Thursday, 25 December 2008 23:00

Comment on the shipping industry

A few days ago, BoomBustBlogger Stuart made the following comments:

I'd be curious to see where you think GNK fits into the mix. They popped up on a screen so I briefly looked at them. Their latest 10Q has a investment in a company called Jinhui. That company trades on the Oslo bors (ticker JIN) and is 54% owned by a Hong Kong company. GNK values their stake at $200 million based on a Sept 2007 stock price. Problem is that JIN has lost about 90% of its value since that time. I don't short stocks so I just eliminated it and moved on. But might be worth a closer look for subscribers, esp if a write down triggers collateral posting requirements under their 2007 credit facility.

On a broader note, this research note [the latest shipping company research note] seemed to rely heavily on the order book to current fleet ratio, which would indicate price will not be rising to prior highs anytime soon. But, how reliable is that number? Shipping co's have been canceling right and left and I expect that trend to accelerate as it becomes clear that China will not miraculously boom during a rest of the world downturn. If few of these cancelled ships are completed, then I would expect the order book to current fleet ratio not to accurately predict future supply. For example, with respect to bulk carriers, the Business Times reported recently that an astounding 30% were placed with "greenfield" yards in China. It would shock me if the majority of those vessels (or even a large portion) ever got built. This makes me think that relying on current order book to predict future supply is not reliable and in fact may be wildly off.

We have looked at Genco Shipping, a carrier of iron ore, coal, grain, steel products and other dry bulk cargoes. Following are some of our observations on the company based on preliminary investigations –

Published in BoomBustBlog
Wednesday, 17 December 2008 23:00

Reggie Middleton on the Shipping Industry

My tertiary research on the shipping companies is now ready. I screened all of them after a tip from a reader several months ago. As usual, I picked the weakest out of the bunch. I expect this company to have a high probability of either defaulting on debt or getting robbed in its pursuit of capital in this rough environment. Spreads are very, very wide for the options, but the stock is shortable with the right effort.

Next up will be more banks, one in the US and two in Europe. One of these three may not make it.

icon Shipping Company Investment Summary - Retail (363.84 kB 2008-12-18 14:13:16)

icon Shipping Company Investment Summary - Pro (473.47 kB 2008-12-18 14:16:07)

Published in BoomBustBlog
Tuesday, 16 December 2008 23:00

Better 5 or 6 months late, than never

GE in the MSM (mainstream media):

S&P Says GE's Credit Rating May Be at Risk
Wall Street Journal - 1 hour ago
Credit analyst Robert Schulz warned earnings and cash flow at GE Capital could decline enough over the next two years to warrant a downgrade, ...
GE, GE Capital Ratings Outlook Cut to Negative by S&P Bloomberg
S&P says chance GE could lose AAA rating Forbes
Stocks Slip After GE's Outlook Lowered

GE in my blog, 6 months ago:

GE and the Uber Bank Forensic Analysis
(Archived/Reggie Middleton's Boom Bust Blog/MyBlog)
This is the follow up to the preview of our analysis of GE. A PDF version is here: GE_ResearchReport_04July2008 (163.44 kB 2008-07-09 13:50:44). These are drafts and haven't received a fi
Wednesday, 09 July 2008

GE: The Uber Bank???
(Archived/Reggie Middleton's Boom Bust Blog/MyBlog)
I'm taking a closer look at GE, the industrial cum uber bank bellweather of the Fortune 500. See the following draft overview, to be followed up by a full forensic analysis. I apologiz, for I've h
Monday, 16 June 2008

Come on MSM guys. Some of you guys really need to get at me. Imagine what a powered financial section would look like in Forbes, Fortune or Barron's.Here's the model for those who haven't seen it.

Published in BoomBustBlog
Wednesday, 03 December 2008 00:00

USG Corporation - A note

This is the better late than never update to USG research. I will make the summary PDF download freely available to anyone who is registered to the site. Those who are not registered can do so for free here (be sure to choose a subscription option, even if it is the free one).

