Reggie Middleton is an entrepreneurial investor who guides a small team of independent analysts, engineers & developers to usher in the era of peer-to-peer capital markets.
1-212-300-5600
reggie@veritaseum.com
For those who are new to my writings and research (those who follow me should skip down to the next section), I have had relatively strong results in ferreting out weak companies which the sell side, the ratings agencies and the media consider "buys", "conviction buys", and AAA/AA credits - only to collapse, be acquired on the cheap or fall into bankruptcy less than a year later. Despite the painful rides necessary to ride out volatile markets that absolutely ignore fundamentals, in the end broke is broke and insolvent businesses tend not to last very long. The list of companies called out as insolvent against the rating agencies/sell side analysts/super smart billionaire investment crowd include:
These calls provided 5 quarters in a row of phenomenal returns (see performance) until the massive market melt-up of 2009 where we saw fundamentals get thrown down the sewer drain while math and common sense were turned on their respective heads. Well, guess what boys and girls... Methinks math is back and it may be here to stay for a while.
Continuing our Bankruptcy Search Series (see BoomBustBlog Bankruptcy Search: Focus on British Petroleum and Collateral Damage and The BoomBustBlog Pan-European Sovereign Debt Crisis Bankruptcy Search) I am moving on to the broad, non-financial sector in the US. Please keep in mind that this is a list for bearish investors who wish to take short positions, and thus does not aim to find the absolute weakest companies but strives to find the companies whose share prices will drop the farthest on a risk weighted basis. The share float, share price, market cap, (over)valuation, cash flows, revenue growth, interest coverage, net debt, etc. can (on a cumulative basis) trump outright insolvency – particularly if the market has already priced such in. In essence, we aim to find the next unpublicized financial collapse that can be primarily captured with short equity positions and options, although CDS investors can definitely benefit from the list as well.
After completing the first round of shortlisting in the non-financial sector, we shortlisted 7 companies using the following process:
This is a snapshot of the initial 1,415 company initial scan along with solvency metrics for each company.
This is presented as a live, embedded spreadsheet and is available, free to all by clicking here (feel free to register as well, its free - register then choose the free subscription option). I urge all who may be bearish this summer to peruse the spreadsheet for it contains the pricing and major solvency metrics for over 1400 companies whose shares have skyrocketed over the past year. As some may realize, literally insolvent companies' shares have participated in that skyrocketing!
The following link reveals the key details behind the weak points of the six shortlisted and analyzed companies (for subscribers only): Non-Financial Retail Subscriber Short List
Pro subscribers can access an expanded list of 33 companies here and institutional subscribers can access the expanded list here.
For those of you who have not registered or subscribed, there is still a company of interest that I will share in case you feel Europe will blow up and the US will hit a double dip recession. This is not nearly a strong a candidate as any of the subscription analyzed companies, but it is worth discussion.
Reggie Middleton is an entrepreneurial investor who guides a small team of independent analysts, engineers & developers to usher in the era of peer-to-peer capital markets.
1-212-300-5600
reggie@veritaseum.com