces, to reduce their direct interest in mines and become more of a downstream producer while prices remain low but that is expected.<endsnip>

    MT has the right to put their Empire mine interest back to Cliffs, they could reduce their direct mine interest to 0% by doing so. They have not done so to date.

    The article was intended to provide information that may not have been generally known. While things look bleak at the moment, it is darkest before dawn. The question becomes might the worst for Cliffs be history and the future starts to look better? The bond market is suggesting that Cliffs faces some serious challenges. FWIW, Cliffs has a long history of rebounding from economic downturns.
    Nov 29, 2015. 08:31 AM | 1 Like Like |Link to Comment
  • A Look At Pershing Square's Increased Valeant Stake [View article]

    Thanks for the comments and information.

    Have a great Thanksgiving,
    Nov 24, 2015. 04:02 PM | Likes Like |Link to Comment
  • A Look At Pershing Square's Increased Valeant Stake [View article]

    60 strike puts were sold for $13, resulting in an effective $47 purchase price, if assigned. The current market is $10.50 bid $12.80 offer.

    Buying the bonds and selling the 60 puts might be an interesting trade idea for high risk income.

    Nov 24, 2015. 11:37 AM | 1 Like Like |Link to Comment
  • A Look At Pershing Square's Increased Valeant Stake [View article]

    The 13D filing has this info:

    <snip>The counterparties to such over-the-counter options are Nomura International PLC and UBS AG.<endsnip>

    Nov 24, 2015. 10:08 AM | 1 Like Like |Link to Comment
  • NYSE Crackdown On... You [View article]
    Hi Ray,

    Agreed stock should be secured (borrowed) before it can be sold short.

    Think LTV had more shares sold short than outstanding shares, when it went belly-up.

    No matter what happens there will be unintended consequences...

    Nov 23, 2015. 05:48 PM | 1 Like Like |Link to Comment
  • NYSE Crackdown On... You [View article]

    Bring back the up-tick rule would hamper the option market. And why should there be an "up-tick" rule and not a "down-tick" rule?

    Hope about having shorts disclose holdings, like longs?

    Nov 23, 2015. 02:51 PM | 3 Likes Like |Link to Comment
  • NYSE Crackdown On... You [View article]

    The problem with stop-loss order is that it triggers a market order. It would be better if it triggered a limit order with a known slippage. However, the investor might not see the limit trade execute. The market order trades, but some have been disappointed with the price. That is the risk of a "market" order.

    Market order -- order get filled but price is unknown.
    Limit order --- price is known, the order may get filled in total, in part or none.

    Nov 23, 2015. 02:40 PM | 1 Like Like |Link to Comment
  • NYSE Crackdown On... You [View article]
    Did the NYSE happen to mention if they would stop the practice of busting trades? That discourages liquidity, imo. Why step in to buy a falling (or sell a soaring) stock if the exchange after the fact can say sorry -- the seller did not mean to sell the stock when they hit the buyers bid, or the buyer did not intend to buy the stock when they took the sellers offer. Too bad if you flipped or hedged your position -- those trades will stand.

    Will the NYSE identify the parties they bailout when busting trades?

    Nov 23, 2015. 02:24 PM | 10 Likes Like |Link to Comment
  • Exchanges canceling erroneous Time Warner Cable trades from brief period [View news story]
    the stock market is an auction market where buyer and seller agree on the price. The action of the exchange(s) will reduce liquidity. Why would a trader want to go against the momentum, if the exchange(s) can step in and bust trades?
    Nov 19, 2015. 09:33 PM | 2 Likes Like |Link to Comment
  • AutoNation - Soaring Stock Price But What About The Market Capitalization? [View article]

    Thanks for the comments. Look forward to reading your thoughts.

    Nov 13, 2015. 07:09 AM | Likes Like |Link to Comment
  • The Economic Risk Of Falling Crude Oil [View article]
    Trouble in the oil sector:

    Magnum Hunter going concern warning --

    Linn Energy explores debt restructure options --

    Chesapeake credit downgraded --
    Nov 12, 2015. 07:06 PM | 1 Like Like |Link to Comment
  • 10-Year Note Yield Marching Higher [View article]

    TIPS require more record keeping and tracking than fixed coupon issues. And with deflation the TIPS nominal income declines. Why not use a balance of cash (t-bills), notes and bonds?

    Nov 12, 2015. 10:12 AM | Likes Like |Link to Comment
  • Paired Trade: Long General Electric And Short Honeywell [View article]
    Update on paired trade. Total price return from YCharts.

    up 14.58% GE
    dn 0.31% HON
    dn 0.27% SPY

    GE has outperformed HON by 1489 basis points.

    Bobcat9 -- if GE follows Peltz idea of a increased debt to fund share repurchase then the trade might run into trouble as interest cost would increase, leaving less dollars for shareholders.

    FWIW -- GE's cash flow statements shows no funds used to repurchase shares for the 9 months ending Sept 2015, but nearly $7 billion in cash returned to owners via dividends.
    Nov 11, 2015. 08:16 PM | Likes Like |Link to Comment
  • Etsy To Be Avoided At All Costs [View article]

    Why do some sellers want to limit the number of items on Esty's site? Shouldn't sellers with a product in high demand be permitted to have help to produce goods to meet the demand? A single person can only make so much due to the number of hours in a day. If it is okay for a family to work together, why shouldn't a single seller be permitted to get assistance?
    Should shops be limited in the number of items that can be offered for sale? Or should sellers be restricted from having more than one shop?
    Nov 11, 2015. 01:07 PM | 1 Like Like |Link to Comment