SubscribeLynching Merrill - Suicide or Murder ?
August 4, 2008
It is really bad isn’t it? Even as we are being told that all is okay on Wall Street, the banks and brokers are so full of disease it can easily be compared to necrotizing fasciitis. You know, that awful flesh eating disease.
The latest shenanigans by Merrill Lynch (MER) is almost too much to Bear (pun intended) and now we are going to surely continue with a crisis of confidence as it seems impossible for this group to allow the truth to come out when they speak. Now Merrill is in a jam and they are trying everything to make it seem that all is just fine.
Bill Fleckstein had a few observations on this that just cannot be ignored:
So the question is: What changed in the past couple of weeks to cause a CDO — a package of loans known as a collateralized debt obligation — valued at 36 cents on the dollar to be “sold” last week at 22 cents? What did Thain know about this at the last conference call, and why was it not made clear to folks? (For more on the sale, click here.)
Of course, this is more a consignment sale than a true sale. Merrill is providing 75% financing on a non-recourse basis. That means it’s really receiving about 5 cents on the dollar. It may get the other 17 cents later, or it may get the securities back. In essence, Merrill wrote a put option “down 5 cents on the dollar” and gets a call option to get the other 17 cents.
Essentially, Merrill is putting up the funds to sell of the assets. Does that mean that the super-senior-debt they put up was sold for almost nothing? Why the payoff? What did Lone Star, Temasek or others have on them or even better, why did they unload the debt and lose the potential upside? Are they out of options?
The ugly factor is at an all time high. If Merrill goes down, it will not be because they were murdered, it will be because they kicked the chair out and hung themselves.
Jim Jubak’s feathers are in a ruffle over this and is mad as heck at the way CEO Thain has treated shareholders. The 38% dilution after this deal is appalling and shareholders should really take notice.
The games that are being played are the absolute worst thievery I have ever encountered. How do we invest in an environment in which the rules are continually changing - and we are not getting any of the updates. Something stinks on Wall Street. Perhaps it is the rotting corpses of the brokers that are still walking around like zombies, not knowing that they are already dead.
Jim Jubak on The Disciplined Investor Podcast is HERE.
Disclosure: Horowitz & Company clients do not hold positions (of this crap) as of the time of this writing.
TDI Episode 68: Crocs Makes a Great Toilet Seat
August 3, 2008
Guest: Michael Santoli, Barron’s Editor brings some important issues to the front regarding how the media deals with information. Andrew asks about the slant of “big media” toward the bullish argument (or at least they appear to frown on the short and negative ideas). We also discuss the summer market doldrums and ideas to fix for the Auto Industry.
Andrew suggests that there is going to be a HUGE fallout and uprising against mainstream media, and…
- General Motors (GM) takes a whopper of a loss, can we fix it?
- Merrill Lynch (MER) is manipulation the news/media.
- Crocs (CROX) makes a great toilet seat.
- Audible.com free audiobook offer.
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Michael Santoli is an Associate Editor for Barron’s, The Dow Jones Business and Financial Weekly. He writes the “Streetwise” column, offering a forward-looking take on the financial markets, illuminating market trends and identifying investment opportunities. Mr. Santoli is a regular on-air contributor to several cable and broadcast networks.
LISTEN TO PODCAST | LISTEN @ ZUNE - @ iTUNES
Prior to assuming his current position in November 2006, Mr. Santoli had been a senior editor for Barron’s since May 2002, writing “The Trader” column, which covered the stock market and investment trends. Previously he had been mutual funds editor for the magazine since March 2000, when he wrote the “Fund of Information” column, edited the quarterly mutual-fund pullout sections and wrote cover stories for the magazine.
In August 1993, Mr. Santoli joined Dow Jones & Company as a reporter for the Dow Jones News Service and covered the securities industry. He moved to Barron’s in February 1997 as a staff writer and wrote the “Commodities Corner.” In 1998, he began writing the “Striking Price” column, covering the options markets.
Before joining Dow Jones, he worked in New York as a reporter/editor for Investment Dealers’ Digest from June 1992 through early August 1993.
Mr. Santoli has received two Dow Jones Newswires Awards for distinguished real-time journalism. In 1995, he was a member of a team honored for a series of stories on the demise of D. Blech & Co., and in 1996, he and a colleague received an award for their coverage of the securities industry.
Born in Manhasset, N.Y., Mr. Santoli received a bachelor’s degree in history from Wesleyan University in Middletown, Conn.
