SubscribeTDI Episode 62: Bye Bye Mr. American Lie
June 22, 2008
Guest: Zach Scheidt, Hedge Fund Manager. We discuss the IPO market and Andrew is back on his soapbox on the Lehman letter saying that a big part of the problem is the lies and PR spin by the financials. We answer some listener questions and get into a few hedging ideas with the use of ETFs. We even dare discuss the idea of shorting the DJ Oil Index!
Zach Scheidt is the founder and Managing General Partner of Stearman Capital, LP. After graduating with honors from Lee University, Zach attended Georgia State University at night while beginning his career in the securities industry. He then received his MBA in 2001 and also achieved the Chartered Financial Analyst designation in 2003.
LISTEN TO PODCAST | LISTEN @ ZUNE - @ iTUNES
Note: Zach’s IPO/New Issue Hedge Fund is available for qualified investors.
Zach is an avid writer (you have to subscribe to his blog) and periodically publishes articles on individual securities as well as sector and general market themes. He is a regular contributor to Seeking Alpha and has been quoted in numerous financial publications including the Wall Street Journal, TheStreet.com and Yahoo Finance. A participating member of the Atlanta Society of Financial Analysts, Mr Scheidt maintains an active profile in the Atlanta investment community. Also, read Zach’s excellent article on Hedge Funds….
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Stocks and other mentions: (DUG) (DIG) (AAPL) (YHOO) (COF) (LEN) (BIDU) (LEH)
ChartFest: Homebuilders or Ski Slopes?
U.S. News & World Report: TDI Podcast is TOP 10!
Lehman’s Private Letter to Limited Partners
The VISA IPO Paradox: IPO or Bailout?
March 19, 2008
The VISA (V) IPO is coming and it is going to be BIG. A few days ago, I speculated here that the IPO may be pushed back as the markets were in no mood for an IPO even as few have been brought to market of late. It was, and is, not the most opportune time as investor’s are frazzled and institutions are disquiet during what is shaping up to be a historic and cataclysmic economic event born out of our general debauched view of leverage. (Barry Ritholtz: thanks for the Thesaurus idea- I hope I didn’t embarrass myself!)
So, what does that mean for Visa? If you look at the proceed distribution, according to Dealbook, it is rather interesting to note that $1.25 billion goes to:
Even so, the offering will generate a windfall for Visa’s thousands of member banks, which own the company. JPMorgan Chase is expected to reap about $1.25 billion, while Bank of America, National City, Citigroup, U.S. Bancorp and Wells Fargo are likely to receive several hundred million dollars each.
Wall Street firms, in the meantime, stand to collect upward of $500 million in underwriting fees from the sale.
At the same time over 75% of the recent IPOs that had been scheduled have been postponed or cancelled as the market is not capable of capitalizing new issues when it it is so close to margin calls. VISA’s get-it-to-market-and-fast attitude for their IPO is a flagrant and obvious bailout for a few of the institutional beneficiaries. Time is the ultimate enemy in this mêlée against insolvency. The money is needed and it is needed NOW!
So, the VISA IPO is a GO!; no matter how much better it would have priced if times were different. I think that with the potential for insolvency increasing, postponing could be a prove disastrous for one or two of the member banks desperately needing a fast infusion of cash to continue business as “usual.”
(V) (BAC) (NCC) (JPM) (C) (USB) (WFC)
Disclosure: Clients of Horowitz & Company clients hold positions of BAC as of the date of publish.
TDI Episode 48: LIARs, VISAs and BEARs - OH MY!
March 17, 2008
Guests: Zach Scheidt, Harry Dent and David Gaffen. Markets and the future with all that occurred this week is our initial topic. David Gaffen of the Wall Street Journal along with Harry Dent, famed author and economist, provide some clues as to where the
markets and the economy is heading.
Zach discusses VISA IPO and the state of the market provides some great tips on profiting from IPOs. Are we going to crash or have we reached bottom? We introduce, The ZachZone in this episode, a segment to become a regular part of The Disciplined Investor Podcast. This is an episode that will help you profit.
