Mark Moran

Why Is Everybody Selling as Buffett Is Loading Up?

Yes, Buffett's purchases of other companies is encouraging, and John Templeton also encouraged investors to buy when there is blood in the streets, which is certainly the case now. But you skirt over the fact that with GE and GS, he got terms that are unavailable to holders of common stock. He has an instrument that yields 2x the GE common and 10x the GS common; due to the 100% warrant coverage, he has all the upside of the common holders; and due to the liquidation provisions, he loses only in the event of an utter failure of the company. GE's current market cap is $225 billion; for a new buyer of common to break even, the market cap must remain at $225 billion; for Buffett to break even, he just needs there to be $3 billion available (plus the value of any other preferred with equal or greater priority) after the Company is liquidated and debts are paid. So Buffett is safe so long as GE can maintain at least 1.5% of its current market cap. A rather shallow vote of confidence.

www.findingdulcinea.co...

Apple Holders Have Heart Attack - But Steve Jobs Doesn't

This proves several things. (1) Major media brands have to filter content before allowing it to be posted; the potential additional liability is a small cost to pay to protect your brand; (2) Apple was right in refusing to provide regular updates on Jobs' health, as once it started down that road there would be hourly rumors; (3) while the collapses of certain stocks have stoked allegations of vast conspiracies, the market is so jumpy right now that a single person can knock a stock down 5%.

Don't Sell Celgene - Cramer's Lightning Round (7/30/08)

Cramer did lose faith in Celgene, but its giant army of loyalists who know it best did not. The near-term is absolutely brilliant, with international and label expansion of Revlimid sales, and Vidaza stealing all of Dacogen's thunder. And that's all that most investors care to hear about. But many who know the company best believe that several products in the pipeline have real potential to be far bigger even than Revlimid - starting with the next one likely to hit the market, Apremilast, which is an oral Enbrel.

California Signaling A Housing Bottom? [Housing Tracker]

A bottom ? I doubt it. And definitely not a turn. Ahhhnold fires 22,000 state workers and temporarily imposed minimum wages on 200,000 more does not suggest a turn in the market. When California learns that not every interaction between employers and employees need be regulated, and not every single dispute should go before a court or arbitration panel, then we'll see a turn.

Bill Gross: The Housing/GSE Bill Is Best Way Out of Credit Crisis

I was actually hoping we'd give the market a little more time to self-correct.

This Can't Be Helping Real Estate

Rising rates will greatly exacerbate the crisis. Right now, the problem of ARMs adjusting higher has been muted by the drastic rate cuts; as these cuts are reversed, the number of forced sellers will only increase. Further, tighter lending guidelines will mean fewer people able to get a mortgage, particularly to buy a home at today's still inflated prices. The only thing that will eventually turn the market around is when deep pocketed speculators come in, and they wait till there is blood in the streets, and when the cost of carrying a house again begins to remotely resemble the amount for which they can be rented, and prices have a good bit to fall before either of these is the case.

Citi, Merrill, WaMu: Death Spiral Financing

Not to be picayune, but this is not what was commonly known as "death spiral" financing during the heyday of that instrument. A death spiral was a security whose conversion price was based on a discount to the stock market price; so if a company initially issued a convert at $50, when the stock fell to $40, the convert price fell to $40, and when the stock fell to $10, the convert price fell to $10. NYSE and Nasdaq essentially put an end to these, or at least put a floor under most of them. What these banks face is a "full ratchet" provision in which any subsequent issuances at lower prices triggers more shares issued to the prior purchaser. But at least the issuer remains fully in control over whether another issuance gets done; with the true death spiral, once the instrument was issued, a plunging stock price acquired its own momentum, and there was little the company could do about it.