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Stocks discussed: Crocs (Crox), General Motors, (GM), Merrill Lynch (MER), Ford (F), Apple (AAPL)
ZachZone Stocks: China Distance Education Holdings Ltd. (DL), Incyte Corporation (INCY), China Mass Media Intl Adv Corp. (ADR) (CMM), Rhino Resource Partners, L.P. (RNO), Rackspace, Inc. (RAX)
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Get your free copy of The Disciplined Investor or any audiobook HERE
TDI Episode 67: The #1 Read Investing Columnist
July 25, 2008
Guest: Jim Jubak. MSN Money and Andrew discuss how to spot the end of a bear market. We also review the financial stocks and Andrew provides insight in the Main-stream-media. (MSM)
I will admit it; I am in quandary. Do we really know what is going on? Do the newspapers, magazines and site that are providing us with the latest business news and insight know what is going on? How did the Holy-19 get on the list and why?
LISTEN TO PODCAST | LISTEN @ ZUNE - @ iTUNES
Jim Jubak is the senior markets editor for MSN Money. Previously, he served as senior financial editor at Worth magazine and as editor of Venture magazine. Jubak was a Bagehot Business Journalism Fellow at Columbia University and has written “The Worth Guide to Electronic Investing“ and “In the Image of the Brain: Breaking the Barrier Between the Human Mind and Intelligent Machines.”
Jim is also the #1 read investing columnist of the web, according to Neilsen’s.
As an investor, he says he believes the conventional wisdom is always wrong — but that he will nonetheless go with the herd if he believes there’s a profit to be made. His column, Jubak’s Journal, appears on MSN Money every Tuesday and Friday.
Also, it appears that in December 2008, there is a book coming that explains how Jim has been able to rack us those amazing gains on an annual basis. The Jubak Picks: Based on The 10 Year Stock-Picking Track Record That Has Returned More Than 300%
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The ZachZone Stocks: GT Solar International, Inc. (SOLR), China Distance Educational Holdings (DL)
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Stocks Discussed in this episode: U.S. Bancorp (USB) , Wells Fargo & Company (WFC), Wachovia (WB) , Adobe (ADBE), ITT Educational Services, Inc. (ESI) , Devon Energy Corporation (DVN) , Pepsi (PEP), Washington Mutual (WM), AECOM Technology Corporation (ACM),
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CLICK HERE for a Virtual Tour of The Disciplined Investor Managed Growth Strategy
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Get your free copy of The Disciplined Investor or any audiobook HERE
Bill Gates and AN - The Most Charitable Man Alive
July 24, 2008
It is official! Bill Gates has to be the most charitable man alive. Now, he is providing a chunk of his assets to help out ailing Autonation (AN). Sure he takes a nice piece of the company and if you look at the history of this once darling/roll-up king, you will realize that this may be actually approaching a bottom.
Whether it is a brilliant move or a plan for a tax write-off is still not know, but it does appear that Autonation’s CEO Michael Jackson seems to have a plan for cost cutting and working within this difficult environment. Do we follow Gates into this without any thought? Do we then follow Lampert as he has been continuing to add to his holdings (40% now)? Maybe not.
How about a contarian play? Maybe… Whatever you think about the fate of the auto industry, this happens to be a well run company that is caught within a very bad situation. It is at a relative low and as oil prices seem to be turning and companies are waking up to the fact that they need to change their ways. This could give Autonation a boost. The biggest concern is still the consumer and their ability to buy or borrow to buy a new car.
Thoughts???
Bill Gates Tunes Up With AutoNation Buys - Barrons.com
The stock has been driven down by the weak economy and consumer pullback, but Bill Gates has used the softness to raise his stake in the auto retailer to 5.5%.
On Monday, Gates’ personal investment vehicle, Cascade Investments, reported owning 5.3 million shares, or a 2.9% stake in Fort Lauderdale, Fla.-based AutoNation. Also, the Bill & Melinda Gates Foundation reported owning 4.6 million shares, or a 2.6% stake in the company.
At the end of the first quarter, Cascade had no position in AutoNation and the foundation reported owning 800,000 shares.
Both filed as passive shareholders and indicated July 17 as the date the ownership threshold was met to trigger the filing.
The investments combined give Gates, the world’s third-richest man according to Forbes, control of 9.9 million shares, a 5.5% stake. Gates is now the company’s third-largest shareholder. Edward Lampert’s ESL Investments is AutoNation’s largest shareholder, with a 40.4% stake. Lampert has been actively buying AutoNation shares since October.
The Fat Lady ain’t singing!
July 21, 2008
It ain’t over it seems. Apple (AAPL) aside, the big news after hours was American Express (AXP). The earnings are awful, the business is in the dumps and now AMEX wants to withdraw any 2008 forecast. Bloomberg reported:
Profit in the company’s U.S. card business dropped 96 percent to $21 million from $580 million a year earlier as provisions for losses more than doubled to $1.5 billion from $640 million. uncollectible debt in the unit rose to 5.3 percent of loans from 2.9 percent a year earlier.
After hours, my old friend Capital One (COF) was knocked for a loop on the news as well. The credit card industry has proven itself to be no better that two-bit loan sharks. They rape customers with exorbitant fees, ruin your life if you cannot pay and now lie to protect themselves. I am totally disgusted with the way they have handled themselves.
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