Erich Riesenberg's Comments RSS Syndication from SeekingAlpha.com http://seekingalpha.comuser/154372/comments http://seekingalpha.com/article/128128-cramer-s-stop-trading-cramer-calls-a-bottom-3-26-09?source=feed#comment-442256 442256

On Mar 27 09:55 AM 107Sid wrote:

> If you guys feel so negative about Cramer's calls, why do you keep
> reading and commenting on them??]]> Fri, 27 Mar 2009 09:58:55 -0400

On Mar 27 09:55 AM 107Sid wrote:

> If you guys feel so negative about Cramer's calls, why do you keep
> reading and commenting on them??]]> http://seekingalpha.com/article/127055-hussman-gets-it?source=feed#comment-434353 434353
Protecting bondholders at the expense of the public is not socialism, it is crony capitalism. I understood it with Bush, he got rich by being given a baseball stadium in Texas built at taxpayer sales tax expense. Perhaps Obama is paying back Wall Street which so strongly supported him.


On Mar 20 06:57 PM User 270430 wrote:

> Good article.
>
> Let the counter parties fail. That is the capitalist solution. What
> we have instead is socialism, but for the rich and connected. This
> country can not survive by privatizing profits and socializing profits.
> At least, not for too long, in my opinion.
> ]]> Sat, 21 Mar 2009 08:53:31 -0400
Protecting bondholders at the expense of the public is not socialism, it is crony capitalism. I understood it with Bush, he got rich by being given a baseball stadium in Texas built at taxpayer sales tax expense. Perhaps Obama is paying back Wall Street which so strongly supported him.


On Mar 20 06:57 PM User 270430 wrote:

> Good article.
>
> Let the counter parties fail. That is the capitalist solution. What
> we have instead is socialism, but for the rich and connected. This
> country can not survive by privatizing profits and socializing profits.
> At least, not for too long, in my opinion.
> ]]> http://seekingalpha.com/article/118377-could-a-markopolos-blog-have-stopped-madoff?source=feed#comment-375814 375814
A scheme like Madoff's is very different and much more definitive than arguing over accounting rules.]]> Wed, 04 Feb 2009 14:13:01 -0500
A scheme like Madoff's is very different and much more definitive than arguing over accounting rules.]]> http://seekingalpha.com/article/107990-berkshire-s-puts-not-such-a-great-idea?source=feed#comment-316144 316144
Could you return the favor? Thank you.


On Nov 26 02:05 AM najdorf wrote:

> Alex: As has been discussed many times, they're European-style puts,
> exercisable only as expiration. The whole point of the investment
> was that the length of the option prevented any short-term market
> risks. BRK has sold someone an insurance policy against long-term
> stock market depreciation. As always, the company continues to operate
> as a moderately bullish long-term stock-market investor that attempts
> to take short-term volatiiity or risk in order for long-term profits
> in excess of what it will have to pay out in insurance.
>
> Of course BRK could have made more money selling puts today, but
> their invested capital/collateral is zero, meaning as long as stocks
> don't stay low for 20 years whatever profit they make will equal
> an infinite ROIC.]]> Thu, 27 Nov 2008 08:42:56 -0500
Could you return the favor? Thank you.


On Nov 26 02:05 AM najdorf wrote:

> Alex: As has been discussed many times, they're European-style puts,
> exercisable only as expiration. The whole point of the investment
> was that the length of the option prevented any short-term market
> risks. BRK has sold someone an insurance policy against long-term
> stock market depreciation. As always, the company continues to operate
> as a moderately bullish long-term stock-market investor that attempts
> to take short-term volatiiity or risk in order for long-term profits
> in excess of what it will have to pay out in insurance.
>
> Of course BRK could have made more money selling puts today, but
> their invested capital/collateral is zero, meaning as long as stocks
> don't stay low for 20 years whatever profit they make will equal
> an infinite ROIC.]]> http://seekingalpha.com/article/107153-berkshire-hathaway-credit-risk-index-puts-are-overblown-worries?source=feed#comment-311690 311690
And, I will not have a lot of faith in Buffett until I hear some attempt to explain why he so strongly supported the original Paulson Plan and Paulson. Buffett and Paulson did not even agree on the Plan (Pauslon wanted to pay above market for the assets) and Paulson did not even implement the Plan. Was Buffett wrong or dishonest?