One hedge fund Zach manages strictly invests in IPOs as well as new equity issues. Zach brings great insight along with a refreshing and honest view of what is billed to be the BIGGEST IPO in history. VISA is being touted as a top play by the investment bankers, even in this horrible market. Yet, we look a bit deeper to see if this is
actually something that will be of benefit. (visit ZachStocks)
Zach is the founder and Managing General Partner of Stearman Capital, LP. After graduating with honors from Lee University, he attended Georgia State University at night while beginning his career in the securities industry. He received his MBA in 2001 and also achieved the Chartered Financial Analyst designation in 2003.
Zach is also an avid writer and periodically publishes articles on individual securities as well as sector and general market themes. He is a regular contributor to Seeking Alpha and has been quoted in numerous financial publications including the Wall Street Journal, TheStreet.com and Yahoo! Finance. A participating member of the Atlanta Society of Financial Analysts, Zach maintains an active profile in the Atlanta investment community.
IPO Sites Mentioned: IPOCentral, Yahoo! IPO, StreetInsider, MorningNotes* (*premium)
Stocks Mentioned in this and recent episodes: (V) (BSC) (LEH) (SPY) (SAFM) (GS) (MER) (QID) (SKF) (QQQQ) (IBKR)
on Thursday, March 20th. CLICK HERE….
Guests scheduled for upcoming Episodes: Bill Cara, Mike Huckman, Robert Reich
Milli Vanilli Government: Latest Casualties - Bear and VISA
March 17, 2008
There is something odd, yet comforting when I watch a classic Bruce Lee or Godzilla movie. The people’s lips are moving and while I hear words, the two don’t quite match up. In spite of that, somehow it works anyway and is a reminder that what is happening on the screen is far fetched and should not be confused with reality. Perhaps a good lesson applied to last Tuesday’s $200 billion announcement to Sunday’s $2 news.
As I read the horrifying news of JP Morgan (JPM) and Bear (BSC), I suddenly thought about the (former) masters of the lip-sync world, Milli Vanilli. Remember them? Rob and Fab were the gorgeous singing duo who had a hypnotic effect on a global scale. When they sang, fans were awed. When they danced…well, actually let’s not go there.
Where are they now? As soon as they were outed in 1989 during a live MTV performance of their hit song, Girl You Know It’s True, they fell quickly and painfully. It was a sad end to one life and the two careers of men who will forever be remembered as talentless puppets.
Our trusted government and its agencies have now taken over as the Milli Vanilli of Finance. Who in the hell is calling the plays? Who is making these abhorrent decisions to hide information from the public and allowing for a multi-billion dollar company to to fail over a weekend? How are we going to have trust in the system if they pull a fast one like this? It is now more obvious than ever that we are in bad shape and the lack of either:
1) The people in the know, knowing or
2) Trust for the system
is going to hit hard. Bear Stearns (BSC) is another casualty that could have been avoided. But, instead of going through steps that could have been taken as that is meaningless at this point, maybe we should be thinking about what else is coming and work on a plan to protect ourselves. Thinks about it…it is now every person for themselves as lips are moving by Ben-n-Bush, though they are not saying anything.
So, as a protective measure, use a hedge against a market nosedive - assuming it is not too late. As was suggested on 3/12/08 (Bernanke’s Junk Exchange), look at (SDS) (SKF) and (QID) as some short-ideas that will give you the best bang for the short buck. Don’t stop there though as there is surely going to be further fallout.
Lehman (LEH) is in the same trouble as Bear since they have somewhat similar business models. JP Morgan is absorbing a massive amount of debt that will continue to be difficult to value. Look no further than the Bank of America (BAC) and Countrywide (CFC) fiasco as a foreshadowing of what is in store for JPM. While the far future may be lined with profits, JPM shareholders will need strong constitutions during the short-term. Be careful to hedge these positions if for some reason you do not want to sell outright.
During the next few days, amazing trading opportunities will probably arise as rumors and speculations will run Read more
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