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    • Sat Aug 16th 16:38 PM | Rating: 0 0
      Commented on:
      Good News for Monolines Wanting To Settle Their CDO Obligations
      Well done Felix - thanks for sharing - look at the recent bounce in the monolines. Smartmoney is cottoning on that things are better than they seem at the monolines. This will also affect the write downs in book value taken by the monolines - we can expect some write-ups in the next quarter. Ambac is esp. interesting as they did not (or could not despite their best efforts) dilute their share-holders.
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    • Fri Aug 15th 22:56 PM | Rating: 0 0
      Commented on:
      AIG: Willumstad's Hard Choice
      Orca - curious as to why do bear such animus for AIG? Have they done you or your family some wrong.

      I have no reason to distrust the company, however I am just a small investor.

      AIG's business model is simple and enduring. Berkshire and AIG are virtually a duopoly in high end insurance. It is the assets they hold which are complex and I would hope that the accountants and auditors are reporting the right figures.
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    • Fri Aug 15th 22:32 PM | Rating: 0 0
      Commented on:
      Everything They Tell You About Solar Is Wrong - Travis Bradford
      Solar, wind, nuclear, clean coal, hydro - we need all these technologies to replace oil and gas. It is not a either-or situation.

      Oil and gas needs to be reserved for transportation fuel.
      View article »
    • Fri Aug 15th 21:43 PM | Rating: 0 0
      Commented on:
      The Long Case for Redwood Trust
      Reading this in August when the current stock price is $20 is very instructive. The shorts on alpha are baying for blood and predicting RWT is going down to single digits - a fraction of book value.

      As Seth Klarman says, A market downturn is the true test of an investment philosophy.

      Wallace Weitz is the portfolio manager of Weitz Value Fund, Weitz Hickory Fund and Weitz Partners Value Fund, which he incepted in 1983. As of 9/30/2007, his Weitz Partners Value Fund has had an annual average total return of 14.5%, and a cumulative return of 2597.7%

      Value investing is the discipline of buying securities at a significant
      discount from their current underlying values and holding them until more of their value is realized. The element of the bargain is the key to the process.
      The greatest challenge for value investors is maintaining the required
      discipline. Being a value investor usually means standing apart from the crowd, challenging conventional wisdom, and opposing the prevailing investment winds. It can be a lonely undertaking. A value investor may experience poor, even horrendous, performance compared with that of other investors or the market as a whole during prolonged periods of market over-valuation.
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    • Fri Aug 15th 19:40 PM | Rating: 0 0
      Commented on:
      Redwood Trust: Ravaged by Credit Losses
      I enjoying the good rational debate here and agree the mark of market taken to RWT are phony baloney accounting losses. If the security is held to maturity marks can be ignored. The cash flows being generated by the securities is key and a good measure of intrinsic value.

      Also could some one comment on the potential for mark-ups here, if and when housing stabilizes and the Acacia and Sequoia SIV's stabilize?
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    • Fri Aug 15th 19:03 PM | Rating: 0 0
      Commented on:
      Forget $100 a Barrel - Oil Will Plummet to $30
      Yes oil is going down - not just because of demand (and that is due to economic weakness not conservation) but increasing supply. Due to the high price of oil - many oil plays like oil sands, shale oil, coal gassificaion, apart from increased exploration. There was a article in Fortune to this effect.

      money.cnn.com/2008/06/...
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    • Fri Aug 15th 00:25 AM | Rating: 0 0
      Commented on:
      The Great Consumer Crash of 2009
      Give me your entrepreneurs, your rich, Your Gucci clad elites yearning to shop till they drop, The capitalistic pigs and fat cats of your teeming shore.

      There is a easy solution to the housing crisis - open the tap for immigration. Any rich foreigner, who does not have a criminal record and can document his earnings, and who can buy a house for cash (no mortgage) should be given a green card.

      The problem will not only be solved in no time, but there will be a huge boom in real estate fueled by equity - not debt.
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    • Fri Aug 15th 00:05 AM | Rating: 0 0
      Commented on:
      Redwood Trust: From $30 to $4 by Year-End?
      Most of the losses are mark to market - not realized losses. So what if the GAAP book value continues to be marked down as long as the cash keeps coming in and dividends keep getting paid out. Once the market comes back and the realized losses do not materialize the write-ups will begin.

