Posts filed under “Valuation”
Lehman broke $10 just now, down 40% for the day.
For laugh, check out Charlie Gaspario’s CNBC video at the time –
simply inexcusable reporting by CNBC, cheerleading a CEO against credible critics of the firm: “Shorts are full of it, desperate . . . Maybe Dick Fuld is right and Einhorn and Ritholtz are wrong… Who do you believe: Dick Fuld, or Einhorn? Dick Fuld, or Ritholtz?
(Charlie, you can mention my name and Einhorn’s in the same sentence anytime!)
Dennis Kneale’s critique of Einhorn is similarly awful.
Some of the comments on our Sell call of Lehman at ~$30 now look a little silly.
Finally, this is directed not to everyone, but to a few hardcore Cramer Kool-Aid drinkers (you know who you are): Stop cheering the Financials. Fannie (FNM), Lehman (LEH), AIG — when are you going to stop arguing with these calls? Hasn’t this track record been enough for you yet?
Lehman Shares Fall After Talks With Korean Bank End Bloomberg
Financial Sector: Beware LEH, CIT June 03, 2008
Updating Lehman Sell Call June 12, 2008
When people try to figure out what was the cause of today’s 344 point whackage, one of the items they will point to will be SocGen’s alert today from Albert Edwards: ***Alert****Economic and equity market meltdown imminent****Alert*** Last week saw the publication of Q2 US whole economy profits data. They were shockingly bad. Core measures…Read More
I’ve been meaning to point to a fascinating part of TheStreet.com: Banks & Thrifts Screener. Its a pretty nifty tool that you can use to see if your bank is on the skids or not. (Note: I don’t know what the basis of the ratings are — they are proprietary)
Excellent tool, and best of all its free.
For example: My neice and nephew live in Chicago, and asked me about a local bank. I popped in Illinois, and screened for all banks rated "D" or below.
Voila! 137 Banks rated from D+ down to F. (see full list after the jump)
In NY, the same search generates 27 banks; In California, 83 banks. If I search all states, I get 1477 banks rated "D" or worse.
TSC Ratings Finds the Weakest U.S. Banks
A bonus Friday afternoon guest post via Macro Man
– a portfolio manager at a London-based hedge fund, he trades global
currencies, equities, fixed income, and commodities. Over a long and
varied career, Macro Man has been an international economist, a
sell-side currency strategist, and a currency options market-maker.
His amusing Friday afternoon topic? Market Monopoly!
With the Olympics and the summer drawing to a close, it’s now time for market participants to get themselves back from the beach, turn off the TV, and focus on making money for the four-and-bit months that remain of 2008. Yet the Olympic spirit lives on, and many of us would love to channel our inner Usain Bolt or Michael Phelps.
Indeed, over the course of his career Macro Man has met many market people who are just as competitive as Bolt, Phelps, or Tiger Woods, for that matter. Sadly, while the mind is willing, the flesh is all too often weak (in this case, literally.) How, then, can desk-driving market people bring out the Olympian that lurks within us all and keep the competitive fires burning?
Macro Man has hit upon the answer: Monopoly. The game requires no discernible athletic ability and is predicated upon acquiring assets as cheaply as possible, levering them up, and separating other players from their cash. It’s a skill set with which many (but by no means all) market punters are well-acquainted.
Of course, in Monopoly, as in life, chance can play a significant role in determining winners and losers. In real life, these slings and arrows of outrageous fortune can come from anywhere, but in Monopoly they derive from the dice and the Chance/Community Chest cards. Come to think of it, it looks like the game of Market Monopoly has already started, because some of the cards have already been drawn. Consider who’s already holding the following (vintage) Monopoly cards:
ADIA, CIC, and Temasek holdings. These SWFs already own very significant stakes in a number of banks in the US and Europe, in many cases via high-yielding preferred shares. Though it may be a case of thrice bitten, four times shy, Macro Man can’t help but think that at the end of the dilutive capital-raising process, these guys will be the only ones left with enough equity to get paid any meaningful dividend income.
Holders of 2007 vintage AA-rated ABX. Unfortunately, to collect the prize, they have to tender $100 of face. (Since this vintage card was printed, prices have fallen further. In the modern editions of Monopoly, second prize winners only get $10.)
John Thain. Mr. Thain’s tenure at the helm of Merrill Lynch has been characterized by three things: large write-downs, a fire sale of assets to clean up the balance sheet, and Merrill itself providing the funding to the buyers in the aforementioned fire sale. Alternatively, this card could represent Merrill’s settlement of its part of the auction rate securities fiasco.
What this country really needs is less tranparency in earnings reports, and more wiggle room for corporate reporting:
We are governed by utter idiots . . .
Similarities and Differences: A comparison of IFRS and US GAAP
Click for PDF
"The Securities and Exchange
Commission signaled the demise of U.S. accounting standards, kicking
off a process Wednesday that could ultimately require all publicly
listed American companies to follow an international model instead.
in two steps, the shift could eventually cut costs for companies and
smooth cross-border investing. At the same time, investors worry it
will create confusion, especially during the transition. Other critics
worry that the international system offers too much wiggle room for
companies, compared with the more precise rules enshrined in U.S.
The SEC’s proposal would allow some large
multinational companies to report earnings according to international
accounting beginning in 2010. The SEC estimates at least 110 U.S.
companies would qualify based on their market capitalization, among
other factors. The agency also laid out a road map by which all U.S.
companies would switch to International Financial Reporting Standards,
or IFRS, beginning in 2014, at the expense of U.S. Generally Accepted
Accounting Principles, the guiding light of accountants for decades.
The proposals will be open for public comment for 60 days and could be finalized later this year."
Anything that artificially boosts earnings is great for America . . .
SEC Moves to Pull Plug On U.S. Accounting Standards
KARA SCANNELL and JOANNA SLATER
WSJ, August 28, 2008; Page A1
SEC May Let Companies Abandon U.S. Accounting Rules
Bloomberg, Aug. 27 2008