Wall Street Breakfast: Must-Know News [View article]
CAT is "aggressively looking into recovering losses from the $580M accounting fiasco at recently-acquired Siwei." The only way they will see any money is if they get it out of the two accounting firms involved. They will get nothing from Siwei, imo.
Forget Herbalife. ViSalus is maybe a more impressive legal pyramid scheme and its majority-owner Blyth (BTH) the best value in the MLM sector, writes Akram's Razor. In addition to the more obvious reasons, weighing on the stock has been Blyth's required purchase of the rest of ViSalus, which - with the IPO market closed - the company doesn't have the resources for. That issue looks to have been resolved, and investors should now focus on ViSalus' rocket-like growth and its owner's low valuation. [View news story]
I have no problem with someone making this type of presentation. It adds to the discussion of the merits of the company. Libel laws protect against outright fabrications.
The performance of regulators in terms of catching frauds has not been very good over the entire history of the SEC. Many big frauds have been perpetrated for a long time. And when frauds are caught, its too late for the investors. So if someone wants to point out potential issues, more power to them. Even if they profit from those actions.
People forget that Enron received praise from Alan Greenspan when he was still Fed Chairman as a model of the "new economy." Detractors were villified until the thing came undone.
AIG sues Maiden Lane II, asking a judge to declare the insurer did not transfer "litigation claims" to the vehicle when it sold it billions in MBS to it during the financial crisis. At issue: Like everybody else, AIG has sued Bank of America (BAC) to recoup losses on bad mortgage paper. The FRBNY - which already got its own settlement from BofA - is of the opinion AIG lost its right to sue when it sold the securities to Maiden Lane. [View news story]
As is always the case. Its the same profession that dominates the halls of the U.S. Congress after all.
2 High Yielders Heading Higher On Positive Catalysts [View article]
Because it is selling at premium to LINE (about 2.6%). You will pay more for the same income and you won't receive the tax advantages.
You will find little "ordinary income" comes from the LINE distribution, so the resulting tax payments are less than for "qualified dividends." I'm not even sure if those exist now as I didn't see how the dividend tax will be impacted on the "fiscal cliff" deal. That tax was scheduled to go back to normal income tax rates on January 1.
ABX has plenty of problems not related to the price of gold. Project overruns, projects on hold, rising costs, etc. ABX had good reason to change out the CEO. Not sold on them getting things under control in the near-term.
In Defense Of Herbalife: Arguments Against Ackman's Short Thesis [View article]
Not at all. It does not make sense to automatically short something you wouldn't buy.
I wouldn't own $CRM or $AMZN, but I wouldn't short either of those either. Both are overvalued, but shorting them offers too much risk as follows:
CRM is still small enough to be bought out at a premium. It could happen, so there is a big risk there. There have been many tech buyouts that added nothing to the purchasing entity. As for going long, well people will catch on eventually if there is no buyout.
AMZN continues rising because of the revenue growth. But where is the profit? The AMZN share price growth has gone on for a long time and could continue. Ultimately, I don't ever see them producing profits to justify the current price. But you can't know when that situation will hit the stock price, it could be January 2013 or it could be another five years down the road.
Shorting isn't free, as some people seem to think. You can't borrow shares without paying margin interest.
So there are two examples of companies that I would not buy, but would not short. I am sure there are many others out there.
As an aside, I have been successful buying puts against CRM, but for very short periods (and never held over a weekend).
It sounds like master limited partnerships will be safe from budget tinkering, as the Obama administration yesterday called on Congress to approve legislation that would let investors utilize MLPs for renewable energy. The mechanism is now available only to coal, gas and oil projects, and has been instrumental in funding U.S. pipeline construction. [View news story]
In my opinion, it is less likely that they will mess around with the MLP structure given this development. I view it in a positive light.
Of course, Obama does like to pick the winners & losers, so as CC0 says we can't know with certainty.
Kiss Goodbye To The Hidden Risk Of Stock Picking [View article]
Here is how Fortune's "Buy and Forget Portfolio: 10 Stocks to Last the Decade" played out: http://bit.ly/WvJ5G8
So apparently it wasn't all that easy for Fortune Magazine's professionals to pick stocks to do well over a 10-year period. A random selection of 10 stocks surely would have done better in this specific case.
Wall Street Breakfast: Must-Know News [View article]
Whether people walk away doesn't matter. The important thing is debt service. I know some of these units were purchased to rent out, so if there are no renters how can payments be made? So you have people buying units on speculation and using credit with the idea that the units can be rented. If they cannot be rented, the payments cannot be made.
If the WMPs are also using high leverage (very probable imo), then all it takes is a small ripple to cause a major upset.
Wall Street Breakfast: Must-Know News [View article]
Those "Wealth Management Products" sound very similar to the high leverage CDSs, CDOs & other financial products that led to the liquidity crisis in the U.S., which in turn caused a global liquidity crisis as much of that garbage paper was held internationally.