Published in BoomBustBlog
Tuesday, 02 December 2008 01:00

Food sector actionable intelligence update

This is the final report and valuation for the food sector actionable item released a few weeks ago. As usual, I recommend the professional users delve deep into the reasonings and logic behind my taking a bearish stand on this company. The micro/macro argument is extensive. Keep in mind that the vast majority of the company's assets are goodwill and intangibles, something that is quite likely to go "poof" when the going get's rough.

icon Retail Analysis (342.01 kB 2008-12-02 01:51:43)

icon Professional Analysis (417.53 kB 2008-12-02 01:48:33)

Published in BoomBustBlog
Friday, 21 November 2008 01:00

Food sector actionable item update

There were some revision errors in the research not issued yesterday. It is recommended that subscribers download the latest version:icon Food Processor Actionable Item - 11-21-08 revised (428.44 kB 2008-11-21 09:57:46)

Published in BoomBustBlog

This is a timely Actionable Intelligence Note on a food processor research subject that I am accumulating a position in. The last food processor position did very well, although I have closed that position in my proprietary account already. I am now offering that report to the public domain. See icon SFD_Pro Report_Final_240908 (286.98 kB 2008-10-07 01:39:23).This is also another opportunity for retail subscribers to see what you are missing out on in the Pro reports.


This newer timely item has a subject that is trading at both a much higher nominal price and valuation.

Published in BoomBustBlog
Tuesday, 18 November 2008 01:00

Another Name Brand bites the BoomBust!

From Bloomberg: Falcone's Harbinger Capital Faces Potential $200 Million Loss on Navistar

Harbinger Capital Partners, the New York-based hedge-fund firm run by Philip Falcone, has almost $200 million in potential losses on bets that Navistar International Corp.’s stock price would rise.

Harbinger bought swap contracts on 4.55 million shares of Navistar that would gain if the truck maker’s shares rose above certain prices, according to a Nov. 14 regulatory filing. Warrenville, Illinois-based Navistar has dropped 63 percent in New York trading this year to $19.86, about two-thirds below the price where the trades are profitable for Harbinger.

Published in BoomBustBlog
Monday, 10 November 2008 01:00

Looking at the blog's sector performance

I know it may be sexier to concentrate on the financial sector, but there has been little discussion on the most recent sectors that I have covered outside of finance. The financial implosion has caused the manufacturing sector to fold, and fold heavily. If your trades have been geared properly, the average return on the 4 manufacturing prospects that I have analyzed are well over one hundred percent in just a few months.

To refresh, you can search the blog for Encore, Navistar, USG, and Smithfield Foods (SFD). I have made the Smithfield research available for free since most of the meat is now gnawed from the bone. Feel free to download Smithfield Foods Professional report here:icon SFD_Pro Report_Final_240908 (286.98 kB 2008-09-25 01:32:23)

Published in BoomBustBlog
Sunday, 26 October 2008 02:00

Global Recession - an economic reality

Global Recession - an economic reality

Part 28 of Reggie Middleton on the Asset Securitization Crisis

The repercussions of the historical events that unfolded on Wall Street in September 2008 are being felt across the global financial system-banks and insurers across the Atlantic and Pacific are beginning to implode at an increasingly rapid pace, held together by the glue of their respective government bailout packages. The crisis, thought to be restricted to US markets, has spread to their European and Asian counterparts, freezing credit markets in the region - with the emerging markets on tap. It looks like the investment banking era on Wall Street has ended with Lehman Brothers going bankrupt, Merrill Lynch being sold off to Bank of America, Bear Stearns imploding over a weekend and the conversion of Goldman Sachs and Morgan Stanley to bank holding companies. Nearly each week sees a new bank filing for bankruptcy (TGIF, its not - OMGIFDICFA). The latest to join the list are Washington Mutual and Wachovia Corporation. Washington Mutual's banking assets were taken over by JP Morgan Chase for US$1.9 billion, while Citigroup made a US$2.2 billion bid for certain banking assets of Wachovia. The crisis has spread to Europe as reflected by the nationalization of Fortis Bank-the governments of Belgium, Luxembourg and the Netherlands provided €11.2 billion to bail out the bank. The FDIC Troubled Bank List grew from 90 to 117 in Q2 08, indicating that more banks could head toward bankruptcy. These developments completely shook the confidence in the banking system, as jittery depositors queued to withdraw their deposits. What has emerged is a credit crunch, making it increasingly difficult for borrowers (individual and corporate) to fund their requirements (see The Butterfly Effect and the The Butterfly is released!). As a result, economic activities are slowing down.

Published in BoomBustBlog
Page 4 of 6