Before reading the following article excerpts, I want to point out a few things that I am in absolutely no way ashamed of (for those that follow me regularly and have this list memorized, please bear with me, I'm trying to make a point):

  1. My investment performance for 2008, 335% for my prop account, 106% for the blog (think Reggie Middleton, prodigious blogger and entrepreneurial global macro/micro investor)
  2. My prognostication that Bear Stearn's would fail (in full detail) 3 months before they failed in " Bear Fight - A most bearish view on Bear Stearns in a bear market " and the follow-up piece and seminal "Is this the Breaking of the Bear" (think Alan Schwartz, former C.E.O. of Bear Stearns)
  3. My prognostication that Lehman would fail 5 months before they failed (think C.E.O. Dick Fuld of Lehman Brothers), see Is Lehman really a lemming in disguise? and Lehman, the lying lemon lemming anecdotal timeline?
  4. My prognostication that General Growth Properties (the nation's 2nd largest REIT) would fail (in explicit detail) 1 year before they failed (think Bernie Freibaum, former CFO of GGP), see GGP and the type of investigative analysis you will not get from your brokerage house and pay special attention to "My Response to the GGP Press Release, which seems to respond to blogs..." and "For those who were wondering what sparked that silly press release from GGP..." for the blow by blog on the company's CFO actually trying to disparage lil' ole innocent me and paint me as incompetant and out for no good. Take particular not of the date of the release and the comments made, then reference the stock chart and the recent news clips warning of bankruptcy.
  5. My warnings on insolvency of MBIA, see A Super Scary Halloween Tale of 104 Basis Points Pt I & II, by Reggie Middleton
  6. My warnings on the insolvency of AMBAC, see Ambac is Effectively Insolvent & Will See More than $8 Billion of Losses with Just a $2.26 Billion and Follow up to the Ambac Analysis and Download a "Window" into Ambac's Problems.
  7. Countrywide and Washington Mutual's early signs of insolvency, see Yeah, Countrywide is pretty bad, but it ain't the only one at the subprime party... Comparing Countrywide to its peers
  8. My many warnings on the Doo Doo 32 regional banks and the insurance industry (a collapse or two to happen very soon in company near YOU! See icon Hartford Insurance Group Forensic Analysis - Pro (619.29 kB 2008-11-22 06:30:43), icon HIG Actionable Item (189.75 kB 2008-11-22 06:32:24), icon HIG Actionable Intelligence Update 8-12-08 (49.96 kB 2008-12-08 08:54:33), icon Hartford Insurance Group spreads and counterparty/debt holders - pro (149 kB 2008-11-22 06:31:47), and icon Principal Financial Group Actionable Intelligence Note - Pro version (252.74 kB 2009-01-15 11:18:50) and As I Continue My Analysis of Global Insurers.(thus far the failures have effectively been limited to AIG and arguabley Ambac and MBIA, but give it time).
  9. I can go on, but its 2 am and I need to get enough sleep to be cheerful when my daughter comes to wake me up in 4 hours, but hopefully you feel the flow that I am trying to convey...

Every now and then I look at comments about me and my work and every now and then there is always someone screaming "Short seller scum of the world" or some similar absurd nonsense. There is still a significant contingent that can't come to grips with the blatant fact that there are a lot of inefficient companies, insolvent companies, and some downright fraudulent companies that are running around masquerading as stock market darlings turned victims of short sellers and a rough economy. When the bull market was in full effect, there was no similar "hating of the hater" for those who profited from going long - and lord knows there was a fair share of pump and dump going on.

Look at the list above, cross reference the dates of the opinionated articles and research with a graph of each companies' share price and tell me, do you really think this was just luck?

Or was I using my blog to manipulate share prices (and at the same time forcing all of the trash, excess leverage, on their balance sheet as well as faulty business models to be perceived as,,,, Well,,,, trash, excess leverage, on their balance sheet and faulty business models!

Okay, let's move on to the excerpt from this piece in Conde Nast's Portfolio.com:

In the view of many C.E.O.'s, short-sellers do more than just profit from corporate misfortune; they inflame it. C.E.O. Dick Fuld of Lehman Brothers and Alan Schwartz, former C.E.O. of Bear Stearns, [Hey, didn't I blog and research their companies in the link list above?] in their own recent appearances before congressional panels, blamed rumormongers and short-­sellers for the demise of their firms [Hmmm!!! Rumors such as "I have a bunch of underwater assets leveraged to the hilt on my balance sheet", or "we are facing a hell of a liquidity crisi because we financed risky long term assets with fickle short term debt", or "that Reggie guy is a damn pain in the ass!" Rumors like those???].

