Posted by: Reggie Middleton in Research, Mortgage Banking, Legislation, Law & the Government, Investment Banks, Global Macro, Financial Shenanigans, Current Affairs, Commercial Banks, Capital Markets, Banking, Asset Securitization Crisis on
Jan 06, 2009
As I sit back and look at the market go through its bear rally, performing a myriad of what if scenarios on my various bearish positions and generating cash where feasible by selling off profits, I revisited the Doo Doo 32 and a few big name banks. I say to myself, "This year will not be as easy as last year, now that nearly everybody should be aware of the extent of the problem, and the violent bear market rally/option spreads that makes shorting and put buying very expensive." Then I listen to talking heads in the media and the "everbull", long only professionals. I ponder, "Hmm, maybe there is a little low hanging fruit to be had after all". To be sure, we will have to sit through this bear market rally which has to hurt anybody not in all cash or hedged, and there seems to be a willingness of traders to push this one relatively far. The FACTS still remain though, if the stocks of the BoomBustBlog bear targets move much farther, this could very well be another repeat of last
To follow up on the post that I scribble together at 3 am, undedited, the other day -A few grim thoughts for the New Year, as I reflect upon the past year, I want to refresh the memory of my readers, particularly in regards to why I was so bearish on many name brand banks last year. This may require some re-reading of the Asset Securitization series. So, before we get started on the major value drainers of 2009 (believe it or not, still mortgages, consumer and corporate loans) I want to provide a few links of interest that put things into perspective.
Yes, I know its a lot of reading, but that is why I have the confidence to short heavily into a rising market, and it is what has powered my returns thus far. Confidence in the fact that I have performed more comprehensive, more diligent, and more accurate research than those that I am selling shares to.
Now, that we have caught up on the happenings of last year, let's look forward to what we can expect this year.
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From Yahoo News:
Analysts downgrade oil tankers on fears that shipping rates will dwindle in economic weakness
NEW YORK (AP) -- A pair of analysts downgraded several oil tanker companies on Monday, predicting that shipping rates might have reached their peaks as the global economy weakens and an influx of ships approaches the market.Jefferies analyst Douglas Mavrinac cut shares of Frontline Ltd. and Nordic American Tanker Shipping Ltd. to "Underperform" from "Hold," citing both companies' heavy reliance on the spot charter market, where rates could be "significantly weaker" in 2009.
Mavrinac also lowered his rating on Tsakos Energy Navigation Ltd. and Overseas Shipholding Group Inc. to "Hold" from "Buy," suggesting the stocks have little room to grow if shipping rates fall as expected next year.
The analyst also cut his 2009 earnings estimates and price targets for most of the oil tanker stocks he covers.
Also Monday, JPMorgan analyst Jonathan B. Chappell cut his rating on Nordic American
Posted by: Reggie Middleton in Strategy, Retail on
Jan 01, 2009
Happy New Year all! With the new year comes the possibility of a strong bear market rally, which brings with it the potential to profit from the same companies whose fundamentals and macro situation led them to be profitable short candidates in 2008. While I don't give trading advice, I do want my subscribers to be aware that a sharp increase in a weak company's share price does not necessarily make that company stronger. Keep in my mind the 12 months that I held on to my GGP bear trade. This company had several major price run ups that pushed the position into deep drawdowns, which enabled me to double up on the position without incurring significant option premiums and paying much less for short stock positions. I was able to do this because I had conviction and confidence in my research. If the research is followed consistently over an extended period of time, there should be enouch profit and confidence for the average follower to easily endure drawdowns and adverse market
Posted by: Reggie Middleton in Media, Blogonomics on
Dec 30, 2008
I don’t necessarily follow management consulting tomes religiously, since I feel that if they truly believed their advice was all of that, they would be out making money acting on the advice in lieu of selling the advice. After all, which is more valuable, the advice itself or the sale of the advice? The same could be applied to my burgeoning, found by accident, little blogging business. I am not an investment advisor, I am an investor. I decided to sell my research because it simply got too expensive and laborious to give it away for free. It does tend to offset the research expense component and lo and behold, it actually turned out to be a viable venture on its own. The fact still remains though; I would like to consider myself to be an investor more than a media company/website operator. Thus, I feel that the media that I do peddle is justified and the results vindicated by the fact that I eat my own dog food, nigh exclusively. Consumers of investment research and opinion products
- Countrywide was forced into a fire sale vs bankruptcy situation. It was totally insolvent and reeked of non-performing, illiquid and depreciating assets.
- Merrill Lynch was forced into a fire sale vs bankruptcy situation. It was totally insolvent and reeked of non-performing, illiquid and depreciating assets.
- Bank of America bought both of these companies. Hmmmm. Look at its share price and balance sheet. Where do we think all of those reeking assets ended up?
- Bear Stearns was forced into a fire sale vs bankruptcy situation. It was totally insolvent and reeked of non-performing, illiquid and depreciating assets.
- Washington Mutual was forced into a fire sale vs bankruptcy situation. It was totally insolvent and reeked of non-performing, illiquid and depreciating assets.
- JP Morgan bought both of these companies. Hmmmm. Look at its share price and balance sheet. Where do we think all of those reeking assets ended up?
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A few days ago, BoomBustBlogger Stuart made the following comments:
I'd be curious to see where you think GNK fits into the mix. They popped up on a screen so I briefly looked at them. Their latest 10Q has a investment in a company called Jinhui. That company trades on the Oslo bors (ticker JIN) and is 54% owned by a Hong Kong company. GNK values their stake at $200 million based on a Sept 2007 stock price. Problem is that JIN has lost about 90% of its value since that time. I don't short stocks so I just eliminated it and moved on. But might be worth a closer look for subscribers, esp if a write down triggers collateral posting requirements under their 2007 credit facility.
On a broader note, this research note [the latest shipping company research note] seemed to rely heavily on the order book to current fleet ratio, which would indicate price will not be rising to prior highs anytime soon. But, how reliable is that number? Shipping co's have been canceling right and left and I expect that trend to accelerate as it becomes clear that China will not miraculously boom during a rest of the world downturn. If few of these cancelled ships are completed, then I would expect the order book to current fleet ratio not to accurately predict future supply. For example, with respect to bulk carriers, the Business Times reported recently that an astounding 30% were placed with "greenfield" yards in China. It would shock me if the majority of those vessels (or even a large portion) ever got built. This makes me think that relying on current order book to predict future supply is not reliable and in fact may be wildly off.
We have looked at Genco Shipping, a carrier of iron ore, coal, grain, steel products and other dry bulk cargoes. Following are some of our observations on the company based on preliminary investigations –
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