Google's Knol Poses a Threat to Mahalo

Knol is an admission that technology-driven search engine results very often do not provide users with answers to their questions. The Web let you quickly access multiple sources of information about almost anything. But most users don't know how to sift millions of results to find the best sources - many do not review more than the first five results, and to Google's chagrin and envy, Wikipedia is usually among those five. This is what has given rise to the next generation of human-powered search alternatives, including my own, findingDulcinea, each of which in its own way distills the Internet through a filter of human judgment, and provides the "endorsed" results that users want, and think they are getting now from search engines. Knol will certainly have some success, but like Mahalo and Wikipedia, it will lack the consistent editorial policy, approach, voice and quality that we bring to helping users find comprehensive and credible resources to Web users. As with Wikipedia and Mahalo, some entries will be very good, and some may be dangerously bad. You get to try to figure out which ones are which.

Suing Critical Analysts Is Wrong and Dangerous

The most famous case of a company head threatening to sue an analyst was Donald Trump's juvenile bomb tossed at Janney's Marvin Roffman for saying the Taj Mahal would be unable to service its debt. Roffman got fired, but won big settlements from both Janney and Trump and was completely vindicated when the Taj went bankrupt a few years later. Then we had Qwest's Nacchio publicly berating analysts for accusing Qwest of accounting fraud, a few years before Nacchio's conviction. And of course the infamous Biovail case, where the company claimed to have lost sales due to the crash of a truck that could not possibly have accounted for the shortfall claimed. Why is BBX eager to join this list ?

www.findingdulcinea.co...

UPS: Market Bellwether at Fire-Sale Price

To believe that UPS is a good long-term buy here, you have to believe that oil is near a peak. If oil stabilizes or falls, UPS could rally; if oil spikes yet further, UPS will at best be dead money and likely will continue to fall. Thus far, Congress seems to believe that the only thing needed to fix the oil crisis is to rein in the speculators, which is as laughable as believing that the Fannie/Freddie/banking crisis can be fixed by reining in the short sellers. Until we have a feasible plan for increasing the supply of oil to world market's, I won't touch a single stock whose fortunes are closely tied to the price of oil.

Clarifying the Vytorin Situation: Three Key Questions

Merck and Schering Plough delayed issuing results of the Enhance study for nearly two years and tried to change the primary endpoint in the late stages. To the extent that coverage is at all unfair to them, they brought it on themselves. And as this article shows, the press has consistently noted that Vytorin lowers LDL, while also noting that lowering a marker but not necessarily treating disease may no longer be good enough. This has been since seen with diabetes drugs as well, and even for cancer drugs, the FDA is looking for survival benefit rather than another proxy for efficacy.

www.findingdulcinea.co...

Yikes, But Duh: Housing Bottom Could Be Two Years Off

Rising rates will not bail out this market. Right now, the problem of ARMs adjusting higher has been muted by the drastic rate cuts; as these cuts are reversed, the number of forced sellers will only increase. Further, tighter lending guidelines will mean fewer people able to get a mortgage, particularly to buy a home at today's still inflated prices. The only thing that will eventually turn the market around is when deep pocketed speculators come in, and they wait till there is blood in the streets, and when the cost of carrying a house again begins to remotely resemble the amount for which they can be rented, and prices have a good bit to fall before either of these is the case.

The Real Cost of the Agency Guarantee

The astonishing about this is how many people saw it coming and have been warning about it for years. Here's a recap of comments by Buffett, WSJ, NYT, et al.

www.findingdulcinea.co...

UBS: Guarded Outlook for Merck's Gardasil

The concern about Gardasil should go well beyond adverse event reporting, which every vaccine endures. Many experts are now beginning to say girls should delay vaccination, perhaps till they are 18 or 21. See this link:

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JP Morgan To Buy Bear Stearns For $2/Share

Is JPM simply a stalking horse ? Bankruptcy wasn't a viable option because the Bankruptcy Code, as recently amended, would have allowed many of Bear's counterparties to seize collateral. For Bear not to fully implode, it needed a deep pocket to step into its shoes by tonight. JPM was the only one that could move that quickly, and even they could only do it with some support from the Fed. But now that the emergency crisis is over, when the smoke clears, are some of the other bidders at the table going to get together and bid higher ?