Seeking Alpha


Send Message
View as an RSS Feed
View geodan85's Comments BY TICKER:
Latest  |  Highest rated
  • Nokia (NOK -10.3%) continues to bleed as its Lumia 920 unveiling fails to impress; shares are now down 24% from their Aug. 27 highs. In addition to disappointment over the specs for the 920's PureView camera, the Street might not like the fact Nokia is only promising the phone will be available in "select markets" in Q4 (no date is provided). All signs point to the iPhone 5 going on sale on or around Sep. 21. Nokia also declined to make any promises about tablet releases. (live blog[View news story]
    NOK, Classic buy the anticipation and sell the news. Hopefully Q4 means next month.
    Sep 5, 2012. 11:59 AM | Likes Like |Link to Comment
  • 5 Commodity Stocks Moving On News [View article]
    Peabody is very interesting as a long term investment in coal, the stocks seems to have bottomed in the low $20's. Revenues are almost equally split between international and domestic. They also have a large Met coal percentage of sales and no exposure to high cost Appalachian coal, with most of their production in the U.S. coming form the PRB out west. They still need to digest the Australian acquisition of Macarthur Coal, which in hindsight was expensive.

    CLF is interesting, although it seems it may have to go lower before a bottom is in (similar to BTU). CLF in the $20's will be worth a look for long term investors.
    Sep 5, 2012. 09:38 AM | Likes Like |Link to Comment
  • Hurricanes And Their Impact On Oil Prices, Major U.S. Oil Companies [View article]
    GoM shut downs from storms are temporary and will have fleeting impact on oil and gas prices, barring any serious damage to the rigs and/or refineries on the Gulf. Commercial reserves (currently at 364.5mil bls, very high levels / link below) in the U.S. can offset downtime from the offshore platforms. Also, any damage to the LOOP (Louisiana Offshore Oil Platform) where VLCCs offload would be problematic for prices.
    Aug 29, 2012. 11:41 AM | Likes Like |Link to Comment
  • Bank Of America: An Unusual Conference Call [View article]
    The Merrill Lynch private client/wealth division in the U.S. was the most profitable in the world and provided a large portion of their profits (before charges) over the last few years. This division of Merrill is considered the crown jewel of the firm and what BAC wanted most when they acquired Merrill in 2008.

    BAC has fully integrated Merrill onto their platform, so a sale will be more difficult then a couple of years ago. Also, under BAC management, some big producing teams from Merrill private client have left. However, I believe BAC wants to keep private client, but may not be so attached to the higher risk capital markets institutional side of the business which also carries the higher risk trading operations.

    A spin-off of the institutional business would seem more likely in that it fits with the lower risk profile the bank seems to be engineering. It would also be inline with what the Fed would like to see for some of the large money center banks.
    Aug 28, 2012. 09:42 AM | 2 Likes Like |Link to Comment
  • Why Nokia Is Rallying Now [View article]
    Nokia traded way too low with fear of bankruptcy driving the price below $2.00. The current rally is bringing the price back to levels that reflect break-up value. However, potential success with WP8 is beginning to enter the equation. If WP8 sales gain traction over the coming months, the stock will continue to trend higher, given that everyone that wanted to sell, likely has done so.
    Aug 24, 2012. 09:33 AM | 1 Like Like |Link to Comment
  • Don't Rush To Sell Stocks At These Levels [View article]
    Everything looks fine as long as growth in profits continue. However, a slow down in economic growth is occurring globally. Revenues and profits are therefore vulnerable and changes to the growth forecast are dependent on political decisions, not exactly comforting.

    I read some very interesting work on secular bear and bull markets based on long term valuation measurements (P/Es and P/Bs). The secular trends tend to last seventeen years with cyclical bull and bear moves in that time frame. Currently, a secular bear market is still in force and the potential for a cyclical bear is growing heading into next year (the current cyclical bull is over three years old and long in the tooth as compared to all other cyclical bulls)

    The good news is that a secular bull market will likely come again in the next few years (net inflows into equities will be one major catalyst), but we may see one more cyclical bear before the all clear signal is made. I hope I am wrong, but hope isn't a investment discipline to be used.

