Albert Meyer

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    • Wed Sep 24th 17:54 PM | Rating: 0 0
      Commented on:
      Caterpillar's Troubling Bond Issue
      Old Limey, you're not missing anything. Pretty good summary. old chap.
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    • Wed Sep 24th 10:20 AM | Rating: 0 0
      Commented on:
      Caterpillar's Troubling Bond Issue
      I like Gramps' spunk. Accountants have written the rules in such a way that they can make the numbers tell you anything they want. Grumps, take cash from operations, deduct capital expenditures and then deduct actual credit losses recognized in the bad debt allowance account (in substance a loss of cash/capital). That will give you CAT's true free cash flow. Compare that to net income. I haven't done the calc for CAT, but it's a pretty useful tool to demystify the accountants' smoke-and-mirror show. Vendor financing was a game Lucent played... and see what happened to Lucent. Lucent's former CEO, McGinn sits on the board of American Express, but his bio in the proxy statement makes no reference to his tenure at Lucent - go figure. Off the topic, but I just thought I'd throw it in the mix.
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    • Fri Sep 5th 10:40 AM | Rating: 0 0
      Commented on:
      Leucadia's Key to Success
      Some of the arguments made by others in favor of LUK are:

      (i) "Earnings sheltered by NOLS are more valuable than earnings that are taxed!" Do you have a history of earnings generated by the company's operating businesses that you could share with us?


      (ii) "Book value compounding at a 21% annual rate and the stock at 26% per year." How much of the compounding came from stock issues (acquisitions funded by stock) and the reversal of deferred tax valuation allowances? If you take out the stock issues and the deferred tax assets, what does the compounding look like then?

      How long will it take the company to realize the NOLs. How long has it been on their books and how much of that have they realized to date?

      Just asking. Thanks for the article. I know managment has been very good at timing acquisitions and subsequent disposals of businesses, but does this churn activity not make LUK more of a closed-end fund? Should it not sell closer to book value and how do you value the intangibles and deferred tax assets (NOLs)? That said, it has been a phenomenal stock.

      Valuation multiples (TTM): ~P/E 27, ~P/S 8, ~P/B 1.8 (book value includes NOLs) EV/EBITDA ~150. Do you have an idea of what forward multiples might look like?
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    • Fri Aug 22nd 11:01 AM | Rating: 0 0
      Commented on:
      Bank Insiders Made Out Like Bandits
      On the contrary, this article is extremely worthwhile. It highlights the dangers of investing in companies that make use of stock options to compensate executives. Far from aligning the interests of insiders and shareholders, employee stock options place insiders at a huge advantage over shareholders.

      Stock option plans are front-running, stock-watering and insider trading all wrapped-up in one and legitimized by the guardians of our capital markets.

      Millions of Americans are foolishly placing their retirement funds in index funds, ETFs and the like. Managers of these funds are "forced" to invest in these stock option disasters. Hundreds of millions of dollars of hard-earned wages are deftly transferred from the middle-class to a handful of executives.

      This inequitable wealth-distribution (legitimized theft) is bad for the social fabric. It’s a stain on our capital markets. Articles like this educate the public. Hopefully one day, legislators and regulators with a conscience will step in and remedy the situation.
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    • Fri Aug 22nd 10:22 AM | Rating: 0 0
      Commented on:
      Bank Insiders Made Out Like Bandits
      This insider trading, mainly at the expense of people who blissfully place their retirement hopes in index funds, is fully sanctioned by the SEC, the so-called guardians of capital markets. The SEC's defense would be that all the facts are disclosed. It's like saying that robbing a bank is no longer a crime because we have installed closed-circuit TV to record the action.
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    • Fri Aug 22nd 08:42 AM | Rating: 0 0
      Commented on:
      Bank Insiders Made Out Like Bandits
      Great analysis. Much appreciated. How about a similar analysis for companies like Cisco and Broadcom?
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    • Tue Aug 5th 09:50 AM | Rating: 0 0
      Commented on:
      Leucadia National: 5 Guidelines for a Well Run Holding Company
      "Earnings sheltered by NOLS are more valuable than earnings that are taxed!" Do you have a history of earnings generated by the company's operating businesses that you could share with us?


      "Book value compounding at a 21% annual rate and the stock at 26% per year." How much of the compounding came from stock issues (acquisitions funded by stock) and the reversal of deferred tax valuation allowances? If you take out the stock issues and the deferred tax assets, what does the compounding look like then?

      How long will it take the company to realize the NOLs. How long has it been on their books and how much of that have they realized to date?

      Just asking. Thanks for the article. I know they have been very good at timing acquisitions and subsequent disposal of businesses, but does that not make LUK more of a closed-end fund? Should it not sell closer to book value and how do you value the intangibles and deferred tax assets (NOLs)? That said, it has been a phenomenal stock.

      Valuation multiples (TTM): P/E 27.04, P/S 8.12, P/B 1.83 EV/EBITDA 151.8. Do you have an idea of what forward multiples might look like?