"The shorts and rumormongers succeeded in bringing down Bear Stearns," Fuld ­asserted. "And I believe that unsubstantiated rumors in the marketplace caused significant harm to Lehman Brothers." [Yeah, okay!] Schwartz gave similar testimony when he appeared before the Senate Banking Committee in April, saying that there was a run on the bank despite a "capital cushion well above what was required to meet regulatory standards." He testified that "market forces continued to drive and accelerate our precipitous liquidity decline." Banking Committee chairman Christopher Dodd chimed in that "this goes beyond rumors. This is about collusion."[Keep this term, accusation, and concept of "collusion" at the forefront of you thoughts as you read on, my dear followers]

But was it? Chanos, for one, is tired of the blame-the-shorts litany, and he recalls a conversation with Bear Stearns’ Schwartz to make his point.

The day before the Fed’s rescue of Bear Stearns, Chanos says he was walking to the Post House restaurant in New York City, when, at 6:15 p.m., his cell phone rang. He saw the Bear Stearns exchange come up on his caller I.D. and took the call.

“Jim, hi, it’s Alan Schwartz.”

“Hi, Alan.”

“Well, Jim [I'm not calling that rat bastard Blogger Reggie Middleton because the less people know about him, the better], we really appreciate your business and your staying with us. I’d like you to think about going on CNBC tomorrow morning, on Squawk Box, and telling everybody you still are a client, you have money on deposit, and everything’s fine.”

“Alan, how do I know everything’s fine? Is everything fine?”

“Jim [F#ck, that was swift of him, did that damn rat bastard blogger Reggie guy get it him first!], we’re going to report record earnings on Monday morning.” 

“Alan, you just made me an insider. I didn’t ask for that information, and I don’t think that’s going to be relevant anyway. Based on what I understand, people are reducing their margin balances with you, and that’s resulting in a funding squeeze.”

“Well, yes, to some extent, but we should be fine.” [Okay, that's it. I'm banning all of those F#@%ing blogs from all of the computers at Bear Stearns for the 24 hours that I anticipate remaining a going concern!]

“This is now 6:15 on Thursday night, the night before the collapse,” Chanos says. “It was after a meeting with Molinaro”—Bear Stearns C.F.O. Sam Molinaro—“who basically told him at that meeting, ‘We’re done. We’re gone. We need money overnight we don’t have.’  So here he is, calling one of his biggest clients to go on CNBC the next morning to say everything’s fine when clearly it’s not. And he knew it wasn’t.” [Nawwwww!!! Get the hell outta here! Seriously????! I am shocked! Absolutely flabbergasted! I mean, really dude... I feel irreparably bamboozled!!!]

Chanos refused to go on CNBC [smart move, my friend!]. By 6:30 the next morning, word was out that the Fed was engineering the rescue of Bear Stearns. Chanos realized that he could have been on CNBC while that was ­announced. “I thought, That fucker was going to throw me under the bus no matter what.” [You know, if I wasn't so naive, I may - no, I just might, get the impression that the CEOs of the companies that I have covered and blogged about may have colluded with each other, and others in the media and business/finance circles to make things appear just a TAD bit rosier than they really were. That is, if I wasn't so naive. Then again, if I wasn't so naive, I would have believed that that rat bastard blogger guy Reggie just might be a pretty valuable counterbalance for the propagandized, accountant engineered (this is the new financial engineering, if you haven't got the memo!) disfigured trash often disguised as corporate reporting and corporate communications, and often disseminated though the MSM (the mainstream media). That's, of course, if I wasn't so naive...]

“So here it is,” Chanos says. “Alan Schwartz takes the position ‘Short-sellers were our problem,’ and who did he try to get to vouch for him on the morning of the collapse? The largest short-seller in the world. You want to talk about ethics and who’s telling the truth on these things? It’s unbelievable.” [Hey, you should have talked to me my friend. I could have told you they were lying about their financial situation months before your converstaion, reference the links above. I'm shocked you even left your accounts in there that long! It wouldn't have been me.]

Schwartz, not surprisingly, has a different version of events [Now, there's a damn surprise if I ever hear of one!]. “I did not make the statements attributed to me by Mr. Chanos,” he says through a spokesperson. According to someone who has spoken to Schwartz, the ex-C.E.O.’s side of the story is that the conversation took place on Wednesday, not Thursday, and that it was entirely different from what was related by Chanos. His contentions are that the call was an effort to obtain a public statement from Chanos that “a group of short-sellers out there are trying to take Bear Stearns down” and that no information on Bear’s financial strength was conveyed to Chanos. [Yeah, okay...]

