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Tim Travis is a veteran deep value investor and money manager. Travis has extensive experience in traditional investments such as stocks and bonds, in addition to having a unique methodology of combining options and distressed investing with value investing to generate income, reduce risk, and... More
My company:
T&T Capital Management
My blog:
T&T Capital Management Blog
My book:
Learn to Treat Your Portfolio as a Business
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  • Divestitures Likely In Modelo Deal-WSJ

    The Belgian brewer Anheuser-Busch Inbev's possible acquisition of the remainder of Grupo Modelo is quite likely to draw antitrust scrutiny, as the combined company would control in excess of 50% of the U.S. beer market. While the company could divest some of its inferior brands to offload market share, the costs of doing so should be strenuously considered. While it does seem that Inbev is paying a relatively high price for Modelo, the assets are exceptional, and the management team at Inbev has a track record for cutting fat, and improving margins. I'd certainly give them the benefit of the doubt on this acquisition. I believe that additional distribution of Modelo's portfolio will have a tremendous impact on boosting market share especially for brands such as Model Especial. Hopefully for Inbev's sake this doesn't turn in to a costly production where ultimately the deal falls apart do to antitrust issues like the AT&T and T-Mobile deal did.

    http://online.wsj.com/article/SB10001424052702304458604577488953216933914.html?mod=business_newsreel

    Tags: BUD
    Jun 26 4:17 PM | Link | Comment!
  • Biggest U.S. Banks Curb Loans As Regional Firms Fill Gap-Bloomberg

    This article describes how many of the larger banks are curtailing lending and the regional banks are picking up the slack. This is a direct result of the Dodd-Frank legislation which has had the effect of reducing lending as banks are forced to horde capital, and shut down formerly profitable business operations. This is a big reason why the economy has experienced such lackluster growth even after the deep recession that we went through. Reducing credit at the worst time possible will likely be one of the worst legacies of this era of financial regulation. The regional banks are in an excellent position to provide financing on attractive terms as the big banks pull back. There are still some very good values on the regional bank side such as Regions Financial (NYSE:RF). These companies are insulated from the European issues as far as direct exposure, but the ramifications of a slowing global economy are unfortunately felt by all.

    http://www.bloomberg.com/news/2012-06-26/biggest-u-s-banks-curb-loans-as-regional-firms-fill-gap.html

    Disclosure: I am long RF.

    Jun 26 3:36 PM | Link | Comment!
  • U.S. Banks Aren't Nearly Ready For Coming European Crisis-Bloomberg

    This article written by Simon Johnson is another in a long line of commentary that is not supported by facts or solutions. Obviously there is a lot of stress directly stemming from the situation in Europe and it will effect banks. Currently banks in the United States have some of the highest capital and liquidity ratios in their history. If the Euro were to break up in a disorderly way, nobody would be prepared including banks, insurance companies, citizens of those countries, conglomerates, etc. There is very little one can do to effectively hedge these types of risks, similar to it being difficult to hedge against the risk of a nuclear disaster. Fortunately cooler heads generally prevail which is why a disorderly unraveling of the Euro is unlikely. It isn't in anybody's best interests.

    What the world needs is economic growth. While this type of worry mongering article seems helpful, it serves to stifle growth when implemented into policy, by forcing banks to horde capital, as opposed to lending to counteract the huge fiscal deleveraging that we are seeing across the globe. It doesn't make sense to raise capital for the sake of raising capital, when there are more productive uses for that capital. In terms of giving a large number reflective of JP Morgan's balance sheet and then showing how $50 billion in losses could potentially wipe out the bank, it would be more instructive to show where those losses would likely come from. Also a bank that generates $20 billion in profits per year can offset many of the potential risks that are out there. Let's not forget we've just been through the worst financial crisis since the Great Depression and JP Morgan came out stronger than just about any other bank in the world. This is the type of article that is written to get in the news but I think it is totally irresponsible without providing any facts, figures, or numbers. The reality is that these types of figures generally show the strength of the banks versus anytime in their history which is why it is much more convenient to be intentionally vague when writing these types of bearish, and fear driven articles.

    http://www.bloomberg.com/news/2012-06-24/u-s-banks-aren-t-nearly-ready-for-coming-european-crisis.html

    Disclosure: I am long JPM.

    Tags: JPM
    Jun 25 1:24 PM | Link | Comment!
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