Greg Weston

http://gweston.wordpress.com

73 Comments

    • Housing Prices: Bottom or Temporary Bear Break? [view article]
      I agree that housing has clearly not hit bottom. Good fair-minded article that considered both sides of the argument. Sep 05 01:27 PM
    • The Option Arm Triplets: Dead Banks Walking [view article]
      Update on CA and FL Housing:

      Please check out the entire article here about how foreclosures are not only getting worse, but getting worse quickly, especially in California and Florida, where DSL/FED and BKUNA have most of their OA lending.

      Marketwatch:
      Homes in foreclosure process set another record
      California, Florida continue to drive national numbers in MBA survey

      www.marketwatch.com/ne...={21015C68-EDCF-4E8B-B...

      In particular, these portions:

      ---Increases in foreclosures seen in California and Florida overshadow improvements seen in states including Texas, Massachusetts and Maryland---

      ---California and Florida alone accounted for 39% of all of the foreclosures started nationally during the second quarter. Together, the two states made up 73% of the increase in foreclosures between the first and second quarters, according to the MBA.
      "The worst states are getting worse,"---

      --- Certain loan types also are driving rates, Brinkmann said.
      "Subprime ARM loans accounted for 36% of all foreclosures started and prime ARMs, which include option ARMs, represented 23%," he said in a news release. "However, the increase in prime ARMs foreclosure starts was greater than the combined increase in fixed-rate and ARM subprime loans," he added.
      In future quarters, foreclosure start numbers will probably be increasingly dominated by problems with prime ARMs, he said. That's due partly to the difficultly some borrowers are having with prime, option ARMs.---

      My fact-driven opinion that DSL, BKUNA, and FED will all soon be shut down by the FDIC and see their stocks go to 0 is supported by even more new facts on the ground.

      Maybe because I am here in San Diego, one of the ground-zeros for the mortgage/housing crises, while many analysts are ensconced in the very unique and still-inflated Manhattan market they refuse to recognize that these banks are on their death bed, and only being kept alive in the short term by the extraordinary degree incompetence banking regulators have shown in even letting them get this far.       Sep 05 01:23 PM
    • The Option Arm Triplets: Dead Banks Walking [view article]
      Yes Wez, I also took the crazy run-up last week as a chance to add to my position. I didn't manage to sell right at the peak, but my call writes (FEDIW) that I sold 8/28 for $1.15 are now worth about 20 cents.

      Looks a few other people with even better timing managed to short FEDIW at 1.30 that same day. Congrats to them.

      Pretty nice 78% gain in one week for me though.

      If you have the nerves short like heck any of the triplets when they have these stupid speculative/short-cove... run-ups.       Sep 04 03:33 PM
    • Google’s Chrome Saturating an Already Crowded Browser Market [view article]
      Thanks for the thoughtful article.

      I have tried a few other searches, and I still find Google's to be much better than the alternatives. We'll see if that ever changes. The only major problem with Google searches are the "spam page" results. I always wonder why it is so hard for them to just block these sites by writing an routine that excludes sites that have thousands of internal links to thousands of other pages on the same site.       Sep 03 01:19 PM
    • Struggling GT Solar Gets Mixed Reviews [view article]
      Do you have any thoughts on their vulnerability to lower-cost competitors? Sep 02 04:01 PM
    • Time To Add Exposure to Clean Energy Alternatives [view article]
      Great article! I am long out of the money PBW calls. I think we'll see a big boost in all of these stocks when Democrats make their expected gains this election year. (Not that I think Republicans are all bad on this issue, the Govenator has been a good leader on alternative energy for example.) Sep 02 03:57 PM
    • WaMu: Speculative Value Play [view article]
      1/3 of book is a great deal until you realize that WM has not written down the value of its performing loans, which are going sour at breakneck speed. Check out my articles on other banks with OA portfolios for more details, much of this applies to WM too. Sep 02 03:53 PM
    • The Option Arm Triplets: Dead Banks Walking [view article]
      E Nuff:

      Having "most" loans perform will still bankrupt the company because of its leverage, which is not especially high for a bank, but is extremely high relative to the risk involved in its portfolio.

      Also, where the heck are you getting "20-30% declines in home value."?

      In much of FED's territory, prices are down by well over 50% from peak values, and still dropping as we speak.

      FICO scores on very risky loans have proved to be a very poor indicator of risk, much better is CLTV. And CLTV is well above 100% of the average current value.

