It ain’t just Lehman, Fannie and Freddie: There are plenty of other Pigs in the sea.

>

Washington Mutual (WM)

wamu_ugly

We are long this — my trading desk has been trying to bottom tick this today — but I don’t like it as anything other than a trade.

>

American International Group (AIG)

aig_is_a_pig

We are short this; See AIG: Don’t Try to Catch the Falling Knife (February 2008) and Bloomberg Video: AIG Earnings (August 2008).

Reuters says AIG’s exposure to Fannie Mae, Freddie Mac preferred shares between $550 mln-$600 mln, according to sources.”

>
Merrill Lynch (MER)

bullish_on_america

>

~~~

The only good news is the dearth of bottom calls for the sector — something that is essential for the actual bottom to occur.

~~~

Long WM, Short AIG, No position in MER.

~~~

UPDATE: Fortune rips off this title!  Putting lipstick on a pig 9/14/08

Category: Bailouts, Corporate Management, Credit, Short Selling, Valuation

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

34 Responses to “Put Some More Lipstick on These Pigs”

  1. Tom L says:

    Yes, but does this represent a, pardon the expression, back-door bottom call?

  2. HCF says:

    BR -

    You forgot to mention how it’s “a great time to buy NOW NOW NOW!”

    It’s the first annual going out of business sale…

    =)
    HCF

  3. Boiled Frog says:

    Who would I listen to Barry Ritholtz or Dick Fuld….do I have time to ponder that? Its a tough one.

  4. Eric says:

    BR, what do you think of Ken Fisher’s article in today’s Forbes?: “We’ve got an unbubble going on right now. People are dour and pessimistic. They are acting as if we were in a depression when we are not. We are not even in a recession.”

  5. Namazu says:

    And only a fool would try to put lipstick on a bull.

  6. Vermont Trader says:

    i was trading around in LEH in premarket this morning and accidentally bought 100k @4.20 instead of 10k….

    i didn’t notice for a couple minutes b/c i was watching the push into the open hit and I was caught up with a phone call.

    Looked down at my P/L and the trade was up 30k… WTF… but there it was.. sold it immediately.

    i’m still shaking.

    i think i need a break for a couple days.

  7. VennData says:

    On Thursday, June 12 when the Dow was at 12,100-3000 Ken Fischer said:

    “People have had their pants scared off of them. Therefore they are running around basically naked,” Fisher said. “And when people are running around basically naked, they’re not very rational, so you don’t have to be very rational in the purchase process either, you can be broad spectrum and do it like a shotgun,” he added.

    http://news.fi.com/fisher-investments-news/default.aspx

    Now, the Dow’s 1,000 points lower, that’s a big drop, awfully fast.

  8. Mr. Beach says:

    Whats up with WFC today? Why is it up?

  9. Stuart says:

    wait for the invisible hand (sticksave)..

    State Capitalism.

  10. Jonny says:

    WFC perhaps coming to grab LEH with Fed’s help? Would this also be the reason the market is back in black today?

  11. Jonny says:

    WFC perhaps coming to grab LEH with Fed’s help? Would this also be the reason the market is back in black today?

  12. Bruce says:

    Bruce in Tennessee’s Wall of Shame:

    Ken Fisher

    Joe Battipaglia (made it on lack of vision prior to this year)

    Abby Joseph Cohen

    Don Luskin

    Steve Leisman

    Alan Greenspan

    Everyone at the NAR

    …etc…

    (I think I see why Cramer gets off on this)…

    Bruce in Tennessee

  13. zackattack says:

    Just dumb rumors. If it hadn’t been that, it would’ve been Buffett, or someone would’ve paid Gasparino to shill something. Somebody is long and lugging.

    We also revisited S&P 1212, which was the 07/15 close.

    A good place for a spirited defense, a good time for a bounce. But it won’t last… not oversold, VIX is only 26.

    Use it as a chance to reload on AIG. Will Goldman buy them too?

  14. Rolling Stone

    With the help of U.S. defense contractors, China is building the prototype for a high-tech police state. It is ready for export.

    Thirty years ago, the city of Shenzhen didn’t exist. Back in those days, it was a string of small fishing villages and collectively run rice paddies, a place of rutted dirt roads and traditional temples. That was before the Communist Party chose it — thanks to its location close to Hong Kong’s port — to be China’s first “special economic zone,” one of only four areas where capitalism would be permitted on a trial basis. The theory behind the experiment was that the “real” China would keep its socialist soul intact while profiting from the private-sector jobs and industrial development created in Shenzhen. The result was a city of pure commerce, undiluted by history or rooted culture — the crack cocaine of capitalism.

