Comments on William Cowie's articles RSS Syndication from SeekingAlpha.com http://seekingalpha.com/author/william-cowie/articles http://seekingalpha.com/article/124851-we-don-t-need-no-stinkin-rally-eye-on-hotel-reits?source=feed#comment-470515 470515 Chris, Zorro, good points, especially the possibility of the common > to recover. However, the thing that gives me the most comfort is > the scale of the amounts - it takes (comparatlively) only a small > amount of money to service the preferreds. So even if a company barely > squeaks by, it might still have enough for the preferred dividend. > > > Agreed on the risk of bankruptcy. However, I doubt that ALL will > meet that fate. I think HST, AHT, LHO and SHO stand a better chance > of making it than the others. Of course, for a return over 20% per > year, one would expect at least some level of risk. > > Speaking of which, there is another risk for the common, which is > dilution. If I'm not mistaken, BEE has already filed a shelf registration > for more stock. It is a rational way for REITs to weather the storm, > and it could take some steam out of the common recovery. Preferreds, > on the other hand, don't face the risk of dilution, because the dividend > is fixed. > > Zorro, thanks for pointing to those other stocks. > > ]]> Mon, 20 Apr 2009 21:29:41 -0400
I'm a long term stock investor. Never bought preferred stocks. What is the ticker for SHO? Thanks.

Andrewsdad


On Mar 09 10:55 AM William Cowie wrote:

> Chris, Zorro, good points, especially the possibility of the common
> to recover. However, the thing that gives me the most comfort is
> the scale of the amounts - it takes (comparatlively) only a small
> amount of money to service the preferreds. So even if a company barely
> squeaks by, it might still have enough for the preferred dividend.
>
>
> Agreed on the risk of bankruptcy. However, I doubt that ALL will
> meet that fate. I think HST, AHT, LHO and SHO stand a better chance
> of making it than the others. Of course, for a return over 20% per
> year, one would expect at least some level of risk.
>
> Speaking of which, there is another risk for the common, which is
> dilution. If I'm not mistaken, BEE has already filed a shelf registration
> for more stock. It is a rational way for REITs to weather the storm,
> and it could take some steam out of the common recovery. Preferreds,
> on the other hand, don't face the risk of dilution, because the dividend
> is fixed.
>
> Zorro, thanks for pointing to those other stocks.
>
> ]]> http://seekingalpha.com/article/124851-we-don-t-need-no-stinkin-rally-eye-on-hotel-reits?source=feed#comment-470511 470511 People make fun of the Yahoo chat boards, but we've been all over > REIT preferreds since October. SHO is one of the most liquid REIT's > in the market, and it flowed plenty of cash from operations even > in a dismal Q4. HPT preferreds have become very cheap the last few > weeks. BEE is a bad shape, no doubt, but it did just handle its credit > line, and it flowed a little cash in Q4. It should make it so long > as there is some recovery in the next year or two. > > Hotels are not necessarily the most solvent REIT's out there, as > pointed out above. Lending REIT's NRF and RAS have preferreds on > sale, as does the apartment REIT AIV. None of these companies have > any serious liquidity challenges coming up.]]> Mon, 20 Apr 2009 21:26:16 -0400
I'm a stock investor and haven't bought preferred. What is the ticker (if that's the correct terminology) for SHO? Thanks.

Gman


On Mar 09 10:15 AM zorro6204 wrote:

