Wednesday, 08 June 2011 07:43

BoomBustBlog Site Update

BoomBustBlog is undergoing a drastic remake to increase speed, performance and readability. The upgrade should be completed by next week. In the meantime we have included a real time Twitter feed to allow users to see my microblogs. Snippets of new analysis and opinion can be had throughout the day.

We will refresh our banking analysis in regards to those entities susceptible to an Irish/Greek/Portuguese restructuring and some new info regarding other entities that will take a hit. Later on in the week we will go over the effect on US real estate with a real life valuation of a property being marketed in NYC by Massey Knakal. We will also apply our Portfolio Protection to the scenario to demonstrate how macro risks can be hedged.

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Intergrated Twitter feed allows readers to get up daily and possible hourly updates on BoomBustBlog research, analysis and opinion.

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Several subscribers have notified me that they are having problems accessing the value-added content. Here is how I suggest going about finding the Google content behind the paywall.

First, go to the subscription content link in the user menu in the left hand margin of the site. Then click the "Search Document" link in the middle/top of the page. Enter Google as the search term.

Below are the results of that particular search. You can also choose to browse all of the reports in the technology (or whatever sector you have an interest in) section. The first selection is the Google Q3 review, which demonstrated that out analysis was right on point. Review our research, compare it to the "Street's" research and expectations, then review Google's actual performance. See Google’s 3rd Quarter Operating Results: The Foregone Conclusion That Was Amazingly Unanticipated by the Street!!! Monday, November 8th, 2010 for more on marking the research to market.

Published in BoomBustBlog

This is the Facebook valuation exercise that I promised to release to the professional (HNW) blog subscribers (File Icon FB note final). As is customary, I am including a material amount for the public blog to chew on. I think most will find it quite the engaging read, at the very least. If you haven't read my first three pieces on this topic, please do so for you will easily be able to glean my overarching opinion on this most recent Facebook "investment":

  1. Facebook Becomes One Of The Most Highly Valued Media Companies In The World Thanks To Goldman, & Its Still Private!
  2. Here’s A Look At What The Goldman FaceBook Fund Will Look Like As It Ignores The SEC & Peddles Private Shares To The Public Without Full Disclosure
  3. The Anatomy Of The Record Bonus Pool As The Foregone Conclusion: We Plug The Numbers From Goldman’s Facebook Fund Marketing Brochure Into Our Models

As reported by Bloomberg, the Facebook stock sale throws new light on the Goldman Sachs potential conflicts of interest – conflicts which we have illustrated in full detail in the past. By offering shares to its most favored clients and forcing them to commit or decline in less than a week, Goldman not only made investing in Facebook seem like a precious privilege from a marketing perspective, but made due diligence nearly impossible for those who did not have a dedicated staff with the free resources to throw at the problem in near real time. We, at BoomBustBlog would like to remedy such an issue as what I see is the new face of  investigative reporting and analysis on the web, and will offer consulting services to HNW and UHNW clients who find themselves in similar binds in the future. Simply drop us an email.

Goldman warns, 'We’re probably going to dump this load, but we may also need you to remain behind to hold the bag!'

In its offer for the $1.5bn stock sale of privately held social-networking company Facebook, Goldman Sachs disclosed that it might sell or hedge its own $375m investment without warning clients. Under the deal, private wealth-management clients would be subject to “significant restrictions” limiting their ability to sell stakes while Goldman Sachs own holding can be sold or hedged at any time, and without warning. One would hope that astute clients and investors would be put on guard by such conflicting and restrictive liquidity measures! In addition, it appears as if Goldman Sachs failed to disclose its clients that it had offered Facebook shares to its internal investment group, Goldman Sachs Capital Partners, headed by one of its star fund managers, Richard A. Friedman.

Published in BoomBustBlog

I received a thought provoking email the other day, and thought it would be good for sparking the debate on the future of the web. Please be aware that this is a reader's opinion, and not necessarily my own, but he definitely seems to have thought his viewpoint thoroughly through. I welcome any and all comment. Portions of the email have been removed to preserve anonymity.

Reggie,

You're well aware of the current models, primarily advertising and direct marketing driven by web publishers such as BusinessInsider, ZeroHedge, SeekingAlpha, etc.  Although these combination publishers/aggregators/bloggers have achieved a certain level of success they don't really have a model, at least as I see it, that will supply them with an ongoing stream of steady high-quality content, such as the research and analysis provided by your blog.

