afeldman1969

3 Comments

    • Blood in the Streets: Buy and Hold GE, For Now [view article]
      I have read in here "mark to market," "subprime," etc., all symbolizing what seems to be the prevalent fear around the financial community now-a-days. GE is a financial play, no doubt; however, it doesn't have subprime exposure, and the big fear of mark-to-market losses is the need to raise capital at expensive prices to make up for the short fall, maintain required capital reserves, or offset those items in some way to maintain balance sheet strength.

      Mark to market losses won't impact GE's balance sheet, and it certainly won't need to raise capital. Accordingly, if GE has to mark to market, they will simply mark up again when the market liquidity returns and will not have diluted in the process of surviving (in comparison to banks such as Citi, Wachovia, Bank of America, Lehman, Merrill, etc, etc.). In terms of earnings, while GE missed estimates in Q1, as opposed to losing billions like some of the traditionally large financial institutions, GE made billions of dollars.

      If you believe that the Bear Stearns salvage mission by the Fed and JPM was the beginning of the bottoming process for the financial crisis, then you believe that GE won't miss again. When that happens, the market will realize that this was a one-time anomoly, as the company has claimed, and the stock will rise.

      As for its trading range, I do think that GE has demonstrated a long-term trading ceiling of around $42/share; however, that is a ceiling it is currently well below, and perhaps a drop like this is just what the company needed to break out of its rut range of the past few years when it again climbs. If not, buying in and holding through 2008 with a company like GE is almost certain to payoff in capital return if you sell, or dividend payouts if you don't.

      Disclosure: While I have never played GE before last month, I am now long GE at a price of 31.87. If it actually did dip below 30, I would certainly buy more.       May 01 06:35 PM
    • MBIA Management's a Safe Short Bet [view article]
      How do you recommend people to short a stock that is so far off it's high as is MBIA, and where the book value of the stock probably exceeds the current stock price even if MBIA itself were to go into "runoff"? Why do you think Warburg Pincus poured so much money into the company and Whitman (a well respected investor) keeps increasing the size of his portfolio holdings. This company is worth more than its current stock price dead or alive; once the market grasps that reality (and the mark to market losses get adjustsed as real loss valuations start coming in) shorts are going to get burned but good. Mar 13 11:58 PM
    • MBIA Is Still Whining About Ackman [view article]
      I would agree that MBIA is best focusing on business at hand and improving its business than on talking about Ackman or continuing the back-and-forth finger pointing. However, MBIA was not bailed out by a self-serving bank; MBIA received considerable capital from (a) surplus notes and (b) equity, $800M of which was invested by Warburg Pincus, a very well respected private equity firm who, last I checked, had no direct exposure to any write-downs that would have come from an MBIA downgrade. Ackman's prediction for MBIA didn't come true because of the confidence of Warburg Pincus, not because of the alleged self-serving position of banks exposed to MBIA insurance protections. [Disclosure: Long MBIA at an average price of $11.77/share.] Feb 28 05:49 PM
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