    We may see new highs soon in this market, but it makes sense to be cautious at these levels, especially given the light volumes and the margin debt mentioned in this article, since a turn in sentiment could result in a sharp reversal.
    Aug 21, 2012. 09:10 AM | 1 Like Like |Link to Comment
  • Banks haven't over-fired, says Meredith Whitney, arguing the big lenders are only about halfway through their expense-cutting cycle. "I hope I'm around when the over-hiring phase returns." Washington can stay out of the "break 'em up" debate, she says as shareholders are taking care of it, not investing until the banks show they can "earn their cost of capital."  [View news story]
    gjg49, Thank you, you are right, I missed keying an input on my HP12C (you run out of space in the window with these astronomical sums). The corrected number only furthers the pace that the bailout has achieved in providing capital to the sector.
    Aug 2, 2012. 11:08 AM | Likes Like |Link to Comment
  • Nokia Enters The Car Industry [View article]

    I have read your articles on Nokia and agree this company is not a bankruptcy and recent insider buying likely supports this view.

    I bought the lumia 900 back in April and really like the phone. I used to have a Nokia phone many years ago and had forgotten they do make a very high quality phone. The fact that this phone won't be upgradeable to WP8 doesn't bother me at all since it does everything I need it to do, it does well.

    However, the rep at the AT&T store told me how they all were given phones to use and went to training to better understand the features and operation. Therefore, the sales rep you encountered was likely expressing personal preference rather than any company mandate. Still, it isn't good for AT&T if they want to get more of WP out there (given the higher fees from Apple) and their sales reps aren't onboard.
    Aug 1, 2012. 05:47 PM | 2 Likes Like |Link to Comment
  • Banks haven't over-fired, says Meredith Whitney, arguing the big lenders are only about halfway through their expense-cutting cycle. "I hope I'm around when the over-hiring phase returns." Washington can stay out of the "break 'em up" debate, she says as shareholders are taking care of it, not investing until the banks show they can "earn their cost of capital."  [View news story]
    Do the math, .25% on the $1.5 trillion excess reserves is ~$375mil risk free to the banks, although the spread will vary for each bank given how they fund (money center banks paying 0% for deposits are capturing almost all of it). I believe this is part of the continuing bailout against the real estate/mortgage collapse and one way the banks are rebuilding capital to write off the bad debts. By the end of the this year it adds up to $1.5bil and continues to accrue to the sector.

    The U.S. is working through the burst debt bubble (I have read that private sector U.S. debt levels relative to GDP have been reduced/written off since 2009 when the recession ended, although much of it has been transferred to the public sector which is well known /link below), but Europe is only getting started.

    Europe remains the focus since their banking system is globally linked to all large banks via derivatives. The European banking system needs to guaranteed by the ECB/EBA and will need euro bonds to do it as they move toward fiscal integration. The only alternative would be a break up of the euro and that potentially could cause a major bank there to become insolvent. If that bank was a major player in the derivatives market it could blow holes in many global banks balance sheets and cause further insolvencies. This is why the large banks are being required to have the extra capital requirement, in my opinion.

    Until global debt levels fall back to more normal levels, growth will remain slow or worse with another recession. Given this scenario, banks have no choice but to continue to cut costs.
    Aug 1, 2012. 03:57 PM | Likes Like |Link to Comment
  • Bank Of America's Future Depends On This [View article]
    The U.S. needs a healthy financial/banking sector for sustained economic recovery. The banks are under pressure from regulators to increase reserves/reduce risk assets. Until this changes recovery and growth will be elusive.

    BAC made two aquisitions in the crisis one good, Merrill Lynch (provided bulk of BAC's cash earnings in 2010 and 2011) and one very bad, Countrywide. BAC most likely should have put Countrywide in Bankruptcy two years ago, if they could legally without impacting their other businesses (this has been debated). Also, it is questionable if the current government would have allowed this, since they effectively control the big banks through regulation and the Fed/Treasury cartel.