If you consider the understandings of the surplus in content as described by Yochai Benkler in Wealth of Networks, Clay Shirky's Cognitive Surplus or Rachel Botsman's Collaborative Consumption, it seems there is no end in site to free, high quality content.  I believe that the so-called net neutrality regulations are going to change that.  A tiered internet will probably create a situation where casual bloggers will lose visbility as a "pay to play" model emerges.

Published in BoomBustBlog

I have been hinting that I plan on taking on partners to build BoomBustBlog into a larger, more prominent media concern. 2011 will be the year that I make this happen, for I see significant opportunity in the media and mobile space as traditional media companies continue to make colossal blunders, all the while destroying brand, equity and shareholder value. At the same time, younger, nimbler, more agile companies are running circles around their more extant brethren due primarily to a superior grasp of the new media model and a dearth of legacy costs and mindset to drag them down.  On that note, let's look at one of the more interesting mainstream media stories of the day...

According to the NY TImes, Goldman Invests in Facebook at $50 Billion Valuation. This investment (along with a reinvestment of $50 million by Digital Sky Technologies (the Russian investment firm that previously invested half a billion dollars) offers Facebook the financial firepower to compete with public companies in hiring, acquisitions, etc., while having the benefit of thinking long term in it investment strategy (like Google has), without suffering the short term-itis that is prevalent in the expectations of the "show me the money, now", quarterly demands of Wall Street analysts.

That is not the most interesting part of the story though. The Facebook stock has more liquidity than some public company stocks, and  the post money valuation of Facebook is now greater than much more established public companies such as eBay, Yahoo and even Time Warner. Hey, it gets a lot more interesting than that. This is where the snarky, smart ass, yet highly analytical nature of BoomBustBlog parts with the reporting of those big MSM rags. I am not going to comment on Facebook's prospects, at least in this particular missive, although I do believe that the young Zuckenberg is a capable and visionary CEO and his company has a lot of potential, there is a waft of bubbliciousness in the air reminiscent of the year 2000. Why do I say this? Well, the capital injection that so duly empowers Facebook is basically an uncapitalized bonus pool for Goldman Sachs. You see, it is highly unlikely that Goldman is actually materially investing in Facebook, particularly at these valuations (is facebook really worth more than Time Warner and eBay, after the private market liquidity discount?). What Goldman is doing is employing its financial engineers to allow its HNW investors to sidestep and circumvent the laws of the land as feebly enforced by the SEC. Its not as if this is a secret, it was published in the NY Times!!! Basically, Goldman has created a spit in the face of the SEC, Facebook hedge fund. See below...

Published in BoomBustBlog

From an astute BoomBustBlogger that reads the fine print buried in the middle of a 250 page servicer agreement...

IF THIS IS A TYPICAL PSA, NO WONDER SO FEW LOAN MODS BECOME PERMANENT.  THE SERVICER GETS 25% OF THE FORECLOSURE PROCEEDS.

http://www.secinfo.com/d1Ax6e.u1u.c.htm

3.12 Realization on defaulted mortgage loans CitiMortgage will use its best efforts, consistent with its customary servicing procedures, to foreclose upon or otherwise comparably convert the ownership of properties securing any mortgage loans that continue in default and as to which no satisfactory arrangements can be made for collection of delinquent payments pursuant to section 3.2. Consistent with the foregoing, CitiMortgage will use reasonable efforts to realize upon defaulted mortgage loans in a manner that will maximize the receipt of principal and interest by the certificate holders, taking into account, among other things, the timing of foreclosure proceedings.

If a deficiency action is available against the mortgagor or any other person, CitiMortgage may proceed for the deficiency. CitiMortgage may retain 25% of the net proceeds received from a mortgagor pursuant to a deficiency action as compensation for proceeding with the deficiency action.

The reader's interpretation was slightly off. The servicer get's to go after the mortgagor in a delinquency action. Please let it be known that this in know way alters the conflicting dynamic that allows for the servicer to push certain mortgagors into foreclosure vs a mod work out. If you are self-employed and judgment proof, you are more likely to get a mod than if you are high income with a steady job with garnishable wages. The profits could very well keep rolling in. Let's engage in some chart porn...

Published in BoomBustBlog

Here's a little cross pollination to attract bears from all over.  Karl Deninger, the editor of the Market Ticker, invited me over for a half hour chat on his Blog Talk Radio show to discuss things such as foreclosure fraud, banks, derivative risk and the markets. You can access the original airing podcast on Karl's site. I have taken the liberty to append some graphics to the background to add some information to the discussion (see below). Enjoy!

