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    • Sat Sep 6th 16:09 PM | Rating: 0 0
      Commented on:
      Bill Ackman's Letter to Paulson On Restructuring Plan
      That is exactly what Ackman is proposing - a new layer in the capital structure below "senior unsecured debt" but above the existing capital structure. This would save the edifice from collapsing while keep the GSE out of the govt. books and basically give time for the market and GSE's to heal themselves.
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    • Sat Sep 6th 15:47 PM | Rating: 0 0
      Commented on:
      Freddie/Fannie Plans In Motion; Why Are They Being Underplayed?
      Fan-Fred shareholders are just an instrument for the govt. to keep the GSE's debt off the federal budget. Therefore unless the govt. wants to explicitly or implicitly assume all govt. debt. it has to maintain the shareholders. If the double cross the shareholders, who in the right mind would invest private money in GSE's equity again.

      However they are going to be massively diluted to appease the "tax payer".

      Ironically it is the tax payer who has benefited all these years by having the lowest mortgage rates and most liquidity in mortgage loans in the world thanks to the GSE's.
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    • Sat Sep 6th 15:19 PM | Rating: 0 0
      Commented on:
      Corning: Looking Very Cheap
      S&P is projecting a 12 month price target of 23. A 40% premium from the current price.

      I have been long GLW since 2007. It has been a slow motion train crash since then. So far it has been a losing investment. My guess is that GLW is transitioning from a "growth" stock to a "value" stock. The story is similar to Starbucks, another one of my losing position.
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    • Sat Sep 6th 00:10 AM | Rating: 0 0
      Commented on:
      WaMu: Speculative Value Play
      People are forgetting the 7 Billion capital raise Wamu in April at $8.75 a share from TPG capital (not exactly naive investors). Also, Charles Leonondis made the point at Bloomberg today that option ARM (or "pick a payment" loans) were made at high interest rates in the first place and now with the cost of capital coming down even further - Wamu capacity to absorb defaults has increased.

      The upside at this stage is great - and the shares can easily quadruple - while the downside at $4 is limited. Hence this is the good opportunity to roll the dice.

      Another small california bank FED with a large portfolio of negative option ARMs - it recently quadrupled from its low. Wamu may do the same.
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    • Fri Sep 5th 23:40 PM | Rating: 0 0
      Commented on:
      Bill Gross: 'Pick Me! Pick Me!'
      Great article and right on the money. Why should equity holders get wiped out when just a 3 months ago the govt. was assuring investors that the GSE's were well capitalized and then eased regulatory restrictions and directed them to buy more mortgages. The companies are still within their statutory leverage requirements. Who in their right mind would trust them again?
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    • Mon Sep 1st 22:45 PM | Rating: 0 0
      Commented on:
      Four Reasons Why Gold's a Slam Dunk Investment
      I don't see Warren investing in gold. In my view stocks remain the best hedge against inflation as well are "wealth creating". Proper selection is of course key.

      The price of gold has defined by brief and dramatic price spikes (following deflating bubbles, wars and other financial panic) followed by periods of long slow declines.

      Notwithstanding recent history here is an interesting post to keep things in perspective.

      www.fool.com/investing...

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    • Mon Sep 1st 18:05 PM | Rating: 0 0
      Commented on:
      Will You Look Back on Today as Your Greatest Missed Opportunity?
      Will You Look Back on Today as Your Greatest Missed Opportunity?

      I beleive so - companies like GE, PG and JNJ etc. are gaining strength and have strong footing in developing markets like India and China. They can leverage their innovations and brands to these huge emerging markets. You are getting "growth" at "deep value" prices. Also don't forget the dividends keep growing and stocks are an hedge against inflation.

      The western countries aging demographics will be more than compensated by the rise of the east and the south.

      These global companies (and others like Toyota, Novartis, Unilever) are the best and safest way to play "the world in flat" theme.

      View article »
    • Mon Sep 1st 16:47 PM | Rating: 0 0
      Commented on:
      Anyone Want a Cheap Coca-Cola?
      KO has been a value trap for me (I have held since 1999) - however it does pay a dividend of 2.7%. I would be tempted to nibble again in the price drops below $50.
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    • Mon Sep 1st 12:13 PM | Rating: 0 0
      Commented on:
      Understanding Brookfield's Malaise
      Good analysis on the softer issues.

