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105 Comments

    • Tue Jul 15th 22:29 PM | Rating: 0 0
      Commented on:
      The SEC Panics
      The SIV analogy is a good one. Both bond and stock holders bought in based on the "implicit" treasury backing. Both investors should be protected now that the backing has become explicit. I don't see any reason why the shareholder needs to be wiped out as the company is only following the rules set by congress on leverage.
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    • Tue Jul 15th 21:58 PM | Rating: 0 0
      Commented on:
      The SEC Panics
      Wipe out the shareholders indeed - esp with the treasury and the OFHEO saying loudly that F&F remain "adequately capitalized". Do you think anyone will invest in the USA again! Once foreign money starts being pulled out - the market will not recover for 5 years.
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    • Mon Jul 14th 23:24 PM | Rating: 0 0
      Commented on:
      The Case for Wiping Out Fannie and Freddie Shareholders
      I guess that wann't a smart thing to say - I may not deserve to but I can get wiped out. I can afford a loss having made more than my share of money in the last few years.

      - but seriously, I cannot see share-holders getting wiped out. With the Fed discount window open, the GSE's have "unlimited liquidity" at least for the short term. The risk is dilution by the Obama's treasury - inspite of that I see the stock back in the 50's in 5 years - A five to ten bagger - worth the risk.
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    • Mon Jul 14th 21:21 PM | Rating: 0 0
      Commented on:
      The Case for Wiping Out Fannie and Freddie Shareholders
      Wiping out the share-holders will acheive no purpose since they bought the stock in good faith going by the govt rules (OFHEO) on leverage and to date OFHEO says Fannie Mae, Freddie Mac remain 'adequately capitalized'.

      The people baying for the current share-holders blood are people on the short stock band-wagon. While a massive dilution "probably in the order of 75%+ may be in order (and congress may have change the rules on capitalization) - I cannot see the shareholders getting totally wiped out.

      The housing market will stablize in less than a year and then a slow climb out of the hole will begin.

      Any yes, I am one of the "bottom feeders" and I don't deserve to be wiped out.
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    • Sun Jul 13th 23:23 PM | Rating: 0 0
      Commented on:
      Boston Scientific: Good Valuation, But Technically Shaky
      ---I am not a chartist but I can see a bargain - and BSX is a bargain. It could also be taken over by someone like JNJ at a small premium to this price. JNJ with AAA rating can borrow money very cheaply to mount a hostile take-over.
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    • Sun Jul 13th 22:55 PM | Rating: 0 0
      Commented on:
      PMNA: PowerShares Opens the Frontier with New ETF
      Investor's beware. These countries have very opaque markets rife with insider trading (more the rule than the exception) i.e., the markets are not efficient by a long shot. It is better to find a mutual fund which can assess management, rather than picking a basket.
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    • Sun Jul 13th 19:45 PM | Rating: 0 0
      Commented on:
      9 Reasons to Short FirstFed Financial
      Looks like a concerted "bear attack" by Weston, Paulmars and others . The stock is still falling, but how much downside is there? Morningstar has the following to say about FED,

      "Furthermore, almost 60% of Firstfed's mortgage book is composed of Alt-A loans, which are loans to borrowers who don't document either their income or assets, or both.

      But prudent underwriting--an area of strength for Firstfed--is the bank's answer to some of these concerns. Firstfed typically originates loans with high FICO scores and low loan/value ratios. The thrift then sells the lower-quality loans to third parties with no recourse. As a result, Firstfed's mortgages average a loan/value ratio of 70% and a FICO score of 720. In addition, Alt-A loans are usually limited to self-employed individuals or employees on commission who earn a decent income but have difficulty properly documenting it. Firstfed also caps negative amortization to a certain percentage of the initial principal and limits the life of the pay option to five years."

      "Firstfed is better reserved than its peers and carries enough capital to weather any credit woes. Any liquidity problems are highly unlikely at this point, given the substantial use of flexible and reliable sources to fund the operation."

      I also note that FEDs core equity is still over 8%. While a rights issue to re-capitalize may be necessary, I doubt they are going out of business.

