Using Veritas to Construct the "Per…

29-04-2017 Hits:84649 BoomBustBlog Reggie Middleton

Using Veritas to Construct the "Perfect" Digital Investment Portfolio" & How to Value "Hard to Value" tokens, Pt 1

The golden grail of investing is to find that investable asset that provides the greatest reward with the least risk. Alas, despite how commonsensical that precept seems to be, many...

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The Veritas 2017 Token Offering Summary …

15-04-2017 Hits:79111 BoomBustBlog Reggie Middleton

The Veritas 2017 Token Offering Summary Available For Download and Sharing

The Veritas Offering Summary is now available for download, which packs all the information about Veritas in a single page. A step by step guide to purchasing Veritas can be downloaded here.

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What Happens When the Fund Fee Fight Hit…

10-04-2017 Hits:78957 BoomBustBlog Reggie Middleton

What Happens When the Fund Fee Fight Hits the Blockchain

A hedge fund recently made news by securitizing its LP units as Ethereum-based tokens and selling them as tradeable (thereby liquid) assets. This brings technology to the VC industry that...

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Veritaseum: The ICO That's Ushering in t…

07-04-2017 Hits:83446 BoomBustBlog Reggie Middleton

Veritaseum: The ICO That's Ushering in the Era of P2P Capital Markets

Veritaseum is in the process of building peer-to-peer capital markets that enable financial and value market participants to deal directly with each other on a counterparty risk-free basis in lieu...

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This Is Ground Zero for the 2017 Veritas…

03-04-2017 Hits:80010 BoomBustBlog Reggie Middleton

This Is Ground Zero for the 2017 Veritas Offering. Are You Ready to Get Your Key to the P2P Capital Markets?

This is the link to the Veritas Crowdsale landing page. Here is where you will be able to buy the Veritas ICO when it is launched in mid-April. Below, please...

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What is the Value Proposition For Verita…

01-04-2017 Hits:82316 BoomBustBlog Reggie Middleton

What is the Value Proposition For Veritas, Veritaseum's Software Token?

 A YouTube commenter asked a very good question that we will like to take some time to answer. The question was, verbatim: I've watched your video and gone through the slides. The exchange...

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This Real Estate Bubble, Like Some Relat…

28-03-2017 Hits:53292 BoomBustBlog Reggie Middleton

This Real Estate Bubble, Like Some Relationships, Is Complicated...

CNBC reports US home prices rise 5.9 percent to 31-month high in January according to S&P CoreLogic Case-Shiller. This puts the 20 city index close to an all time high, including...

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Bloomberg Chimes In With My Warnings As …

28-03-2017 Hits:81323 BoomBustBlog Reggie Middleton

Bloomberg Chimes In With My Warnings As Landlords Offer First Time Ever Concessions to Retail Renters

Over the last quarter I've been warning about the significant weakness in retailers and the retail real estate that most occupy (links supplied below). Now, Bloomberg reports: Manhattan Landlords Are Offering...

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Our Apple Analysis This Week - This Comp…

27-03-2017 Hits:81323 BoomBustBlog Reggie Middleton

Our Apple Analysis This Week - This Company Is Not What Most Think It IS

We will releasing our Apple forensic analysis and valuation this week for subscribers (click here to subscribe - lowest tier is the same as a Netflix subscription). As can be...

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The Country's First Newly Elected Lame D…

27-03-2017 Hits:81135 BoomBustBlog Reggie Middleton

The Country's First Newly Elected Lame Duck President Will Cause Massive Reversal Of Speculative Gains

Note: Subscribers should reference  the paywall material here for stocks that should give a good risk/reward scenario for bearish trades. The Trump administration's legislative outlook is effectively a political desert, with...

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Sears Finally Throws In The Towel Exactl…

22-03-2017 Hits:86987 BoomBustBlog Reggie Middleton

Sears Finally Throws In The Towel Exactly When I Predicted "has ‘substantial doubt’ about its future"

My prediction of Sears collapsing once interest rates started ticking upwards was absolutely on point.

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The Transformation of Television in Amer…

21-03-2017 Hits:85001 BoomBustBlog Reggie Middleton

The Transformation of Television in America and Worldwide

TV has changed more in the past 10 years than it has since it's inception nearly 100 years ago This change is profound, and the primary benefactors look and act...

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I've started to look into the Jefferies Group Inc., and thought I would share some preliminary findings.

Increased dependence on short term financing (higher REPOs)

Repurchase agreements are classified as a money-market instrument and used as a key source of short term capital by investment banks. Investment banks have been dependent on repo financing for their capital structure needs for quite sometime now. Jefferies is heavily dependent on repo financing with 40% of its liabilities account for repurchase agreement as compared to 13% last year. It is significantly higher when compared with to other bigger names in the investment banking industry such as Lehman Brothers at 27% and Goldman Sachs at 15%. In the last four quarters, the company’s securities sold under agreement to repurchase has increased to US$11 billion at the end of 2007, from US$2 billion at the end of 2006.

 

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Difficult operating environment and rise in compensation ratio drives 4Q 07 losses- Jefferies Group reported a net loss of US$23.5 million in 4Q 07 owing to challenging credit market conditions and a rise in compensation and non compensation ratios. Jefferies reported high compensation ratio largely due to increase in the headcount in line with the company’s growth strategy. The compensation ratio increased to 60.3% for 2007 as compared to 54.3% for 2006 with the average employee headcount increasing 12% to reach 2,394 in 2007. Jefferies also paid higher signing and guaranteed bonus which exerted pressure on the margins.

 

Non compensation ratio also increased to 24.0% of net revenues in FY 2007 compared to 21.8% in FY 2006. The increase in non-personnel expenses is attributable to increased compliance, technology and communications costs. In addition, the new hiring has resulted in increased occupancy at London and New York offices

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Fixed income revenues under severe pressure in the last two quarters

Fixed income, and commodities revenue comprising high yield secondary market trading activities, investment grade fixed income, and commodities products revenue also declined during the quarter. Fixed income's contribution to revenues has declined to 6% in 2007 from 12% in 2006. The revenues declined 29% to US$173.1 million owing to extremely challenging and illiquid US high yield credit markets in the second half of 2007. The widening spreads and reduced levels of liquidity negatively impacted the high yield products and resulted in a significant decline in revenues from fixed income products in 3Q 07. However, the contributions from the investment grade fixed income products and volatility in commodities product in 4Q 07 supported the revenue growth. As the abating of credit crisis still not in sight after the number of steps taken by US Federal Reserve, revenues from these operations will be under pressure.

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Investment banking revenues declined sequentially

The investment banking operations contributing 28% of the company’s total revenues has declined 12% on a sequential basis to US$167 million. The decline is attributable to the challenging market environment as the ongoing credit crisis has restricted the growth of the sector. The investment banking activities in the near future is anticipated to remain subdued owing to difficult market conditions and tight liquidity conditions.

 

Jefferies Group’s investment banking activities are focused on sectors not considered volatile like the aerospace and defense, energy, gaming and leisure, healthcare, industrial, retail & consumer, technology, oil service & infrastructure, media and communications. The company also provides investment banking services to some financial services companies. The exposure to varied sectors has helped Jefferies in reporting healthy revenues from investment banking operations in the difficult market environment.

 

Deteriorating fixed charge coverage ratio raises questions on company’s ability to service loans

The company’s fixed charge coverage ratio has declined from 5.5X in 2005 to 3.0x in 2007 owing to increased debt issuance. The company’s long term debt has increased from US$780 million in 2005 to US$1.9 billion in 2007 increasing pressure on its ability to service the loans.

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