Chris Marshall's Comments RSS Syndication from SeekingAlpha.com http://seekingalpha.comuser/167681/comments http://seekingalpha.com/article/98465-bailout-1-1-passed-will-we-have-to-go-back-to-the-well-for-v2-0?source=feed#comment-273285 273285
1) mark to market eased ( hide more crap under the carpet)
2) undetermined warrants for the Treasury, to dilute the financials equity values
3) Deal to make good all losses, in the event that the bailout loses money.

So if you are inclined to invest in preferred equity of a large bank, for a long term investment, how would you now value it?

This package has made the financials more opaque than ever, it looks likely that the only people that can recapitalize the banks, in these circumstances, is the Treasury. Therefore you can expect a further massive bailout plan in the new year.]]> Sat, 04 Oct 2008 04:26:57 -0400
1) mark to market eased ( hide more crap under the carpet)
2) undetermined warrants for the Treasury, to dilute the financials equity values
3) Deal to make good all losses, in the event that the bailout loses money.

So if you are inclined to invest in preferred equity of a large bank, for a long term investment, how would you now value it?

This package has made the financials more opaque than ever, it looks likely that the only people that can recapitalize the banks, in these circumstances, is the Treasury. Therefore you can expect a further massive bailout plan in the new year.]]> http://seekingalpha.com/article/89181-merrill-lynch-unafraid-of-contradictions?source=feed#comment-224773 224773
If they are so desperate as to carry out the Bloomberg transaction on these terms, what are they hiding from us regarding raising capital and the state of their balance sheet.]]> Thu, 07 Aug 2008 08:01:18 -0400
If they are so desperate as to carry out the Bloomberg transaction on these terms, what are they hiding from us regarding raising capital and the state of their balance sheet.]]> http://seekingalpha.com/article/84543-ge-too-tired-for-growth-but-yield-s-attractive?source=feed#comment-203298 203298
I do think that talk of $20 is a bit on the low side, my fair value is around $24- $26, but in an poor market, it may overshoot to the downside slightly.

Regarding the spin off of the appliance/consumer lighting division, why make the shareholders suffer when you can't sell it a reasonable price?

1) The new entity will almost certainly lose the AAA rating that GE has.

2) There will probably be a lot of covenants attached regarding the use of the GE brand, as Philips or Haier may buy it in the future, and extend the brand to cover some of their other product ranges.

3) Points 1 and 2 will cause the value of the new entity to drop significantly.

Regarding the approximately $ 200 Billion of securities maturing in 2008, the debt will probably be rolled over, but at what price?
This must affect the bottom line as credit rates are tight and will certainly be above the price that the new loans are replacing.

GE certainly has problems to face in the 2nd half, but large write downs were always unlikely this Quarter, or the CEO would have become the ex- CEO, it only just made the estimate without them. The full year estimate is still extremely optimistic.]]> Fri, 11 Jul 2008 16:41:03 -0400
I do think that talk of $20 is a bit on the low side, my fair value is around $24- $26, but in an poor market, it may overshoot to the downside slightly.

Regarding the spin off of the appliance/consumer lighting division, why make the shareholders suffer when you can't sell it a reasonable price?

1) The new entity will almost certainly lose the AAA rating that GE has.

2) There will probably be a lot of covenants attached regarding the use of the GE brand, as Philips or Haier may buy it in the future, and extend the brand to cover some of their other product ranges.

3) Points 1 and 2 will cause the value of the new entity to drop significantly.

Regarding the approximately $ 200 Billion of securities maturing in 2008, the debt will probably be rolled over, but at what price?
This must affect the bottom line as credit rates are tight and will certainly be above the price that the new loans are replacing.

GE certainly has problems to face in the 2nd half, but large write downs were always unlikely this Quarter, or the CEO would have become the ex- CEO, it only just made the estimate without them. The full year estimate is still extremely optimistic.]]> http://seekingalpha.com/article/83105-fed-credibility?source=feed#comment-195076 195076
The sovereign wealth funds and central banks have intimated that if the FED reduces interest rates, or weakens the dollar again, that they will stop buying T Bills Etc.

The ECB will raise interest rates to 4.25% this week (unless the FED tries to bring undue pressure to bear), which will weaken the dollar and probably cause the oil price to reach $150 pb.

It would be in everybody's interest for the FED to raise their rates by 0.25% to match the ECB rise, whereby the oil price would remain at around $140 pb.

The Qtr point rise in interest rates will hurt industry, and especially financials, but in the long term it should prove to be more beneficial to the overall world economy, if all central banks act with the same strategy.

