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Jeff Cross

Jeff Cross
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  • Finding Value: JPMorgan Vs. Noble Corp. [View article]
    I don't believe comparing two companies in such completely different industries is very useful. They do have some good historical data and history guided by experience and intelligence is the only way we have to foresee the future. They should mention in comparing value that NE trades at only 8.8 X 2015(E) while JPM trades at 9.6 X 2015(E) based on current consensus. This difference, almost a multiple, may be understated because NE is doing a spin off (Paragon) this year and it is possible that at least a few of the analysts estimates for next year reflect the NE stand alone entity and no longer count the part of earnings leaving with Paragon.
    Jul 7 11:14 AM | Likes Like |Link to Comment
  • Offshore drillers in for rough seas, Morgan Stanley says as it cuts Rowan [View news story]
    Those are low expertise shipping yards (build mostly bulk carriers). The vast majority of rigs are built in Korea, the few Chinese yards that have contracts are all high expertise and in no financial difficulties. It's likely that a few will slip, they always do from construction and material delivery vagaries, but no meaningful or unusual number.
    Apr 7 04:45 PM | Likes Like |Link to Comment
  • Missed Lesson Of Great Depression And Financial Crisis Blinds Economists To Bubble And Coming Recession [View article]
    Obvious garbage. This just shows, yet again, that with careful selection of which data to look at you can demonstrate anything, no matter how invalid.
    Mar 25 05:47 PM | 1 Like Like |Link to Comment
  • Tax By Inflation [View article]
    A gross oversimplification, but correct except in one aspect. Inflation does not act as a fully regressive tax because it also reduces the real value of debt, thus the gain in debt (from the debt being repaid in lower value currency) has to be offset against the loss on currency denominated assets. When you allow for this and the effect of paying capital gains taxes on bogus appreciation (you are taxed on the nominal value of the gain) one finds that it hits everybody with higher taxes to similar extent.
    Mar 24 09:45 AM | 3 Likes Like |Link to Comment
  • This 7% Yielding Oil And Natural Gas Producer Deserves The Attention Of Income Investors [View article]
    The stock is down because of disappointing 2014 production guidance, both the total boe and mix were not as good as expected.
    It is clear the company has (assuming the detailed data they present is both accurate and representative) a world class bitumen deposit. However it is not yet in commercial production and there is considerable risk in getting it there.
    It is also clear to me that a management both adequately concerned about long term shareholder wealth and adequately cogent would have cut the dividend a lot further and made fewer dispositions. This might have caused lower share prices short term, but short term market vagaries are not what I'm talking about when I say "long".
    Mar 19 03:17 PM | 3 Likes Like |Link to Comment
  • Should You Still Buy Geron? [View article]
    The hold only effects company sponsored trials. They have to send a letter to each investigator to put a hold on those. Company trials are much more often put on hold than investigator.

    There is no good Biomedical reason for the FDA to be concerned about what management thinks they said over the phone. If the FDA has put a hold on the company sponsored trials solely due to the observed liver function markers that we know about then it is one of their most ill-considered actions, though unfortunately not a record.
    Mar 17 05:09 PM | Likes Like |Link to Comment
  • Is The China Real Estate Bubble Real? [View article]
    The site says:
    "allows users to enter or edit price, rents, interest rates and other relevant information regarding housing for every major city in the world"