> People make fun of the Yahoo chat boards, but we've been all over
> REIT preferreds since October. SHO is one of the most liquid REIT's
> in the market, and it flowed plenty of cash from operations even
> in a dismal Q4. HPT preferreds have become very cheap the last few
> weeks. BEE is a bad shape, no doubt, but it did just handle its credit
> line, and it flowed a little cash in Q4. It should make it so long
> as there is some recovery in the next year or two.
>
> Hotels are not necessarily the most solvent REIT's out there, as
> pointed out above. Lending REIT's NRF and RAS have preferreds on
> sale, as does the apartment REIT AIV. None of these companies have
> any serious liquidity challenges coming up.]]> http://seekingalpha.com/article/130629-ppip-killed-the-2008-bear?source=feed#comment-462299 462299 Mon, 13 Apr 2009 23:55:47 -0400 http://seekingalpha.com/article/130629-ppip-killed-the-2008-bear?source=feed#comment-462254 462254 Mon, 13 Apr 2009 22:51:22 -0400 http://seekingalpha.com/article/130629-ppip-killed-the-2008-bear?source=feed#comment-462174 462174 Mon, 13 Apr 2009 20:18:02 -0400
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.
]]> http://seekingalpha.com/article/130629-ppip-killed-the-2008-bear?source=feed#comment-462095 462095 Mon, 13 Apr 2009 18:32:11 -0400
"The U.S. Treasury's toxic assets clean-up plan is the greatest market opportunity since the savings & loan crisis, says veteran investor Bill Bartmann.
He should know: Bartmann made a fortune snapping up distressed loans from the wreckage of failed savings banks some 18 years ago.
"The current crisis is creating a whole new playing field and, with that, a whole new opportunity," Bartmann said in an interview. "It's going to be a bigger opportunity this time than last crisis."
Bartmann's Commercial Financial Services was among the first to purchase distressed assets from the Federal Deposit Insurance Corp and the Resolution Trust Co following the failure of some 2,500 thrifts in the late 1980s and early 1990s.
Now, Treasury's plan to help private fund managers purchase securities and loans from struggling banks has inspired the Tulsa, Oklahoma, businessman to dust off his Rolodex, assemble his partners and raise a $1 billion (670 million pounds) fund from wealthy investors and hedge funds.
Bartmann, who is 60, said his fund would purchase consumer loans from struggling banks through the public-private investment partnership. With a matching co-investment from Treasury and as much as six-to-one leverage through FDIC-backed bonds, Bartmann could purchase up to $14 billion in loans.
Several major fund managers, such as Ray Dalio of Bridgewater Associates, have poked holes in the government plan and said they will not participate. Yet Bartmann argues Treasury may finally have found the tool that will revive banks and put the economy back on its feet.
"It's a great opportunity for us to finally get back on the road to recovery, but we can't get there until we admit we have some really bad loans stinking up the books of our financial institutions," he said. "This is going to be their chance to purge."
In the last crisis, Bartmann said his closely held firm bought 4.5 million loans with a book value of $15 billion from 800 failed banks. Bartmann packaged these loans into $3 billion of asset-backed securities that were then sold into the market, raising cash to finance new purchases.
This time around, Bartmann hopes to have his fund in place and ready to invest within two months. The fund, he said, would target credit card loans and other consumer assets.
The government, he explained, also needs to act quickly.
Commercial real estate losses, expected to rise as the recession drags on, have only begun to impact results, he said. Indeed, without the toxic-assets plan, Bartmann estimates some 500 banks could go bust.
Treasury, he said, will help banks unload problem assets and boost capital so they resume lending and help fuel the economy, he said. The cleansing process will also restore investor confidence in banks.
"What the FDIC is telling 8,300 banks is, 'Gentleman, we have a bad loan amnesty program,'" he said. "They're saying, 'Give us your bad loans, pull them out from their hiding places, all those loans you've been in denial about or trying to defend, and we will let you disgorge them.'"
Bartmann, who in the 1980s struck it rich investing in Oklahoma oil wells, said inspiration for the new fund came last fall. That's when then-Treasury Secretary Henry Paulson announced the $700 billion Troubled Asset Relief Program.
The TARP ultimately became a capital- injection plan, but the government has followed up with a series of taxpayer-funded bailouts. Yet current Treasury Secretary Timothy Geithner's toxic-assets plan, announced last month, served to reassure Bartmann that his investment plan was the right idea at the ideal time.
"We saw the TARP as a wonderful opportunity," he said. "Little did we know there was $2 trillion more right behind it. This is wonderful squared."
from Reuters


Posted by Denis Ouellet, CFA at 11:56 AM

Labels: banks, financial crisis, PPIP, TALF


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]]> http://seekingalpha.com/article/130629-ppip-killed-the-2008-bear?source=feed#comment-461561 461561 Mon, 13 Apr 2009 11:25:13 -0400
The next step in the logic is whether such "pipelines" will have any long-term beneficial effect. Wealth Redistribution always seems to be at odds with Wealth Creation.]]> http://seekingalpha.com/article/130629-ppip-killed-the-2008-bear?source=feed#comment-461529 461529 Mon, 13 Apr 2009 11:04:31 -0400
Maybe not 'directly' (since it's funded through government debt), but three things WILL happen, due to Bernake's 'quantitative easing':
1. Inflation (inflation is a tax, it reduces your purchasing power)
2. Interest rates will rise
3. Direct taxes will rise