The Bank for International Settlements meeting in Switzerland this week, may be stormy, hopefully a new consensus will be forthcoming.]]> Sun, 29 Jun 2008 08:59:45 -0400
The sovereign wealth funds and central banks have intimated that if the FED reduces interest rates, or weakens the dollar again, that they will stop buying T Bills Etc.

The ECB will raise interest rates to 4.25% this week (unless the FED tries to bring undue pressure to bear), which will weaken the dollar and probably cause the oil price to reach $150 pb.

It would be in everybody's interest for the FED to raise their rates by 0.25% to match the ECB rise, whereby the oil price would remain at around $140 pb.

The Qtr point rise in interest rates will hurt industry, and especially financials, but in the long term it should prove to be more beneficial to the overall world economy, if all central banks act with the same strategy.

The Bank for International Settlements meeting in Switzerland this week, may be stormy, hopefully a new consensus will be forthcoming.]]> http://seekingalpha.com/article/82434-dont-worry-about-a-return-to-70s-stagflation?source=feed#comment-191884 191884
If anything it may be easier to cut payrolls from service jobs, as they do not tend to be linked to high capital cost equipment (factories). Reducing 2 or 3 burger flippers is easy, cashiering 10% of your bank staff (expensive, but an opportunity to remove the dead wood).

The only jobs safe in the short term would probably be the public sector, as the Government would not want to be seen to be influencing the voting intentions before an election.]]> Tue, 24 Jun 2008 12:34:12 -0400
If anything it may be easier to cut payrolls from service jobs, as they do not tend to be linked to high capital cost equipment (factories). Reducing 2 or 3 burger flippers is easy, cashiering 10% of your bank staff (expensive, but an opportunity to remove the dead wood).

The only jobs safe in the short term would probably be the public sector, as the Government would not want to be seen to be influencing the voting intentions before an election.]]> http://seekingalpha.com/article/82295-valuing-ge-it-s-cheap?source=feed#comment-190681 190681
The problems with growth assumptions for GE, is that its recent growth has been based on the availability of cheap money, I cannot foresee this situation returning for at least 5 years.

Once I have seen the level of write downs over the next 2 quarters, I will be better informed as to whether its time to invest in GE, until then I will sit on cash.

Chris Marshall]]> Mon, 23 Jun 2008 06:31:11 -0400
The problems with growth assumptions for GE, is that its recent growth has been based on the availability of cheap money, I cannot foresee this situation returning for at least 5 years.

Once I have seen the level of write downs over the next 2 quarters, I will be better informed as to whether its time to invest in GE, until then I will sit on cash.

Chris Marshall]]> http://seekingalpha.com/article/80738-does-buy-and-hold-work-on-major-blue-chips?source=feed#comment-185217 185217


The Infrastructure division is the only one performing well at present. But the high oil price, may be extremely difficult for them in the short term. Airlines are starting to mothball aircraft, and mothballed aircraft do not need spares, also options on new aircraft can disappear overnight. The same may happen on locomotives, if the higher running costs cannot be passed to the end user.

Yes, Solar, wind and (possibly nuclear) will help to offset the higher oil price, but margins will be hit in the near term.

The financial divisions are due to have some pretty hefty write downs, so rumours of a capital raising exercise are not to be discounted.

You can expect GE to divest itself of non-performing assets, for quite a while, to help rebuild its balance sheet. It is interesting to note that GE has almost $200 billion of Debt maturing THIS YEAR, yes they can probably roll it over, but the rates may be higher than they once were.

I hold no stock in GE, and have no interests to disclose. I just feel that GE may have split itself in to logical focused companies, if it wants to maintain high dividends.



Chris Marshall]]> Fri, 13 Jun 2008 16:30:12 -0400


The Infrastructure division is the only one performing well at present. But the high oil price, may be extremely difficult for them in the short term. Airlines are starting to mothball aircraft, and mothballed aircraft do not need spares, also options on new aircraft can disappear overnight. The same may happen on locomotives, if the higher running costs cannot be passed to the end user.

Yes, Solar, wind and (possibly nuclear) will help to offset the higher oil price, but margins will be hit in the near term.

The financial divisions are due to have some pretty hefty write downs, so rumours of a capital raising exercise are not to be discounted.

You can expect GE to divest itself of non-performing assets, for quite a while, to help rebuild its balance sheet. It is interesting to note that GE has almost $200 billion of Debt maturing THIS YEAR, yes they can probably roll it over, but the rates may be higher than they once were.

I hold no stock in GE, and have no interests to disclose. I just feel that GE may have split itself in to logical focused companies, if it wants to maintain high dividends.



Chris Marshall]]> http://seekingalpha.com/article/80997-nyt-smears-david-einhorn-again?source=feed#comment-183944 183944
The $2 Billion of preferential shares pay 8.75% per year, this is effectively a loan ( at a high interest rate) with the option to do a debt for equity swap at an agreed price. How is this capital?