If only CNBC had some hungry journalists who would ask worthwhile questions.]]> Fri, 21 Nov 2008 10:27:17 -0500
And, I will not have a lot of faith in Buffett until I hear some attempt to explain why he so strongly supported the original Paulson Plan and Paulson. Buffett and Paulson did not even agree on the Plan (Pauslon wanted to pay above market for the assets) and Paulson did not even implement the Plan. Was Buffett wrong or dishonest?

If only CNBC had some hungry journalists who would ask worthwhile questions.]]> http://seekingalpha.com/article/105623-is-buffett-really-losing-his-touch?source=feed#comment-304848 304848 Thu, 13 Nov 2008 07:00:42 -0500 http://seekingalpha.com/article/68980-how-safe-are-your-investments?source=feed#comment-254710 254710
From the Lehman press release: "In addition, fully paid securities of customers of Neuberger Berman are segregated from the assets of Lehman Brothers and are not subject to the claims of Lehman Brothers Holdings’ creditors."]]> Mon, 15 Sep 2008 07:57:09 -0400
From the Lehman press release: "In addition, fully paid securities of customers of Neuberger Berman are segregated from the assets of Lehman Brothers and are not subject to the claims of Lehman Brothers Holdings’ creditors."]]> http://seekingalpha.com/article/67479-comparing-income-taxes-clinton-vs-bush?source=feed#comment-166713 166713
The elite rich include the investment managers who make hundreds of millions of dollars in a year and pay a 15% rate because they claim it is capital gain, rather than earned income. They pay a lower tax rate than their administrative stafff.

The elite rich includes the pretense that social security tax does not flow into the general fund, which allows anyone who earns above that income limit to pay a lower tax rate than the poor saps paying it.

Until people start talking with each other honestly instead of trying to obfuscate issues, there can be no honest discussion about our broken government.]]> Tue, 13 May 2008 09:09:57 -0400
The elite rich include the investment managers who make hundreds of millions of dollars in a year and pay a 15% rate because they claim it is capital gain, rather than earned income. They pay a lower tax rate than their administrative stafff.

The elite rich includes the pretense that social security tax does not flow into the general fund, which allows anyone who earns above that income limit to pay a lower tax rate than the poor saps paying it.

Until people start talking with each other honestly instead of trying to obfuscate issues, there can be no honest discussion about our broken government.]]> http://seekingalpha.com/article/76534-hardball-in-vallejo-california?source=feed#comment-164789 164789 Fri, 09 May 2008 10:20:35 -0400 http://seekingalpha.com/article/69850-the-case-against-ethanol?source=feed#comment-132398 132398 Thu, 27 Mar 2008 11:03:11 -0400 http://seekingalpha.com/article/68980-how-safe-are-your-investments?source=feed#comment-128048 128048 www.occ.treas.gov/ftp/... Search for the text SIPC to find a relevant paragraph. Great, another potential systemic shortfall to keep an eye on.]]> Tue, 18 Mar 2008 06:54:34 -0400 www.occ.treas.gov/ftp/... Search for the text SIPC to find a relevant paragraph. Great, another potential systemic shortfall to keep an eye on.]]> http://seekingalpha.com/article/67479-comparing-income-taxes-clinton-vs-bush?source=feed#comment-123597 123597
Fortunately, Warren Buffett provided a more coherent analysis during a recent appearance on CNBC.

"QUESTION: EMAIL TEXT: You have stated that people, including you, aren't paying enough taxes. OK. So why don't you send some of your billions to the government? Douglas Smith, Alexandria, VA

BUFFETT: Well, I don't--I don't say generally people. I think the lower class, the middle class, even the upper middle class are paying more than they should be paying. I think that the super rich, like myself, you know, my tax rate was 17 and a fraction percent in 2006, and everybody else in the office was paying way more. I'm not advocating tax increases across the board at all. I'm advocating a redistribution to the super rich. In the last 20 years, the total wealth of the Forbes 400 has gone from 220,000,000,000 to a 1,540,000,000, seven for one. The average wage has gone no place in real terms, it's up about 80, 85 percent and that's exactly what inflation is. So the world has gotten tilted to the super rich, and I think that the middle class and even the upper middle class, I think they've been getting a very raw deal. So I would change their taxes and move them over to people like me. "

And, for these individuals to voluntarily pay extra tax does not, of course, solve the problem. It is a glib, unintelligent response to a serious question: why are the super rich entitled to lower tax rates than working people?]]> Fri, 07 Mar 2008 11:46:59 -0500
Fortunately, Warren Buffett provided a more coherent analysis during a recent appearance on CNBC.

