Andrew is MONEY GIRL!

April 29, 2008

Okay… so I am getting in touch with my financial femininity. Any problem with that? :-)

Seriously, if you are familiar with podcasts, then you have undoubtedly heard of Grammar Girl. Mignon Fogarty is the grammatically correct host of one of the web’s top podcasts, is a best selling author and heads-up of one of the fastest growing podcasting properties. Mignon is also the founder/creator of Quick and Dirty Tips and produces several very popular short-format podcasts.

The shows cover the gamut of topics, all with the unified goal of providing listeners useful and actionable ideas to help enhance their personal and business lives.

Even though I tremble with punctuational-fear each time I write her, over the last several months, Mignon and I have become good friends. Recently, she asked if Read more

Tim Sykes on Wallstrip

January 26, 2008

It seems it is the weekend of videos on TDI.

My good friend Tim Sykes was recently interviewed on Wallstrip. You are either going to love him or hate him I suppose. He has an irreverent style that has turned thousands of investors into fans of his website/blog. Tim is a teacher and an entertainer. His story is rather fascinating and his current non-stop sleep depriving obsession is to create greater transparency on Wall Street.

The basic tale-o-tim is that while studying Philosophy and Business at Tulane University, he managed to turn his $12,415 Bar Mitzvah Gift money into a fully audited pre-tax sum of $1.65 million. This was from 1999 to 2002 before founding his hedge fund, Cilantro Fund Management, LLC in 2003. He is was also one of the cast of traders on Wall Street Warriors and has been featured in dozens of financial rags.

In 2006, Timothy’s hedge fund was ranked the #1 Short-Bias Fund by Barclays for 2003-2006 and he was named to Trader Monthly’s 2006 ‘Top 30 under 30,’ a list recognizing the top 30 investment professionals under the age of 30.

Here is where the plot thickens; according to Tim, after suffering a roughly 35% loss over the course of two years, on October 1, 2007, he closed his hedge fund and started a publishing company, BullShip Press, LLC. All of this was in an effort to promote Freedom of Finance, the concept of a hedge fund manager’s right to discuss their business freely without risk of penalty or censorship. Then, on November 1, 2007, Tim unveiled TIM, or Transparent Investment Management, announcing he will go back to his $12,415 roots and repeat the feat of turning this sum into $1.65 million. This time around, his plan is to detail all his investments and his investment process on his blog, as he hopes to “become the first hedge fund manager to detail their strategies for all to see.”

Check out his Wallstrip interview and make sure to track his real-time trading account on Covestor. AND, if you are looking for a good read that will give you the details of Tim’s story, get a copy of his book, An American Hedge Fund. It is an entertaining and fast read.

Bank of America Bluffing or Holding the Nuts?

January 11, 2008

In Texas Hold ’em Poker, the bluff is the definitive strategy that separates bracelet winners from ordinary card players. Today, there seemed to be a bit of card playing going on in a winner-take-all scenario down at the Curb. Suspect as it seems, I wonder if this is an amazing bluff or does Bank of America hold the unbeatable, unbreakable hand also known as “the nuts”?

Poker or Investing.. What is the Difference?

Back in August, I speculated (Last Man Standing) that Bank of America (BAC) would become the logical suitor if Countywide’s (CFC) solvency problems continued. The idea that was presented was simple: If Mozilo took the $2 billion hand-out infusion, he would have to soften his attitude towards a merger since this would be one of the only ways to keep his beloved company intact.

The article concluded with the thought that, “Either way, Bank of America will surely be one of the last ones standing. The wild card will be if they do it with, or without, Countrywide by their side. Even though Countrywide CEO Mozilo currently denies any merger talks, he will surely warm up to the idea if the sub-prime mess worsens and his company continues to suffer.”
Now, after four tortuous months for the industry, Bank of America may be realizing that they may of been slightly premature with their $2 billion gift. Since August, with news circling along side of the vultures, CFC has been in a free-fall due to fundamentals and panic selling. The big problem for BAC has been that their money is evaporating faster than ice in the Gobi. Even thought the original deal calls for CFC to sell BAC 7.25% preferred shares that could be converted into common stocks at a price of $18.
Bank of America in talks to buy Countrywide: sources: Reuters Business News: CFC – MSN Money

Bank of America in August bought $2 billion of preferred shares convertible into a roughly one-sixth stake in Countrywide. Analysts have said that investment made the bank — whose own profitability is suffering from rising credit losses — an obvious candidate to buy Countrywide, eventually.

Looking back, the only thing that may have been keeping up down with the performance of CFC shares is CFC-A preferred shares. As the potential for a bankruptcy squeeze mounted, preferred shareholders were bailing out at any price. Here is where the plot thickens….

Fast Forward
It will come as no surprise when in a few days, after the excitement from the stunning rumorannouncement rumor dims, Bank of America denies any additional progress towards an acquisition. Mozilo will continue his general denial and continue to look for hope that he can do this without any physical intrusion or merger. Sure he will be glad to take your money and issue a few more shares of a convertible preferred. Of course he will also deny any wrong doing on his or management’s part. (Did you catch the recent news investigations into about oversight issues and improper practices?) If this is a poker game and Mozilo is one of cards from the deck, he would surely be tagged as the “Suicide King” by the way he runs his company. into the ground.

Reality Check

It is nothing short of dubious that on the day that Bernanke is scheduled to speak on the state of the economy along with the 100% probability built-in for a rate cut approaching 50bps that a well timed rumor/announcement appears, vaulting the shares of CFC. What is even more interesting is the fact that the day before, the stock was halted on concerns over the news of another investigation. Top it off with a troubling announcement by Goldman Sachs that they believe that recession is imminent and investors were set-up for Read more