    A change of leadership this fall in the U.S. is needed for a variety of reasons, but in particular for the financial sector and the health of the economy. If this occurs, the banks will do well and BAC will be in double digits next year.
    Jul 20, 2012. 10:49 AM | 11 Likes Like |Link to Comment
  • BAC: New Signs Of Life? [View article]

    Totally agree, if a TBTF bank has to dissolve, they would not be alone given the derivative exposure they all have to each other. Also, hard to imagine one bank assuming assets from another bank without help from the government for the liabilities that caused the reason for dissolving the problem bank.

    This is another political move by the government to quell any residual anger over the so called bailout of the big banks (remember banks that did not request help were forced to take TARP funds anyway).

    Finally, I think it was also done to see how this procedure could proceed if needed and if it is all possible. Bottomline, the government really doesn't know how to implement this (short of nationalization of banks) and is demanding from the senior management of the TBTF banks to see how they view a disaster scenario.
    Jul 13, 2012. 10:16 AM | 1 Like Like |Link to Comment
  • The Consequences Of Prospect Capital's Secondary Offering [View article]
    The deep discount on the offering is where the demand was from institutional buyers (Barclays did the deal not a large wire house like Merrill or Morgan Smith Barney with bigger retail distribution). That is how the process works, unfortunately the small investor has no real say. Also, 21.0 mil shares (24.15 with shoe) is over 20 % of free float and ~20% of outstanding shares.

    What is interesting was as of June the short position was listed over 10% (~11.0mil shares), which is a lot especially given the monthly dividend. Hopefully, the deep discount wasn't done to help a large hedge short position, although the short position seems to be the difference between the shares outstanding and free float so maybe something structural is related to this deal and is legal.

    Finally, given how quiet the market is (seasonal summer lull) and the amount of uncertainty about Europe, Fiscal cliff/tax cuts extension in U.S., presidential election looming, Q2 earnings beginning, LIBOR scandal etc... the company may have wanted to get this done before sentiment turns bearish (if it does) and the opportunity to raise capital closes. Therefore in their view, the deep discount seems more tolerable and worth it rather than missing a chance to issue additional equity.
    Jul 12, 2012. 04:36 PM | 2 Likes Like |Link to Comment
  • The Consequences Of Prospect Capital's Secondary Offering [View article]
    All very good comments. In my opinon, the secondary was likely done because they see more opportunities to invest/lend in the still tight credit environment to their target base. Therefore, growth and cash flow should be fine.
    Jul 12, 2012. 02:58 PM | 1 Like Like |Link to Comment
  • Earnings Preview: Bank Of America [View article]

    I would check the $3.0 trillion figure for delinquent mortgages. As of last year BAC had a total of ~$2.2 trillion in assets.
    Jul 12, 2012. 01:28 PM | Likes Like |Link to Comment
  • LIBOR Related Lawsuits: How Do They Affect The Banks? [View article]
    LIBOR explained:

    The calculation of Libor is coordinated by just two people, who work in an unremarkable open-plan office in London’s Docklands. I watched the process, which seemed utterly routine, a couple of years ago. Just after 11 a.m. on every weekday that’s not a bank holiday, traders at leading banks send in their estimates of the interest rates at which their banks could borrow money. They do this electronically, but sometimes the co-ordinators make a phone call to a bank that hasn’t sent in its estimates, and if the latter seem implausible – typos, for example, are fairly common – they’re checked, also with a quick call: ‘Hi there, is the Kiwi chap [provider of the estimates for borrowing New Zealand dollars] about? … Bit of a spread on the two month. Everyone else is coming in a good bit under that.’

    A simple computer program discards the lowest quarter and highest quarter of the estimates, and calculates the average of the remainder. The result is that day’s Libor. The calculation is repeated for each of ten currencies and 15 loan durations (from overnight to 12 months), so 150 Libors are published daily: overnight sterling Libor, one-week euro Libor, one-month yen Libor, three-month US dollar Libor and so on.
    Jul 5, 2012. 02:28 PM | 2 Likes Like |Link to Comment