      However when the current bear raid on RWT by Weston, et. al, abates it may be worth going long. I will watch this battle from the sidelines for a couple of months before going long.
      View article »
    • Wed Aug 13th 23:50 PM | Rating: 0 0
      Commented on:
      May Take Several Years for the Financials to Work Out Their Kinks
      Amid all the write downs there are two big positives for financial's 1) the steep yield curve as you mentioned 2) pricing power for risk. The last is under-appreciated. Risk capital is now scarce and finally risk is being rewarded - and the interest the spread the banks are able to exploit will widen. These two factors will have a synergistic effect and go a long way to mitigate the loss of volume.

      In this environment the strongest banks (WFC, USB, JPM, SNV) will print money while the weaker ones will sink as risk capital will flow to the strongest (and safest) players.
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    • Tue Aug 12th 23:35 PM | Rating: 0 0
      Commented on:
      The FDIC vs. CompuCredit: Does the Agency Have Nothing Better to Do?
      Tom, You should disclose your interest in Compu credit. Given that your fund is a major shareholder, I take your spirited defense with a grain of salt.

      Looking at their business model it appears that that these guys are just a couple of steps away from being loan sharks and thus need govt supervision to keep them in check.
      View article »
    • Tue Aug 12th 21:09 PM | Rating: 0 0
      Commented on:
      AIG: Willumstad's Hard Choice
      First some facts,

      AIG is currently levered about 13 X. A little more than most depository banks and much lower than investment banks.

      Also it is still generating huge cash flows from its insurance businesses. Sure the derivative investments will take some losses but losses to date have been manageable (AIG incurred a $13.1 billion net loss in the first half of 2008, $12.1 billion of realized losses on its investment portfolio and a $14.6 billion unrealized mark-to-market loss on its credit default swap business.)

      A 27 Billion $ loss on a 1 Trillion $ portfolio amounts to less than 3%. My guess is that it can take another $15 Billion loss before raising more capital. Dilutive capital raising in my opinion is the biggest short term risk. If AIG can tough it out, I think the stock can go to the 50's in 2 years given core earning power of $5+/share/year.
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    • Tue Aug 12th 20:31 PM | Rating: 0 0
      Commented on:
      Financials: Bottoms Happen When Everyone's Convinced They Won't
      TB' thesis seems to make sense. Rich Pzena seems to think the same way as does Bill Miller.

      I had no financials in my portfolio prior to mid last year.

      I started buying financials a bit early (Aug 2007) a bit early in hindsight, and kept on buying through the Jan, March and June lows. I am at present just breaking even. As long as the situation does not worsen I am happy to collect dividends for the next couple of years and wait till the crunch blows over. I am focusing on buying big Money managers, Canadian (CIBC, BMO) and UK banks (Lloyds, Barclays) and Insurance companies. I have also taken big positions in AIG, GE, LM etc. I don't think their earning power has been compromised and most issues have been discounted into the stock price. I have avoided imvestment banks except for small nibbles which have been mostly losers.
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    • Tue Aug 12th 19:39 PM | Rating: 0 0
      Commented on:
      Capital One: A Different Short Case
      Morningstar is still rating the stock with an intrinsic value of $103, S&P 12 month target is at $45 and Argus at $30.

      Obviously COF is a cyclical play and currently in value territory. In the last recession it had bottomed at $25. Even pessimistic earning estimates are $4.25 for 2008. I think the core non-recession earning power is well over $5. It is trading well below book value of $66. My own calculations suggest based on earning power suggest that it should trade in the mid 70's.

      Value guru's like Bill Miller & Nygren have been buying into this in a big way.

      People are not going to stop using cards and COF seems well reserved for losses. If you can take the volatility then this sucker is for the long haul.

      However this is a risky security and you may be able to make some money on volatility, but don't go on a vacation while in a short position. Heck if we are lucky it will miss a quarterly earning estimate and go into the 30's. You guys can make some money and I can buy some more.

      Cheers.
      View article »
    • Sun Aug 10th 22:37 PM | Rating: 0 0
      Commented on:
      Capital One: A Different Short Case
      You folks likely be caught with your shorts down and get shafted.

      COF business model is not broken and it has a strong franchise.
      The stock is price very low compared to its core earning power of $5 per share.

      Given that there is little if any sub-prime exposure (like C or AIG) I would not expect it to fall substantially. The Price / Cash Flow ratio is just over 2 and financial leverage is under 7 - low for a bank..
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    • Sat Aug 9th 13:35 PM | Rating: 0 0
      Commented on:
      Blackstone Now Bullish on Subprime?
      Sub-prime debt may have become very attractive. It is now selling literally 15 cents on the dollar. For a small investor, a closed end fund which has invested in sub-prime asset may be attractive. Example is RMK Advantage fund - RMA. It pays an attractive monthly dividend has the potential to double or triple as sub-prime markets recover.
      View article »
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