Inflation is an entirely monetary phenomenon. The government, for now, has discovered there's no (short term) consequences of printing as much currency as you want when it is the reserve currency. While the world has a long way to go to wean itself off the US $, the first step has been taken... other countries are talking about NOT using the US$. It might take a while, but the first step has been taken.

The Fed's 'trust us' policy has me tossing at turning at night. The Fed's asleep at the switch, they won't raise interest rates or reduce the money supply fast enough. They didn't see a recession until a year after it started... they won't see inflation until its double digits.

Remember.. Zimbabwe's quantitative easing resulted in 1^112% annual inflation, a $10 TRILLION note that can't buy a loaf of bread (imagine if their national debt was $14 TRILLION Zim, they could pay it off with 2 bank notes and get change back) and social unrest. And this occurred in the space of < 5 years.]]> http://seekingalpha.com/article/130629-ppip-killed-the-2008-bear?source=feed#comment-461415 461415 Mon, 13 Apr 2009 09:43:25 -0400
Unfortunately, the more things change the more they stay the same. Consequently, we may be economically of life support which can keep us above the water short-term.

Watch the Treasury auctions for the next "Black Swan".]]> http://seekingalpha.com/article/130629-ppip-killed-the-2008-bear?source=feed#comment-461330 461330 Mon, 13 Apr 2009 08:53:30 -0400
One way is to demand transparency. If we can't follow the money then ... well ... they don't get anyway.

The greater good's claim for secrecy is horse manure.

]]> http://seekingalpha.com/article/130629-ppip-killed-the-2008-bear?source=feed#comment-461326 461326 Mon, 13 Apr 2009 08:53:14 -0400
On the other hand, in a "real money" world, it would be the taxpayer's money and that is exactly what we would be asked to do. In that case it would be especially disturbing to me to be forced to pay money I don't have to greedy, power hungry, criminals (in a Just world they would be criminals) who do not need the money.

Every president seems to be a pragmatist. He realizes where the real power lies and that he is just a song and dance man for the money. He then gets to enjoy the perks at no risk. Where have the great men gone, all we have are entertainers, dupes and thieves.]]> http://seekingalpha.com/article/130629-ppip-killed-the-2008-bear?source=feed#comment-461310 461310 Mon, 13 Apr 2009 08:41:03 -0400
The PPIP represents a "real option" for the Banks, to partake in the upside of toxic asset porfolio for a small premium, with the Govt. (we tax payers) backstopping bulk of the losses.

The beauty of the PPIP is that it finally aligns the motives of the Banks with that of the Obama administration.

To wit:
* Banks have incentive to oversubscribe to the PPIP, given the artificially low premium of the real option thanks to the FDIC sibsidy. A robust PPIP auction allows...
* ...The Treasury Secretary to emerge smiling at the huge success of the program. He will further state that "tax payers will make a profit on this program" bacause...
*...It depends on rising asset values (home prices) to repay the FDIC. And Thanks to Mr. Bernanke's Quantitative Easing, all asset prices will begin to re-inflate. Which allows...
*...Mr. Obama to be crowned as the "The Man" who saved the economy...

(until a few more years down the road, when the asset bubble pops again)]]> http://seekingalpha.com/article/130629-ppip-killed-the-2008-bear?source=feed#comment-461268 461268 Mon, 13 Apr 2009 07:59:14 -0400 http://seekingalpha.com/article/130076-letting-the-zombie-banks-fail-a-viable-plan?source=feed#comment-457837 457837 Thu, 09 Apr 2009 14:50:21 -0400
All of these stocks are up 10-25% today.

Nice call, dude.

