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geodan85

geodan85
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  • LIBOR Related Lawsuits: How Do They Affect The Banks? [View article]
    LIBOR is traded (similar to fed fuds in U.S. but with no central bank involvement) and the published rate is a compilation/average of the inter-bank trade or where willing to trade.

    It will be interesting to see if responsibility only lies with trading desks as Barclay's CEO claims and if this claimed behavior exists at other banks. The more damaging theory for manipulation would be senior management acknowledges views from government/treasury officials and then has that explicitly interpreted by trading desks in daily trade.

    Another interesting fact is again a major trading scandal is based in London. Recently, JPM's loss in derivatives occurred in London as did the UBS loss and the SocGen loss a couple of years ago to name a few. So maybe it isolated to Barclay's and not a trend/conspiracy amongst the major players, which is the best case scenario for this scandal not to gain traction and hurt already fragile sentiment in financials.
    Jul 5 02:25 PM | 1 Like Like |Link to Comment
  • LIBOR Related Lawsuits: How Do They Affect The Banks? [View article]
    Proving the collusion between the banks will be hard, unless there are "smoking gun" e-mails. As one post stated, banks set interest rates as a part of their business, so they have a right to determine various rate levels independently.

    What is a worry, is that the current DOJ (a national joke given their record) is likely looking at how to use this as an issue going into the presidential election this fall, which will not help sentiment for the banks.

    Finally, this seems like another step (or in this case an opportunity)by government/regulators to continue to move large banks toward a model more like utilities. Unfortunately, this model limits profits and ultimately overall economic activity by restraining credit to the real economy.

    To change this, we need to change the president/Senate majority this November and hope that new leadership will remove some of the shackles of regulation/mandates on businesses and individuals and put the country on a more fiscally prudent path. This is "hope and change we can believe in" (to use the now hollow phrase) that would benefit many rather than the few who are benefiting from the current regime's view of reducing American influence internationally, anti-business attitude, and absurd class warfare.
    Jul 5 12:27 PM | Likes Like |Link to Comment
  • Mid-June Conference Reveals New Life For Bank Of America [View article]
    BAC has moved to more conservative liquid investments and reduced level 2 and 3 assets. This impacts returns, ask JPM how the more illiquid investments are working out since they increased their exposure over the last few years. BAC is still a play on the U.S. economic recovery and in particular housing.
    Jun 29 10:45 AM | 1 Like Like |Link to Comment
  • Peabody Energy Analyst Day: 110 Slides Of Coal Market Joy [View article]
    Interesting, that likely means when the turn comes, that group should provide some leadership. Until then, the sector will probably go through the dead money stage for a period of time (if we haven't already entered it).

    They are also the names the big buyside long onlys institutions focus on in the sector. I traded the small/midcap coal names at a major investment bank for a while before retiring, but sat next to the guy that traded the large cap names. I also traded the European industrial, energy/utlity and materials sector for many years and remember when RWE (large German utliity/energy firm) owned a large percentage of CNX (~73% /original investment was joint venture with DD). They eventually sold their stake (below these levels as well) which allowed the stock to finally perform better.

    It will be interesting to see if any other large foreign company begins to look at the coal companies at these levels, although it would likely come from Asia given the well known problems in Europe and the continuing divestures from the large German utlilities (EON and RWE) who go on acquiring binges from time to time.
    Jun 27 01:10 PM | 2 Likes Like |Link to Comment
  • Peabody Energy Analyst Day: 110 Slides Of Coal Market Joy [View article]
    Peter, I agree the coal sector is a better long term story and not yet on the radar screen for many institutional investors (unless of course it starts working), at least as buys given their main focus on quarterly performance.

    That is why I believe some are dumping BTU into quarter end since it hasn't worked this quarter and they don't want to show anything resembling market weights, let alone overweights to the stock/sector. That would result in unpleasant conversations/reports that would be hard to justify given current conditions and the myopic view of certain investors/institutions.
    Jun 27 12:12 PM | 3 Likes Like |Link to Comment
  • Peabody Energy Analyst Day: 110 Slides Of Coal Market Joy [View article]
    Peter, BTU's recent weak performance (new 52 week lows yesterday) has been disappointing relative to the group, but I think it can be somewhat explained by end of the quarter/half factors given the high institutional ownership of the stock. Probably will continue to underperform into Friday as well.
    Jun 27 11:47 AM | 2 Likes Like |Link to Comment
  • Is Nokia A Trading Gem? [View article]
    The $3.54 to $3.30 gap was the annual dividend.
    Jun 27 11:36 AM | Likes Like |Link to Comment
  • Peabody Energy Analyst Day: 110 Slides Of Coal Market Joy [View article]
    Do you really think BTU buying back $100mil shares this quarter is actually holding the stock higher? If you take a simple average price of say $25.00 per share the $100mil amounts to 4.0mil shares, which is less than one half a days average trading volume. The buyback amounts to less than ~1.0% of total volume for the quarter, hard to consider that a major factor in driving price either way.

