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Ted Bear

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  • But Mr. Ackman, Herbalife Is A Sustainable Pyramid Scheme [View article]
    All the institutional investors need to do is sit tight. (You can be sure that they have ALL been called by Ackman and he has pitched his argument, so they are keenly aware of the bear raid).

    The shorts will borrow and short every share they can get their mitts on.

    They probably already have.

    Now the Institutions call their stock loans in. This creates an enormous short squeeze which takes the stock higher than where it was when the shorts started their attack.

    The institutional investors sell their positions into the buying frenzy, making a huge gain well beyond where the share were when the short attack began.

    The share price collapses, and only a few core shorts (and the 'dumb' institutions) make any money.

    HLF dies a silent death.

    Seen it many times before. (Take a look at the Canon Films chart if you can find one. The shorts were right; they got killed from the buy ins when the institutions called their loans). Likely to see it repeat itself this time around. Good luck Mr Ackman. Nice job doing your homework. Remains to be seen whether you will make money from the idea.
    Dec 23, 2012. 08:21 PM | 3 Likes Like |Link to Comment
  • "The stock market is a giant distraction from the business of investing." So says index-fund pioneer Jack Bogle about the trend that disturbs him: short-term speculation replacing investing as a stake in the whole-life yield of an asset. His takeaways are little surprise: Focus on broad indexes and manage your return expectations toward your "fair share." [View news story]
    CSStauufer......the (corporate) objective of most investment managers is to garner assets. That's how they make their money. As long as their returns don't deviate too far from the over all market, they are safe. Stock selection and/or market timing are really only a secondary to their goals.

    Hence, they hide behind the 'we are full invested as per our fund objective' or 'we outperformed/underperf... the market by 200 basis points during the period.' None of them every mentions absolute returns, as that is not their objective. Making money, if it (accidentally) happens, is nice, but so what? Ever notice how, when the market craters, they pat themselves in the back with "the S&P fell 14% for the period, but we were 'only' down 13.7%" language. Hell, where's my bonus for being so "good'?

    I am always astonished that SO many 'active' managers exist, when most investors would be much better off giving their money to John Bogle and letting him employ his lower cost strategy and create 'market' returns, when that is what the vast majority of active managers effectively mimic anyhow. The number of guys who are astute enough to create positive returns in the market is minimal and yes, they probably take greater latitude in their stock selection, but with that comes greater risk...and the possibility that their assets might diminish, and that is a no-no in the fund business for reasons cited above.

    The market might give you decent returns over time; investment funds are searching for corporate returns, not market returns.

    If you want the latter, go find a good hedge fund.

    Caveat Emptor.
    Dec 23, 2012. 11:42 AM | 5 Likes Like |Link to Comment
  • Pimco mortgage chief Scott Simon scratches his head over Bank of America's (BAC) and Citigroup's (C) reluctance to fire up their home-lending operations. Citigroup has described the business as "non-core." "How does it get more 'core'," says Simon. "You sell 6 products to the average person who has a mortgage with you. It's a money machine." [View news story]
    Whatever else, who wrote the fine print for TARP?

    We saved these bastards, and no-one ever thought to put language in there which changed the management, capped compensation at something like $100,000/yr for the most senior people, and demanded that the banks work to meet the needs of the new owners: the people.

    Hell, i didn't even get a free check book cover (not that i can't say that i would be hugely embarrassed to be walking around with a check book that said CitiBank or Bank of America on the cover).

    What were Schumer and Dodd doing when they jammed this legislation through? Counting their campaign contributions from the banks?
    Dec 21, 2012. 08:36 AM | 1 Like Like |Link to Comment
  • Shares of Herbalife (HLF -14.5%) take a hit coming off a trading halt and move toward a fresh 52-week low after hedge fund manager Bill Ackman told CNBC that he is "short" the shares, calling the company a "pyramid scheme." [View news story]
    at the end of the day, so what? It doesn't mean the shares will go fact, in the next day or two, they are likely to fly as the retails shorts who got in today get their butts kicked.

    I am NOT defending HJLF, but......

    There is another company....Amway...shares only listed in Japan.....which has been in the same biz for many years. Looks like a scam/pyramid/whatever, but they continue to exist.