Lehman are now in a hole because they lack credibility, previously via another capital raising exercise they used the funds to buy back their own shares, why?

Are the executives share options based on the share price?
Do they believe this is the best use of the capital, when their balance sheet was under severe strain?

The latest $4 Billion rights issue of common shares, does not discount the possibility of another share buyback ( maybe the shares that the execs own, could be part of this buyback? .... nobody knows what they are going to do with the capital ).

Another problem is that the senior management have made statements, in the not too distant past, which appear to misrepresent their company exposure. Why have the media (or even the SEC ) not hammered the company and the executives for these statements?

I do not believe that the media have a secret agenda, I just believe that they lack the required knowledge to base a judgement on the views of Mr Einhorn. Mr Einhorn has proved correct, much to the chagrin of the Wall St Analysts, who should have scrutinised Lehmans debt portfolio better.

Maybe they did scrutinise the debt portfolio, but did not want to rock the boat, we will probably never know, but their are many views on this subjkect currently, many negative.

Chris Marshall]]> Thu, 12 Jun 2008 07:04:30 -0400
The $2 Billion of preferential shares pay 8.75% per year, this is effectively a loan ( at a high interest rate) with the option to do a debt for equity swap at an agreed price. How is this capital?

Lehman are now in a hole because they lack credibility, previously via another capital raising exercise they used the funds to buy back their own shares, why?

Are the executives share options based on the share price?
Do they believe this is the best use of the capital, when their balance sheet was under severe strain?

The latest $4 Billion rights issue of common shares, does not discount the possibility of another share buyback ( maybe the shares that the execs own, could be part of this buyback? .... nobody knows what they are going to do with the capital ).

Another problem is that the senior management have made statements, in the not too distant past, which appear to misrepresent their company exposure. Why have the media (or even the SEC ) not hammered the company and the executives for these statements?

I do not believe that the media have a secret agenda, I just believe that they lack the required knowledge to base a judgement on the views of Mr Einhorn. Mr Einhorn has proved correct, much to the chagrin of the Wall St Analysts, who should have scrutinised Lehmans debt portfolio better.

Maybe they did scrutinise the debt portfolio, but did not want to rock the boat, we will probably never know, but their are many views on this subjkect currently, many negative.

Chris Marshall]]> http://seekingalpha.com/article/80337-making-sense-of-david-einhorn-vs-lehman-brothers?source=feed#comment-180143 180143 Fri, 06 Jun 2008 06:12:09 -0400 http://seekingalpha.com/article/80058-is-lehman-in-the-midst-of-a-bear-stearns-like-meltdown?source=feed#comment-179524 179524 Thu, 05 Jun 2008 06:23:11 -0400 http://seekingalpha.com/article/79184-should-citi-cut-its-dividend?source=feed#comment-175375 175375
I think that this is another example of Exec's working in their own best interests, rather than the Company's.

A Bank having to lend money, or recapitalize, gives the impression that the Bank cannot use its depositors money as effectively as other institutions.]]> Wed, 28 May 2008 13:49:45 -0400
I think that this is another example of Exec's working in their own best interests, rather than the Company's.

A Bank having to lend money, or recapitalize, gives the impression that the Bank cannot use its depositors money as effectively as other institutions.]]> http://seekingalpha.com/article/78900-commercial-real-estate-headed-the-way-of-residential?source=feed#comment-175031 175031
cap rates in NY are around 5.5% currently, I expect the GM Tower cap rate is around 5.75% - 6.00% ( This is my informed guess ).

A 10% cap rate is great, but difficult to achieve, they tend to be accompanied by short time left on the leases, which means that you may be stuck with a vacant building.

I agree with John regarding the European Pension funds, they are really struggling (I'm based in the UK). If we use the 9% cap rate as a yard stick, and estimate the current cap rate as 6% (for ease), then Commercial Real Estate may be 50% over valued. Potentially this could mean $1.66 Billion of Asset write downs!

I don't believe that they will fall this far, but if recession really kicks in, don't discount the possibility either. Financials are still a one way short bet at this current time, regardless of what the FED and Treasury say.

Chris Marshall

PS: Regarding GE, Did you know that one credit card co in India has a default rate of 16%, so don't bank on emerging markets coming to the rescue of the international banks, they appear to be as self obsessed and stupid, as the rest of us.]]> Wed, 28 May 2008 06:54:55 -0400
cap rates in NY are around 5.5% currently, I expect the GM Tower cap rate is around 5.75% - 6.00% ( This is my informed guess ).

A 10% cap rate is great, but difficult to achieve, they tend to be accompanied by short time left on the leases, which means that you may be stuck with a vacant building.