    Also, I have read CNX is somewhat risky due to low met coal production and high Appalachia based thermal coal production which is more vulnerable to utility switching to natgas from coal. Last year, reported in a bloomberg survey of company filings, the average cost to extract a ton of Appalachian steam coal was ~$61 a ton, which is above the ~$58 a ton average selling price this year. CNX certainly has some production locked in at higher prices, but IMO it makes sense to have BTU over CNX (I know CNX has natgas which has hurt as well, although the recent price recovery will help) since PRB production, international exposure and the higher percentage of met coal (~60% of production) would seem to offer more protection from current lower prices here in the U.S.
    Jun 27 11:25 AM | 1 Like Like |Link to Comment
  • Why Bank Of America Shares Are At High Risk [View article]
    The last paragraph the author makes BAC a better buy than sell (IMHO) based on risk/reward from current levels.

    BAC is more volatile due to high frequency/algorithmic trading since it is very liquid. BAC is also less exposed to capital market risk than say JPM (based on real knowledge on how both banks manage risk).

    No mention of the real issue with BAC, meaning Countrywide's legacy assets? Better housing numbers this week and if they continue, will eventually lift BAC's share price.

    Finally, the Europeans need to back stop their banking system (this will eventually happen since their is no other real choice) since the risk from derivatives exposure from Global European banks to U.S. banks as well as the global financial system is the 800 lb gorilla in the room. Once this happens, the U.S. financial stocks can resume an uptrend and provide leadership to take markets out of the current trading ranges.
    Jun 26 11:04 AM | 1 Like Like |Link to Comment
  • Will Nokia Recover Or Be Bought? [View article]
    Marcap

    Time will tell, but I agree ultimately consumer acceptance, or rejection, will determine what products succeed. However, the future is in mobile communications and MSFT knows this. They do have their problems, but they will not give up since that will mean deserting this continuing growth market.

    NOK being bought anywhere at $5.00 or less only helps them if they fail on halting the cash burn. However, by only producing WP they are already acting like an operating arm of MSFT, so a takeover, in essence, changes the financial structure and relieves the current financial pressure.

    The current MSFT financial support/partnership is needed by NOK during this transition and likely impossible for NOK to walk away from. Therefore, this prevents them from producing android phones as some have suggested, which would be helpful for NOK since the platform is strong/accepted and NOK would just need to provide a quality product priced attractively to gain incremental sales.
    Jun 25 01:06 PM | 1 Like Like |Link to Comment
  • Will Nokia Recover Or Be Bought? [View article]
    MSFT doesn't benefit by NOK going under. NOK's production of WP8 is critical for MSFT to achieve global distribution and a manufacturing platform. I have read comments from executives at other mobile phone manufacturers that they are all watching NOK as the main supplier of WP8 and that the success, or lack of, will help determine their commitment to producing WP8. Also, MSFT waiting for NOK to fail after committing to WP sends the wrong message to other potential WP manufacturers about aligning with MSFT.
    Jun 25 11:50 AM | 7 Likes Like |Link to Comment
  • Will Nokia Recover Or Be Bought? [View article]
    Below is my take on Nokia, I responded to an article on Seeking Alpha last week which discussed the recent MSFT announcement (and the lack of mentioning Nokia prominently during the presentation other than using Nokia Maps and pureview/ both indicating cooperation) on their tablet and rumor they may make their own WP8.

    If MSFT is considering buying NOK, I doubt they would be issuing statements that would help drive up the price. If they are in current negotiations to buy NOK they would be restricted in what they can say publicly.

    MSFT buying NOK would be a classic buy vs build decision for entry onto a global platform giving them critical mass immediately to compete with AAPL and Samsung. MFST clearly has staying power and brand recognition, a new Microsoft/Nokia brand in mobile phones would be a strong competitor.