Don't quit your day job.]]> http://seekingalpha.com/article/124851-we-don-t-need-no-stinkin-rally-eye-on-hotel-reits?source=feed#comment-457249 457249 Thu, 09 Apr 2009 06:34:31 -0400 priceline.com, whose competitive offering system unleashes avalanches of cheap rooms dumped on the market. As a result, the average price of a room has dropped from $156.16 to $127.59 in a year. Many hotels acquired at the market top in 2004 and 2005 have cash burn rates so severe that they are in imminent threat of defaulting on loans.]]> http://seekingalpha.com/article/130076-letting-the-zombie-banks-fail-a-viable-plan?source=feed#comment-456870 456870 > We need to bailout the too big to fail because the consequences of > NOT bailing them out exceeds the cost of the bailout itself. Some > companies are too big too fail.]]> Wed, 08 Apr 2009 18:03:16 -0400
If companies such as GM cannot sell their cars, they should be allowed to fail. No exception. If banks made bad loan decisions, they too should be allowed to fail. No exception. Why should so many be expected to pay so much for the mistakes of so few? Those who think otherwise obviously have a vested interest in bailouts that the remaining 99% of Americans do not have.

On Apr 08 06:09 AM Cetin Hakimoglu wrote:

>
> We need to bailout the too big to fail because the consequences of
> NOT bailing them out exceeds the cost of the bailout itself. Some
> companies are too big too fail.]]> http://seekingalpha.com/article/130076-letting-the-zombie-banks-fail-a-viable-plan?source=feed#comment-456847 456847 And this morning, this appeared on Bloomberg. > > http://www.bloomberg.com/apps/news?pid=20601087&sid=aJJ_MkIv9VvA&refer=home > > > Interesting to see that people way more qualified than I am are beginning > to think the same way...]]> Wed, 08 Apr 2009 17:42:57 -0400

On Apr 08 10:28 AM William Cowie wrote:

> And this morning, this appeared on Bloomberg.
>
> www.bloomberg.com/apps...
>
>
> Interesting to see that people way more qualified than I am are beginning
> to think the same way...]]> http://seekingalpha.com/article/130076-letting-the-zombie-banks-fail-a-viable-plan?source=feed#comment-456793 456793 Wed, 08 Apr 2009 16:54:33 -0400
The problems in the US today goes beyond that. Consensus from Main Street to Washington agrees the system needs to be redone. If reinventing the wheel is the objective, bailout money should be used for an orderly liquidation of these ill financial giants and rebuild a sound financial system from its ashes.

Alternatively, US gov can buy those banks for $1 to acquire the staff and technology, fire the incompetent and run the bank themselves. If the Fed wants banks to lend again but they are not willing to, let the state runn'ed bank show them how its done.]]> http://seekingalpha.com/article/130076-letting-the-zombie-banks-fail-a-viable-plan?source=feed#comment-456704 456704 > We need to bailout the too big to fail because the consequences of > NOT bailing them out exceeds the cost of the bailout itself. Some > companies are too big too fail.]]> Wed, 08 Apr 2009 15:35:48 -0400

On Apr 08 06:09 AM Cetin Hakimoglu wrote:

>
> We need to bailout the too big to fail because the consequences of
> NOT bailing them out exceeds the cost of the bailout itself. Some
> companies are too big too fail.]]> http://seekingalpha.com/article/130076-letting-the-zombie-banks-fail-a-viable-plan?source=feed#comment-456678 456678 http://mises.org/story/2442 > > Milton Friedman supported intervention]]> Wed, 08 Apr 2009 15:13:01 -0400

On Apr 08 12:47 PM Cetin Hakimoglu wrote:

> mises.org/story/2442
>
> Milton Friedman supported intervention]]> http://seekingalpha.com/article/130076-letting-the-zombie-banks-fail-a-viable-plan?source=feed#comment-456675 456675 Wed, 08 Apr 2009 15:10:16 -0400 http://seekingalpha.com/article/130076-letting-the-zombie-banks-fail-a-viable-plan?source=feed#comment-456572 456572 > We need to bailout the too big to fail because the consequences of > NOT bailing them out exceeds the cost of the bailout itself. Some > companies are too big too fail.]]> Wed, 08 Apr 2009 14:03:09 -0400
The Cure Will Be Worse Than The Disease.



