Reggie Middleton's Boom Bust Blog

  In the vein of comparing the blog's research to name brand hedge funds, see "Another Name Brand bites the BoomBust!", I have decided to update the performance charts and announce the availability of a new instiutional program that will allow a new higher tier subscriber level to gain access into my outlook in regards to the positions that I have taken. Below you will find the most recent results to all of the performance comparisons that I have made in the last couple of months.

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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.

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Radio broadcasting companies, an out-of-favor sector with investors and media consumers, are extremely leveraged and facing difficult business environment.
With the advent of the internet, audio related media distribution barriers to entry have come down dramatically. The dissemination of news has encountered a paradigm shift with the advent of blogs, including the one owned by yours truly. With arguably better content, easier and more customizable access, and a rapidly changing business model that is difficult to grasp by the traditional MSM (mainstream media) management, the Web has literally painted a R.I.P. sign on the coffin covers of many a once might radio station holding company. Are TV station companies next? Did this truly have to come to pass, or was the changing of the guard inevitable? Should Bloomberg, or Murdoch or Curtco Media buy a stake in BoomBustBlog.com to hedge their future?

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Here is something that should spark some discussion. As I stated in a previous post, I owned and ran a social class discussion, research and study site (from and applied perpsective, I am not a scientist) that became very popular. I offered tools and research that I utilized in my residential real estate investing, and have decided to offer a model to this blog. For those who wonder why I am offering this model here, just think of it as my layman's version of applied behavioral finance theory.

I welcome all constructive comments, and feel free to pass the model around the Web. Registration is not required.

 Socio-economic stratification model (156 kB 2008-11-07 13:47:25) 

James Cramer: marked to market!

This is most likely the final installment in my "Name Brands aren't all they're cracked up to be" series. This string of articles has seen me compare my (a lowly blogger's) research model investment results with the biggest and most influential names and indices in the US stock market. For those who feel that the research model is too hypothetical (nonsense actually, since it is the most well documented of its kind that I have seen), I have included a snapshot of my own proprietary trading account. I will get to Cramer in a minute, but before I do, let's peruse the roadmap of how we got here. Here is the synopsis to date:

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The Name Brand - that bastion of marketing that the finance and investment industries have come to rely on to convince those who should no better to do things that they shouldn't -has come under attack. "Attack by who?", you may ask. Attack by me, Reggie. "Who the hell is Reggie?" you ask. Well, a quick bio , and a list of writings that have brought use here so we can move on...

  In the past week or two I attempted to debunk the "'Name Brand' is the best" mentality of so many individual and INSTITUTIONAL investors enamored by the marketing machine that is the Wall Street banks, brokers and Greenwich/mid-town hedge funds. In attmepting to do so I have released this blog's research model results, provided a glimpse into my proprietary trading, a backgrounder on my investing style, and a comprehensive comparison of both the blog and my results as compared to all major (and minor) hedge fund indices. 

Now that we know:

1. that a man can beat market averages,
2. we know hedge funds don't necessarily deliver that much absolute alpha,
3. we know the difference between relative and absolute return,
4. we know the difference between return and risk adjusted return,
5. and know who the hell Reggie is...

It's time to move on to what is the actual essence of Wall Street, the big money center banks and brokerages (or at least what's left of them). As representative of Wall Street, I am using the four largest and most representative banks and brokerages - Goldman Sachs, Citibank, JP Morgan, and Morgan Stanley.

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In the news today...

The Doo Doo 32 pops back up:

Paulson Planning to Buy Stakes in Regional U.S. Banks to Unfreeze Credit 

"The decision to buy stakes in more lenders comes after some of the mid-sized American financial institutions report mounting losses. National City Corp., Ohio's largest lender, Oct. 21 posted a wider loss, put aside more money for unpaid loans and announced plans to eliminate 4,000 jobs. Its third-quarter net loss widened to $729 million, from $19 million a year earlier.

SunTrust Seeks Funds

SunTrust Banks Inc., Georgia's largest lender, posted a 26 percent decline in third-quarter profit yesterday. The bank's board authorized the sale of $1.6 billion to $4.9 billion in preferred shares to the U.S. Treasury, Chief Executive Officer James Wells said in a conference call."

HSBC shares down after Morgan Stanley cuts price

Shares of HSBC fell more than 5 per cent to a five-year low on Friday after Morgan Stanley cut its target price amid a negative outlook for emerging markets growth....