Published in BoomBustBlog


As I sit back and look at the market go through its bear rally, performing a myriad of what if scenarios on my various bearish positions and generating cash where feasible by selling off profits, I revisited the Doo Doo 32 and a few big name banks. I say to myself, "This year will not be as easy as last year, now that nearly everybody should be aware of the extent of the problem, and the violent bear market rally/option spreads that makes shorting and put buying very expensive." Then I listen to talking heads in the media and the "everbull", long only professionals. I ponder, "Hmm, maybe there is a little low hanging fruit to be had after all". To be sure, we will have to sit through this bear market rally which has to hurt anybody not in all cash or hedged, and there seems to be a willingness of traders to push this one relatively far. The FACTS still remain though, if the stocks of the BoomBustBlog bear targets move much farther, this could very well be another repeat of last year's triple digit performance. Yes, it's risky, but risk is the price of reward, isn't it.

With that disclaimer espoused, let's look at how accurate my longer term thesis have fared. The graph below was taken from the Doo Doo 32 article.


In order to determine how likely the aforementioned event
is, let's create a metric by which Reggie Middleton measures risk. This metric
will be units of risky or non-performing assets as a percentage of statutory
equity. This, of course, can be refined by removing goodwill, Bullsh1t, and the
various accounting pollutants to plain old economic earnings, but less just
start with this. When applying Reggie's Risk Metric to the graphs above, we can identify more banks.

image006.png

Looking at risk from this perspective, we not only see who has no
clothes on when the tide goes out, but also how well (un)endowed they
are in addition.

Now, compare the companies from the Doo Doo 32 article and the allocation of the TARP program below (sans the companies that have already failed or have been driven into other firms), and you will see that I am on to something. After all, the Doo Doo 32 article was penned on

The credit crisis is (not) waning

Reggie
Middleton says don't believe Paulson: S&L crisis 2.0, bank failure
redux
)

Allocation of TARP Capital Injections ($ billions) 100% = $250
bn

Others (201 in total count)

$ 48

Citigroup

$ 45

AIG

$ 40

Bank of America/Merrill Lynch/CountryWide

$ 25

JP Morgan Chase/Bear Stearns/WaMu

$ 25

Wells Fargo

$ 25

Godlman Sachs

$ 10

Morgan Stanley

$ 10

PNC

$ 8

US Bancorp

$ 7

Sun Trust

$ 5

Unallocated

$ 3

Now "the worst is behind us" Secretary Paulson wants to claim the balance of the TARP that is not already spent. WHY??? Well let's look at it visually.

Big on this list are the recipients of much of my research from early last year. Never let it be said that I don't have a clue about what's going on.


Well, I have some other thoughts on certain financial institutions, the first of which is available below (with at least one other following). Subscribers can view my opinion here. I trust you will find the inconsistencies that I have found to be quite interesting. You will also be wise to beware of those "name brands" that are "too big to fail"! Keep the recent post, "
The banking backdrop for 2009 " in mind as you read the following:

pdf JP Morgan Forensic Highlights 2009-01-06 19:18:08 133.34 Kb

Published in BoomBustBlog
Thursday, 01 January 2009 08:17

Reggie Middleton's BoomBustBlog.com Press Room

Who is Reggie Middleton?: A Backgrounder 

For the Media Only 

Call +1.718.407.4751 or email our customer relations


Reggie Middleton's Bio


What does Reggie Middleton do and how does he do it

Performance & Research: Reggie beat ALL of the major Wall Street analysts, hedge fund indices, pop investment personalities and global market indices by at least 100%


Facts & Figures
Reggie had nearly 5 million visitors since September of 2007, and over 3,000 subscribers
  •  Seventy five percent of BoomBustBloggers are executives and professionals
  • Over 35% of Reggie's readers make over $100,000 per year, and over 25% make over $200,000 per year.
  •  Thirty two percent of Reggie's readers are millionaires.
  • 18%are multimillionaires
  •  Five percent have net worths over $10 million.
  •  Seventeen percent have investable assets over a million dollars
  •  Nine percent have currently investable assets over $2 million
Reggie's BoomBustBlog research model has produced returns of approximately 100% for the year ending December 31st, 2008 while practically every other professional investor and index was deeply negative
 
Reggie's proprietary trading account finished the year up well over 400% on a time weighted basis for the year ending December 31st, 2008 




  Reggie has appeared in the following: Forbes, Las Vegas Business Press, NY DailyNews, CNNfn: Digital Jam, Fortune, PC Magazine, BET, PC World, Real Estate Finance Today, Interactive Week, eWeek, Computer Shopper

Well, I fancy myself the personification of the free thinking maverick, the ultimate non-conformist as it applies to investment and analysis. I am definitively outside the box - not your typical or stereotypical Wall Street investor. I work out of my home, not a Manhattan office. I build my own technology and perform my own research - in lieu of buying it or following the crowd. I create and follow my own macro strategies and am by definition, a contrarian to the nth degree. You can consider me the individual investor of the new millenium.