On Apr 08 06:09 AM Cetin Hakimoglu wrote:

>
> We need to bailout the too big to fail because the consequences of
> NOT bailing them out exceeds the cost of the bailout itself. Some
> companies are too big too fail.]]> http://seekingalpha.com/article/130076-letting-the-zombie-banks-fail-a-viable-plan?source=feed#comment-456464 456464 Agree with the author completely. I can't fathom why the RTC approach > to bank insolvency wasn't used right from the beginning. > > The RTC approach also addresses that little matter of moral hazard > which every bailout incurs. It's all about the reward system - if > prudent businesses aren't rewarded and irresponsible businesses aren't > punished then the entire system loses the compass by which decisions > are made.]]> Wed, 08 Apr 2009 13:05:06 -0400

On Apr 08 07:45 AM D. McHattie wrote:

> Agree with the author completely. I can't fathom why the RTC approach
> to bank insolvency wasn't used right from the beginning.
>
> The RTC approach also addresses that little matter of moral hazard
> which every bailout incurs. It's all about the reward system - if
> prudent businesses aren't rewarded and irresponsible businesses aren't
> punished then the entire system loses the compass by which decisions
> are made.]]> http://seekingalpha.com/article/130076-letting-the-zombie-banks-fail-a-viable-plan?source=feed#comment-456462 456462 Market surging after news of government aid for life insurers. This > follows a 1% decline in the futures so the gain is almost 2%. This > is irrefutable proof wall street likes bailouts and stimulus. maybe > because they work.]]> Wed, 08 Apr 2009 13:03:46 -0400

On Apr 08 09:47 AM Cetin Hakimoglu wrote:

> Market surging after news of government aid for life insurers. This
> follows a 1% decline in the futures so the gain is almost 2%. This
> is irrefutable proof wall street likes bailouts and stimulus. maybe
> because they work.]]> http://seekingalpha.com/article/130076-letting-the-zombie-banks-fail-a-viable-plan?source=feed#comment-456457 456457 I agree that no institution should have ever been allowed to get > "too big to fail." And I also agree they should be allowed to fail. ]]> Wed, 08 Apr 2009 13:02:43 -0400
On Apr 08 12:06 PM @TexasER wrote:

> I agree that no institution should have ever been allowed to get
> "too big to fail." And I also agree they should be allowed to fail.
]]> http://seekingalpha.com/article/130076-letting-the-zombie-banks-fail-a-viable-plan?source=feed#comment-456455 456455 > We need to bailout the too big to fail because the consequences of > NOT bailing them out exceeds the cost of the bailout itself. Some > companies are too big too fail.]]> Wed, 08 Apr 2009 13:00:30 -0400

On Apr 08 06:09 AM Cetin Hakimoglu wrote:

>
> We need to bailout the too big to fail because the consequences of
> NOT bailing them out exceeds the cost of the bailout itself. Some
> companies are too big too fail.]]> http://seekingalpha.com/article/130076-letting-the-zombie-banks-fail-a-viable-plan?source=feed#comment-456349 456349 Wed, 08 Apr 2009 12:06:15 -0400
But make no mistake, the pain and destruction will be enormous. If these institutions are liquidated, the true scope of the losses will not only become apparent, it will be realized.

Thousands of small institutions will instantly become insolvent, and this will cause a panic. And then there will be civil unrest.

But delaying in my opinion only postpones the day of reckoning until such a time as we are in a weaker position and less able to deal with it.
]]> http://seekingalpha.com/article/130076-letting-the-zombie-banks-fail-a-viable-plan?source=feed#comment-456167 456167 Wed, 08 Apr 2009 10:30:51 -0400
Cetin, Wall Street Rally because People like Wall Street "Pro" and you are clutching on straws. If you are so sure, maybe you should buy stocks with the maximum leverage allow to you now. Even better, put your family fortune all into the market so that you will become unspeakable rich with this BULL RUN.....................

]]> http://seekingalpha.com/article/130076-letting-the-zombie-banks-fail-a-viable-plan?source=feed#comment-456162 456162 Wed, 08 Apr 2009 10:28:58 -0400
www.bloomberg.com/apps...

Interesting to see that people way more qualified than I am are beginning to think the same way...
]]> http://seekingalpha.com/article/130076-letting-the-zombie-banks-fail-a-viable-plan?source=feed#comment-456009 456009 Wed, 08 Apr 2009 09:20:36 -0400