    Now, speaking of pyramids.....i give you the US that any different?
    Dec 19, 2012. 03:20 PM | 2 Likes Like |Link to Comment
  • Global fund managers are more bullish about economic growth than they have been in nearly two years, according to BofA Merrill Lynch's monthly fund manager survey. They're particularly optimistic about China, even as they fear the global impact of the U.S. "fiscal cliff." 67% of managers said they expect China's economy to strengthen over the next year, which is up from 51% in October. Additionally, the number of managers viewing the fiscal cliff as the biggest risk for markets fell to 47% in December from 54% in November. Along with those numbers, risk appetite has also risen, with the percentage of investors willing to take on higher-than-normal risk at its highest level since April 2011. [View news story]
    Good news for the Bears!
    Dec 18, 2012. 07:34 PM | Likes Like |Link to Comment
  • "With 20/20 hindsight, the Nextel merger was a mistake," states Sprint (S +0.2%) CEO Dan Hesse in a fairly candid interview. Hesse also admits Sprint had allowed its customer service to deteriorate, and that changing consumer perceptions will take time. As you'd expect, he still remains worried about AT&T and Verizon's market clout, SoftBank (SFTBF.PK) and Clearwire (CLWR) deals or not.  "Five years ago I wouldn’t have called them a duopoly. Today they’re darn close." (previous[View news story]
    "Customer Service to Deteriorate...."

    It is hard to even call that thing Customer Service.

    I was a Sprint Nextel customer. Their Customer Service is SO bad that they couldn't even help me renew my plan.

    Verizon was happy to help me, was very efficient about it, threw in a new phone, ported my number (which Sprint was unable to do when i joined them), and has provided excellent in store service which has exceeded my expectations.

    Now, if we could just get someone's attention at Sirius Radio. They act like they are trying to displace Sprint at the bottom of the Customer Service barrel. I would say it is neck and neck for the worst imaginable customer treatment.
    Dec 17, 2012. 07:57 PM | 1 Like Like |Link to Comment
  • The Fed is proposing rules to strengthen the oversight of U.S. operations of foreign banks. The rules would require foreign banking organizations with combined U.S. assets of $50B or more to create an intermediate holding company over their U.S. subsidiaries, and foreign banks would also be required to maintain stronger capital and liquidity positions. [View news story]
    Just what we need; more bureaucracy.

    Has it gone unnoticed by everyone else that HSBC, for a HUGE money laundering operation, got a Goldmanesque slap on the wrist this week for their heinous behavior? The paid a paltry fine which was less than their earnings for even one quarter of the year, let along significant enough to make them think that their behavior was anything other than very profitable and well outside the reach of the "bureaucracy".

    If you wish to curb 'bad behavior', you have to have 'bad consequences' accrue to those who act poorly. Maybe if HSBC had had their profits taken away for one year, or had their banking license removed in the US, eyebrows within the firm might have been raised.

    Adding more bureaucracy just does not deter. It simply adds a layer of obfuscation behind which bad behavior can hide with relatively little punishment.

    And no, i am not picking on HSBC. They just happen to be a foreign bank with US assets greater than 50 billion. But shouldn't their walking away from such horrendous corporate behavior be the poster child for the 'regulation does not work unless you meaningfully enforce it' effort?
    Dec 14, 2012. 07:15 PM | Likes Like |Link to Comment
  • Bank of America is reiterated a Buy by JPMorgan's Vivek Juneja, with price target raised to $13 from $11.50. No Dick Bove, Juneja makes the move even as he cuts price targets on 6 of the other 8 big cap banks he follows. Of the 9, just BAC, C, and KEY still trade at discounts to their tangible book value. [View news story]
    "No Dick Bove".

    Does that mean Juneja does real work, and not just BS?

    "Tangible Book Value"

    I'd pay money to see THAT calculation. How do you calculate Book Value when you can't even see the whole balance sheet?
    Dec 14, 2012. 03:59 PM | 1 Like Like |Link to Comment
  • "Let the fiscal cliff happen and reduce the deficit very substantially as a consequence," quips GOP advisor Bruce Bartlett. The combination of spending cuts and tax hikes will eventually strengthen the economy. Conversely, he says, the Republicans refusal to raise taxes will actually hurt the economy. Baby boomers are due to retire in droves over the next few decades, and government spending has to rise. If we don't raise taxes we'll just have to borrow more from abroad, thereby increasing interest payments on the debt. (video[View news story]
    Those Republicans.

    See, they WERE really, really clever when they cut the current deal a few years back.

    They got the stimulative tax cuts we needed back then, we grew our economy like gangbusters, and now that we need to increase government spending, the tax increases are in place to fund that spending.

    Who knew? And we didn't have to elect mittens to make it all happen.

    Isn't life just perfect, sometimes?
    Dec 13, 2012. 08:22 PM | 3 Likes Like |Link to Comment
  • The Fed is reportedly discouraging the top U.S. banks from making large acquisitions as it informally uses powers it received under the Dodd-Frank Law and attempts to limit the ability of banks to threaten the stability of the financial system should they fail. Those told not to make major purchases include Capital One Financial (COF) after its $9B acquisition of ING's U.S. online business. [View news story]
    Mexcom...the only reason we have gone through a period which is absent of any negative news about the banks is because accounting and regulatory types have been encouraged to 'look the other way.'