Since I use my research as a tool for my own investing to actually put food on my table, I can stand behind it as doing what it is supposed too - educate, illustrate and elucidate. I do not make my living from selling advice, I make my living from acting upon my own advice, I am not a reporter hence do not sell stories. I am not a broker/bank, hence I do not have to hawk my services. I am an entrepreneur who exists just outside of main

stream corporate America and Wall Street. This allows me freedom to do things that many can not. For instance, I pride myself on developing some of the highest quality research available, regardless of price. No conflicts of interest, no corporate politics, no special favors. Just the hard truth as I have found it - and believe me, my team and I do find it!

 

I find most research lacking, in both quality and quantity. Thus, the reason why I had to create my own research staff of high caliber analysts and forensic accountants was due to my dissatisfaction with what was currently available - to both individuals and institutions. 

So here I am, creating my own research for my own investment activity. What really sets my actions apart is that I offer much of what I produce to the public at highly subsidized prices or free of charge. Why would I do such a thing when others easily charge 5 and 6 digits annually for what some may consider a lesser product? It is akin to open source analysis! My ideas and implementations are actually improved and fine tuned when bounced off of the collective intellect of the many, in lieu of that of the few - no matter how smart those few may believe themselves to be.

Very recently, I have started charging for the forensics portion of my work, which has freed up the resources to develop the site to deliver even more research for free, particularly on the global macro and opinion front. This move has allowed me to serve an more diverse constituency, which now includes the institutional consumer (ie., investment turned commercial banks, hedge funds, pensions, etc,) as well as the newbie individual investor who is just getting started - basically the two polar opposites of the investing spectrum. I am proud to announce major banks as paying clients, and brand new investors who take my book recommendations and opinions on true wealth and success to heart.

So, this is how I use my background and knowledge in new media, distributed computing, risk management, insurance, financial engineering, real estate, corporate valuation and financial analysis to pursue, analyze and capitalize on global macroeconomic opportunities.

 

Our Subscribers - Social Proof:

  • Banks (Morgan Stanley, UBS, Citibank)
  • Consultants (Deloitte)
  • Hedge Funds (Citadel)
  • Central Banks and global quasi-government agenices (the European Central Bank, the Central Bank of Canada, The International Monetary Fund)
  • Insurance companies (The Hartford)
  • The nations largest real estate companies (General Growth Properties)
  • High net worth and very high net worth individuals .
    • 75% of the BoomBustBloggers are executives and professionals
    • Over 35% of Reggie;s readers make over $100,000 per year, and over 1/4 make over $200,000 per year.
    • 32% of Reggie's readers are millionaires.
    • 18% are multimillionaires
    • 5% have net worths over $10 million.
    • 17% have investable assets over a million dollars
    • 9% have currently investable assets over $2 million

 

Praise from our readers/subscribers

  • wanted to say hello and thank you for all the work thats done here. i know nothing, basically about investments, markets, stratagy etc. i'm a working a playwright-actor-director. thats my line. therein lies my cash supply. ive not traded on your advise as yet, i do indeed think that may change over time. i stuck my 550 in the pot and the langauge of the martkets i'm taking in from you is eyepopping. the curve is breaking down quickly and i thank you and your team.


  • From KC Dallas – “For those ignorant to assume the style of ones writing is an indication of their investment knowledge is, well, ignorant. Those that chose to bash Reggie Middleton should check out his work. It is some of the most in-depth analysis you will find! 
While the pundits were telling everyone the worst was over and to buy, buy, buy (that includes Mr. Bove) Reggie's analysis told you how sick the financial companies were. If the pundits took the time to do their job and actually report the truth, they would have told you exactly what Reggie had been stating since 2007.Pundits have a job and that's to help Wall Street take your money.
I highly recommend those who decided to bash on Reggie to take a look at his site and his data. You WILL NOT be disappointed. You'll get the truth backed up by factual data. Look over some of the data Reggie put out there on MS, LEH, GS, and WFC.
When the pundits started reporting on earnings reports that were stretched truths, you would have already known exactly what amounts of Hide the Level 3 assets these firms had.If you want to see a difference in your accounts, check out his work. Yes, I am biased. Why? Because I've been checking out his site for months and I've been very well educated by his information as well as benefiting financially. Reggie... Thanks for an awesome year!!!! Looking forward to 2009 with you.”

