Wednesday, 06 January 2010 19:00

Someone Is Paying a Lot for High Priced Doo Doo

In reviewing the banks that were originally included in the Doo Doo 32 (a list of likely doomed banks created in the spring of 2008), I decided to have a team take the devil's advocate perspective (an exercise that we normally pursue) and attempt to build a bullish case for the sectors that I viewed bearishly yet have outperformed the S&P and escaped profitable shorting during the last three quarters. The results are illuminating.

Below is a list of shortlisted banks that have reported higher returns relative to S&P 500 between the period March 9, 2009 and January 5, 2010 - the bear market rally of 2009. The methodology that we followed for this short listing is as follows:

·         We took out a list of banks that are domiciled in the US and have market capital of more than $500 million and current share price of more than $10.

·         Next we calculated returns for each bank and S&P 500 between period March 9, 2009 and January 5, 2010.

Wednesday, 06 January 2010 19:00

Someone Is Paying a Lot for High Priced Doo Doo

In reviewing the banks that were originally included in the Doo Doo 32 (a list of likely doomed banks created in the spring of 2008), I decided to have a team take the devil's advocate perspective (an exercise that we normally pursue) and attempt to build a bullish case for the sectors that I viewed bearishly yet have outperformed the S&P and escaped profitable shorting during the last three quarters. The results are illuminating.

Below is a list of shortlisted banks that have reported higher returns relative to S&P 500 between the period March 9, 2009 and January 5, 2010 - the bear market rally of 2009. The methodology that we followed for this short listing is as follows:

·         We took out a list of banks that are domiciled in the US and have market capital of more than $500 million and current share price of more than $10.

·         Next we calculated returns for each bank and S&P 500 between period March 9, 2009 and January 5, 2010.

As illustrated in my last post, Goldman Sachs has upgraded the US REIT sector, an action that was obvious to those who know that Wall Street analyst departments are basically marketing arms for their broking, trading and underwriting arms. Tyler at ZeroHedge saw it coming months in advance (see Is Goldman Preparing To Upgrade The REIT Sector?) and the writing on the wall had already cured as they hawked their first CMBS offering in quite some time (see Reggie Middleton Personally Contragulates Goldman, but Questions How Much More Can Be Pulled Off).

We all know what's next. The products that they are hawking to finance these ailing companies must have their paths paved by glorious upgrades and buy recommendations - damn be the facts and the obvious observations (which you will definitely get from me). Many of these actions can easily be seen as a REIT pump and dump scheme by Wall Street - "Here's a Big Company Bailout by the Taxpayer That Even the Taxpayer's Missed!." I have already released independent and unbiased subscription research on Taubman (TCO Report - Professional, TCO Report - Retail), whom Goldman Sachs has issued a buy recommendation on. I am also researching the CMBS that contain the properties from the REITs that I am analyzing (part and parcel of the analysis is an independent review of the property portfolio) and will be creating reports on the actual performance of assets behind the CMBS. You know, the type of work that the rating agencies should have done before they stamped these things with that AAA market, yet you know they never bothered to perform.