"QUESTION: EMAIL TEXT: You have stated that people, including you, aren't paying enough taxes. OK. So why don't you send some of your billions to the government? Douglas Smith, Alexandria, VA

BUFFETT: Well, I don't--I don't say generally people. I think the lower class, the middle class, even the upper middle class are paying more than they should be paying. I think that the super rich, like myself, you know, my tax rate was 17 and a fraction percent in 2006, and everybody else in the office was paying way more. I'm not advocating tax increases across the board at all. I'm advocating a redistribution to the super rich. In the last 20 years, the total wealth of the Forbes 400 has gone from 220,000,000,000 to a 1,540,000,000, seven for one. The average wage has gone no place in real terms, it's up about 80, 85 percent and that's exactly what inflation is. So the world has gotten tilted to the super rich, and I think that the middle class and even the upper middle class, I think they've been getting a very raw deal. So I would change their taxes and move them over to people like me. "

And, for these individuals to voluntarily pay extra tax does not, of course, solve the problem. It is a glib, unintelligent response to a serious question: why are the super rich entitled to lower tax rates than working people?]]> http://seekingalpha.com/article/67104-thornburg-s-a-huge-bargain-after-monday-s-crash?source=feed#comment-123045 123045
The last industry wide margin wreckage I recall which was much the same as it is now was during the Russian crisis. Some borrowers did sue lenders who had made margin calls, and a few, at least, won.

I haven't owned TMA and wouldn't buy it now, because it is just a guess on the value of the oustanding mortgages. However, the chap who compared it to Chrysler, with TMA, once the value of the mortgages has fallen, there is little chance they will recover. The market is flooded. Dow Jones reported the calls were due to UBS writedowns. Unlike Chrysler, there is little chance the market will soon push up the value of TMA's assets. If there is value in any equity, it will be in the preferreds, up to multiples of its stock price, yesterday or today. With Rainwater as an investor, at least there will be some oversight in court.

I still wouldn't buy any myself, knowing where these assets will end up being valued is not possible and likely to continue falling. The only way I considered taking a position here was going long the preferred and short the common, but never did. Generally, the first thing I would look for in a lender is its susceptibility to short term destruction.]]> Thu, 06 Mar 2008 12:29:49 -0500
The last industry wide margin wreckage I recall which was much the same as it is now was during the Russian crisis. Some borrowers did sue lenders who had made margin calls, and a few, at least, won.

I haven't owned TMA and wouldn't buy it now, because it is just a guess on the value of the oustanding mortgages. However, the chap who compared it to Chrysler, with TMA, once the value of the mortgages has fallen, there is little chance they will recover. The market is flooded. Dow Jones reported the calls were due to UBS writedowns. Unlike Chrysler, there is little chance the market will soon push up the value of TMA's assets. If there is value in any equity, it will be in the preferreds, up to multiples of its stock price, yesterday or today. With Rainwater as an investor, at least there will be some oversight in court.

I still wouldn't buy any myself, knowing where these assets will end up being valued is not possible and likely to continue falling. The only way I considered taking a position here was going long the preferred and short the common, but never did. Generally, the first thing I would look for in a lender is its susceptibility to short term destruction.]]> http://seekingalpha.com/article/67441-ambac-s-announcement-is-a-joke-disagreeing-with-whitman-on-monolines?source=feed#comment-122923 122923
One thing I am curious about is why those short MBIA and Ambac don't cover and sit it out, with the stocks down 70 - 90%. I realize if they go to zero it is still theoretically a 100% gain from here, but with so much desire to prop them up and holding and opportunity costs it seems like so much has already been made. If any financial companies are "too important" to fail, these seem to fit the bill.

Another problem for owners of Ambac specifically, Whitman apparently thinks they have value even in case of runoff, but with common stock dilution at these levels that value, if it exists, is being diluted.]]> Thu, 06 Mar 2008 09:52:39 -0500
One thing I am curious about is why those short MBIA and Ambac don't cover and sit it out, with the stocks down 70 - 90%. I realize if they go to zero it is still theoretically a 100% gain from here, but with so much desire to prop them up and holding and opportunity costs it seems like so much has already been made. If any financial companies are "too important" to fail, these seem to fit the bill.