      No, not everyone casually "walks away" form their home, but when you take out a $550,000 mortgage, and then it rises to $605,000 because of Neg-Am, and then your payments double, and the economy goes into the recession, and your house is only worth $400,000 if it were even possible to sell it.... well you get the picture.

      As for the run up, I am a medium to long term value investor, not a day trader.       Sep 02 03:51 PM
    • The Option Arm Triplets: Dead Banks Walking [view article]
      GBGB:

      I think 40% is a pretty good estimate of what has happened to California real estate. A change in the mix of home sellings can bias the figure to be sure, but here are some other things that can bias the figure:

      (1) seller incentives that don't go to the purchase price (the recorded price is $500,000, but the seller gives the buyer $5,000 in cash for closing costs and another $10,000 for "repairs" or for "decorating"...

      (2) the seller pays for expensive upgrades and renovations. So X buys a house for $400,000 in 2006, spends $100,000 on extensive renovations, and then the bank forecloses and resells the place for $360,000. This gets counted as a 10% decline, when in fact the loss for the first buyer and/or the bank is 140,000 or 35%.

      Certainly some parts of California, like Pacific Heights in SF, Mountain View in Santa Clara County, and the good parts of Santa Monica and West LA, are down only about 5-10% from the peak.

      On the other hand, other areas are down 50-70%. Same for Florida. condos in South Beach are down about 20%, downtown Miami more like 40%, and Naples 60%.

      When it comes to the banks I am writing about, the numbers in the bad areas are actually the more important figures, because that where all the foreclosures are.       Aug 31 03:19 PM
    • A Short Update on My Four Short Ideas [view article]
      Bogey: thanks for the update from NY

      Matt: Bear market rallies are to be expected.

      As for the reason why, I am no good at explaining short term market movements, which is why all of my articles deal with fundimentals.

      That said, FED is one of the most heavily shorted stocks on the market, so short squeezes can always happen. I think current prices are a great opportunity to short FED.       Aug 31 03:11 PM
    • Will You Look Back on Today as Your Greatest Missed Opportunity? [view article]
      Those "average" PE ratios you list were years in which the massive baby boom generation (not just US but Western Europe, Canada and Japan) were at their peak earnings and buying stocks for their retirement. This generation is already starting to sell assets as it goes into retirement. Those born in 1946 are now 62 so many are still buying, but the number of buyers goes down and sellers goes up each and every year.

      Current P/E ratios are also inflated because of an extremely pro-corporate president (2001-2008) and Congress (1995-2006).

      That soon will change, and the historically high corporate profits of the 2000's will be a distant memory. For example, stronger unions will lead to more wage pressure.       Aug 28 06:28 PM
    • Short Thesis Still Intact at FirstFed [view article]
      Great article!

      Especially the point you make about the monthly report not telling the whole story. REOs we know went up dramatically from Q1 to Q2. However, once a property is foreclosed, it is removed from the delinquent loan figures.

      So the moderation in growth (not by any means a decline) in total delinquent loan figures could be because (1) suddenly Californians with toxic loans decided to start paying them at a higher rate (2) a lot of bad loans are no longer delinquent, but now are REOs.

      As for the decrease in NPA ratio (1) total assets increased because of the funding of new loans and increase in uninsured "hot money" (2) write-downs of the value of NPA decrease the amount of NPA.       Aug 28 02:43 PM
    • A Short Update on My Four Short Ideas [view article]
      Thank you Groty for the response. I typically give up responding to someone after more than one post that seems to show either gross or willful ignorance of a topic, or that asks me to do research for others. Aug 21 04:18 PM
    • A Short Update on My Four Short Ideas [view article]
      tquill: I am a lawyer, not a financial adviser, so I can't talk to you via e-mail about investments (unless you have a real estate investment issue or financial fraud case).

      Probably the best thing you can do to learn about options is open up a "practice account" using Yahoo or Google's "portfolio" option (other sites have this too) and see how you do.

      Or perhaps open an options account with just a few thousand of real money.       Aug 21 04:16 PM
    • A Short Update on My Four Short Ideas [view article]
      Tquill: If you've got the stomach for FED's volatility, yes I do think today's run-up presents a good time to short FED calls.

      Steve: My financial short calls have fallen a lot more than the average financial stock. You are wrong, my number is correct, and comes right from the mouth of the company:

      "This loss includes $60 million (negative $1.84 per share) of net negative market valuation adjustments."

       Aug 20 06:06 PM
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