I agree with John regarding the European Pension funds, they are really struggling (I'm based in the UK). If we use the 9% cap rate as a yard stick, and estimate the current cap rate as 6% (for ease), then Commercial Real Estate may be 50% over valued. Potentially this could mean $1.66 Billion of Asset write downs!

I don't believe that they will fall this far, but if recession really kicks in, don't discount the possibility either. Financials are still a one way short bet at this current time, regardless of what the FED and Treasury say.

Chris Marshall

PS: Regarding GE, Did you know that one credit card co in India has a default rate of 16%, so don't bank on emerging markets coming to the rescue of the international banks, they appear to be as self obsessed and stupid, as the rest of us.]]> http://seekingalpha.com/article/78837-why-the-us-markets-will-continue-to-struggle?source=feed#comment-174627 174627
Just to confirm I have no interests to disclose, but I would be short on Financials, Retail (except for Walmart), Property, Automobiles, Airlines and Housebuilding. I am neutral on Commodities and Energy, and long on Materials, and Industrials ( which export over 50% of product - and do not have 45% as Financials (GE)).

Chris Marshall]]> Tue, 27 May 2008 13:34:41 -0400
Just to confirm I have no interests to disclose, but I would be short on Financials, Retail (except for Walmart), Property, Automobiles, Airlines and Housebuilding. I am neutral on Commodities and Energy, and long on Materials, and Industrials ( which export over 50% of product - and do not have 45% as Financials (GE)).

Chris Marshall]]> http://seekingalpha.com/article/75069-commercial-real-estate-still-in-fairly-good-shape?source=feed#comment-159966 159966
The FED is unlikely to reduce interest rates in the next 6 months, so unless the stimulus package works (which I doubt), any bad economic news will have a negative effect on equities and property prices.]]> Thu, 01 May 2008 08:19:54 -0400
The FED is unlikely to reduce interest rates in the next 6 months, so unless the stimulus package works (which I doubt), any bad economic news will have a negative effect on equities and property prices.]]> http://seekingalpha.com/article/73325-rbs-getting-stronger-by-raising-equity?source=feed#comment-155059 155059
It is looking to beef up the balance sheet to cope with further write downs during the rest of the year, which are now coming to light.

Recapitalisation is the correct way to go, but the share price will continue to drop, as the discounted rights issue is priced at 2.00 pounds per share, the shares may drop as low as 2.30, until the rights have been purchased and sold on.]]> Wed, 23 Apr 2008 04:57:10 -0400
It is looking to beef up the balance sheet to cope with further write downs during the rest of the year, which are now coming to light.

Recapitalisation is the correct way to go, but the share price will continue to drop, as the discounted rights issue is priced at 2.00 pounds per share, the shares may drop as low as 2.30, until the rights have been purchased and sold on.]]> http://seekingalpha.com/article/73222-digging-into-citigroup-s-numbers?source=feed#comment-154534 154534
I cannot understand the Market rise, after Citi announced its earnings, the market appears to be ignoring fundamentals, but hopefully this is the last bull rush, before commonsense prevails.

There is a lot of financial bad news to come, on both sides of the Atlantic, during the next month, so I am expecting the Citi shares to fall well below $20, during the next 2 months.]]> Tue, 22 Apr 2008 06:04:30 -0400
I cannot understand the Market rise, after Citi announced its earnings, the market appears to be ignoring fundamentals, but hopefully this is the last bull rush, before commonsense prevails.

There is a lot of financial bad news to come, on both sides of the Atlantic, during the next month, so I am expecting the Citi shares to fall well below $20, during the next 2 months.]]> http://seekingalpha.com/article/72716-ge-immelt-gets-welched?source=feed#comment-152708 152708
Quarterly reporting has, I believe, brought more volatility to stocks, which has helped hedge funds, day traders Etc. When stocks are more volatile derivatives become more attractive to investors, but this volatility makes decision making more risky.

Regarding GE in particular, It would appear that they have to refinance over $100 Billion of debt this year. But with the tightening credit market, will it be on inferior terms?]]> Fri, 18 Apr 2008 04:31:56 -0400
Quarterly reporting has, I believe, brought more volatility to stocks, which has helped hedge funds, day traders Etc. When stocks are more volatile derivatives become more attractive to investors, but this volatility makes decision making more risky.

Regarding GE in particular, It would appear that they have to refinance over $100 Billion of debt this year. But with the tightening credit market, will it be on inferior terms?]]> http://seekingalpha.com/article/72515-ge-quintessential-american-finance-company?source=feed#comment-151720 151720
Refinancing the short term borrowings, even for GE, could cost more than their current terms. At 0.75 over their current rates, could cost an extra $1 Billion pa.

