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geodan85

geodan85
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  • Bank Of America: Buy Now Before Dividend Increases [View article]
    What no one seems to mention with BAC has been the effort to make their balance sheet the safest amongst the big U.S. banks. As of last October, BAC had the highest tier 1 capital ratio (safest most liquid) of all the U.S G-SIFI (globally systematically important financial institutions / link below from Fitch). They also have the lowest tier 3 ratio (most illiquid risky assets). BAC has been reducing tier 3 assets for years, while JPM has increased tier 2 and 3 (ask JPM how the London Whale trade worked out) which in my opinion makes that bank more risky given those tier assets are the mark to model variety (one reason the financial crisis occurred) and not the clear mark to market for very liquid assets.

    http://bit.ly/XPxr70

    BAC's biggest mistake, as everyone knows, was the Countrywide purchase which they are still paying for with it seems endless litigation. However, at some point the litigation issues will mostly be behind BAC and the earnings will rebound and allow for a basis change in valuation and increased dividend capacity. I commented yesterday on another SA article on BAC and will repeat why I think (if allowed by Fed) BAC will increase their dividend.

    From yesterday:

    BAC needs to raise their dividend after the latest stress test results are announced. If the Fed allows it, a $.21 increase to $.25 annually would make sense and yield ~2.1% with the potential to continue to raise it incrementally going forward as long as the economy improves and litigation risks fade.

    Given that senior management of the bank has a lot of restricted stock from prior compensation years and their personal tax rates have recently risen, an increased dividend essentially gives them a tax efficient raise. A stock buyback is also a possibility, but I believe a dividend that pays something of a noticeable yield will come first, given what BAC's peers pay and the self interest of management.
    Mar 6, 2013. 09:58 AM | 2 Likes Like |Link to Comment
  • Coal Is Dead [View article]
    The only thing dead about coal is the money invested in these stocks and other mining stocks. Volatility has declined and most have drifted lower.

    Coal will continue to be in the energy mix for the future, despite the efforts of current idiots running our country to move away from it. The U.S. has the largest reserves in the world making it an abundant energy resource that is dependable and cheap and easy to supply, store and use. Wait until natgas goes back above $4.00 and towards $5.00 when shale reserves deplete faster than expected as demand picks up form various types of switching. Coal will be back since lower cost energy always is an alternative that wins out.
    Mar 5, 2013. 05:50 PM | 5 Likes Like |Link to Comment
  • The Return Of King Coal And The Coal Stock To Play The Rebound [View article]
    Also, Germany's coal consumption is rising with their move away from nuclear which is good for global pricing/demand.

    Peabody is the best managed coal company in the world and a very good long term investment at these levels with a potential double over the next few years (short term as well since a move back toward the mid twenties wouldn't be a surprise).

    Patience is required for coal investments currently, although once high cost shale gas (faster depletion rates therefore more drilling costs) meets rising demand, prices for natgas will rise and coal will be a cheaper alternative once again. This may occur more quickly than most anticipate.
    Mar 5, 2013. 02:47 PM | 2 Likes Like |Link to Comment
  • Backing Buffett's Bet On Bank Of America [View article]
    BAC needs to raise their dividend after the latest stress test results are announced. If the Fed allows it, a $.21 increase to $.25 annually would make sense and yield ~2.1% with the potential to continue to raise it incrementally going forward as long as the economy improves and litigation risks fade.

    Given that senior management of the bank has a lot of restricted stock from prior compensation years and their personal tax rates have recently risen, an increased dividend essentially gives them a tax efficient raise. A stock buyback is also a possibility, but I believe a dividend that pays something of a noticeable yield will come first, given what BAC's peers pay and the self interest of management.
    Mar 5, 2013. 10:34 AM | 1 Like Like |Link to Comment
  • Atlantic Power Cuts Dividend And Adopts A 'Poison Pill' Plan [View article]
    @2old2care