 

  • From Prescient – “For those who don't know Reggie he's the best around, GGP is his crown jewel. He also called HIG and the other insurers and the downfall of the IBs. His analysis is the best. I shouldn't have closed my short on GGP in the $20s, and you shouldn't have closed it in the teens,wow! Congrats on all the success man, you've earned it.
  • From Smarty Pants “Nice summary of the Keynesian viewpoint of the economy. As your chart of US consumer credit shows, the US economy has been running on borrowed money for some time. The past four years of "growth" have been paid for by borrowing nearly $500 Billion to spend…….. That said, Mr. Middleton has presented an extensive and useful body of economic evidence that, for those who fantasize about a return to 2005, there really is more to fear than fear itself.”
  • From Mike – “Hello Reggie:I am a new subscriber. Great research reports from what I am reading this far. Question: is there a summary listing of companies that you have covered or looking at from an investment point of view? There is a lot of content here and want to get caught up and focus on where the opportunities are. I do not want to overlook any potential investment opportunities. Great write up on HIG (The Hartford). I am actually an employee of the company, so it was a very insightful read. Stock rebounded after Friday's "investor day" but I think troubles still loom..particulary is the commercial mortgage market continue to get hit. Thanks Mike
  • From Shaunsnoll -  “you've been KILLING it lately!! is this the longest streak you've ever been on?  because its the longest streak of anyone i personally know for sure.  looking forward to the emerging market stuff Reggie!
  • Reggie has been consistently bearish on the financial stocks for many months. I, for, one, am appreciative of his insights and articles, and have made a lot of money following many of his short recommendations. I would have done even better if I had followed them more aggressively!

   

  See what else my readers have been saying in our Praise section .

Published in Uncategorized
Thursday, 01 January 2009 08:17

Reggie Middleton's BoomBustBlog.com Press Room

Who is Reggie Middleton?: A Backgrounder 

For the Media Only 

Call +1.718.407.4751 or email our customer relations


Reggie Middleton's Bio


What does Reggie Middleton do and how does he do it

Performance & Research: Reggie beat ALL of the major Wall Street analysts, hedge fund indices, pop investment personalities and global market indices by at least 100%


Facts & Figures
Reggie had nearly 5 million visitors since September of 2007, and over 3,000 subscribers
  •  Seventy five percent of BoomBustBloggers are executives and professionals
  • Over 35% of Reggie's readers make over $100,000 per year, and over 25% make over $200,000 per year.
  •  Thirty two percent of Reggie's readers are millionaires.
  • 18%are multimillionaires
  •  Five percent have net worths over $10 million.
  •  Seventeen percent have investable assets over a million dollars
  •  Nine percent have currently investable assets over $2 million
Reggie's BoomBustBlog research model has produced returns of approximately 100% for the year ending December 31st, 2008 while practically every other professional investor and index was deeply negative
 
Reggie's proprietary trading account finished the year up well over 400% on a time weighted basis for the year ending December 31st, 2008 




  Reggie has appeared in the following: Forbes, Las Vegas Business Press, NY DailyNews, CNNfn: Digital Jam, Fortune, PC Magazine, BET, PC World, Real Estate Finance Today, Interactive Week, eWeek, Computer Shopper

Well, I fancy myself the personification of the free thinking maverick, the ultimate non-conformist as it applies to investment and analysis. I am definitively outside the box - not your typical or stereotypical Wall Street investor. I work out of my home, not a Manhattan office. I build my own technology and perform my own research - in lieu of buying it or following the crowd. I create and follow my own macro strategies and am by definition, a contrarian to the nth degree. You can consider me the individual investor of the new millenium.

Since I use my research as a tool for my own investing to actually put food on my table, I can stand behind it as doing what it is supposed too - educate, illustrate and elucidate. I do not make my living from selling advice, I make my living from acting upon my own advice, I am not a reporter hence do not sell stories. I am not a broker/bank, hence I do not have to hawk my services. I am an entrepreneur who exists just outside of main

stream corporate America and Wall Street. This allows me freedom to do things that many can not. For instance, I pride myself on developing some of the highest quality research available, regardless of price. No conflicts of interest, no corporate politics, no special favors. Just the hard truth as I have found it - and believe me, my team and I do find it!

 

I find most research lacking, in both quality and quantity. Thus, the reason why I had to create my own research staff of high caliber analysts and forensic accountants was due to my dissatisfaction with what was currently available - to both individuals and institutions. 

So here I am, creating my own research for my own investment activity. What really sets my actions apart is that I offer much of what I produce to the public at highly subsidized prices or free of charge. Why would I do such a thing when others easily charge 5 and 6 digits annually for what some may consider a lesser product? It is akin to open source analysis! My ideas and implementations are actually improved and fine tuned when bounced off of the collective intellect of the many, in lieu of that of the few - no matter how smart those few may believe themselves to be.