I mentioned last week, that their AAA rating may be at risk (CRE risks), if their paper is re-rated, then potentially it may cost them over $5 Billion pa.

Chris Marshall]]> Wed, 16 Apr 2008 12:57:31 -0400
Refinancing the short term borrowings, even for GE, could cost more than their current terms. At 0.75 over their current rates, could cost an extra $1 Billion pa.

I mentioned last week, that their AAA rating may be at risk (CRE risks), if their paper is re-rated, then potentially it may cost them over $5 Billion pa.

Chris Marshall]]> http://seekingalpha.com/article/72451-could-the-u-s-lose-its-aaa-rating?source=feed#comment-151458 151458
If the downgrade does take place, yields will have to rise, to keep the buyers happy. You cannot simply keep printing more cash, as the USD will tumble, and the buyers will stop buying T Bills.

The worst case scenario is sovereign funds selling T Bills to buy Euro denominated, or other currency denominated bonds. If this occurs, T Bill yields will have to rise significantly, to keep bankrolling the US economy.]]> Wed, 16 Apr 2008 03:22:15 -0400
If the downgrade does take place, yields will have to rise, to keep the buyers happy. You cannot simply keep printing more cash, as the USD will tumble, and the buyers will stop buying T Bills.

The worst case scenario is sovereign funds selling T Bills to buy Euro denominated, or other currency denominated bonds. If this occurs, T Bill yields will have to rise significantly, to keep bankrolling the US economy.]]> http://seekingalpha.com/article/71998-ge-drops-a-bomb-but-options-traders-are-cautiously-optimistic?source=feed#comment-150924 150924
The Commercial Division will suffer with its own direct real estate as well CMBS. It's own real estate assets, are small by comparison to the securities, but are still relevant. I cannot comment on their full exposure to CRE, but if we use the residential RE analogy, you can expect progressive write downs over the next 6 quarters. With the GE balance sheet, I expect the Execs, to write off, what they think is acceptable to the markets, rather than the real figure.

I think that they will have to do this, or look for another CEO.]]> Tue, 15 Apr 2008 05:49:51 -0400
The Commercial Division will suffer with its own direct real estate as well CMBS. It's own real estate assets, are small by comparison to the securities, but are still relevant. I cannot comment on their full exposure to CRE, but if we use the residential RE analogy, you can expect progressive write downs over the next 6 quarters. With the GE balance sheet, I expect the Execs, to write off, what they think is acceptable to the markets, rather than the real figure.

I think that they will have to do this, or look for another CEO.]]> http://seekingalpha.com/article/72282-abusive-comments-blog-aggregators-and-freedom-of-speech?source=feed#comment-150897 150897
I think that it is important to let readers state their views, good or bad. If my analysis is correct, they will regret their comments. If my analysis is wrong, then some of the comments will be deserved.

The only point that is annoying, is when somebody says " trust me I'm a professional ", usually it is this type of person, who does not analyze anything, just goes with the flow from Wall St.

Most of my focus is on macro-economic overviews of the current market, which I believe is over priced. As EPS falls, so too should Corporate values. Generally, I look at at the Macro-economic Overview, followed by sector trends, followed by detailed corporate analysis. On many occasions I have been troubled by "Wall St analysts" not carrying out point Number 1.

Many analysts appear to study a sector, compare Company's, and then determine winners and losers. But this approach is flawed without looking at the macro-economic view, after all, in a probable recession, they may ALL be losers.

I also believe that listing your full research may be detrimental to the long term interests of your readers, you should have enough information to get your point of view across. If the readers are serious investors, they will analyse the companies themselves, which is the best way for them to learn.

Nobody is going to be correct all of the time, maybe I'm just luckier than others, but if you're correct most of the time, your portfolio will always perform well.

Thank you for your interest in the GE comments.

Best regards,

Chris Marshall]]> Tue, 15 Apr 2008 02:54:50 -0400
I think that it is important to let readers state their views, good or bad. If my analysis is correct, they will regret their comments. If my analysis is wrong, then some of the comments will be deserved.

The only point that is annoying, is when somebody says " trust me I'm a professional ", usually it is this type of person, who does not analyze anything, just goes with the flow from Wall St.

Most of my focus is on macro-economic overviews of the current market, which I believe is over priced. As EPS falls, so too should Corporate values. Generally, I look at at the Macro-economic Overview, followed by sector trends, followed by detailed corporate analysis. On many occasions I have been troubled by "Wall St analysts" not carrying out point Number 1.

Many analysts appear to study a sector, compare Company's, and then determine winners and losers. But this approach is flawed without looking at the macro-economic view, after all, in a probable recession, they may ALL be losers.