Part One (the impatient may want to skip ahead about 1:32 to get the actual start of the discussion. I highly recommend you choose the 720p HD setting and expand to full screen in order to read the graphics in full fidelity.

Part one

[youtube nSFWrvznCp8]

Part two

[youtube 9noMeVOC-DE]

Published in BoomBustBlog
Tuesday, 19 October 2010 02:18

Reggie Middleton on CNBC

For those who haven't seen it yet, here is my interview on CNBC with Herb Greenberg - who I must say is a very good investigative reporter. Kudos, my friend!

Published in BoomBustBlog

Summary: Bloomberg features what they consider to be the most successful and accurate financial analysts since 2008. Of course, the firm that "Does God's work" is the one that won! Reggie Middleton disagrees, and thinks a blog beat them all! I urge the mainstream media to look beyond the traditional banking centers of influence for analysis. Not only is it soooo old school in a new digital age, but they just might find comparable (if not superior) talent in the blogosphere.

I urge the mainstream media to take a look at more than just the traditional sources when they make these all star rankings...

Bloomberg Regports: Goldman No. 1 at Rating Financial Companies With 38% Right

Daniel Harris, a financial services analyst at Goldman Sachs

Daniel Harris, a financial services analyst at Goldman Sachs Group Inc. [Clean cut, meticulous, ivy league, cookie cutter Goldmanite, Hamptoms in the summer, straight out of the Wall Street handbook - I get it]

... Goldman Sachs and KBW did better than most at figuring out where markets were headed. Goldman is No. 1 and KBW No. 2 in the Bloomberg Markets ranking of the world’s best financial sector research firms. Goldman’s Harris is one of the top three analysts of financial service firms, according to data compiled by Bloomberg.

2,500 Analysts [but no bloggers, which is exactly where this story went awry, IMHO :-)]

The ranking is based on stock recommendations made by more than 2,500 analysts worldwide at 77 research firms and investment banks from January 2008 to July 2010. It looks at the analysts’ “buy,” “hold” and “sell” calls on shares of 90 of the largest banks, diversified financial service companies and insurers in the U.S., Europe and Asia with at least 20 analysts covering them.

Even the best of the firms and individual stock pickers failed to accurately predict the fall and rise of most big financial stocks. Goldman Sachs’s analysts won their No. 1 rank by making 30 accurate calls on the 79 financial stocks they follow, or 38 percent, while KBW’s No. 2 post was based on 27 prescient calls on 78 stocks.

... “It was a very difficult climate to make stock recommendations in,” says S.P. Kothari, a professor of management and deputy dean at Massachusetts Institute of Technology’s Sloan School of Management in Cambridge. “First, you had to predict the downfall of the financial sector in 2008, which only very few people did. Then, you had to change your outlook to catch the recovery -- all within a relatively short period of time.” [So true, at least sort of. The problem was not about changing your outlook, it was about going against the fundamentals to catch manipulated stock price action to capture bank stocks as they shot to the upside in an environment where they were doomed to simply crash back down. Of course, I don't really expect to hear a lot of that in the MSM, but it does peek its nose out every now and then]

Looking for Ideas... Jason Brady, a managing director at Santa Fe, New Mexico- based Thornburg Investment Management, which oversees about $56 billion, says he doesn’t read analyst reports for picks on individual stocks. “It’s unusual to see original thinking in these reports, even though that’s what’s most valuable to me,” he says. “The ones who are different aren’t always right, but they’re frequently the most interesting and thoughtful.” [May I suggest you subscribe to BoomBustBlog, I am the antithesis of the sell side, and have nothing but crazy ideas - that is until a year  has gone past, and people say "hmmmm..."]

Yeah, I bet these guys get paid an awful lot of money for that as well. I hope Bloomberg's editors dont' forget us poor bloggers in the future comparisons. Uhh.... Not that I'm hating or anything (I definitely want to give these Goldman dudes credit where their due), but I think I may have just BLOWN THESE GUYS OUT OF WATER with damn near zero recognition. Come on mainstream media, it's a new day and age and you should know by now there are other places to look for analysis other than the big banks that "Do God's work"! Give the little man some luv! You know times are hard when you get featured as the best of the best with only a 38% success rate! Then again, and admittedly, these last few years were very hard - all jokes aside. Let me recast this Bloomberg article in BoomBust fashion.

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