colorful macro image of human eye picjumbo com1100This is our Q4 analysis of Deutsche Bank. When analyzing and valuing entities such as banks and platform-driven tech companies, perception is always key. You see, what one maverick or true contrarian may see, very few others can perceive. The difference, oft times, is sometimes as simple as... They were looking. 

Published in BoomBustBlog
Sunday, 06 December 2009 19:00

The Latest REIT Updates are Now Available

In case subscribers haven't noticed, I have decided to decrease the frequency of analysis in order to increase the depth of the subjects analyzed. Due to the market's detachment from the fundamentals (a phenomenon that looks like it has just about run its course, btw), fundamental practitioners must tread very, very carefully. On that note, I am releasing the 2nd REIT analysis, which I feel makes for an  outstanding short opportunity, particularly in comparison to the previous analysis whose subject has no immediate and/or pressing concerns. This is the most comprehensive work performed in the real estate space since the GGP project, and has the potential to be just as successful as well. The professional version of the document is nearly 30 pages long, and although it is dense reading, I strongly recommend subscribers read through every page very carefully. The retail version is twice its normal length as well.

There will be a substantial amount of follow up analysis and opinion coming. Basically, I am at loggerheads with Goldman Sachs who has out a buy call on the banking and CRE space, wherein my readers know that I am very bearish on this space for fundamental reasons for 2010. I will present evidence to support my case both privately through the subscription services and public through the blog by pulling up instances in the past when GS turned bullish on real estate and what happened to those clients a year or two afterwards.

Enjoy!

MAC Report Consolidated 051209 Retail MAC Report Consolidated 051209 Retail 2009-12-07 03:46:49 580.11 Kb

MAC Report Consolidated 051209 Professional MAC Report Consolidated 051209 Professional 2009-12-07 03:48:11 1.03 Mb

Sunday, 06 December 2009 19:00

The Latest REIT Updates are Now Available

In case subscribers haven't noticed, I have decided to decrease the frequency of analysis in order to increase the depth of the subjects analyzed. Due to the market's detachment from the fundamentals (a phenomenon that looks like it has just about run its course, btw), fundamental practitioners must tread very, very carefully. On that note, I am releasing the 2nd REIT analysis, which I feel makes for an  outstanding short opportunity, particularly in comparison to the previous analysis whose subject has no immediate and/or pressing concerns. This is the most comprehensive work performed in the real estate space since the GGP project, and has the potential to be just as successful as well. The professional version of the document is nearly 30 pages long, and although it is dense reading, I strongly recommend subscribers read through every page very carefully. The retail version is twice its normal length as well.

There will be a substantial amount of follow up analysis and opinion coming. Basically, I am at loggerheads with Goldman Sachs who has out a buy call on the banking and CRE space, wherein my readers know that I am very bearish on this space for fundamental reasons for 2010. I will present evidence to support my case both privately through the subscription services and public through the blog by pulling up instances in the past when GS turned bullish on real estate and what happened to those clients a year or two afterwards.

Enjoy!

MAC Report Consolidated 051209 Retail MAC Report Consolidated 051209 Retail 2009-12-07 03:46:49 580.11 Kb

MAC Report Consolidated 051209 Professional MAC Report Consolidated 051209 Professional 2009-12-07 03:48:11 1.03 Mb

The full report is ready for download for subscribers. The professional version is roughly twice the length of the public preview (see below). Any institutions who are contemplating a subscription may reach out to me (Reggie Middleton) access a sample.

The full report is ready for download for subscribers. The professional version is roughly twice the length of the public preview (see below). Any institutions who are contemplating a subscription may reach out to me (Reggie Middleton) access a sample.

Thursday, 10 September 2009 20:00

LRN Quarterly Results Review

K12 released their quarterly results, causing a significant dip in the share price. These results featured quarterly revenues that were slightly off from both consensus and our estimates, but margin expansion that has also bested both for the fiscal year. The accounting loss that stemmed from the increase in expenses appear to be right on target with both our estimates and the consensus. This makes the expected growth prospects of this young, high growth company that much cheaper on a per share basis.