I also believe that listing your full research may be detrimental to the long term interests of your readers, you should have enough information to get your point of view across. If the readers are serious investors, they will analyse the companies themselves, which is the best way for them to learn.

Nobody is going to be correct all of the time, maybe I'm just luckier than others, but if you're correct most of the time, your portfolio will always perform well.

Thank you for your interest in the GE comments.

Best regards,

Chris Marshall]]> http://seekingalpha.com/article/72124-after-ge-s-miss-whos-next?source=feed#comment-150160 150160
Thank you for your kind words. I was very interested in your comments regarding the AIA, I did not receive that in the UK.

Regarding fair value for properties, I believe that Texas, The Deep South and the Rust Belt are pretty close to fair value for residential properties.

Regarding CAP rates, look for at least 7%, in todays market. There are plenty of NNN leases from large Co's available on the open market at this level.

Regarding the financial stocks, the writedowns are only one part of the story, recapitalizing is required to boost their balance sheets and do not forget the GE effect, I think that market sentiment may turn bearish this week.

Regarding Caterpillar, I believe that they will have better figures than most, but as I feel that there will be a down trend, for market values, it just means that they will fall less than the rest.

Chris Marshall]]> Mon, 14 Apr 2008 01:40:08 -0400
Thank you for your kind words. I was very interested in your comments regarding the AIA, I did not receive that in the UK.

Regarding fair value for properties, I believe that Texas, The Deep South and the Rust Belt are pretty close to fair value for residential properties.

Regarding CAP rates, look for at least 7%, in todays market. There are plenty of NNN leases from large Co's available on the open market at this level.

Regarding the financial stocks, the writedowns are only one part of the story, recapitalizing is required to boost their balance sheets and do not forget the GE effect, I think that market sentiment may turn bearish this week.

Regarding Caterpillar, I believe that they will have better figures than most, but as I feel that there will be a down trend, for market values, it just means that they will fall less than the rest.

Chris Marshall]]> http://seekingalpha.com/article/72081-economic-report-summary-consumer-sentiment-index-at-26-year-low?source=feed#comment-149793 149793 GE). I fully expect the effects to be felt in the Retail sector and the Commercial Real Estate Market shortly.

I am looking for a silver lining, but so far the only thing that I can find is that the residential real estate prices in Texas, the Deep South and the rust belt, are nearing fair value.

Conversely the sunshine states are still very overvalued.

I believe that recession now is probable, maybe lasting up to 2 years. I believe that the US economy will start to grow about 15 months after residential real estate has reached bottom, but we're not there yet.

The NAR are a bad joke, there forecasting skills appear to motivated by the need of its members to sell quickly to survive.

]]> Sun, 13 Apr 2008 11:32:43 -0400 GE). I fully expect the effects to be felt in the Retail sector and the Commercial Real Estate Market shortly.

I am looking for a silver lining, but so far the only thing that I can find is that the residential real estate prices in Texas, the Deep South and the rust belt, are nearing fair value.

Conversely the sunshine states are still very overvalued.

I believe that recession now is probable, maybe lasting up to 2 years. I believe that the US economy will start to grow about 15 months after residential real estate has reached bottom, but we're not there yet.

The NAR are a bad joke, there forecasting skills appear to motivated by the need of its members to sell quickly to survive.

]]> http://seekingalpha.com/article/72063-general-electric-first-quarter-miss-rattles-markets?source=feed#comment-149677 149677
A share rise of 6.5% is pretty good going, during a period of zero growth, if it happens.

I feel that $28 is more realistic, as they will not solve their problems overnight. Commercial and Healthcare will continue to be a drag on the EPS, probably until next year, at the earliest.]]> Sun, 13 Apr 2008 07:52:07 -0400
A share rise of 6.5% is pretty good going, during a period of zero growth, if it happens.

I feel that $28 is more realistic, as they will not solve their problems overnight. Commercial and Healthcare will continue to be a drag on the EPS, probably until next year, at the earliest.]]> http://seekingalpha.com/article/71966-7-reasons-march-was-not-the-bottom?source=feed#comment-149498 149498
Until consumer confidence rises, credit frees up, and corporate earnings start to rise, we haven't come up from the bottom.

I expect major problems in finance for the next 6 quarters, what with Commercial real estate to follow Residential downwards, Bonds to be downgraded and at least one institution to fail, you could be looking at a floor around 10,000 to 10,500. At this level you will be approaching the p/e of other exchanges.]]> Sat, 12 Apr 2008 13:13:55 -0400
Until consumer confidence rises, credit frees up, and corporate earnings start to rise, we haven't come up from the bottom.