    If MSFT bid $5.0 per share for NOK (~$18.5bil) they get ~$13.0bil in cash/liquid investments, assume ~$6.25bil debt (which they service and call as soon as possible to retire or refinance at their credit rating) and the patent portfolio's cash flow of ~$625mil per year. Therefore, the bid will cost MSFT ~$5.5bil cash net (actually less if you consider the $1.0bil they are paying NOK under the current partnership and patent portfolio income which could be viewed, in essence, as financing the acquisition), less than 10% of their cash position and probabaly be further reduced if they sold patents they didn’t view as necessary or desirable.

    NOK's restructuring to stop the cash burn only makes the company more attractive to MSFT, although the price they would need to pay will rise once the cash burn is halted.

    The recent announcement that they will produce their own tablet shows they will be more involved wth hardware production, therefore how can they not be looking at this as an alternative?
    Jun 25 11:17 AM | 12 Likes Like |Link to Comment
  • Microsoft Needs To Put Its Weight Behind Nokia [View article]
    If MSFT is considering buying NOK, I doubt they would be issuing statements that would help drive up the price. If they are in current negotiations to buy NOK they would be restrcted in what they can say publicly.

    MSFT buying NOK would be a classic buy vs build decision for entry onto a global platform giving them critical mass immediately to compete with AAPL and Samsung. MFST clearly has staying power and brand recognition, a new Microsoft/Nokia brand in mobile phones would be a strong competitor.

    If MSFT bid $5.0 per share for NOK (~$18.5bil) they get ~$13.0bil in cash/liquid investments, assume ~$6.25bil debt (which they service and call as soon as possible to retire or refinace at their credit rating) and the patent portfolio's cash flow of ~$625mil per year. Therefore, the bid will cost MSFT ~$5.5bil cash net (actually less if you consider the $1.0bil they are paying NOK under the current partnership and patent portfolio income which could be viewed, in essence, as financing the acquisition), less than 10% of their cash position and probabaly be further reduced if they sold patents they didn/t view as necessary or desireable.

    NOK's restructuring to stop the cash burn only makes the company more attractive to MSFT, although the price they would need to pay will rise once the cash burn is halted.

    The recent announcement that they will produce their own tablet shows they will be more involved wth hardware production, therefore how can they not be looking at this as an alternative?
    Jun 22 10:52 AM | Likes Like |Link to Comment
  • Last week's OPEC decision to maintain its quota of 30M bbl/day had the added effect of emboldening tanker operators to raise shipping rates for very-large crude carriers, as Bloomberg calculates Q3 rates will average $18K/day vs. a low of nearly half as much in Q2. Stocks poised to benefit after painful declines: FRO, SFL, NAT, OSG, TNK, TNP.  [View news story]
    What OPEC says and what they do are quite different. The quota is always ignored, they will ship more oil if the demand is there.
    Jun 20 04:05 PM | Likes Like |Link to Comment
  • Nokia: Terrible Bets Come Back To Haunt Them [View article]
    It is rare to see a stock so hammered in one direction by shorts/bears without any significant rally. Recent NOK rallies (few and far between) have been sharply reversed after one day. Given the current price level, it seems shorts may now have second thoughts establishing new positions with the potential for MSFT to bid (if they do and at too low a level imagine the lawsuits given Elop's former affiliation) given the break up value is clearly greater than the currrent share price.

    Today's warning, while lowering the previous forecast from same as Q1 or slightly lower to now say lower really isn't that surprising given the transition to WP only began in Q2 and is ultimately a second half story when WP8 arrives. The bar is now set very low for the Q2 report and news flow in the second half on WP8 along with continued sales data may not be as bad as anticipated since Nokia still makes quality phones.

    I recently switched to the Lumia 900 (from an LG phone) and find the basic phone operations (voice clarity, sound etc..) far superior. Many years ago I had a Nokia phone and had forgotten how durable and well they worked, I believe other users could be of the same mind. The apps on the phone are more than enough for what I need/use, although I don't claim to be a tech addict/heavy user.

    Finally, I find it hard to believe they are headed toward insolvency, although if management starts selling off core assets, I may have to reconsider since the proceeds won't be going to shareholders.
    Jun 15 12:06 AM | 1 Like Like |Link to Comment
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