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    • Sun Jul 13th 18:47 PM | Rating: 0 0
      Commented on:
      Fannie and Freddie - Some Facts to Keep in Mind
      Re: Rawberts comment - MBIA and AMBAC are part of the problem. Since F&F as part of the mortgages can only deal with prime mortgages with less than 70% loan (30% principal) it depends on the insurers to gaurantee mortgages with higher loan amounts i.e. the insurers like MBIA would have to gaurantee 20% of a 90% mortgage. Since the insurers have been downgraded, such mortgages (in CDO') held by F&F and other entities are also been down graded.

      If the housing market recovers and actual losses don't materialize then all will be OK and the mark to market losses will be reversed. If housing market continues to go south and losses materialize then all these entities will go to hell in a hand basket -- esp the monolines like Ambac and MBIA.
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    • Sun Jul 13th 18:30 PM | Rating: 0 0
      Commented on:
      Housing: Barron's Calls a Bottom
      Going by what happened here in Canada (after a similar bubble) starting in 1990 the sharp declines were over by 1993. From 1994 to 1999 the housing market was essentially flat.
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    • Sat Jul 12th 20:19 PM | Rating: 0 0
      Commented on:
      Buying Dow for a Better Deal than Warren Buffett Got
      This argument is pointless. Since you cannot get the deal Buffet got - the next best thing is to buy the stock. Given the Dividend and growth prospects I agree with Todd that this is good value.
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    • Sat Jul 12th 15:02 PM | Rating: 0 0
      Commented on:
      The Long Case for Canadian Oil Sands Trust
      Alberta is like the Texas of Canada and the politcians are in the pocket of the oil-men. Burning NG to heat water in order to wash the oil out of the sand is very expensive and (as noted above)degrades the environment. Any long term investment in oil sands needs to factor this in.
      A better bet in my opinion would be to use Nuclear Plants to generate power and then use it to produce oil from oil sands. Also the waste water will need to be cleaned.
      View article »
    • Fri Jul 11th 14:28 PM | Rating: 0 0
      Commented on:
      Piper Defends GSEs After Major Kick in Fannie from Mr. Market
      Total unreasoning panic - like a run on the bank. Only and unlike Bear-Sterans no one can withdraw their money out of fannie and freddie. These are truly too big to fail. If the govt intervenes the US$ will fall by 10% the next day and oil will hit 175.
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    • Fri Jul 4th 18:11 PM | Rating: 0 0
      Commented on:
      The "Texas Ratio" and FirstFed Financial
      Great analysis. I was unfortunately long and have lost a few thousands. I was not aware of the "texas ratio" analysis. The short interest on FED is substantial, indicating that many sophisticated market players feel as the paulmars does above that FED is dead.

      However is real estate has been re-possessed it has to be valued at market prices as per FASB so writing them off (or devaluing them) further is unnecessary. Therefore I am not sure of your "california ratio" analysis.

      Interestingly there is a lot of insider buying, which would suggest that insiders are more confident than you are. As usual time will tell.
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    • Sat Jun 21st 15:20 PM | Rating: 0 0
      Commented on:
      The Long Case for ABB Ltd.
      Given a choice between GE and ABB - GE wins hands down. Even after stripping out its financial business GE is more profitable and diverse.
      The value of GE's industrial business is over $30. You are basically getting one of the best run finance business for free. I'd like the author to do a comparison between GE and ABB.
      View article »
    • Sat Jun 21st 13:00 PM | Rating: 0 0
      Commented on:
      'The Time to Buy Financials' Is Still Not Now
      You got to take advantage of market panics. This is as close to a panic as I have ever seen.

      I have been selling resources/ materials and buying financial s since January when I noticed value guys like Pzena, Whitman etc loading up on Financials. My losses since January are well into the six figures. I am starting to sweat but am prepared to wait it out a few years.

      I really cannot see names like AIG, AXP, Citi, Barclays, LLoyds etc going out of business. Seems to be a panic.

      One of biggest success was buying P&G in 2000 when it got chopped more than 50% in a matter of weeks, due to a panic because they missed earnings. I re-mortgaged my house to buy the stock. It took 2.5 years - but the stock came back and after 8 years I am sitting on gains of over 300%+.
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