    Scary they can't even get something as simple as a brief bio correct!
    Mar 2, 2013. 12:15 PM | Likes Like |Link to Comment
  • Nokia (NOK) will be removed from the Euro Stoxx 50 index on March 18 (translation), along with GDF Suez (GDFZY.PK). Replacing them are EADS (EADSY.PK) and Schneider Electric (SBGSY.PK). [View news story]
    May reduce some volatility since Euro Stoxx 50 program trades won't need to trade NOK anymore. Also, most of the impact will be in the ordinary shares traded in Helsinki and London. As to the impact, on the day it officially comes out the European close (11:30 am NY time) may see a temporary push down on some volume during the final auction, otherwise it really won't have a tremendous impact.
    Mar 2, 2013. 11:54 AM | Likes Like |Link to Comment
  • Nokia (NOK) will be removed from the Euro Stoxx 50 index on March 18 (translation), along with GDF Suez (GDFZY.PK). Replacing them are EADS (EADSY.PK) and Schneider Electric (SBGSY.PK). [View news story]
    Maybe, but GDF Suez is not market cap related (eur31.4bil), so it may have to do more with regional operations and the European concentration or not.
    Mar 2, 2013. 11:45 AM | Likes Like |Link to Comment
  • Atlantic Power Cuts Dividend And Adopts A 'Poison Pill' Plan [View article]
    When you look into AT, it really is not a corporation in a traditional sense. They are more a private equity fund run by former investment banker types (link below / also checkout the CFO link within for Ronan, unless I am missing something, some how the timeline of his career doesn't make sense...26 years Navy, 14 years BofA and predecessors, 2 years Merrill Lynch and CFO at Atlantic power from 8/12).

    It's seems they buy (or invest) in generation assets that have (or will have) PPAs and then contract out operations (although they do manage a few projects themselves) and line up supply agreements with larger established energy suppliers. They use derivatives to manage the risk inherent in mismatched durations between their cost (supply) and revenue (demand/usually fixed with PPAs).

    They finance most of this with various kinds of debt (convertible, revolvers and so on) and other techniques (tax equity syndication) and sell RECs (Renewable Energy Credits) from projects where and when available, which they stated in the CC that prices for these RECs have softened. They also plan to issue equity for so called further accretive acquisitions going forward (talk of 50/50 debt equity split), although hard to believe they will be able to do this in the public markets.

    Sadly, it seems they are not very good bankers and are a little worried that their managing positions in this fund/corporation is at risk, hence the poison pill. Lastly, when you look at these guys and the company, they really are minnows swimming in an ocean of whales that can strand them on the beach at any time by using their vast size to utilize cheaper financing and/or demand better pricing (the current problems and what seems to have happened in FLA).

    http://bit.ly/Vmg278
    Mar 2, 2013. 11:32 AM | 1 Like Like |Link to Comment
  • Atlantic Power Cuts Dividend And Adopts A 'Poison Pill' Plan [View article]
    @Tucsonbill

    An investigation absolutely needs to be done as you state. The company has mislead investors as the author states, but the potential for insider trading is off the charts. Look at the price action and volume over the last two weeks leading into this announcement today. Fairly obvious that some people were in the know about this dividend cut.
    Mar 1, 2013. 05:29 PM | 5 Likes Like |Link to Comment
  • Is Total A Better Investment Than Exxon And Chevron? [View article]
    All the big European oils (RDSa and RDSb, BP, STO, E) trade in ranges over a period of a few years (or months when volatility increases). Foreign exchange and U.S. institutional investment flows (EU institutional flows as well) that overweight, underweight and neutral weight influence these trends (I experienced this first hand this since I traded them professionally for ten years at a major investment bank before retiring). Obviously, BP was a little different over the last few years due to the GOM oil spill, but will likely head back toward the $50 area and higher (stock was over $60 when spill occurred) when final liability is determined.

    Total is a solid company, but you have to question some of their projects/investments which destroys some shareholder value. For example, the Shtokman project with Gazprom suspended last year cost them (and Statoil, who joined after TOT and was the desperately needed expert for drilling in those extremely harsh conditions), but more important why did TOT even get involved? The answer was political (Putin invited the French in)and that is a risk when you invest in European national champions.

    An interesting long term investment in France/Europe now is GDF Suez, a company still viewed predominantly as a utility, but has global natgas (as well as oil / link below for full description) production/distributio... networks. The shares are unloved and down over 70% in last five years. The stock yields over 8.0% is very cheap on many metrics. E.ON in Germany, another European giant, is another interesting long term play as well.

    GDF link

    http://yhoo.it/YZvQKI

    E.ON link

    http://yhoo.it/13kEdGJ
    Feb 27, 2013. 12:45 PM | 1 Like Like |Link to Comment
  • Seadrill Limited Is Not Worth The Risk [View article]
    Don't bet against John Frederiksen who is the power behind Seadrill as well as a few other companies. Invest with him and you won't be disappointed.

    http://bit.ly/Xv6yWS
    Feb 24, 2013. 08:51 PM | 11 Likes Like |Link to Comment
  • Visualizing Bob Farrell's 10 Rules [View article]
    Alan

    Thank you for that observation. I should have been more specific and said the equity market has been quite volatile in the last ten years plus, but has not surpassed the old record highs seen over a decade ago.

