E Nuff Sed

101 Comments

    • ON: Sun Sep 28th 14:13 PM
      Commented on:
      A Tale of Three Pharmaceuticals: Abbott Labs, Pfizer and Eli Lilly & Co.
      It is hard to judge what is hot, cold and what could blow up in your face.

      I have all three as well as Merck, Schering-Plough, Aventis and Novartis. Like insurance and finance - pharma is inherently risky - apart from pipeline and patent (expiry, litigation) risks, there is product risk (i.e. Vioxx) as well as the massive investments needed to bring a product to the market.

      Best is to buy a basket of top Pharma/Biotech - with strong dividends and diversity - they are not a bad investment in the long run with the aging population and the start of the genomic revolution ...

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    • ON: Sat Sep 27th 18:19 PM
      Commented on:
      Lloyds Buys HBOS: Good Deal or Bad?
      The merged bank will be Britain's biggest mortgage lender and current account provider with a near-30% market share in both. It will be the largest life assurer, too. The pricing power this gives CEO Eric Daniels' new behemoth is quite extraordinary. I can't think of any other bank in any other major industrial economy holding such a large market share. I think if the markets do not go to hell in a hand basket LYG ADR's could be a triple to ($60) while the down side (assuming dilution) is probably $10. Best is to hold for now and see how the next few months play out.
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    • ON: Sat Sep 27th 15:11 PM
      Commented on:
      Lloyds Buys HBOS: Good Deal or Bad?
      Jeff Cross is correct that UK and US banks are not directly comparable. UK is a oligopolist market, where a few super banks dominate the market. LYG with its strong deposit base will balance out HBOS's exposure to the whole sale market.

      Lloyd's CEO Eric Daniels said that immediately after the deal — which is expected to complete early next year the bank would have core tier 1 capital ratio, the measure most used by analysts for balance sheet strength, of 5.9%. That is marginally below its target of a ratio of between 6% and 7%, and less than the 6.2% it reported at the halfyear stage. At its half-year stage HBOS's core tier 1 ratio was even better at 6.5%.

      LYG is cutting its dividend to preserve capital ratio's but if the UK housing market continues to plummet it may be forced to raise more capital at below book value.
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    • ON: Tue Sep 23rd 22:31 PM
      Commented on:
      Bernanke Gives Up on Reverse Auction Idea
      The truth is probably in the middle - a reverse auction will force price discovery but at "fire sale" prices and the banks will have to be recapitalized by the treasury (or will fold). A hold to maturity price (or close to it) is more of a bail out. Neither very palatable solutions.

      However I favor the latter because Bernanke want to unfreeze the market and his argument is that once the govt. starts the ball rolling other market participants can start bidding for the securities as well.
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    • ON: Sun Sep 14th 18:49 PM
      Commented on:
      AIG: The Mark-to-Lehman Market
      AIG is not a bank from where depositors can withdraw or counter-parties can withdraw in a hurry. I can understand this for Lehman which as a investment bank is facing a classic run at the banks engineered by shorts. So comp. are apples to oranges.

      AIG's financial leverage is approx 14 while, quite reasonable for a financial services company.

      AIG shares are going to be hammered tomorrow as the investment sheep, scared by the short wolf pack, crap & run for the hill. My advise to the longs is to sit tight - watch how the next few days unfold. There might be a buying opportunity of epic proportions.
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    • ON: Sun Sep 14th 14:00 PM
      Commented on:
      So, Do We Own Fannie and Freddie or Don't We?
      The banana republic type seizure of private property from shareholders will be challenged in court and will need to be resolved in court (4th Amendment).
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    • ON: Sat Sep 13th 20:25 PM
      Commented on:
      Crunching Numbers: Why I'd Buy AIG
      Distressed investing can be very profitable. Look at Ambac as an example (up 800%). I was lucky enough to get in right at the bottom. No luck so far with AIG. However I think at this stage the upside is much more than the downside.

      Long AIG.
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    • ON: Sat Sep 13th 13:24 PM
      Commented on:
      Yahoo: Have We Seen the Bottom?
      I don't get the sense the YHOO is undervalued. It stuck in limbo, no longer a growth stock but not a value stock. Takeover is the only option. Currently this probability is priced into the stock. Below 15 it becomes interesting.