    It was a force so addictive to investors that the Shenzhen experiment quickly expanded, swallowing not just the surrounding Pearl River Delta, which now houses roughly 100,000 factories, but much of the rest of the country as well. Today, Shenzhen is a city of 12.4 million people, and there is a good chance that at least half of everything you own was made here: iPods, laptops, sneakers, flatscreen TVs, cellphones, jeans, maybe your desk chair, possibly your car and almost certainly your printer. Hundreds of luxury condominiums tower over the city; many are more than 40 stories high, topped with three-story penthouses. Newer neighborhoods like Keji Yuan are packed with ostentatiously modern corporate campuses and decadent shopping malls. Rem Koolhaas, Prada’s favorite architect, is building a stock exchange in Shenzhen that looks like it floats — a design intended, he says, to “suggest and illustrate the process of the market.” A still-under-construction superlight subway will soon connect it all at high speed; every car has multiple TV screens broadcasting over a Wi-Fi network. At night, the entire city lights up like a pimped-out Hummer, with each five-star hotel and office tower competing over who can put on the best light show.

    Many of the big American players have set up shop in Shenzhen, but they look singularly unimpressive next to their Chinese competitors. The research complex for China’s telecom giant Huawei, for instance, is so large that it has its own highway exit, while its workers ride home on their own bus line. Pressed up against Shenzhen’s disco shopping centers, Wal-Mart superstores — of which there are nine in the city — look like dreary corner stores. (China almost seems to be mocking us: “You call that a superstore?”) McDonald’s and KFC appear every few blocks, but they seem almost retro next to the Real Kung Fu fast-food chain, whose mascot is a stylized Bruce Lee.

    Now, as China prepares to showcase its economic advances during the upcoming Olympics in Beijing, Shenzhen is once again serving as a laboratory, a testing ground for the next phase of this vast social experiment. Over the past two years, some 200,000 surveillance cameras have been installed throughout the city. Many are in public spaces, disguised as lampposts….
    http://www.thepeoplesvoice.org/cgi-bin/blogs/voices.php/2008/09/05/china_s_all_seeing_eye

    ya gotta love it when a plan comes together

  15. Jeff M. says:

    @Bruce: You forgot one very BIG one – Jerry Bowyer.

  16. Neal says:

    ——”We’ve got an unbubble going on right now. People are dour and pessimistic. They are acting as if we were in a depression when we are not. We are not even in a recession.”—–

    I wish I had what he’s taking. Is it the new version of exstacy?

  17. Stuart says:

    How sexist of a headline!!! lol

  18. geckoman says:

    Vince Farrell readying his..”We’ve successfully tested the bottom” call. For good measure he’ll come up with a analogy that appears to make sense but in reality in just dumb. “The patient’s in the ER, we’ve stabilized him”.. Get the F’ out here Uncle Vince.

    Bruce in TN…Please add Vince Farrell, Jerry Bowyer and Dennis Kneale to your wall of shame as these are agents of misinformation.

  19. Jonny says:

    Trading folks, crunch time for me here, Curious about your positions right now. I’m massively short at the moment, working on reducing by at leats half, and I’m afraid this could be one of those intervention moments that sparks a long (but temporary) profit-eating rally. I’m also greedy and aware that even if LEH gets taken over and the Fed eases 50bps, the fundamental realities are still very bad, and there could be lots more bad news in the next few days. Are you folks still short (if so, strongly or just a bit), or did you already take your profits and are sitting on the side waiting for another opportunity. Many thanks.

  20. HCF says:

    > Whats up with WFC today? Why is it up?
    In regards to WFC today, perhaps it’s b/c they operate in many of the same markets as WaMu? You figure in much of the West Coast, it’s WFC, WM, and BAC doing most retail banking. Get rid of competition and it might be good (or so the buyers of WFC think)…

  21. Flic says:

    Thinking of taking a position in UYG for a trade. I assume something will happen over the weekend (yet again) to bump markets (although temporary) on Monday. Maybe not….

  22. CNBC Sucks says:

    Bruce, what about Westbury, or is he too small time? What about that Ewok lookalike that sometimes shows up on Kudlow & Company?

    Kneale does not belong on the list because he is just a 401(k) investing civilian. Yes, he is an idiot to be sure, but just because he is on CNBC does not mean he had any credibility to begin with.

  23. ben says:

    Verm Trader,

    Great story and congrats.

    I really think out of these three AIG, if they survive, has the most problems long term. If I had a 50 year time horizon I still don’t think I’d get long AIG here.

    What do others think?

    @Bruce In Tenn.

    I think you could also add Brian Westbury to your Wall O’ Shame.

  24. Eric says:

    I’d like to pat myself on the back for correctly predicting that Cramer, in the face of yet another busted bottom call, would again start talking about how the government is to blame because it is “not taking charge” of the situation. When he traded, Cramer used derivatives to hedge quickly. Now he hedges with his rant — “Market up? I called it!!! Market down? Hey, I ranted. It’s all Uncle Sam’s fault.”

  25. MarkTX says:

    Vermont Trader,

    LEH is coming back in to that $4.20 range

    are you going to double dip in one day????

    What a great trade! Phat thumb wins one!