I expect major problems in finance for the next 6 quarters, what with Commercial real estate to follow Residential downwards, Bonds to be downgraded and at least one institution to fail, you could be looking at a floor around 10,000 to 10,500. At this level you will be approaching the p/e of other exchanges.]]> http://seekingalpha.com/article/71998-ge-drops-a-bomb-but-options-traders-are-cautiously-optimistic?source=feed#comment-149494 149494
Is it surprising that investors went into shock?

I don't know how the options boys are viewing GE, but Commercial Real Estate prices tend to lag Residential by about 18 months, if this still holds true, you can expect 6 Quarters of write downs from the GE Commercial Division. With Industrial, Money and Medical also performing poorly, all that is left is Broadcasting and Infrastructure.

Broadcasting ( as a percentage is irrelevant), but Infrastructure bears further investigation.

Many Infrastructure projects require huge amounts of capital, signing a "memorandum of understanding" for a project, does not necessarily mean that it will progress, as funding may be withdrawn.

Additionally, I would like to know if the Aero Engine division books all of its "options" on the order backlog, as these options tend to disappear rapidly when 1) fuel prices are high 2) When airlines are going bankrupt 3) When financing is hard to come by

All three of these difficulties are present, so the infrastructure division may be affected over the coming months.

I feel that a price of $28 dollars per share is more realistic, until the economic outlook improves.

I did point out that GE was over priced (prior to the announcement),
and as I hold no stock in GE, I have no axe to grind, or any Bank bosses to keep happy. ]]> Sat, 12 Apr 2008 12:56:29 -0400
Is it surprising that investors went into shock?

I don't know how the options boys are viewing GE, but Commercial Real Estate prices tend to lag Residential by about 18 months, if this still holds true, you can expect 6 Quarters of write downs from the GE Commercial Division. With Industrial, Money and Medical also performing poorly, all that is left is Broadcasting and Infrastructure.

Broadcasting ( as a percentage is irrelevant), but Infrastructure bears further investigation.

Many Infrastructure projects require huge amounts of capital, signing a "memorandum of understanding" for a project, does not necessarily mean that it will progress, as funding may be withdrawn.

Additionally, I would like to know if the Aero Engine division books all of its "options" on the order backlog, as these options tend to disappear rapidly when 1) fuel prices are high 2) When airlines are going bankrupt 3) When financing is hard to come by

All three of these difficulties are present, so the infrastructure division may be affected over the coming months.

I feel that a price of $28 dollars per share is more realistic, until the economic outlook improves.

I did point out that GE was over priced (prior to the announcement),
and as I hold no stock in GE, I have no axe to grind, or any Bank bosses to keep happy. ]]> http://seekingalpha.com/article/71987-america-s-on-sale-and-the-world-s-buying?source=feed#comment-149395 149395
As an example of poor analysis ( or too bullish views), ask the following:

Out of 16 Analysts, for GE, 10 were BUY, 3 were Overweight and 3 were Neutral, no wonder the market reacted so badly. Why did no Wall St analyst take their financial exposure into consideration?

All of the institutions that have analysts appear to refrain from rating their peers at anything below neutral, even during a financial crisis. Is this Wall Streets final defense, or just the ineptness of its analysts?

For the worst case of being long look at Thornburg Mortgage (TMA).

Under the rescue package $1.3 Billion is being injected, and the Equity guys will receive $2.75 Billion of Warrants (that cost 1c each, $27.5 Million).

The price of TMA is currently $1.25 each, so these shrewd Equity guts will do the following:

Upon the dilution, they will short the stock, and be happy with $1 per share. Total return $ 2.75 Billion, Total profit on share sale $1.45 Billion. On top of this they will have the loan of $1.3 Billion ( totally secure against ALL of the TMA mortgage book) with a yearly interest of 12%.

Now TMA does have a good name, but effectively that is all that it has, so the common shareholders have been diluted to practically nothing, the execs keep their highly paid jobs, and nobody (except for the common shareholders) will lose, whatever the outcome.

As long as the stock price is held at ridiculous levels, shorting the stock on dilution, will become a brutal spectator sport, and the poor common stock holders, will be hammered. So please, any of the little guys out there, sell NOW, before dilution, as after dilution, and the short selling, I expect the price to drop to well below 50c.

(Chris Marshall)]]> Sat, 12 Apr 2008 02:27:11 -0400
As an example of poor analysis ( or too bullish views), ask the following:

Out of 16 Analysts, for GE, 10 were BUY, 3 were Overweight and 3 were Neutral, no wonder the market reacted so badly. Why did no Wall St analyst take their financial exposure into consideration?

All of the institutions that have analysts appear to refrain from rating their peers at anything below neutral, even during a financial crisis. Is this Wall Streets final defense, or just the ineptness of its analysts?

