ProfessionalHFAnalyst

The Problem with Hedge Funds

HFs need to hire people outside of the "2 yrs at Goldman, then an MBA" mold. Otherwise groupthink will dominate.

Bank of America vs. Banco Santander: Whose Dividend Is Secure?

For those of you who misunderstood my earlier comment: the ADR was yielding 9.7% while the stock listed in Madrid was yielding 4.8%. Given that most US based investors would buy the ADR (indeed this conversation was predicated on the high ADR yield), I was warning you that such a disparity between the Euro and the US yield was unsustainable. Guess what, a month later, the ADR yield is now 5.06%, while the Euro yield is still 4.8%. Nothing like a little market therapy for the idiot posters below.

The Long Case for GE

The larger and more internationally diversified the company, the more exposure it has to the global macroeconomic environment. GE is probably one of the biggest, most diversified out there. If you think it is time to go long the global economy, then GE is your way to play that. With OECD growth projections being cut down to near recession levels around the world, I would say that now is probably not the time to buy.

Five Struggling Dividend Stocks I'm Still Bullish On

With OECD numbers showing developed country GDP growth at only 0.2% QoQ, I would be worried about an internationally diversified and government spending-dependent company like GE

CANROYs Remain Attractive as Oil-Related Investments

On your comment with respect to oil sands, I disagree. Oil sands, especially the mining operations, are already profitable at $40 oil, including capotal costs. So there is no doubt that they would continue to produce at $80 oil.

The Housing Bill: Uncle Sam Is Moving Into the Spare Bedroom

The illustration above with the $500k hoome in which a buyer put down $100k in cash is not the kind of homebuyer that is in trouble right now, for the most part. Most if not all of the homes in trouble had close to zero equity in them back when thee mortgages were issued. That is precisely why so many people are sending the key to the bank, since they have invested zero of their own money in the home to date.
A more realistic example of the $500k home.
(1) Home is purchased in 2006 for $500k, with $400k in mortgage and $80k in second mortgage, to avoid having to pay PMI (Standard trick that everyone did). Equity stake is therefore $20k.
(2) Home prices tick down 4% in 2007. Equity is already wiped out, but homeowner stay in house, figuring that market will turn around shortly and they will be able to sell at a profit as originally anticipates.
(3) Home prices fall hard in 2008, say 20%. Home now worth $384k. Prospects for recovery look bad. So homeowner sends keys to bank and walks away. Net: got to live in a nice house for 3 years at a cost of $20k of equity capital.
(4) Wait, govt steps in. Forces lenders to write off loand above 90% loan-to-value. Since home is worth $384k, 90% of that is $345k. Second mortgage issuer gets wiped out 100%, losing $80k. That should have been written off by now anyway. First mortgage holder therefore takes hit from original $400k loan to $345k, i.e. $54k. Government now issues loan to you for $345k, 30 yr fixed rate. Not clear so far if the govt pays some of that $54k loss to the mortgage originator to entice them into doing this deal. But net-net, you got a big bonus for overleveraging yourself and living beyond your means.

Stocks to Buy Before the Oil Bubble Bursts

Oil is down yes, but cracks are too. It is too simplistic to just look at crude prices. Plus VLO is exposed to mexican heavy, not WTI.

Airline Stocks: Where Value Investing Takes Flight

If memory serves, no US airline has ever returned its cost of capital. Even in the good times. Until there is a cartel/monopoly established where tickets can be sold at multiples of current prices, I would avoid this sector at all costs.

Bank of America vs. Banco Santander: Whose Dividend Is Secure?

The yield in US terms is 9.7% but in Euro terms is it merely 4.8%. Nuff said. Plus the average household in Spain is *more levered* than the average household in the US.

Bank of America: Better Than Treasuries

There is one thing lost in all of this conversation about dividends on common vs pfd. If I were a bank executive contemplating cutting dividends to common shareholders, for whom I theoretically work for, then without a doubt, I would also cut the dividend on the preferred at the same time. I don't care about preferred holders, and to the extent that cutting dividend to common and not to preferred would annoy common holders, why not cut the dividend to the preferred too? Save money and make it look fair at the same time - it's a no brainer from management's perspective.