    (I assume you went long)
    which brings up,
    I guess all the people on and around this blog are not a bunch of bears piss’n and moan’n but normal people/traders/investors (if there is such a thing) trying to make money and trying to make sense of it all.

  26. leftback says:

    VT Trader – good story, too much coffee? or not enough?

    Jonny – I am not doing much, I missed the week’s best trade like a tool (getting short banks on Monday), although I did short gold. I am sitting on the sidelines, except for some retailer shorts I put on ahead of tomorrow’s numbers.

    Every time I went anywhere in August the stores were empty or people were buying only the HUGE markdown items, not good for the bottom line. There is a massive Coldwater Creek on 3rd Avenue in Manhattan – really expensive real estate, and it is always empty when I walk by. Retail and commercial RE are the next group of stocks to crumble.

  27. MarkTX says:

    CNBC
    Lehman Now Seeks Buyer For Entire Firm: Sources
    http://biz.yahoo.com/cnbc/080911/26658460.html

    Ya gotta love this line in the article,

    “Lehman also has one of the best investment banking outfits on wall street, as well as savvy traders.

    $4.57 worth of savvy trader eh??

    Put ALL of CNBC on the Wall of Shame and be done.

  28. Jeff M. says:

    Thank God Morgan Stanley did this. Nicely done.

    2:17 pm Today Morgan Stanley removed its overweight rating on Lehman Brothers (LEH) because of market uncertainty.

    Ya think?

  29. mephisto says:

    Call me crazy, but I find the WAMU thing much more important than the LEH. Is LEH a diversion they are letting play out while they try and figure what to do with WM??

    People are weirdly complacent about this bank.

  30. ben says:

    @ Johnny
    I think I’m like some others here, a few shorts with the biggest short left in FXP. I’ve done well with this one.

    I’m personally looking at building long positions here since I have a long time horizon so I’m trying to ease into a handful. My most recent has been purchases of CHK in the low 40′s and took another stab at it today around high 38′s.

    Other than this I’ve got a bunch of cash and laddered certs and small tax advantaged portfolio that I have put together that will eventually get put to work in equities but I don’t see that coming any time soon.

  31. Yves says:

    Rem Koolhas is an idiot.
    I worked in one of his buildings for years and it s..ked

    Disclosure;
    I bet a McDonald Number one with a colleague that LEH: would close below $5.

  32. Click Broker says:

    Barry, what is your average price for WaMu?

  33. Robert Reed says:

    This Time, WaMu May Have To Say Yes To Chase

    Earlier this year, New York-based JP Morgan Chase tried to acquire the sagging Washington Mutual in an all-stock deal worth $8 per share. At the time, WaMu’s CEO Kerry Killinger’s reply to Chase leader Jamie Dimon was your basic, ”thanks, but no thanks.”

    Apparently, Killinger was betting that an infusion of capital from private investors, coupled with an easing of the mortgage lending crisis that crippled WaMu’s earnings and capital reserves, would allow the Seattle-based lender to remain independent. It would also help Killinger keep his CEO office.

    Killinger guessed wrong, especially about job security because he was ousted a few days ago. More troubling, his former company looks like it’s coming in for a crash landing, prompting increased speculation that WaMu must soon be saved– either through a federal bailout, a merger with another bank, or some combination of the two.

    No matter what, WaMu may have to swallow hard and try to renegotiate with Dimon, who was disappointed at that earlier rejection.

    WaMu is not dealing from a position of strength because it’s woes have ballooned since JP Morgan’s March overture. In the second quarter, WaMu suffered its biggest loss ever. And it’s staggering under $44 billion in debt due this year, with another $43 billion due over the next few years. WaMu’s stock is now trading below $2 a share–far south of that estimated $8-per-share it turned down from Chase and it’s 52-week high of nearly $39 per share. Yet beneath those financial ailments beats a viable consumer lending franchise.

    Lucky for WaMu, Dimon is determined to turn Chase into a national retail banker and keep pace with major competitor Bank of America, which in recent years spent $21 billion to acquire Chicago-based LaSalle National Bank and another $4 billion buying rickety California-based mortgage lender Countryside Financial.

    To take on BofA, Chase must bulk up it’s retail banking side by adding customers, checking accounts, branches and ATMs in major West Coast and selected Midwest markets. In short, regions where WaMu already has a presence.

    That doesn’t mean Dimon is going to give up the store to buy WaMu, especially as it’s financial situation becomes more dire and there’s increased speculation that federal regulators may have to lend a helping hand.

  34. Barry,

    Thanks for stopping by my site. I’m honored that you came by. I did figure that you were attempting to make a statement with the title, I just figured I’d make my opinions known a little differently.

    Keep up the good work!

    Tom