For the worst case of being long look at Thornburg Mortgage (TMA).

Under the rescue package $1.3 Billion is being injected, and the Equity guys will receive $2.75 Billion of Warrants (that cost 1c each, $27.5 Million).

The price of TMA is currently $1.25 each, so these shrewd Equity guts will do the following:

Upon the dilution, they will short the stock, and be happy with $1 per share. Total return $ 2.75 Billion, Total profit on share sale $1.45 Billion. On top of this they will have the loan of $1.3 Billion ( totally secure against ALL of the TMA mortgage book) with a yearly interest of 12%.

Now TMA does have a good name, but effectively that is all that it has, so the common shareholders have been diluted to practically nothing, the execs keep their highly paid jobs, and nobody (except for the common shareholders) will lose, whatever the outcome.

As long as the stock price is held at ridiculous levels, shorting the stock on dilution, will become a brutal spectator sport, and the poor common stock holders, will be hammered. So please, any of the little guys out there, sell NOW, before dilution, as after dilution, and the short selling, I expect the price to drop to well below 50c.

(Chris Marshall)]]> http://seekingalpha.com/article/71976-weingarten-realty-reit-strong-yield-safe-property-portfolio?source=feed#comment-149097 149097
Discounting the non-recurring item, their income was only $150 Mill, and their cashflow is poor. The net tangible assets is low, compared to the current market value and the way that Reits were set up, makes it difficult to rebuild a balance sheet.

On the plus side, being at the "value for money" end of retailing is probably a shrewd strategy, during the down turn.

However, there are inherent dangers, as I expect vacancy rates to settle between 11% - 12%. On top of this, as their revenue worsens, the company debt will cost more to service.

I hope their strategy sees them through, I much prefer their chances to those of GGP and Taubman.]]> Fri, 11 Apr 2008 13:41:26 -0400
Discounting the non-recurring item, their income was only $150 Mill, and their cashflow is poor. The net tangible assets is low, compared to the current market value and the way that Reits were set up, makes it difficult to rebuild a balance sheet.

On the plus side, being at the "value for money" end of retailing is probably a shrewd strategy, during the down turn.

However, there are inherent dangers, as I expect vacancy rates to settle between 11% - 12%. On top of this, as their revenue worsens, the company debt will cost more to service.

I hope their strategy sees them through, I much prefer their chances to those of GGP and Taubman.]]> http://seekingalpha.com/article/71501-is-general-electric-overvalued?source=feed#comment-148885 148885 1) GE is a great company, but I rate the price at $28-$30.
2) Any company with exposure to the financial sector is probably overvalued.
3) Writedowns are likely to occur for the next 6 Qtrs.
4) The FED/IMF think that US growth will be around Zero- One Percent.

The reason that I feel that GE was overvalued, is that ALL US stocks are currently overvalued, when the P/E drops to between 12 and 13, I will reenter the market. Until then, cash is king, and I will sit and wait until I think that the risk/reward balance is OK.

Best regards,

Chris Marshall

PS: I hold no stock in GE, so I do not have any axe to grind.]]> Fri, 11 Apr 2008 09:20:49 -0400 1) GE is a great company, but I rate the price at $28-$30.
2) Any company with exposure to the financial sector is probably overvalued.
3) Writedowns are likely to occur for the next 6 Qtrs.
4) The FED/IMF think that US growth will be around Zero- One Percent.

The reason that I feel that GE was overvalued, is that ALL US stocks are currently overvalued, when the P/E drops to between 12 and 13, I will reenter the market. Until then, cash is king, and I will sit and wait until I think that the risk/reward balance is OK.

Best regards,

Chris Marshall

PS: I hold no stock in GE, so I do not have any axe to grind.]]> http://seekingalpha.com/article/71925-lehman-shorts-scared-by-bear-stearns-investigation?source=feed#comment-148782 148782
But the Senator is missing the point with Bear Stearns, the problem was a weak balance sheet and an over exposure to risk.

If somebody willfully sells a decent stock short, just to make a quick buck, I would understand his point of view ( but it still would not be illegal).

But as the short sellers analyzed the company, and quite rightly saw it as massively over priced, owing to its risk profile and liquidity, an investigation will be without foundation, and likely to be for political posturing purposes only.]]> Fri, 11 Apr 2008 04:10:00 -0400
But the Senator is missing the point with Bear Stearns, the problem was a weak balance sheet and an over exposure to risk.

If somebody willfully sells a decent stock short, just to make a quick buck, I would understand his point of view ( but it still would not be illegal).

But as the short sellers analyzed the company, and quite rightly saw it as massively over priced, owing to its risk profile and liquidity, an investigation will be without foundation, and likely to be for political posturing purposes only.]]>