Very recently, I have started charging for the forensics portion of my work, which has freed up the resources to develop the site to deliver even more research for free, particularly on the global macro and opinion front. This move has allowed me to serve an more diverse constituency, which now includes the institutional consumer (ie., investment turned commercial banks, hedge funds, pensions, etc,) as well as the newbie individual investor who is just getting started - basically the two polar opposites of the investing spectrum. I am proud to announce major banks as paying clients, and brand new investors who take my book recommendations and opinions on true wealth and success to heart.

So, this is how I use my background and knowledge in new media, distributed computing, risk management, insurance, financial engineering, real estate, corporate valuation and financial analysis to pursue, analyze and capitalize on global macroeconomic opportunities.

 

Our Subscribers - Social Proof:

  • Banks (Morgan Stanley, UBS, Citibank)
  • Consultants (Deloitte)
  • Hedge Funds (Citadel)
  • Central Banks and global quasi-government agenices (the European Central Bank, the Central Bank of Canada, The International Monetary Fund)
  • Insurance companies (The Hartford)
  • The nations largest real estate companies (General Growth Properties)
  • High net worth and very high net worth individuals .
    • 75% of the BoomBustBloggers are executives and professionals
    • Over 35% of Reggie;s readers make over $100,000 per year, and over 1/4 make over $200,000 per year.
    • 32% of Reggie's readers are millionaires.
    • 18% are multimillionaires
    • 5% have net worths over $10 million.
    • 17% have investable assets over a million dollars
    • 9% have currently investable assets over $2 million

 

Praise from our readers/subscribers

  • wanted to say hello and thank you for all the work thats done here. i know nothing, basically about investments, markets, stratagy etc. i'm a working a playwright-actor-director. thats my line. therein lies my cash supply. ive not traded on your advise as yet, i do indeed think that may change over time. i stuck my 550 in the pot and the langauge of the martkets i'm taking in from you is eyepopping. the curve is breaking down quickly and i thank you and your team.


  • From KC Dallas – “For those ignorant to assume the style of ones writing is an indication of their investment knowledge is, well, ignorant. Those that chose to bash Reggie Middleton should check out his work. It is some of the most in-depth analysis you will find! 
While the pundits were telling everyone the worst was over and to buy, buy, buy (that includes Mr. Bove) Reggie's analysis told you how sick the financial companies were. If the pundits took the time to do their job and actually report the truth, they would have told you exactly what Reggie had been stating since 2007.Pundits have a job and that's to help Wall Street take your money.
I highly recommend those who decided to bash on Reggie to take a look at his site and his data. You WILL NOT be disappointed. You'll get the truth backed up by factual data. Look over some of the data Reggie put out there on MS, LEH, GS, and WFC.
When the pundits started reporting on earnings reports that were stretched truths, you would have already known exactly what amounts of Hide the Level 3 assets these firms had.If you want to see a difference in your accounts, check out his work. Yes, I am biased. Why? Because I've been checking out his site for months and I've been very well educated by his information as well as benefiting financially. Reggie... Thanks for an awesome year!!!! Looking forward to 2009 with you.”

 

  • From Prescient – “For those who don't know Reggie he's the best around, GGP is his crown jewel. He also called HIG and the other insurers and the downfall of the IBs. His analysis is the best. I shouldn't have closed my short on GGP in the $20s, and you shouldn't have closed it in the teens,wow! Congrats on all the success man, you've earned it.
  • From Smarty Pants “Nice summary of the Keynesian viewpoint of the economy. As your chart of US consumer credit shows, the US economy has been running on borrowed money for some time. The past four years of "growth" have been paid for by borrowing nearly $500 Billion to spend…….. That said, Mr. Middleton has presented an extensive and useful body of economic evidence that, for those who fantasize about a return to 2005, there really is more to fear than fear itself.”
  • From Mike – “Hello Reggie:I am a new subscriber. Great research reports from what I am reading this far. Question: is there a summary listing of companies that you have covered or looking at from an investment point of view? There is a lot of content here and want to get caught up and focus on where the opportunities are. I do not want to overlook any potential investment opportunities. Great write up on HIG (The Hartford). I am actually an employee of the company, so it was a very insightful read. Stock rebounded after Friday's "investor day" but I think troubles still loom..particulary is the commercial mortgage market continue to get hit. Thanks Mike
  • From Shaunsnoll -  “you've been KILLING it lately!! is this the longest streak you've ever been on?  because its the longest streak of anyone i personally know for sure.  looking forward to the emerging market stuff Reggie!
  • Reggie has been consistently bearish on the financial stocks for many months. I, for, one, am appreciative of his insights and articles, and have made a lot of money following many of his short recommendations. I would have done even better if I had followed them more aggressively!