Another problem for owners of Ambac specifically, Whitman apparently thinks they have value even in case of runoff, but with common stock dilution at these levels that value, if it exists, is being diluted.]]> http://seekingalpha.com/article/67104-thornburg-s-a-huge-bargain-after-monday-s-crash?source=feed#comment-122176 122176 Tue, 04 Mar 2008 20:10:38 -0500 http://seekingalpha.com/article/67104-thornburg-s-a-huge-bargain-after-monday-s-crash?source=feed#comment-122175 122175
"The Santa Fe, N.M., mortgage lender said proceeds were used to reduce the company's debt under its ARM loan warehouse financing lines by about $920 million.

Thornburg said it anticipates more use of collateralized mortgage debt financing and reduced reliance on reverse repurchase financing going forward."

It should have reduced their warehouse line of credit (which is funding companies use to "warehouse" originated loans while awaiting securitization), replacing it on the balance sheet with collateralized mortgage debt. And they are saying they plan to use securitizations rather than reverse repos going forward, which should have been an obvious decision for them last year, or well before. So it replaces short term debt with long term debt, but doesn't impact the cause of their margin calls, at least not much, is my guess.]]> Tue, 04 Mar 2008 20:03:09 -0500
"The Santa Fe, N.M., mortgage lender said proceeds were used to reduce the company's debt under its ARM loan warehouse financing lines by about $920 million.

Thornburg said it anticipates more use of collateralized mortgage debt financing and reduced reliance on reverse repurchase financing going forward."

It should have reduced their warehouse line of credit (which is funding companies use to "warehouse" originated loans while awaiting securitization), replacing it on the balance sheet with collateralized mortgage debt. And they are saying they plan to use securitizations rather than reverse repos going forward, which should have been an obvious decision for them last year, or well before. So it replaces short term debt with long term debt, but doesn't impact the cause of their margin calls, at least not much, is my guess.]]> http://seekingalpha.com/article/67104-thornburg-s-a-huge-bargain-after-monday-s-crash?source=feed#comment-122164 122164
The current margin calls are apparently related to the purchased assets. As of Dec-07 purchased loans totaled $10.7 billion. Now I guess it is $11 - $12 billion, because they bought nearly a billion in January, per the 10K.

There were $11.5 billion in reverse repos at Dec-07. TMA has stated it has $2.9 billion in purchased ARMs that are "super senior ALT-A" which have caused the $570 million in margin calls, $270 million unmet per the March 3 report.

That means about 1/3 of these purchased assets are the so-called Alt-A. The margin call since mid-Feb has been nearly $600 million or 20% of the $2.9 billion.

The recent securitization is likely originated assets, because that is how TMA has operated and it would be odd to securitize assets which TMA already bought as securitized assets. This securitization might free up some assets to help meet margin calls, but it probably is not directly related to those assets.

The preferred is interesting here because it is so far below liquidation value, and the high stated yield. It is curious the F is priced well above the others, and had high volume today. All the outstanding preferreds rank equally, per the September offering document for the F preferred.

As for the leverage, at Dec-07 TMA had about $15 billion in non-securitized loans, and $13 billion in various debt other than securitizations. The market value of the non-securitized loans has apparently fallen more than a half billion dollars in the past couple weeks.]]> Tue, 04 Mar 2008 19:02:45 -0500
The current margin calls are apparently related to the purchased assets. As of Dec-07 purchased loans totaled $10.7 billion. Now I guess it is $11 - $12 billion, because they bought nearly a billion in January, per the 10K.

There were $11.5 billion in reverse repos at Dec-07. TMA has stated it has $2.9 billion in purchased ARMs that are "super senior ALT-A" which have caused the $570 million in margin calls, $270 million unmet per the March 3 report.

That means about 1/3 of these purchased assets are the so-called Alt-A. The margin call since mid-Feb has been nearly $600 million or 20% of the $2.9 billion.

The recent securitization is likely originated assets, because that is how TMA has operated and it would be odd to securitize assets which TMA already bought as securitized assets. This securitization might free up some assets to help meet margin calls, but it probably is not directly related to those assets.

The preferred is interesting here because it is so far below liquidation value, and the high stated yield. It is curious the F is priced well above the others, and had high volume today. All the outstanding preferreds rank equally, per the September offering document for the F preferred.

