Using Veritas to Construct the "Per…

29-04-2017 Hits:85766 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:79996 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:79857 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:84335 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:80877 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:83124 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:54132 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:82257 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:82110 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:81979 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:88002 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:85878 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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From CNBC: The Treasury Department is directing General Motors to lay the groundwork for a bankruptcy filing:

The Treasury Department is directing General Motors to lay the groundwork for a bankruptcy filing by a June 1 deadline, despite GM's public contention that it could still reorganize outside court, people with knowledge of the plans said during the weekend.

Fritz Henderson, the new chief executive of General Motors , says the company may still be able to reorganize without bankruptcy.

...

The goal is to prepare for a fast “surgical” bankruptcy, the people who had been briefed on the plans said. GM, which has been granted $13.4 billion in federal aid, insists that a quick restructuring is necessary so its image and sales are not damaged permanently.

The preparations are aimed at assuring a GM bankruptcy filing is ready should the company be unable to reach agreement with bondholders to exchange roughly $28 billion in debt into equity in GM and with the United Automobile Workers union, which has balked at granting concessions without sacrifices from bondholders. No matter how you add it up, GM bondholders are going to get the shaft. The most recent asset manager featured in my intelligence note is one of the largest bondholders, both on behalf of clients and as itself. Guess whose going to have a run on assets? To make it even more interesting, this particular company's share price ran up significantly in the most recent bear rally. This can start smelling like opportunity to follow the market price of this stock down to fundamental reality!

President Obama, who was elected with strong backing from labor, remained concerned about potential risk to GM’s pension plan and wants to avoid harming workers, these people said.

None of these people agreed to be identified because they were not authorized to discuss the process. GM declined to comment and the Treasury Department did not comment.

One plan under consideration would create a new company that would buy the “good” assets of GM almost immediately after the carmaker files for bankruptcy.

Less desirable assets, including unwanted brands, factories and health care obligations, would be left in the old company, which could be liquidated over several years.

Treasury officials are examining one potential outcome in which the “good GM” enters and exits bankruptcy protection in as little as two weeks, using $5 billion to $7 billion in federal financing, a person who had been briefed on the prospect said last week.

The rest of GM may require as much as $70 billion in government financing, and possibly more to resolve the health care obligations and the liquidation of the factories, according to legal experts and federal officials. In other words highly insolvent! It is highly unlikely you can strip the best assets from this company, then subtract $70 billion dollar and come up with a positive number. 

Since replacing Rick Wagoner on March 31, GM’s chief executive, Fritz Henderson, has sent increasingly clear signals that bankruptcy is probable unless agreements are reached with labor and the bondholders by the administration’s June 1 deadline.

Unlike Mr. Wagoner, who refused until his final days at GM to consider a Chapter 11 filing, Mr. Henderson has deployed staff to work with legal and government advisers, although he does not agree a bankruptcy is inevitable.

Last week, he said GM was proceeding on a dual track, hoping to restructure out of court, but also preparing for a filing.

“If we need to resort to bankruptcy, we have to do it quickly,” Mr. Henderson said in an interview with the Canadian Broadcasting Corporation.

John Paul MacDuffie, an associate professor at the Wharton School at the University of Pennsylvania, said he saw little chance of an out-of-court restructuring, given that the Obama administration had rejected GM’s proposed revitalization plan in March. It was submitted without the concessions that were required from bondholders and the union, and which have still not been reached.

“The simplest way to frame it is that they took the loans, there were conditions on the loans, they didn’t prove their case for financial viability, and they didn’t meet the deadline, either,” Professor MacDuffie said. Sometimes the hard way is the best way.

Lawyers for GM and the government have much work to do before any bankruptcy case can begin, executives with bankruptcy experience said last week.

First and foremost, GM would have to formulate a business plan that addresses virtually every aspect of the company that it hopes to transform while under bankruptcy protection.

It would have to show how it would save billions of dollars through agreements with its bondholders and unions, how many dealers it plans to keep, and the plants and offices it plans to either close or preserve.

The plan also needs to give a candid forecast of the car market, a tricky prospect given the sharp falloff in sales over the last few months, these executives said.

Treasury has hired the Boston Consulting Group to help with the business plan, according to a notice posted April 8 on FedBizOpps.gov, a government procurement Web site.

 

Participation from banks also may be needed, and because of the weak economic climate, lenders are likely to insist that GM wring as much out of its operations as possible....

Finally, legal experts said, GM would have to try to prevent panic among consumers in the event of a bankruptcy filing. The government has said it will guarantee GM’s vehicle warranties.

...

GM faces an unfunded liability of about $13.5 billion for its plans, which had $84.5 billion in assets and $98 billion in liabilities as of Dec. 31. That amount could sink the pension agency, requiring its own bailout before a GM case could be resolved.

 

General Motors unsecured debt holders would have to accept two-thirds less than the face value of their bonds which would result in and additional 33% loss. Resultantly, some of the biggest holders of GM debt including Franklin Resources Inc., Fidelity Investments and Capital Research & Management Co might have to record significant losses.

http://www.cfo.com/article.cfm/13354418/?f=rsspage

http://www.bloomberg.com/apps/news?sid=ahJ7iV0RMPrs&pid=20601103

http://www.financialexpress.com/news/Pimco-Franklin-GM-debt-value-may-fall-75-in-aid-bid/391011/

http://www.bloomberg.com/apps/news?pid=20601087&sid=aR48OgeFqVMM&refer=home

However most of the above losses would not be borne directly by asset manager shareholders' but by investors in the Assets Uner Management since majority of fixed income investment is towards AUM. As of December 31, 2008 the asset manager we analyzed had $132 bn investments in fixed income (total AUM of $439 bn) of which US fixed income was at $30 bn. In contrast the company had total investment of $2.4 bn including Equities, US treasuries and other debt securities. However the company would be impacted via its $0.80 bn investment in Sponsored investment products (investment in own AUM) which would take a substantial hit following decline in bond prices. In addition the company would also get impacted on account of lower AUM fee through greater outflow of funds resulting in  lower AUM fee and lower profit sharing fee.

Subscribers can download the relevant research below. I will be issuing updated research using my stress testing methodology for this asset manager as well. Spreads will most likely widen, I have the model and stress test complete and we are just tightening up the assumptions before I release it to subscribers. There is much, much more content on the way. I advise those who are risk adverse to stay out of the markets for the time being, but those who have a longer term horizon and an appetite for risk and hunger for fundamentals may see a big profit horizon coming.

pdf Asset Manager Intelligence Note 2009-03-09 11:01:30 351.07 Kb