    In my experience this renders it unreliable and wildly inconsistent since users enter incorrect information and periods always vary (depending upon the last update).
    Feb 23 03:15 PM | Likes Like |Link to Comment
  • Is The China Real Estate Bubble Real? [View article]
    Are you comparing home prices in a given city to average income for that city or are you comparing home prices in a given city to average income for China as a whole? This is very important because average income in some cities such Beijing and Shenzhen is many times that for China as a whole. For instance for 2012 the average income in Beijing was 4.8 times the average for China as a whole, thus if you were comparing China national income the figure adjusted for local Beijing income would be an average home price to income ratio of only 7.2, which, while worrisome, is not any clear evidence of a bubble in Beijing.
    Also income amounts are only available for 2012 (so far as I can find) and if you are comparing last years prices to 2012 income then you need to take approximately another 0.4 off Beijing.
    Feb 22 10:19 AM | 2 Likes Like |Link to Comment
  • What Accounts For The Decrease In The Labor Force Participation Rate? [View article]
    Many large companies either before or concurrently with a lay off will offer an early retirement program, this probably accounts for the entire increase in the retired category.
    Another problem in interpreting these results is that people often do not put down the real reason, but just an excuse, in their response. For instance approximately 5% of the 31 yr olds put down "retired", this is implausible.
    Jan 20 09:16 AM | Likes Like |Link to Comment
  • Northern Offshore: Improved Revenue Visibility Can Trigger More Than 55% Upside [View article]
    Northern has a really, really ancient fleet. They have two jackups which are now just over 30 years old. The normal useful life assumption for jackups is 25 years. Given excellent maintenance and rebuilding you can probably keep one going indefinitely, but the profitability trails off baring demand rising continuously ahead of new builds. The same thing goes for their drill ship, 31 years old against a normal useful life assumption of 30.
    Northern has no net debt, which is great, and two new jackups on order, but their delivery is two years off at present. Without detailed on site equipment inspection I can't make a comfortable guess what this business is really worth.
    Jan 10 09:20 PM | Likes Like |Link to Comment
  • Talk Me Down From the Wells Fargo Ledge [View article]
    You are correct in that WFC is substantially overpiced for the current environment by any rational analysis (just like JPM). However, you do ignore several highly positive factors, particularly the quality of WFC underwriting and the "Buffet Halo" effect. I wouldn't short WFC at the present (if it were legal), but I already sold my JPM and WFC in the recent run up, due to price/risk ratio. I'm only holding a couple of non-US banks and some extremely well capitalized regionals and I'm quite nervous about them. Given a comparable WFC risk adjusted price I'd love to swap, but it's just way too expensive.
    Oct 2 01:02 PM | Likes Like |Link to Comment
  • Lloyds Buys HBOS: Good Deal or Bad? [View article]
    The leverage ratios presented in the article are not comparable to US accounting. They include all off balance sheet financing, which US firms do not if (as is the case for LYG) they do not include residual risk for the firms. Taking out the on balance sheet securitizations for LYG (which do include some counter party risk, which, I understand, the UK government has now quietly assumed for both banks if the deal closes - this may not be the actual fact, it's not officially disclosed) and making a few other comparability adjustments the LYG tangible leverage ratio is about 12 to 1 (similar to JPM on the same basis). I don't know what the US comparable ratio is for HBOS (LN) but it's a lot less than 37. We should also note that on a common shareholder tangible equity basis the exchange ratio works out to LYG paying 39 cents on the dollar for HBOS's tangible equity (this is based on equating LYG and HBOS tangible equity). We should contrast this 0.39 ratio to banks normally trading at 2 to 5 times tangible common equity (though we see a number of banks trading below 1.0 today in the US). It might also be worth noting that both these banks were profitable in the first half even after write downs and mark to market charges, unlike the bulk of US banks.
    Sep 18 12:57 PM | Likes Like |Link to Comment
  • What's the BofA / Merrill Synergy? [View article]
    Paying $29 for Merrill is the stupidest thing I've heard of since the government destroyed the value of the agency pfd stocks and thereby cratered the regulatory capital surplus of the US small banks (which were, until this week, the most active lenders, having not immolated themselves with all kinds of fancy products they didn't understand). I suppose one act of colossal and egregious idiocy is the weekly standard now.
    Of course, the $29 is no doubt based on a stock swap and if BofA opens down 50% tomorrow and stays about there (the first seems more likely than the second, but niether seems unreasonable), what Merrill shareholders get will really only be a reasonable $14.50; what the BofA shareholders get is best not discussed.
    Sep 15 12:39 AM | Likes Like |Link to Comment
  • Online Advertising: ING Direct vs E*Trade [View article]
    You idiot! It has nothing to do with the format wording or any other bullshit, Etrade was offering 15 bps more than ING! It's like comparing the adds of somebody offering a much larger discount on a product with a smaller discount or regular price! Of all brainless poop I've wasted my time reading....
    Sep 2 08:30 AM | Likes Like |Link to Comment
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