As for the leverage, at Dec-07 TMA had about $15 billion in non-securitized loans, and $13 billion in various debt other than securitizations. The market value of the non-securitized loans has apparently fallen more than a half billion dollars in the past couple weeks.]]> http://seekingalpha.com/article/67104-thornburg-s-a-huge-bargain-after-monday-s-crash?source=feed#comment-121996 121996
I thought TMA may have converted some Reverse Rept to Collaterlized Debt, but the securitization appears to be of originated prime loans, not the purchased Alt-A securities causing the recent margin calls.

The F Preferred, for instance, has a 10% yield on $25 liquidation value. At a market price of $10.50, that is a 24% yield. If the company survives it goes back to $25 per share.

If the debt were all long term, the credit quality would likely be the primary factor. With margin debt, market value matters.]]> Tue, 04 Mar 2008 12:33:21 -0500
I thought TMA may have converted some Reverse Rept to Collaterlized Debt, but the securitization appears to be of originated prime loans, not the purchased Alt-A securities causing the recent margin calls.

The F Preferred, for instance, has a 10% yield on $25 liquidation value. At a market price of $10.50, that is a 24% yield. If the company survives it goes back to $25 per share.

If the debt were all long term, the credit quality would likely be the primary factor. With margin debt, market value matters.]]> http://seekingalpha.com/article/67104-thornburg-s-a-huge-bargain-after-monday-s-crash?source=feed#comment-121931 121931
A lack of understanding of these things is what allows cyclical boom and bust fiannce companies continue. In 2001 the company had about $5 billion in assets, at year end it was over $36 billion.

If a person is interested in buying TMA, I don't understand the appeal of the common stock versus the preferreds.]]> Tue, 04 Mar 2008 10:40:52 -0500
A lack of understanding of these things is what allows cyclical boom and bust fiannce companies continue. In 2001 the company had about $5 billion in assets, at year end it was over $36 billion.

If a person is interested in buying TMA, I don't understand the appeal of the common stock versus the preferreds.]]> http://seekingalpha.com/article/66752-some-muni-bonds-appear-screaming-buys-here?source=feed#comment-121739 121739
Municipalities can not simply raise the mill rate, it can be raised but eventually it won't be simple.

The standard refrain is muncipals never fail, similar to the quaint old refrain that house prices never fall.

I think municpal defaults will be low, with the default protection coming from inflation. Look at what is being done to prevent some foreclosures, imagine the effort which will be made to flood with dollars if municpal defaults appear imminent.]]> Mon, 03 Mar 2008 19:47:53 -0500
Municipalities can not simply raise the mill rate, it can be raised but eventually it won't be simple.

The standard refrain is muncipals never fail, similar to the quaint old refrain that house prices never fall.

I think municpal defaults will be low, with the default protection coming from inflation. Look at what is being done to prevent some foreclosures, imagine the effort which will be made to flood with dollars if municpal defaults appear imminent.]]> http://seekingalpha.com/article/66742-2-noteworthy-points-from-warren-buffett-s-annual-shareholder-letter?source=feed#comment-121484 121484
And of course, PRS is making unhedged investments, it is impossible to know precisely why BRK is selling credit default protection.]]> Mon, 03 Mar 2008 10:16:39 -0500
And of course, PRS is making unhedged investments, it is impossible to know precisely why BRK is selling credit default protection.]]> http://seekingalpha.com/article/66650-applauding-hank-treasury-secretary-rejects-keynesian-mortgage-bailout?source=feed#comment-120637 120637 Fri, 29 Feb 2008 10:32:46 -0500 http://seekingalpha.com/article/66424-mbia-is-still-whining-about-ackman?source=feed#comment-120169 120169
Monoline shareholders should be blaming management, not investors who properly analyzed the companies.]]> Thu, 28 Feb 2008 10:28:56 -0500
Monoline shareholders should be blaming management, not investors who properly analyzed the companies.]]> http://seekingalpha.com/article/65422-thestreet-com-on-primus-guaranty-wacky-and-uninformed?source=feed#comment-117650 117650
With Buffett offering to reinsure so many municipals the concept of credit default coverage seems reasonable, but it doesn't appear to have been done in bulk at least through Dec of 2006.

Also, a typo, I hope no one is paying $91,000 a year to insure $1 million in BRK default.]]> Thu, 21 Feb 2008 12:33:54 -0500
With Buffett offering to reinsure so many municipals the concept of credit default coverage seems reasonable, but it doesn't appear to have been done in bulk at least through Dec of 2006.

Also, a typo, I hope no one is paying $91,000 a year to insure $1 million in BRK default.]]>