If you remember, after the rally last week, I went shopping in the UK and EU - See "Do you who's going to screw who next week?": I spent the majority of my Wednesday of last week spreading my bearish positions further around the European banks. The balance was catering to my beautiful, yet demanding 2 year old daughter, the only 2 year old I know who forces her dad to go clothes shopping - seriously! She is also one of the main reasons I decided not to open up the hedge fund after spending SOOOOOO much money getting it set up. I was putting her down for her afternoon nap (a perk - and bain - of working from home) about a month ago and she looked me in the eyes and said "I wuv yoo too, Daddy!" Now, here I am cuddling my little girl to sleep, while half of Wall Street and Park Avenue was yelling at traders and kissing client ass trying to beg them not to withdraw funds during a time when EVERYONE was losing money. I thought to myself, "Hey,they can keep the extra cash and the headaches that go along with it. My girl needs a hug". For the record, I have two boys (7 and 16, both work on the blog) as well, both raised the same way with Dad slaving from home on a 24 hour work day. When I was younger, I was actually ashamed of not having the Wall Street office, with many service providers looking down upon the home office entrepeneur - not to mention a stay-at-home dad! Enter a little wisdom, age and common sense and I was able to confidently say F@#$%' em, it's the results that matter, and results are what I produce.

For those international blog members, notice how it seems as if I am always awake? Well, I am... as I type this post at the usual 3 am time slot in an effort to get 2 hours of sleep before I see my kids off to school.

Let this post be not only about the degradation of the UK/EU banking system, but about having balance in your life as well. This is starting to truly become a blog about my personal thoughts and opinions. Alas, I digress. Let me give you a glimpse into some of the additional reasons why I went shopping.

Bloomberg's take :

U.K. stocks dropped, led by financial and energy companies, as the government reported Britain's economy shrank more than forecast in the third quarter, diminishing the outlook for earnings. HSBC Holdings Plc, Europe's biggest bank, declined the most since Sept. 11, 2001, after Morgan Stanley cut its share- price estimate for the company by 25 percent. Barclays Plc fell after it was lowered to ``neutral'' from ``buy'' at UBS AG, which said earnings and dividends at the U.K.'s second-biggest bank may be hurt as it raises capital...

``Corporate earnings aren't looking good,'' said Andreas Nigg, a Zurich-based fund manager at Vontobel Asset Management which oversees $39 billion. ``In previous recessions, analysts' estimates have usually been too optimistic. It looks like this is also the case now.''

Britain's economy shrank in the third quarter, the government said today, as the global financial crisis ravaged industries from banking to construction, evidence that the country is in the grips of its first recession since 1991...

HSBC slid 8.4 percent to 737.25. Morgan Stanley lowered its earnings estimates for HSBC by 3 percent to $1.11 a share for this year and 10 percent to $1.05 for 2009.

``We question how long HSBC shares can continue to tread water in the face of falling earnings and increased pressure on capital,'' Morgan Stanley analysts led by Anil Agarwal wrote in a report today.

`More Difficult'

Barclays fell 4.1 percent to 209.25. ``A more difficult outlook for the U.K. economy has contributed to lower than previously expected top-line growth and higher impairment losses,'' London-based UBS analyst John-Paul Crutchley wrote in a note today. ``3.6 billion pounds of new equity prior to the end of March 2009 will lead to further dilution to earnings per share.''

Barclays is likely to cut its dividend next year as profit declines, Crutchley said, predicting a 2009 dividend of 12 pence and earnings of 24.36 pence a share, reduced from a previous estimate of 43.59 pence.

HBOS Plc, the U.K. bank that agreed to be bought by Lloyds TSB Group Plc, slid 9.3 percent to 66 pence. Aviva Plc, the U.K.'s biggest insurer, declined 8 percent to 253 pence.

The Riskiest Bank on the Street is a little late to the HSBC party (professional subscribers can download the full HSBC analysis from the Downloads section). This coincides with the third installment of my "Name Brand" buster series of posts (see the preview) that actually mark the name brand's performance to market. I have decided to include James Cramer's thestreet.com calls in the analysis as well (actually, it is being contributed by a reader). I also have a lot of macro commentary and research coming online very soon. Should be an interesting weekend.

I just got a newsflash (7 am) that the DOW futures dropped 500 points. The Dow is actually a meaningless marketing moniker, but the broad market is probably priming itself for a similar drop, thus I will continue blogging throughout the day. Next up, an insurance sector update (HIG) for subscribers and a macro report on why the global recession is here already - no need to guess. I may also have those blog vs bank vs newsletter comparisons for you as well. You guys and gals will be getting your money's worth today.

  In the past week or two I attempted to debunk the "'Name Brand' is the best" mentality of so many individual and INSTITUTIONAL investors enamored by the marketing machine that is the Wall Street banks, brokers and Greenwich hedge funds. In attmepting to do so I have released this blog's research model results, a glimpse into my proprietary trading, a backgrounder on my investing style, and a comprehensive comparison of both the blog and my results as compared to all major (and minor) hedge fund indices.

Now, I will be moving on to the big money center banks and brokerages (or at least what's left of them). Some time tomorrow, I will release a comprehensive comparison of my blog's statc research model against the timed buy/sell recommendations from all of the big bank/brokerages.No excuses made for disparities in budget, resources, political conflicts of interest, etc. Be aware that I refrained from giving explicit buy and sell advice (except in the case of Bear Stearns where I inadvertantly shared my opinion), which has handicapped the blog's results in cases where stocks have dropped and then risen again, ex. PNC. If you click the "proprietary trading" link above you can get an illustration of the results possible when this blog's research is used to actively manage positions.