      BTW- the google ad deal is a fianl admission of utter defeat.
      View article »
    • ON: Sat Sep 13th 12:32 PM
      Commented on:
      Attention Locusts: The Party Is Moving to Merrill and AIG
      Lot of bad advice, here. For people who are already in these stocks, it is too late to bail out. It is more likely you will get whipsawed. Once the current short selling subsides (a big IF - I admit) there is likely to be a huge short squeeze.

      For my money, I willing to watch my position go to zero than get out in this market. I might even take a Pepcid and add to my position.

      Disclosure: Long on AIG.
      View article »
    • ON: Sat Sep 13th 12:21 PM
      Commented on:
      AIG: The Mark-to-Lehman Market
      AIG's financial leverage is just 8:1. As to getting rid of CDS-CDO's - it cannot. There is no market. These have to be held to maturity. It can however get rid of other assets to maintain capital ratio's. It will have to sell the family silver at fire sale prices, since capital raise is no longer an option (given stock is at 40% of book).
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    • ON: Sat Sep 13th 00:22 AM
      Commented on:
      The Lehman Situation: Brutally Logical, or Patently Illogical?
      I also think the naked shorting and puts have created a massive negative feedback loop. If LEH can hang on, for a couple of weeks there could be a massive short squeeze. Same for Wamu and AIG.
      View article »
    • ON: Fri Sep 12th 20:50 PM
      Commented on:
      Market Losing Patience with AIG
      The immediate short term risk is "Dilution" - Last time AIG raised capital at $38 per share - this time it could be $10.

      Greenberg had built a house of cards!
      View article »
    • ON: Fri Sep 12th 18:43 PM
      Commented on:
      Market Losing Patience with AIG
      Mr. Market is going vaporous again for no good reason - there is no news. There is obviously a negative feedback loop of great intensity. The CDS spread is linked to the decline in the stock price and vice versa. The shorts are having a field day.

      In times like this, there is a grand re-ordering of the share holder base --- money flows from weak hands to strong.

      I am long AIG - and losing my shirt.
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    • ON: Wed Sep 10th 23:47 PM
      Commented on:
      Expect the Real Rally by Mid-2009
      Looks like this thread has been taken over by doom & gloomers. I am more in the author's camp and take a more optimistic view.

      The next President will confront the housing problem head on, and the federal balance sheet has more than enough room to weather this housing mess. By IMF stats, the U.S. debt-to-GDP ratio stands at 63%, barely more than half the hole Japan dug in the 1980s or Canada in the 1990s .

      According to David Rosenberg of Merrill-Lynch the federal debt-to-GDP stands at just 37.1%, if we exclude the local (state & municipal) debt not guaranteed by Uncle Sam, and agency mortgage debt only net of the underlying portfolio of housing assets as well as social security. (This would rise merely to 37.2% adding in the net liabilities at Fannie and Freddie. )

      Rosenberg says that social security (& other entitlements) are not guaranteed by Uncle Sam and the government can break or more likely discount these entitlements at will. (kinda like it did to Fannie and Freddie's shareholders). IMF numbers add the social security liabilities while Rosenberg reasons they should not be as entitlements are no guarantees.

      Also the US in one of the least taxed countries in the world and really the current deficit is basically about fighting 2 major wars with no tax increases. A 5% tax increase will close the deficit and put us in a surplus.
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    • ON: Wed Sep 10th 20:04 PM
      Commented on:
      WaMu on the Brink
      This thread has almost completely degenerated into useless political rhetoric of left vs. right. One last try before I move on ....

      WM stock has dropped 50% in 2 days. Another article on alpha mentioned that about the quarter of the market cap of Wamu is on loan to the shorts.
      seekingalpha.com/artic...

      It does look like some-entity is pushing Wamu off the cliff. It is possible that this entity is hoping to engineer a crisis of confidence and buy Wamu for pennies (like JPM did to Bear-Stearn).
      View article »
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