Thursday, 25 June 2009 01:00

Manufacturing and Industrial Research is Released for Subscribers

Please see the latest research, it makes for a very interesting read. Professional subscribers should read their document very carefully and in detail, keeping in mind my doubt of the validity of the "green shoots" observations...

CAT Forensic Analysis RetailForensic Analysis Retail 2009-06-25 15:43:20 374.87 Kb

CAT Forensic Analysis ProfessionalForensic Analysis Professional 2009-06-25 15:44:27 836.39 Kb

Last modified on Thursday, 25 June 2009 01:00

10 comments

  • Comment Link Rumi Saturday, 27 June 2009 21:26 posted by Rumi

    I forgot to addMCD and DRI to that above list of decent bets to short

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  • Comment Link NDbadger Saturday, 27 June 2009 15:22 posted by NDbadger

    Given FASB's changes, does this mean you think the banks may not take the heat until Q3 or maybe even Q4? The bad loans continue to pile up on the banks' balance sheets, so I was expecting to see continued deterioration this quarter. Sounds like your not sure stock prices will react to the deterioration.

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  • Comment Link Reggie Middleton Saturday, 27 June 2009 07:04 posted by Reggie Middleton

    Practically any highly levered company reliant upon bubbled real estate as collateral was not only in serious trouble, but probably still is in serious trouble. Just as many totally underestimated the ramifications of the real estate bubble, they are also underestimating the extent of the real estate bubble and the extent to which the government can provide assistance. Toyota, and all of the car manufacturers for that matter, where a very good short early last year. I just missed the boat on them (except for Navistar.

    I get the feeling that when we get midway through earnings season, we will see the extent to which the government was able to manufacture green shoots, and how green they actually are. My only concern is that the banks can now lawfully hide the balance sheet losses they have taken thanks to the spineless ones at FASB. Investors have very, very short memories, and many will only look at revenue top line and forget the trash on the balance sheet from last year (with no one to sell them to at inflated prices).

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  • Comment Link Rumi Saturday, 27 June 2009 03:25 posted by Rumi

    OK, I see your point (again!), but now you seem to be arguing along Phirang's lines. Even with gov't assistance, GE et al still dropped like rocks. In fact, your research on many other companies indicates that you are betting heavily against companies that you know for a fact are currently getting government assistance.

    In any case, I think we've got a couple of interesting weeks coming up...

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  • Comment Link Reggie Middleton Friday, 26 June 2009 23:03 posted by Reggie Middleton

    The major difference is that toyota is GUARANTEED to get government assistance. This company probably wouldn't.

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  • Comment Link Rumi Friday, 26 June 2009 18:01 posted by Rumi

    /dried up revenue streams, increasing credit losses, and the potential inability to roll over a large amount of debt are all part of the story here./

    I agree, and they all apply equally well to Toyota (as a case in point).

    /If you have been following me for a while, you can see this./

    You're right, and I have. Until my time dried up, I used to look at the stocks you researched and try to find devil's advocate cases that would justify the existing stock price levels. I never could.

    Have a good weekend, y'all...

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  • Comment Link shaunsnoll Friday, 26 June 2009 17:22 posted by shaunsnoll

    check this out:

    gov track record at operating companies

    http://www.caseyresearch.com/displayCcs.php?e=true

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  • Comment Link Reggie Middleton Friday, 26 June 2009 16:51 posted by Reggie Middleton

    You have to take into consideration the fundamental overvaluation and the existence of catalysts that, if triggered, will push valuation down furhter. Tripping coveneant, dried up revenue streams, increasing credit losses, and the potential inability to roll over a large amount of debt are all part of the story here. If any one, or a set, of these come to fruition, the stock is instantly devalued - at least fundamentally.

    As far as teh optimistic target price, I have always been very, very conservative in my analysis. I do not want anybody to come behind me and say I was too aggressive or unrealistic in my assumptions, thus I always tilt to the conservative side. If you have been following me for a while, you can see this. I also provide sensitivity analyses for all to draw their own conclusions along a myriad of assumptions.

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  • Comment Link Rumi Friday, 26 June 2009 14:36 posted by Rumi

    I liked the research, too, but I've got a couple minor points:

    1. I think that target price is *far* too optimistic. I think the final price for this stock will be in the happy-meal price range

    2. Given your logic, I'm somewhat astonished that IBM, DE, MMM, TM aren't on your list. Then again, I'm still new at this, I guess

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  • Comment Link jarret Friday, 26 June 2009 09:57 posted by jarret

    Good research as always and I am not sure if it has been mentioned but the layout of the research report that you changed earlier this year looks great.

    As far as this one goes in my opinion there are lot more overvalued companies given the recent one up than this one.

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