    Don't forget, we are in an extraordinary period of 'free money'. The banks have used this windfall to generate operating earnings, while at the same time sticking their crap to the Fed through a window that is open as wide as possible. (You notice that we hear how well we did on AIG, but never that the GM position, let alone Maiden Lane, is massively underwater).

    The large banks are still laden with all of the off balance sheet 'assets' and HUGE derivative positions which are enormously under water. While we can look the other way for a short period of time, eventually something has to give. Encouraging the banks to keep their knitting close to home is a simple reminder that they are still massively encumbered and should not look to make acquisitions until their existing situation is (somehow) resolved.

    Kicking the can down the road not only applies to the Washington debacle. It is visible in the banking sector as well, and serves, in a macro sense, to encumber the entire economy. Simply stated, the foundations of these banks are poor, or non existent. Adding additional infrastructure on top of that shaky underpinning is not a wise idea.
    Dec 12, 2012. 07:25 AM | 2 Likes Like |Link to Comment
  • A pair of right-to-work bills are officially passed in Michigan to set the stage for new employees at General Motors (GM +0.3%), Ford (F -0.1%), and Chrysler (FIATY.PK) to skip around union fees. While labor groups are still making quite a bit of noise on the issue, the Big Three have been deathly quiet[View news story]
    Yeah, we don't need unions. Every shop can be like Walmart: they take the profits; you get the bill for food, healthcare and social services. No need to ask an employer to provide sufficient pay which covers those things when we can spread the cost to society/taxpayers.
    Dec 11, 2012. 03:53 PM | 12 Likes Like |Link to Comment
  • More on Apple: Though lowering his PT to $800, Jefferies' Peter Misek is predicting an iPhone 5S will arrive in June: he sees the device potentially sporting camera, display, battery, and storage upgrades, and arriving in 6-8 colors. He also thinks a cheaper iPhone ($200-$250 unsubsidized) will arrive in June to boost Apple's low emerging markets share. But as Jay Yarow notes, Misek's Apple TV predictions haven't exactly been on the mark. [View news story]
    Products, baby. These guys better start coming out with creative new products....not just bells and whistles on existing crap, or they are going to face some serious headwinds from the copy-cat suppliers.

    There's a reason why this stock has been pummeled, and it not just 'tax selling.'
    Dec 10, 2012. 05:34 PM | 3 Likes Like |Link to Comment
  • The Treasury announces an offering for its remaining stake in AIG. The government currently holds a 16% stake in the company - 234M shares - and will continue to hold some warrants following the sale. Shares -0.8% AH. [View news story]
    maybe we can use some of these 'profits' to offset the bath we took on GM....

    We never hear much about the trillions in crap that Maiden Lane owns either......
    Dec 10, 2012. 05:02 PM | 1 Like Like |Link to Comment
  • GameStop (GME -0.1%) could be a beneficiary of the decision by Target and Wal-Mart to stop selling Kindle tablets after it worked out a deal with Amazon to offer the products. In what's becoming its go-to marketing tactic, the company will offer consumers store credit for trading in their old Kindle Fire devices. Though it's up in the air if the company will see a big profit swing from the deal, execs continue to be praised for their ability to help keep the retailer out of the brick-and-mortar junkyard (Blockbuster, Borders, KB Toys) as technology evolves beyond its core product. [View news story]
    GME is a classic zombie short. It is a horrible company with a broken business model. Reminds me of Blockbuster.

    What we have seen over the past few months is the professional shorts piling in. Then the retail guys piled on. Now we have just gone through the classic short squeeze/buy ins for the weak shorts. Hence the price run up on 'no news'.

    What's next? Watch the news. If the fundamentals continue as expected, the thing will just implode as the cornered longs have nowhere to go. The machines and the shorts will exacerbate this selling.

    If the fundamentals turn around, the longs will sell the strength, the shorts will cover into their selling, and we start the cycle all over again. The current price from the buy ins already reflects any good news which might come from this company.

    My money is on the shorts,,,,,or at least the bottom falling out of the fundamentals for this once high flying company.
    Dec 10, 2012. 01:36 PM | Likes Like |Link to Comment
  • "Death of Equities?" Assets in fixed income hedge funds are set to overtake those in equity strategies for the first time in the history of the industry, according to HFR. The move jibes with other stories from 2012 about the abandoning of stocks for the "safety" of fixed income. [View news story]
    Equities don't revert to 'normal' valuations until the Fed removes the punch bowl.

    You tell me when that is likely to happen, and I'll tell you when the top in equities is likely occur.

    Until then, you, sadly, just buy blindly on any weakness and enjoy the high.
    Dec 10, 2012. 08:32 AM | Likes Like |Link to Comment