E Nuff Sed

Total Rating:
+1 / -1

105 Comments

    • Fri Sep 12th 20:50 PM | Rating: 0 0
      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 »
    • Fri Sep 12th 18:43 PM | Rating: 0 0
      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.
      View article »
    • Wed Sep 10th 23:47 PM | Rating: 0 0
      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.
      View article »
    • Wed Sep 10th 20:04 PM | Rating: 0 0
      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 »
    • Wed Sep 10th 00:06 AM | Rating: 0 0
      Commented on:
      Washington Mutual: Short Interest Remains High
      The shortsqueeze data can be upto a month old. Also it does not report "dark pool" data - only from excahnges.
      Also I checked Smartmoney.com - it says only 3.8% of the float is short (as of 8/12/2008).
      View article »
    • Tue Sep 9th 23:51 PM | Rating: 0 0
      Commented on:
      WaMu on the Brink
      BTW I am long Wamu (I bought some today). Though highly risk, I think the risk/reward ratio's are favorable. The stock is an easy double, after the current bout of market jitter passes.
      View article »
    • Tue Sep 9th 23:48 PM | Rating: 0 0
      Commented on:
      WaMu on the Brink
      I think Wamu will pull through. Wamu has access to the Fed discount windows (so a bear sterns like run is not possible); its capital ratio's are adequate so regulatory action is unlikely. It had raised $7 Billion of new capital in April.

      The problem is the continued deterioration of the housing market - further mark to market write off could eat through the capital cushion necessitating another capital raise, which could wipe out the current share holders.
      View article »
    • Tue Sep 9th 22:16 PM | Rating: 0 0
      Commented on:
      The "Worst Is Over" Crowd Is In for a Shock
      While I agree the worst is not over, I believe we are 3/4th of the way through. The problem now is the US election is in the way adding to the uncertainty. However, the stock market will begin to start to recover much before the end of a recession given that it is forward looking.

      So far it seems to be an ordinary recession. We can draw some lessons from previous ordinary recessions.

      The fall in the stock market from the peak of the business cycle to the market lowest level in the recession was 21.0% in the 1970 recession, 33.88% in the 1974-75 recession, 10.6% in the 1980 recession, 18.2% in the 1981-82 recession, 14.6% in the 1990 recession, 10.3% in the 2001 recession.

      In terms of length, modern recessions have lasted an average of 11 months ( range is 6 - 16 months).

      The stock market peaked in early October 2007 and most economist believe that the US recession started in December 2007. Therefore given the historical context I believe we should start looking for the stock market to bottom this fall or early winter and start recovering thereafter.

      In summary, my educated guess for the market is another 5 - 10% to go, with a bottom within 3 - 6 months.
      View article »
    • Tue Sep 9th 13:58 PM | Rating: 0 0
      Commented on:
      AIG and the Lunacy of GAAP Reporting
      There are some big insider buys at AIG in August. Three directors bought 50,000 shares of AIG, the first open market purchase in a long time. Thus insider buying corroborates your thesis. AIG is now selling at less tha 2 X cash flow; and 2/3rd of book value (which may be further reduced by mark to market losses but has the potential to increase rapidly after the credit crunch abates.)
      View article »
    • Tue Sep 9th 13:47 PM | Rating: 0 0
      Commented on:
      Global Capital Asset Death Spiral
      I believe the fix is slowly being put in place. The treasury just turned fannie and freddie into a resolution trust for mortgages. Once the new govt. is in place they can set about putting together a resolution trust which then start to buy other assets on the cheap.
      View article »
    • Sun Sep 7th 22:12 PM | Rating: 0 0
      Commented on:
      American Capital Agency: Making Money the Old-Fashioned Way
      The value of their existing portfolio's should increase in the short term given the explicit backing of the govt. So there might be a short term trading opportunity.
      View article »
    • Sun Sep 7th 20:24 PM | Rating: 0 0
      Commented on:
      American Capital Agency: Making Money the Old-Fashioned Way
      Looks like their model is the same as Annaly, Hatterras etc. The borrow short term to buy long term mortgages. This is a profitable business as long as the yeild curve is steep. The model will breakdown in a flat yeild curve or inverted yeild curve.

      Financial leverage of 8 X is actually not bad. It is much better than most banks. Leverage is needed to amplify the spread between short term interest they have to pay in order to buy MBS from the GSE's.
      View article »
    • Sun Sep 7th 15:24 PM | Rating: 0 0
      Commented on:
      Fannie and Freddie: We All Support You!
      Mediaguy is not alone. Lots of very smart people (i.e. Bill Miller, Rich Pzena) , including some not so smart people like me, took a chance and lost. However this is a minor skirmish in the never ending war to seeking alpha.

      There should be nice short term rally in financial s in the coming weeks.
      View article »
    • Sun Sep 7th 15:09 PM | Rating: 0 0
      Commented on:
      A Closer Look at the Treasury's GSE Preferred Stock Purchase Plan
      You win some, you lose some. Take comfort that equity is not completely lost. Even at as 80% haircut of book value the intrinsically the equity is worth about $5 for fannie and $2 for Fred.

      Hopefully the housing market will stabilize now and the book value of the GSE will increase from here.

      This should have a positive impact on the broader market and will signal an end to the bear market.
      View article »
    • Sun Sep 7th 13:59 PM | Rating: 0 0
      Commented on:
      A First Look Inside the Fannie / Freddie Bailout Plan
      Looks like 80% dilution from book value of the common would value FNM about $5 and FRE about $3 (this assumes book value was misstated by 50%).
      View article »
Loading...
Symbols:
Authors:
Quick Links:
Contribute an Article Become a Seeking Alpha Contributor

Transcripts

More Transcripts»