From the downloadable Q4 review (available for free download): LRN 4Q09 review_091009 LRN 4Q09 review_091009 2009-09-11 01:19:01 118.42 Kb 

 K12 reported results for FY09 on September 09, 2009. The company delivered robust sales growth as well as improvement in operating margins in FY09, in line with our expectations. Penetration in the existing markets as well as foray in the new states has fuelled the growth, with the Company’s average enrolments increasing 34.5% (y-o-y) in FY09. Growth in average enrolments along with 3.7% increase in revenue per enrolment resulted in about 40% (y-o-y) growth in revenues to $315.6 mn in FY09 compared to $226.2 mn in FY08. Further, the operating margin improved 130 basis points to 7.1% in FY09 versus 5.8% in FY08. Growth in the top line coupled with expansion in operating margin resulted in 72% ( y-o-y) increase in operating income to $22.3 mn in FY09 compared to $13.0 mn in FY08. Net income grew 81.1% (y-o-y) to $12.3 mn in FY09 against $6.8 mn in FY08 (after excluding one time income tax benefit of $27 mn recorded in FY08). K12’s results were in line with our expectations, the variation between the actual and projected operational performance being only marginal. Average enrolments and revenue per enrolment were 0.6% and 1.4% lower than our estimates, respectively. Although the revenues in FY09 were 2.0% lower than our estimates, the higher than expected expansion in operating margins resulted in 5.0% higher than expected operating profit. Net income of $12.3 mn is exactly in line with our estimates with a variation of just 0.2%.

For 4Q09, while our estimated revenues were higher than the actual revenue by 8.3%, the estimated operating income at negative $1.4 million was in line reported operating income figure of negative $0.3 million. The Company reported net income of negative $0.7 million (versus our estimate of negative $0.6 million) with EPS of negative $0.02 (same as our estimate).

I do recommend that those who are interested in my opinion on this company read the download linked above, particularly the strengths and caveats sections. 

Thursday, 10 September 2009 20:00

LRN Quarterly Results Review

K12 released their quarterly results, causing a significant dip in the share price. These results featured quarterly revenues that were slightly off from both consensus and our estimates, but margin expansion that has also bested both for the fiscal year. The accounting loss that stemmed from the increase in expenses appear to be right on target with both our estimates and the consensus. This makes the expected growth prospects of this young, high growth company that much cheaper on a per share basis.

From the downloadable Q4 review (available for free download): LRN 4Q09 review_091009 LRN 4Q09 review_091009 2009-09-11 01:19:01 118.42 Kb 

 K12 reported results for FY09 on September 09, 2009. The company delivered robust sales growth as well as improvement in operating margins in FY09, in line with our expectations. Penetration in the existing markets as well as foray in the new states has fuelled the growth, with the Company’s average enrolments increasing 34.5% (y-o-y) in FY09. Growth in average enrolments along with 3.7% increase in revenue per enrolment resulted in about 40% (y-o-y) growth in revenues to $315.6 mn in FY09 compared to $226.2 mn in FY08. Further, the operating margin improved 130 basis points to 7.1% in FY09 versus 5.8% in FY08. Growth in the top line coupled with expansion in operating margin resulted in 72% ( y-o-y) increase in operating income to $22.3 mn in FY09 compared to $13.0 mn in FY08. Net income grew 81.1% (y-o-y) to $12.3 mn in FY09 against $6.8 mn in FY08 (after excluding one time income tax benefit of $27 mn recorded in FY08). K12’s results were in line with our expectations, the variation between the actual and projected operational performance being only marginal. Average enrolments and revenue per enrolment were 0.6% and 1.4% lower than our estimates, respectively. Although the revenues in FY09 were 2.0% lower than our estimates, the higher than expected expansion in operating margins resulted in 5.0% higher than expected operating profit. Net income of $12.3 mn is exactly in line with our estimates with a variation of just 0.2%.

For 4Q09, while our estimated revenues were higher than the actual revenue by 8.3%, the estimated operating income at negative $1.4 million was in line reported operating income figure of negative $0.3 million. The Company reported net income of negative $0.7 million (versus our estimate of negative $0.6 million) with EPS of negative $0.02 (same as our estimate).

I do recommend that those who are interested in my opinion on this company read the download linked above, particularly the strengths and caveats sections. 

It looks as if a BoomBuatBlogger subscriber has made it into the news with a large option trade - STOCKS NEWS US-Bears flock to PNC Financial put options

PNC Financial Services fell 4.33 percent to $35.79. It reported a steep drop in quarterly earnings, hurt by credit losses and in its options, bears clawed at puts in the November contract, said Andrew Wilkinson, market analyst at Interactive Brokers Group. One player apparently enacted a ratio put spread in a bid to profit to the downside, he said. The Nov $36 strike had 20,000 puts bought for an average premium of $4.08 apiece spread against the sale of 40,000 puts at the Nov $31 strike for $1.97. The cost of the trade was 14 cents and yields maximum potential profits of $4.86 if shares fall to $31 by expiration. He also noted new put action at the Nov $29 strike and the $27.5 strike where 15,000 puts traded.

