Sell Rating on Brokers
Note: This was written Sunday, and scheduled to post later this week — but given the Lehman news, its more timely this AM:
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We have been discussing some of the issues surrounding the brokers. We have had an "AVOID" on the sector for the past 2 years (due to balance sheet concerns), and we reiterated a sell on Lehman Brothers (LEH) last week for due to Technical factors. (My pal Charlie Gasparino disagrees with me on this).
Research from Portales reveals the some of the details regarding exposure to further write-downs.
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click for larger table
Source: Portales
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I do not have high expectations for sector earnings in Q2’08, with more write-downs of RMBS, weak underwriting activity, and questionable trading returns.
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Previously:
Dirty Tricks at Lehman? (June 2008)
http://bigpicture.typepad.com/comments/2008/06/dirty-tricks-at.html
Related:
Lehman Set To Raise $5 Billion Amid Losses (WSJ)
http://online.wsj.com/article/SB121296377617855623.html
Lehman Sheds at Least $120 Billion of Assets to End Bear Stigma (Bloomberg) http://www.bloomberg.com/apps/news?pid=20601087&sid=aUaJYcbwzbjI&
Where Will U.S. Banks Beg Next? (WSJ)
http://online.wsj.com/article/SB121296970442155821.html
Tags: and looking for more complete disclosure. Leveraged lo, and the rating agencies moved to downgrade non-resident, as commercial banks showed higher credit losses in othe, hedging losses and reversals of the gains on structured, http://bigpicture.typepad.com/comments/files/brokers_ma, into Lehman’s $6.5B “other” asset-backed securities cat, our ratings remain L.” While many Street analysts seem, so we are watching out for potential surprises, we would question whether there are other securitized p, we are more concerned about the unknowns rather than wh, we may observe further spreading of the write-downs (i., which received a gross mark of just $200M in Q1’08).
June 9th, 2008 at 9:25 am
How much longer will Mark Faber be able to open his CNBC telecast by saying “From the financial capital of the world”? Already commodities trader Kevin Kerr forsees a shift to Dubai’s market.
June 9th, 2008 at 9:27 am
When you’re running 25 to 1 leverage, you’d better have low-default, low-volatility assets capping that monstrous pyramid. RMBS were thought to be such an asset. But the events of the last year have disproven that notion.
Does this business model make sense, for any of the companies listed in the table? Or did the competitive pressure of making quarterly earnings push them all into excessive leverage?
I vote for the latter …
June 9th, 2008 at 10:04 am
Fascinating how idiots like Gasparino come out to support companies who leverage to the max in highly volatile securities…who then expect to get bailed out by us poor schmucks. I wonder what’s their motivation…
Anyways, LEH and all their bandits deserve to get their throats cut. Let them die, a purging is good once in a while. If the Fed is ready to save these bums then they’ll surely be ready to save us poor folls, right? Right?
June 9th, 2008 at 10:55 am
MarcM,
Their motivation is that they keep a high-level source(s) inside the company. Trash the company and be seen as piling-on the shorts side and Gasparino is dead to any ranking insider.
June 9th, 2008 at 11:42 am
Here’s some ratings you can sink your teeth into.
http://www.nytimes.com/interactive/2008/06/08/travel/20080608_BALLPARK_GRAPHIC.html
I was at the Sox game yesterday and half disagree: they have a decent Polish sandwich from the carts, but the Leinenkugel Summer tasted like blueberry sodapop.
To the topic:
…a friend picked up his season tickets from a major firm looking to cut costs. Once they start selling the season tickets, well… a potential indicator?
Scanning Craiglist might reveal some interesting buy/sells, unless they deal them to an interested party in the manner my friend fell into his.