      However, given the projected $35 intrinsic value, the "margin of safety" does not seem to be there at the current prices and the current market where opportunities abound. BAM would be interesting in the mid-20's.
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    • Sun Aug 31st 19:08 PM | Rating: 0 0
      Commented on:
      The Option Arm Triplets: Dead Banks Walking
      How is it that FED stock has shot up 400% from its low of $3.99. The shorts must be getting out.

      While no denying that FED has a lot of problem with non-performing loans and will take big write downs in book value, I think the bank will survive given that most of the loans were to people with high FICO scores and average loan to value of 70% at origination. Even accounting for 20 - 30% declines in home value from peak not everyone walks away from their home.
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    • Sun Aug 31st 18:40 PM | Rating: 0 0
      Commented on:
      Our Advice? Buy the Financials Now
      It makes sense that as supply (of leverage) dries up, the price of the remaining money available for debt with go up. It is time to buy the most robust financial s like Wells Fargo, JP Morgan. Coupled with a steep yield curve these strong financial's will be printing money.
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    • Mon Aug 18th 16:47 PM | Rating: 0 0
      Commented on:
      Fannie and Freddie Are Largely Responsible for the Housing Bubble
      Fannie and Freddie (GSE's) guaranteed mortgage backed securities (MBS) are held to maturity - so day to day market prices of the the MBS's should not matter, unless they are traded. You using day to day prices coming out of a nervous market to calculate leverage.

      Given that the MBS's are now rock solid - (the "implicit" govt. backing) this leverage should not matter.
      View article »
    • Sun Aug 17th 14:10 PM | Rating: 0 0
      Commented on:
      Why is Bill Miller Increasing His Stake in Freddie Mac?
      I have yet to read the Barron's article (I will do so tomorrow when it is free) but this does not make sense. Say, the govt. buys prefferred stocks at 10% dividend and FRE turns around and generates a 15% ROE - then the shareholders win. Why would the govt. want to wipe out the shareholders - this makes no sense?

      I'd rather bet on Miller than the hacks at Barron' - and the folks sitting at the back of the class (or on the sidelines) with their calculators are ususally the morons. Volatality is a friend not an enemy.
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    • Sun Aug 17th 12:39 PM | Rating: 0 0
      Commented on:
      R.H. Donnelley: An Attractive Bet for High-Risk Investors- Barron's
      The shareholders can get wiped out in a hurry. I will want to see significant insider activity before I would want to get in.
      View article »
    • Sun Aug 17th 01:04 AM | Rating: 0 0
      Commented on:
      MBIA's Momentous 2Q: Need More Evidence That the Turn Has Arrived?
      I am, long on MBIA as I agree that risk / reward is favorable. In fact I have already doubled my initial investment. However the stock is risky and very volatile.

      Tom as usual has articulated a highly optimistic scenerio. However there is a pessimitic scenerio where housing continues to deteriorate and MBIA has to make good on securities it has gauranteed. It should be noted that the figures on stress testing come from MBIA - I would at least double the "margin of safety".

      Morningstar's Jim Ryan estimates the fair value of MBIA at $18 - which extreme Fair value uncertainity. The problem may be that MBIA is likely now in "run off" mode - not sure if it has sustainable business model given its current rating. It has likely completely lost its municipal bond business and the markets in CDO etc is dead and will be dead for a long time. With new AAA players like Berkshire in the market, a tainted player like MBIA has a long haul.

      If housing does recover MBIA will have significant "write ups" which would likely push up book value. In fact MBIA recently took an approx 2.9 billion write-up (almost $10) a share in Q2. This likely took its book value from around $16 to $26. However "book value" has to be taken with a grain of salt as it is mark to model and likely to be volatile.

      Marty Whitman (3rd avenue) and Warburg Pincus obviously see great value in the company and have loaded up on stock. My bet is on Whitman in the tussle with Ackman.
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