As subscribers know, we have determined that the overly lenient government stress tests (SCAP) will leave more than one bank requiring an additional capital raise before this credit malaise is all said and done. See The Re-Release of the Open Source Mortgage Default Model and Green Shoots are Being Fertilized by Brown Turds in the Mortgage Markets for our in depth take on loan losses to come for all banks who participated in residential real estate lending. These are the facts, unfiltered by green shoots mantra. PNC's government mandated $600 million capital raise was a joke,plain and simple. They will probably require multiples of that amount due to their National City acquisition and a careful glance at their balance sheet easily supports that assertion.

I have decided to show all a summary of what is arming subscribers to remain bearish against PNC, among other banks. 

It looks as if a BoomBuatBlogger subscriber has made it into the news with a large option trade - STOCKS NEWS US-Bears flock to PNC Financial put options

PNC Financial Services fell 4.33 percent to $35.79. It reported a steep drop in quarterly earnings, hurt by credit losses and in its options, bears clawed at puts in the November contract, said Andrew Wilkinson, market analyst at Interactive Brokers Group. One player apparently enacted a ratio put spread in a bid to profit to the downside, he said. The Nov $36 strike had 20,000 puts bought for an average premium of $4.08 apiece spread against the sale of 40,000 puts at the Nov $31 strike for $1.97. The cost of the trade was 14 cents and yields maximum potential profits of $4.86 if shares fall to $31 by expiration. He also noted new put action at the Nov $29 strike and the $27.5 strike where 15,000 puts traded.

As subscribers know, we have determined that the overly lenient government stress tests (SCAP) will leave more than one bank requiring an additional capital raise before this credit malaise is all said and done. See The Re-Release of the Open Source Mortgage Default Model and Green Shoots are Being Fertilized by Brown Turds in the Mortgage Markets for our in depth take on loan losses to come for all banks who participated in residential real estate lending. These are the facts, unfiltered by green shoots mantra. PNC's government mandated $600 million capital raise was a joke,plain and simple. They will probably require multiples of that amount due to their National City acquisition and a careful glance at their balance sheet easily supports that assertion.

I have decided to show all a summary of what is arming subscribers to remain bearish against PNC, among other banks. 

This blog's first long biased forensic analysis is now available, and I am releasing it to the public (this one time) to illustrate the depth of the work that is put into these efforts.

This is the first of several long-biased research reports. I would like to make clear from the start - this is not investment advice. This is the result of my search for a company that has high growth potential, healthy metrics and is underpriced. I have a 6 to 18 month investment horizon. This research is for use in my own investment operations and is presented to subscribers and (for this instance) blog readers for illustrative purposes only. Althoug this is long-biased research, I am still bearish on the US equity market in general. This also serves as an opportunity for me to highlight a company that makes a tangible product that actually helps society (educates children), and exhibits rapid growth without bankrupting state governments, requiring billions in federal bailout funds, or having to resort in paying 50% of its net revenues to its employees after accepting said federal bailouts. I, of course, am not naming any names (but if I were to do so, here is where the names would be). I'm sorry, but the record bonuses generated from taxpayer funds really grates my nerves.

There are two things that will really stand out about the analysis and opinion that comes out of this site. For one, the team that generates it is very smart, with both a deep and broad knowledge base and skill set. They are not amateurs. The second thing is increasingly difficult to find in the investment world today - I/we are BRUTALLY honest. There are no big client's asses to kiss, there is no advertisers to be beholden to, and I have been a Wall Street outsider my whole life. I call it as I see it. The good, the bad, and the ugly. This has pissed off the management of General Growth Properties (who are now bankrupt - see GGP and the type of investigative analysis you will not get from your brokerage house), Lehman ("Is Lehman really a lemming in disguise?") and Bear Stearns (Is this the Breaking of the Bear?)) also both also bankrupt, or the equivalent thereof, MBIA and ABK (effectively in runoff mode, aka bankrupt - see A Super Scary Halloween Tale of 104 Basis Points Pt I & II, by Reggie Middleton, Ambac is Effectively Insolvent & Will See More than $8 Billion of Losses with Just a $2.26 Billion,   Follow up to the Ambac Analysis, and Monolines swoon, CDOs go boom & I really wonder why the ratings agencies are given any credibility), and a whole host of other companies. Well, now I have some nice things to say, and I hope corporate management can be as sweet to me as they have been mean. If not, well, you know what I'll say...

I invite all to learn more about virtual schools, and the potential growth opportunity. I also welcome all to peruse and participate in the bear debate published in the Wall Street Journal concerning the subject of the long biased report. Of course, I feel that we have performed superior research, but sometimes one needs to hear the opposing argument to truly appreciate the quality of the extant argument. Feel free to download the professional version of the forensic analysis here: pdf  K12 Forensic Analysis (ticker:LRN) 2009-07-20 07:54:32 619.70 Kb . Those who wish to subscribe to the research may do so by clicking here.

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