   

  See what else my readers have been saying in our Praise section .

Published in Uncategorized
Tuesday, 16 December 2008 23:00

More on Madoff: the financial perspective

Ponzi scheme operated by Bernard Madoff, a former chairman of the NASDAQ, with allegedly $50 bn of assets is by far one of the largest scam in history of financial markets. To put it in perspective, it literally dwarfs that of Enron and Worldcom/MCI in the corporate arena. With investors already battling massive losses on their investment portfolio, a scam of this magnitude could further dampen their confidence. As most of the exposure for leading banks and financial institutions towards Madoff's investment was indirect exposure in the form of clients' assets with minimal direct exposure, the potential capital loss / write-downs in the financial statements could be limited for these financial institutions. However there could be significant indirect impact in terms of future inflows and/or redemptions for their asset management and private banking division.

  • The main impact from a systemic point of view is that it undermines the levels of confidence which is already being plagued by economic slowdown and financial woes. This cannot be understated. Take a look at the comparison of some of the biggest, most renowned Wall Street banks' performance as compared to the performance of the research model of this blog, my proprietary performance, and that of the broad and global equity markets. I didn't make this stuff up. The marketing machine of the street will take many years to repair the damage that fraud, combined with relative underperformance has wrought on their business.
  • Since most of the money belonged to institutional investors, international and high net worth clients of private-banking business, the potential losses will probably affect one of the profitable segments for banks - Private and Wealth management business. This is a segment that was aggressively pursued by many medium and large financial institutions, along with the prime brokerage business, whose near to medium term growth prospects have been significantly overestimated. Expect a significant drag on these business segments that have seen a significant ramp up in resources, and significant opportunities to small and nimble entrepreneurial operations such as this hybrid new media/investment/ financial analysis publication from which you are currently reading. There will be an enormous impact for the hedge fund industry in form of higher redemption pressure. Already Hedge fund performance has been dismal due to slumping market situation See "In the Great Global Macro Experiment, the next bubble to burst is.." for more on this topic. In September 2008 alone Hedge Funds faced redemptions of $43 bn. This scam could further aggravate the redemption pressure for hedge funds which could in turn lead to massive global de-leveraging. With increased redemption and de-deleveraging the stock prices could witness further downside.
  • Also the scam could enforce tighter regulation for the hedge fund industry. The financing requirements for hedge funds could get adversely impacted as they would be required to post more collateral with financial institutions that could limit their leverage.

In the table below we have highlighted some of the entities with largest exposure in Madoff investments (both direct and indirect).

Institution Potentila loss / exposure Exposure type where available
US $ mn Euro mn
Fairfield Greenwich Group $7,500
Banco Santander SA $3,298 € 2,347 Indirect exposure - 2.3 bn Euros. Direct exposure - 17 mn Euros
Santander $2,300 Indirect exposure
Bank Medici AG $2,100
Ascot Partners LLC $1,800
Fortis NV $1,405 € 1,000
Union Bancaire Privee $1,250
HSBC Holdings Plc $1,000 Indirect exposure
AXA SA $703 € 500
Natixis $632 € 450 Indirect exposure
Royal Bank of Scotland $623 Through trading, collateralized lending
Carl Shapiro $545
BNP Paribas $506 € 360 Potential loss (however indirect exposure)
Banco Bilbao Vizcaya Argentina SA $422 € 300 Potential loss (however indirect exposure)
Man Group $360 € 450
Reichmuth & Co $327
Nomura $302 Impact on P&L virtually nil
Maxam Capital Management LLC $280
Aozora Bank $137
UniCredit SpA $105 € 75 Indirect exposure
Swiss Life Holding AG $79 Through fund of funds
Nordea Bank AB $67 € 48
Credit Agricole S.A $14 € 10
Bramdean Alternatives 9% of portfolio
Published in BoomBustBlog

From Bloomberg: Former Bear Stearns CEO Greenberg Says Investment Banks ‘Gone’ .

“There’s no more Wall Street,” Greenberg, 81, said today in an interview to be aired on Bloomberg’s “Money & Politics” television program. “That model just doesn’t work because it’s at the mercy of rumors.” Really??!! Would these be the rumors that you bought a bunch of bad assets with a lot of leverage at the top of bursting bubble?