      View article »
    • Mon Jul 21st 11:08 AM | Rating: 0 0
      Commented on:
      Bank Executive Compensation and the Bailout
      The Norwegian government considers stock options a criminal activity. The German government wants to clamp down on stock options. Avoid companies that use options to transfer wealth from shareholders to insiders. Pity Countrywide is not on the list - stock option abuse at its very worst. Respected mutual funds owned loads of Countrywide. American workers, trying to provide for their retirement, entrusted their hard-earned wages to these managers, who in turn thought they were investing in Countrywide. In fact, they were bailing out management, who were offloading their stock, took the money and ran, right under the eyes of the SEC and our lawmakers.
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    • Fri Jun 6th 09:08 AM | Rating: 0 0
      Commented on:
      Absurd Accounting Rules and $5 Trillion Off Bank Balance Sheets
      The "F" in FASB stands for fraud. The "S" in SEC for scam...
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    • Thu Jun 5th 09:25 AM | Rating: 0 0
      Commented on:
      Unfortunately, There's an "I" in BRIC (and a "C")
      Arkay's first response was helpful and a catalyst for an insightful debate. The next two postings were superfluous and mean-spirited. They scuttled the chance of any meaningful discourse.
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    • Thu May 29th 09:02 AM | Rating: 0 0
      Commented on:
      How to Invest in Norway
      Bearfund, you are spot on. The Norwegian government has roughly (if my memory serves me correctly) $40K per man, women and child invested for their future. The dividends are rolling in. We have piled up roughly $30K per man, women, and child in federal debt, not counting the liabilities of the Social Security Ponzi scheme and the $3 trillion war debt coming down the pike. $500 billion plus in annual interest payment sucked out of our paychecks every year. Norway, not part of the European Union, is a neutral country and can do business anywhere in the world; and they do - smart, honest folk. Long: STO, TELNY, CEQ and PHO.
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    • Wed Apr 9th 09:26 AM | Rating: 0 0
      Commented on:
      Uranium Miners Expected to Benefit from Falling Inventories
      FP Trading Desk, "Cameco currently trades at 0.8 times net asset value [NAV]" Anybody can make a mistake, so could you fact check this statement, confirm the number or correct it and show us your calculation.? Thanks.
      View article »
    • Thu Apr 3rd 09:53 AM | Rating: 0 0
      Commented on:
      SEC on Marking to Market: Yet Another Problem Solved
      Rumpole... (as in "she who must be obeyed"), I accept your arguments especially with regard to fairness if these entities were able to profit from the rule in prior years. However, two wrongs don't make a right. If my neighbor sells his house for a song, it does not necessarily change the value of my house, especially if I have no intention or need to sell. According to MBIA's management (I have no vested interest) the fair-value related accounting hits that the company was forced to take are “not predictive of future claims” and “should reverse over the remaining life of the insured credit derivatives,” with actual losses not exceeding $200 million. Other financial executives have chimed in making the same argument. That being the case, the application of the fair value rule to these Level 3 assets lacked predictive value, a crucial qualitative characteristics of accounting information. Based on a mark established in an illiquid market a company might have to book a $2 billion loss. Logic might dictate that the loss would never exceed $200 million, at least not as far as one can discern in the short- to medium term. It's a tough one, but we will know the answer, depending on whether or not these losses reverse over time. My gut feel is more than 50% of them will reverse over time. If so, then all this rule has accomplished is to create cookie jar reserves and greatly unsettle the financial markets.
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    • Mon Feb 11th 11:58 AM | Rating: 0 0
      Commented on:
      Who's Sharing Cisco's Cash?

      [Please pardon me if this message is posted more than once. I tried twice as a non-registered user, but nothing happened. I emailed the website, but no response. I then registered, logged-in and will now make another attempt at this. Again, forgive me if multiple posts appear.]


      Since 1995, Cisco spent approximately $45 billion buying back 2.2 billion shares. Employees paid $15 billion to exercise 2.2 billion options. Despite all the cash spent on buybacks, the share count remained essentially the same. The net $30 billion the company spent on buying back stock is in reality compensation paid in a roundabout way; not that the accounting rules would reveal such a scandalous fact.

      The "F" in FASB stands for fraud. FASB rules help deceive investors and give management the right to boast that they are "returning cash to shareholders." The only shareholders getting the cash are the employees. Cisco supports the stock price when employees flood the market with option exercises.

      Here's the deal breaker: there are 1.2 billion options awaiting exercise, a dilution of 22% looms. Cisco will report "record" earnings, but it will use those "earnings" to buy back stock and mop up dilution.

      There is one heartening fact amidst the gloom. Balance sheets don't lie. Stock buybacks are appropriations of profit. Cash spent on buybacks is classified as Treasury Stock and netted off against Retained Earnings. There has been no growth in Retained Earnings the past twelve years. In fact, in 2006 the balance sheet reported an "Accumulated Deficit" of $600 million. Today, "Retained Earnings" comprises only $0.04 of Cisco's approximately $4 book value per share.

      In cash flow terms, the company generates more cash selling stock to employees at a deep discount than it does selling equipment to customers. Growth in Paid-In Capital exceeds top line growth. Let me remind you, last year after Barron’s touted the stock and Cisco reciprocated (awful thought) with double spread color advertisements, the company’s market capitalization surged to $200 billion. Executives quickly cashed out over a hundred million dollars worth of options.

      I'm not short the stock. That way I can post this message without fear of the SEC terrorizing me. Cisco can publicly state that they are "returning cash to shareholders," which is a bold face lie, and regulators turn a blind eye. Post something on a message board that might cause you to gain on the short side and you risk arrest.

      Just to protect myself further, all amounts above are approximations - do your own math. In principle, regardless of the numbers, the truth remains, Cisco is a company operated for the benefit of executives and employees. Shareholders don't have a prayer to ever make dime, other than to play the short-term volatility.

      Albert Meyer (no pseudonyms for me)

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