paulibloom

The Inverse Fannie/Freddie Correlation Indicator

Think MBI and ABK-manufactured negative spin-even the rating agencies changed opinion when the stocks went up. I have no investment in any of these but the parallel is striking when you consider the comments of the NLY-and they are smarter than most on FNM and FRE. Do you remember how MBI/ABK were going to take down the free world until they did not and then they actually did much better than feared. Think again

MBIA and Ambac: Monoline Malaise

Fools welcome to hardball it cuts both ways. Silly analysis. why should a company throw good money after bad-you are delusional to think they will do that. Think about another insurance business with shareholders getting a new piece of paper and big financial backers. I do not know what MBI is worth but you guys are basically asking the company to commit suicide-like I said this hardball - will not happen. Now think again.

Book Review: David Einhorn's 'Fooling Some of the People All of the Time'

The fact is the Einhorn was completely wrong period-full stop. During the intervening years, ALD has increase the dividend, and created a multi earnings backlog. Goldman Sachs and GE decided to be partners. The rest of this asset value stuff is a waste of time for Wall Street fools. Cash and cash flow are all that count-and ALD has increased that without mirrors. The incredible stupidity of Einhorn is that he does not recognize great investors who have outlasted everyone. Cash is always king and always wins-keep the dividends coming. It is amazing how many people are fooled by these arcane but baseless discussions.

The GDP on the Eve of Recession: Then and (Maybe) Now

Go look at bank loan data from the St Louis FED, the monster employment index, and the house employment survey, they all tell a different story. The funny part is you guys think you can really figure it out, when such forecast eludes thousands of smart people. Nice arm chair general talk.

Evaluating a Negative View on American Capital Strategies

My comment about selling equity at a loss can be understood this way. First realize that ACAS has the largest percentage of their total investment portfolio of any BDC in non-dividend paying equity. If they reduce that equity by selling companies they free up cash to get higher paying dividends. To be clear, you can not carry this too far. However, the thought is to move equity to dividend paying debt. Management actually said they were doing just that, and in fact last year indicated in trouble times they can sell some of their equity positions and get more NOI. ACAS by virtue of their large and diversified portfolio, as well as substantial assets where they control the sale event, can selectively exercise this strategy.

We should not expect that the buyers are stupid, they are smart aggressive firms looking to make a solid return as well. A large measure of the middle-market buyout business is what can you do with the company after you have acquired it, via cost reductions and importantly bolt-on acquisitions. ACAS has done a good job of just that. My bet is that they have a number of companies in their portfolio where they feel they can realize substantial gains, based upon their detailed knowledge of the market. This is why they were so emphatic about what their spillover taxable income will be into 2009. They made a point of putting it in their annual report. Again to be clear if we had perfect knowledge, then the stock would not be priced where it is. The overall business climate appears to indicate they have a good chance of success.

Lastly, the commentary from many other BDCs is reasonably consistent with their views on pricing and activity.

Evaluating a Negative View on American Capital Strategies

David is quite right in focusing on the dividend. This is the primary and maybe the only reason to own this stock. The discussion about asset valuations is a tired replay of the last cycle, and simply does not get at the underlying dividend producing power of ACAS. For example, ACAS has such a high percentage of its portfolio in equity rather than dividend paying instruments that they could actually sell businesses at a loss and increase the NOI substantially.

Along these lines the really important statistic is the assets on non-accrual, as that figure impacts dividends and cash flow. The shorts never discuss this, as it is in reasonable shape. I will tell you from other investments, that the assets on non-accrual is the key discussion factor for CSE, NRF, AHR, KFN, all best in class financial companies.

The shorts rely on the inexperience of retail investors. In addition, I believe most institutional analysts are focused on short term trading and really do not know how to make money or build wealth(I was an analyst for over 20 years and interacted with many many analysts).

The short argument is long in the tooth. The economy is improving, debt market liquidity is improving, and transactional volume will start to increase. With many marginal players, not able to get financing, this is increasingly a big boys game.

ACAS is focused on turning part of their portfolio into cash and gains. As the recent analyst day presentations, indicate, the company likely has numerous candidates that it has nurtured for years that can now be sold for substantial gains to rational buyers. If this goal is achieved, ACAS will enter 2009 with even better visibility on the dividend and an increasing NOI. While all this is going on the Company has the earnings backlog and ongoing earnings power, to make this a very reasonable risk reward scenario.

The shorts should be nervous -if ACAS announces another big capital gain, their whole thesis is sunk. This is why they replay such weak old stuff. Can you imagine a whole article on SPL which has been discussed for months.

I was an investor in ALD during the BLX situation, which was a much larger issue for ALD. After all was said and done, the dividend was increased, as well as the visibility. In a normal world, you would think that would stop the discussion. But it rattles on, over things that do not make real economic sense for the dividend.

Stock Market Moves into Critical Testing Zone

Reading chicken entrails-what amazes me is that you guys really think this analysis is useful-expect the unexpected. Remember the recession that has not arrived. This stuff will keep you poor. By the way most market forecasters are good for one cycle.

U.S. Economy Is Expanding, Not Receding

Monster employment index up sequentially three months in a row-and accelerating, commercial loan growth steady at 10%, household job survey showing a job increase. These are the facts-spinning them does not change reality-only makes you miss opportunities or be poorer.

Payroll Numbers Beat Expectations, But Trend May Be Temporary

The Monster Online employment index has increased sequentially for the past three months-check it out. In addition we have the comments about the BLS data from Mark Perry (Carp Diem Blog) "According to the more comprehensive Household Survey Data (which unlike the establishment data, includes the self-employed, unpaid family workers, agricultural workers, and private household workers), there were 146.331 million Americans employed in April (see chart above), which is: a) 618,000 higher than April of last year (145.733 million jobs), and b) 362,000 higher than March of 2008 (145.969 million). " You should also review bank loan data from the St Louis Fed which shows loan growth of around 10%. Those are the facts-sorry it does not fit your thought process.

Thinking In Themes: What Color Are Your Markets?

Amazing how people react to the actions of thousands of participants and billion of dollars by putting in their own views. What silliness. The author took the perspective of not giving his own personal view but rather an analysis's what the market might be saying. The response is personal opinions which we all have which are frankly of little or no value. How funny.

Some Key Observations on KKR Financial

Reggie-you are right my manner was unprofessional. Does not change any of my conclusions, but you are right. What I find troubling in general is analyst wannabe's who are really momentum players-on either side of the story.

Some Key Observations on KKR Financial

Oh I forgot to add that subsequent to your article some "fools" invested over $350 million in the company in roughly two days-I wonder why

Some Key Observations on KKR Financial

We have not seen Reggie review the 10K and report back to us - I wonder why. Could it be he does not understand the material, or that he now feels foolish that he really did not do his homework. I was an analyst on Wall Street for over 20 years-this is way minor league stuff that would get your fired because the professionals would tell the salesmen that you had no clue.

Collapse of the BRIC Trade

Great article!!!!!!

Shows how the obvious will kill you

Do not own any shares but so many negative comments on home builders- a study in those learning about the market the hard way

The Recession Has Arrived; How Long Will It Stay?

Amazing how people will comment on things over which they really have no predictive capability with such conviction. Yet another set of bears-we might be late in that game. Look at the article on the BRIC trade-what a surprise, the hated US stock market is the best performing. Reducto absurdom