Greenberg elected to stay when JPMorgan Chase & Co. acquired Bear Stearns through a forced sale in March. The acquisition followed a run by clients and lenders that left Bear Stearns on the brink of bankruptcy. Market rumors helped cause customers to pull their money from Bear Stearns and Lehman Brothers Holdings Inc., and pushed down the stock prices, he said. I would think your balance sheet and opaque reporting helped to cause customers to pull their money from Bear Stearns and Lehman Brothers. See Is this the Breaking of the Bear? and Bear Fight - A most bearish view on Bear Stearns in a bear market.

Published in BoomBustBlog

The Wall Street Journal ran an interesting, well researched piece on the run on Morgan Stanley that has been well covered in the blogoshere. From a journalistic perspective, it was excellent, but it was lacking from an actual hard core investor's perspective - the very same hard core perspective that drives my patrons to pay for my blog. So, lest I disappoint my readers, let's throw some analytical and historical facts into this debate. I feel the need to throw my two cents in because nobody is calling a spade a spade, thus partially justifying the nonsense that was the short sale ban that came down from the highly hypocritical industry. Yeah, the same industry whose prop desks short other companies and industries,,, the same industry that profits heavily form enabling their clients (through prime brokerage) to short other companies and industries. With the final fall of the big sell side brokerages, there is even a bigger dearth of services left on Wall Street. Honest, unbiased research. That is, I believe, the draw that the BoomBustBlog has. That is what is lacking throughout nearly all of Wall Street. That is what this blogging medium has allowed me to provide - and I'm just luv'in it.

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Published in BoomBustBlog
Monday, 03 November 2008 01:00

Corporate welfare

I was very clear in warning about the "everyman for himself" phenomenon back when the first US bailout package was announced in the US. All of the money given banks are going straight to the bank's coffers and nowhere else. It is a farce to believe that banks will act against their own self interest when given money. PNC took the money and bought a bank with a risky loan portfolio to boost deposits, AIG is paying margin calls with its taxpayer money, JP Morgan and Merrill chiefs flat out said, "No, I will not lend the new money out", and the Euro banks are also designing special textual diagrams to display their views on handling the new low interest rates they are benifititing from by way of the UK government. See what I just pulled off of the memorandum of understanding between HSBC and the government:

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……..(’(…´…´…. ¯~~/’…’)
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…………..………….

HSBC Defies Brown, Signals It Won't Pass On All of Rate Cuts to Customers

From Bloomberg:

Published in BoomBustBlog
Monday, 27 October 2008 02:00

Shining some light into the GGP shadows

GGP has disclosed that a Bucksbaum family trust made a loan to former CFO Bernie Friebaum to cover his margin call.
"The Company also announced that it has recently come to the attention of the Board that an affiliate of a Bucksbaum family trust advanced unsecured loans to Mr. Michaels and Bernard Freibaum, the company’s former director and CFO, for the purpose of repaying personal margin debt relating to company stock. The loan to Mr. Michaels, which totaled $10 million, has been repaid in full. The loan to Mr. Freibaum, whose employment was terminated prior to the Board’s knowledge of these loans, totaled $90 million and has $80 million presently outstanding.
A review by the Company’s independent directors concluded that, while the failure to disclose the loans to the Company’s Board of Directors did not follow internal company policy, no company assets or resources were involved in the loans and that no laws or Securities and Exchange Commission rules were violated as a result of the loans."
Management should subscribe to the blog. There are a few GGP employees who are members already.
It appears there's more to come out about the circumstances surrounding the stock offering earlier this year. We have dug very deep into this company's apparent shenanigans, and if I am not mistaken this blog was the only one to sound the alarm. I published my research in November, stating I was bearish at about $57 to $60. GGP is currently trading at $2.37.
See the following list for the GGP history to date...
Published in BoomBustBlog

The Guys From ‘Government Sachs’

A most interesting article in the NY Times . Here's an excerpt...

Photo illustration by The New York Times

Treasury faces, from left: Steve Shafran (formerly of Goldman), Kendrick Wilson III (ditto), Henry Paulson Jr. (you guessed it), Edward Forst (yep) and Neel Kashkari (see a trend?).

THIS summer, when the Treasury secretary, Henry M. Paulson Jr., sought help navigating the Wall Street meltdown, he turned to his old firm, Goldman Sachs, snagging a handful of former bankers and other experts in corporate restructurings.

In September, after the government bailed out the American International Group, the faltering insurance giant, for $85 billion, Mr. Paulson helped select a director from Goldman’s own board to lead A.I.G.

And earlier this month, when Mr. Paulson needed someone to oversee the government’s proposed $700 billion bailout fund, he again recruited someone with a Goldman pedigree, giving the post to a 35-year-old former investment banker who, before coming to the Treasury Department, had little background in housing finance.

I recommend reading the whole thing.

Published in BoomBustBlog