    It seems obvious we have been in a secular bear market and may still be in the final stages of these long seventeen year cycles that some have called long term valuation wave theory (LTVWT). Within the secular trends you can have multiple cyclical bull and bear markets, with the current being a cyclical bull.

    The link below discusses the LTVWT and where it was last year. The author believes another cyclical bear is on the horizon, although his timing/prediction may have been a little early the theory behind it seems plausible. To change his forecast and for a new secular bull to begin we would need a much better macro environment for corporate earnings, which currently appears to be missing.

    Finally, the shale oil/natgas boom may provide a trigger in the coming years with comparative economic advantages for the U.S. with lower energy costs a primary driver (provided they materialize) as well as potential energy product exports (already occurring in some refined products where the U.S. has flipped to net exports).

    http://bit.ly/VOyxm8
    Feb 21, 2013. 10:08 AM | Likes Like |Link to Comment
  • Visualizing Bob Farrell's 10 Rules [View article]
    Bob Farrell's wisdom is some of the best and his technical work on markets was interesting, and much better the subsequent technicians that followed him at Merrill.

    The one striking aspect in all the above charts is just how the market really hasn't gone anywhere in the past decade plus. While a correction is likely, let's not forget what a correction means, which is to correct over bullishness. In order to do that the selloffs have to scare most out before any meaningful bounce can occur. Unfortunately, we are a long way from those conditions.

    Feb 20, 2013. 08:53 PM | Likes Like |Link to Comment
  • Nordic American Tankers Is A Sucker's Bet [View article]
    As I stated, my friend mentioned in his experience as a banker these types of transactions can proceed an eventual sale of a company (call it a experienced observation rather than a premise).

    Also, do you believe management would have seen all shares tendered if they bid $8.90 (where Hansson received his shares) or even $10.00 per share? Of course it is possible, but in my opinion not likely. A leveraged management buyout would also reduce the ability to acquire additional ships (still a stated strategy) since secondary equity issuance would be off the table (as you stated, something they do every few years) and Nordic American would become another highly leveraged shipping company with less flexibility in raising future capital.

    Now, imagine a real sustained recovery in suezmax spot rates and volumes (granted it hasn't occurred and bears believe it won't anytime soon) which would likely improve ship values as well (allowing some to be sold and debt reduced). This scenario could prompt a sharp rally in NAT shares. Even, if the entire company isn't sold, Hansson could reduce his stake more easily with NAT remaining a public company as well as receive increased dividends. Finally, I don't know what the management company agreement was prior to the sale to NAT, but I think if is safe to say that cashing out a stake in NAT (if that is the intention) in the future then selling the management company would be more profitable if/when a real recovery in the industry emerges.
    Feb 15, 2013. 11:27 AM | 1 Like Like |Link to Comment
  • Nordic American Tankers Is A Sucker's Bet [View article]
    While there are no guarantees the company will be sold, why would the CEO sell his management company for mostly shares rather than all cash? Hansson is in position to best access the value and potential value for this company. No one knows the future for spot prices and volumes (as one post correctly states) in the suezmax tanker market, but you would think he is in a better position than most to gauge the potential and more importantly back up the belief with an equity stake rather than sell the management company for 100% cash.

    I am a retired institutional trader for a major investment bank (actually traded NAT for the bank for while, although mostly spent my career there trading Europe which included Norway) and always try to determine multiple reasons for transactions by companies other than the stated ones. Furthermore, I have a very good friend who is a retired investment banker who spent his career working on many deals in Norway and Russia and when I mentioned this transaction by NAT, it was his observation that he has seen these type of transactions prior to companies being sold. I also interpret Hansson's statement after the deal that he plans to be CEO for many years to come as twofold. First, he likely thought about cashing out his stake, but believes NAT is worth more than current share price (hence the equity stake increase). Second, the statement was to stop speculation (before it happened) he was bailing out of a sinking ship (sorry couldn't resist) to prevent a potential sell off.

    Finally, when I look at NAT's full year numbers I make the following calculations for cash (all in millions and numbers rounded): Rev $92-Opexp $64- Gaexp $15- Netintexp $5.5 +Noncashexp $7.0-Divpaid$63.5=($49.0) for the year. Certainly not great numbers, but if adjusted for the lower dividend payment going forward and all other numbers stay unchanged (of course unlikely with longs looking for improvement this year and next as is Hansson, shorts further industry weakness) the cash burn drops to ($19.5) which hardly puts the company in dire straits (again,sorry for pun).
    Feb 13, 2013. 10:46 AM | 5 Likes Like |Link to Comment
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