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.

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

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

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 Briefing.com

GE in my blog, 6 months ago:

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

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).

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.

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

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

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

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 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.

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

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.

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: SFD_Pro Report_Final_240908 (286.98 kB 2008-09-25 01:32:23)

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.

I am releasing the balance of the Butterfly Effect (see The Asset Securitization Crisis Part 27: The Butterfly Effect) to the public in anticipation of the next two installments of the Asset Securitization Crisis to be published to subscribers, probably sometime this week. Before we go on, I would like to thank the loyal supports of my blog. I think this as I sit up at 3 am (my standard blogging time) typing this post into the blog’s text editor, slightly pissed off at some guy giving me a hard time because I won’t give him what he wants for free. I was enthusiastically supported by readers who truly appreciate the value of actionable intelligence. I would like to put a few excerpts here, starting with an explanation from me (edited to take some of the passion out of the debate):