Posts filed under “Valuation”

AIG: Don’t Try to Catch the Falling Knife

Here’s an excerpt of a report we put out on Monday:


AIG shares broke down through what had been solid support over the last three years on the second heaviest weekly volume on record going back to 1996. The breaking of support happened to coincide with news that outside auditors had found deficiencies in the way the company values some financial derivatives it has written based on collateralized debt obligations (CDOs). 

Additionally with a FusionIQ Technical Rank of only 12 (out of a possible 100) forward returns for AIG do not look promising. The next downside target for AIG shares is $ 32.00 (green line) and this aligns nicely with the objective point and figure derived target of $ 33.00. 

Analyst sentiment remains overly bullish with 14 BUYS and only 4 HOLDS, particularly given the recent breakdown in price.  We would expect to see the analyst recommendation skew migrate from its more bullish posture over the next several weeks/months bringing additional downward pressure to shares.

From a tactical trading strategy rallies into strength can be sold into to either exit long positions or put on new shorts positions.

American International Group (AIG) -

Weekly Chart through Monday’s close


chart courtesy of

Category: Derivatives, Quantitative, Technical Analysis, Valuation

Was a Private Equity Bid for Yahoo Thwarted by Microsoft ?

Category: Corporate Management, M&A, Valuation, Web/Tech

Yahoo to Microsoft: No, Thank You

Category: Corporate Management, M&A, Valuation, Web/Tech

ISM Services Index: Look out below!

One of the themes we have been hearing of late is that stocks, 10% off of their all time highs, are fully reflecting a recession.

That statement turns out to be, um, a tad less than accurate, as was shown by the most recent ISM non-manufacturing Index. Headlines such as Services Data Blindsides Market reveal how little the market actually had priced in even a mild recession, much less a deeper and longer one.

  The ISM’s non-manufacturing
index reflects almost 90% of the economy, according to Bloomberg. Consensus expectations of 53% were dashed, as the index plummeted to ~41.0%. to the lowest level since October 2001. If we exclude 9/11, this was the weakest reading since the data began in 1997.   

In response, all 10 industry groups in the S&P 500 declined, and the Dow dropped 220 points.

Across the board, the data released was surprisingly weak:

Business Activity Index at 41.9% (consistent with a recession historically)
New Orders Index at 43.5%  (fell 10 pts)
Employment Index at 43.9% (An 8 point fall, matching the lowest on record).
Prices Paid remained elevated at 70.7

This is particularly surprising, as we recently learned from the WSJ OpEd pages that The U.S. Economy Is Fine (Really). I haven’t figured out why those pages insist on denying reality, but its their option to live in an alternative universe (Iraq has WMDs, economy is great, etc.)

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Category: Economy, Markets, Valuation

The Flawed Fed Valuation Model

There are lots of things that investors believe which I find perplexing. The Superbowl indicator is one, but the oddest to me is the so-called Fed Model, also known as the IBES Valuation Model. It is not that the Fed model is so terribly wrong — it has been both right and wrong over the…Read More

Category: Data Analysis, Earnings, Fixed Income/Interest Rates, Quantitative, Valuation

Open Thread: Financial Analysts

Category: Finance, Markets, Psychology, Valuation

Financial Sector: More Damage to Come

Category: Derivatives, Real Estate, Taxes and Policy, Valuation

Monoline Insurance: There’s a New Sheriff in Town…

Category: Corporate Management, Credit, Derivatives, M&A, Valuation

Here Comes Another Bubble

Hysterical . . .

via GMSV

Category: Valuation, Video, Web/Tech

Profits vs Cash Flow

Category: Earnings, Economy, Valuation