Are "liar loans" being generated in China to provide fuel for the WMPs? Is the debt that forms the basis for the WMPs being serviced? When things are highly leveraged, a little problem becomes a big problem very quickly. Just ask the geniuses who ran LTCM.
Instagram (FB) triggers a backlash by announcing it will have the right (effective Jan. 16) to sell access to photos and user information for use in ads without notification. Facebook had already signaled it plans to monetize Instagram, but few expected big privacy policy changes. The mobile photo-sharing platform had already upset users this month by ending Twitter integration. Henry Blodget: "The truth about Instagram's horrifying new terms of service: No one will care." [View news story]
That is almost unbelievable. So people who use this service can now find their images used for advertising purposes without their knowledge and maybe for something that they don't support.
Wall Street Breakfast: Must-Know News [View article]
Forget Herbalife. ViSalus is maybe a more impressive legal pyramid scheme and its majority-owner Blyth (BTH) the best value in the MLM sector, writes Akram's Razor. In addition to the more obvious reasons, weighing on the stock has been Blyth's required purchase of the rest of ViSalus, which - with the IPO market closed - the company doesn't have the resources for. That issue looks to have been resolved, and investors should now focus on ViSalus' rocket-like growth and its owner's low valuation. [View news story]
The performance of regulators in terms of catching frauds has not been very good over the entire history of the SEC. Many big frauds have been perpetrated for a long time. And when frauds are caught, its too late for the investors. So if someone wants to point out potential issues, more power to them. Even if they profit from those actions.
People forget that Enron received praise from Alan Greenspan when he was still Fed Chairman as a model of the "new economy." Detractors were villified until the thing came undone.
AIG sues Maiden Lane II, asking a judge to declare the insurer did not transfer "litigation claims" to the vehicle when it sold it billions in MBS to it during the financial crisis. At issue: Like everybody else, AIG has sued Bank of America (BAC) to recoup losses on bad mortgage paper. The FRBNY - which already got its own settlement from BofA - is of the opinion AIG lost its right to sue when it sold the securities to Maiden Lane. [View news story]
2 High Yielders Heading Higher On Positive Catalysts [View article]
You will find little "ordinary income" comes from the LINE distribution, so the resulting tax payments are less than for "qualified dividends." I'm not even sure if those exist now as I didn't see how the dividend tax will be impacted on the "fiscal cliff" deal. That tax was scheduled to go back to normal income tax rates on January 1.
Don't Believe The Hype In Gold [View article]
In Defense Of Herbalife: Arguments Against Ackman's Short Thesis [View article]
I wouldn't own $CRM or $AMZN, but I wouldn't short either of those either. Both are overvalued, but shorting them offers too much risk as follows:
CRM is still small enough to be bought out at a premium. It could happen, so there is a big risk there. There have been many tech buyouts that added nothing to the purchasing entity. As for going long, well people will catch on eventually if there is no buyout.
AMZN continues rising because of the revenue growth. But where is the profit? The AMZN share price growth has gone on for a long time and could continue. Ultimately, I don't ever see them producing profits to justify the current price. But you can't know when that situation will hit the stock price, it could be January 2013 or it could be another five years down the road.
Shorting isn't free, as some people seem to think. You can't borrow shares without paying margin interest.
So there are two examples of companies that I would not buy, but would not short. I am sure there are many others out there.
As an aside, I have been successful buying puts against CRM, but for very short periods (and never held over a weekend).
It sounds like master limited partnerships will be safe from budget tinkering, as the Obama administration yesterday called on Congress to approve legislation that would let investors utilize MLPs for renewable energy. The mechanism is now available only to coal, gas and oil projects, and has been instrumental in funding U.S. pipeline construction. [View news story]
Of course, Obama does like to pick the winners & losers, so as CC0 says we can't know with certainty.
Kiss Goodbye To The Hidden Risk Of Stock Picking [View article]
So apparently it wasn't all that easy for Fortune Magazine's professionals to pick stocks to do well over a 10-year period. A random selection of 10 stocks surely would have done better in this specific case.
Wall Street Breakfast: Must-Know News [View article]
If the WMPs are also using high leverage (very probable imo), then all it takes is a small ripple to cause a major upset.
Wall Street Breakfast: Must-Know News [View article]
Are "liar loans" being generated in China to provide fuel for the WMPs? Is the debt that forms the basis for the WMPs being serviced? When things are highly leveraged, a little problem becomes a big problem very quickly. Just ask the geniuses who ran LTCM.
Ellington Financial: The Best Mortgage 'REIT' At A Healthy Discount To Book Value [View article]
Instagram (FB) triggers a backlash by announcing it will have the right (effective Jan. 16) to sell access to photos and user information for use in ads without notification. Facebook had already signaled it plans to monetize Instagram, but few expected big privacy policy changes. The mobile photo-sharing platform had already upset users this month by ending Twitter integration. Henry Blodget: "The truth about Instagram's horrifying new terms of service: No one will care." [View news story]
The Selling In PIMCO's High Income Fund Continues [View article]
The Selling In PIMCO's High Income Fund Continues [View article]
Wall Street Breakfast: Must-Know News [View article]