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Posted
Oct 05 2009, 08:23 AM
by
Jim Van Meerten
Rating:
Money Blog: Top Stocks Blog - MSN Money
Over the weekend, McClatchy Newspapers had two powerful articles entitled "Help with mortgages is difficult to come by" and "Some firms with spotty pasts get tax dollars." The articles expose how firms like Bank of America (BAC), Citigroup (C) and Morgan Stanley (MS) -- firms who were bailed out from the brink of bankruptcy by TARP with billions of taxpayer dollars -- are now abusing mortgage borrowers who are in trouble. The Treasury is doing little, if anything to monitor the situation.
In one case, Ronnie Fruia was about to lose his home when he, his mother and son were all hospitalized. He was recovering from a stroke and couldn't talk, but CitiFinancial sent someone to his hospital room to sign modification papers that didn't even cut his interest rate. State regulators had to step in to get his rate changed from 11.5% to a reasonable 5%.
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Posted
Aug 10 2009, 09:13 AM
by
Minyanville
Money Blog: Top Stocks Blog - MSN Money
This article was written by Minyanville's Megan Barnett
Since the downfall of Lehman Brothers, many of the biggest Wall Street banks have moved in lock step, as if to assume there is safety in numbers. Everyone took the bailout money at the same time (not that they had much choice), and now everyone wants to pay it back.
But now that the worst is behind the banking industry, or so many of them hope, at least one bank is finding reason to zig when everyone else zags. JPMorgan Chase (JPM) is taking the unusual step of auctioning off the warrants held by the U.S. government, instead of buying them back for a price negotiated privately with Treasury officials, according to the New York Post. The auction will be held in the open market and conducted by the Treasury Department.
(See also: Megan Barnett's "The Small Price to Pay for Financial Fraud")
It's different. It's transparent. It's fair. It makes sense.
It's also suspicious.
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Posted
Jul 15 2009, 09:28 AM
by
Minyanville
Rating:
Money Blog: Top Stocks Blog - MSN Money
It's hard to keep track of the untold spin-offs of the original Terminator movie -- but I wouldn't be surprised if the next installment is set on Wall Street. Why, you ask? Because computers are now running the economic show, and they -- like the Terminator's eponymous robots -- seem to be engaged in a pitched battle to the death. Dramatic market moves have become commonplace, and those looking for a fundamental explanation are missing a significant structural change: The majority of stock trades now originate with so-called “high frequency” funds, which use computers programmed with obscure mathematical correlations to execute trades. The computers trade in and out of stocks at light speed, sans human intervention -- no trader, no economist, no chart tracker. These funds argue that computers aren’t swayed by emotion, and naturally move much faster than a person ever could.
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Posted
Jul 14 2009, 12:11 PM
by
Ken Kam
Rating:
Money Blog: Top Stocks Blog - MSN Money
With today's news of Goldman Sach's (GS) strong second-quarter results, it is becoming clear that the financial industry's survivors are going to be big winners. To find out which companies are worth evaluating, I asked one of Marketocracy's mFOLIO Masters, Eugene Groysman, for his best idea. mFOLIO Masters are the creme of the crop at Marketocracy.com, I've tracked Groysman for the past 6 years, and over that time he averaged 21.8% a year. That's why we started making his portfolio available for clients in our managed account program.
He surprised me by picking US Bancorp (USB) over better-known rivals Goldman Sachs, Bank of America (BAC), Citibank (C), Morgan Stanley (MS) and JP Morgan (JPM). I'm going to let him explain in his words why US Bancorp is his pick.
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Posted
Jun 12 2009, 11:14 AM
by
Minyanville
Rating:
Money Blog: Top Stocks Blog - MSN Money
This post was written by Minyanville Executive Editor Kevin Depew.
1). Credit crisis abating
Last week I talked about rising bond yields affecting equity prices and how the most-watched events of the week would be the Treasury auctions. I was wrong. I began this week fiercely determined to remain awake long enough after churning out one of these daily columns to closely monitor three days' worth of Treasury auctions; the 3-year, 10-year and 30-year auctions collectively known as "refunding," a *** misnomer that was probably once an inside joke that just happened to stick. So much for that. The action isn't in Treasury funding at all, but corporate issuance.
On Tuesday, the following note on Anadarko Petroleum (APC) scrolled across my Bloomberg screen:
* ANADARKO PETROLEUM TO SELL $750 MILLION OF 5-, 10-YR DEBT
But that's not what happened. As it turned out, demand was so strong APC boosted the size of its sale from $750 million to $900 million. As well, the spread (the difference in yield for this debt above Treasurys) estimated to be in the 305-337.5 basis point range, actually came in lower, 295 to 325 basis points.
OK, that's one company, but all told there were more than $2.2 billion in corporate bonds issued last Tuesday, in spite of a record $71 billion the Treasury is raising over the next couple of days.
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Posted
Jun 11 2009, 12:05 PM
by
Minyanville
Rating:
Money Blog: Top Stocks Blog - MSN Money
In February, when Bank of America (BAC) was below $4, some folks scoffed when I said it was worth at least $30.
I know some may think I'm some sort of loony tune, or might suspect I make outrageous claims just to attract attention. Quite the contrary: I do serious analytical work, and I take my reputation as an analyst very seriously.
Why do I bring this up? I wrote a report in which I presented a model showing that Bank of America was probably worth at least $30. I was called everything from ignorant to a stooge of the government.
On May 8, in an article entitled The Crisis is Over -- For Now, I shared the fact that I'd updated my model and believed that, based on SCAP assumptions, Bank of America was worth $40. People scoffed again.
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Posted
Jun 10 2009, 02:29 PM
by
Minyanville
Rating:
Money Blog: Top Stocks Blog - MSN Money
In early 2006, when subprime powerhouse New Century went bust, vulture investors began to salivate at the opportunities a collapsing mortgage market would offer up like manna from the trading gods. They started raising money. And lots of it.
Billions were poured into so-called "mortgage opportunity funds," which planned to pick through the wreckage of the once-high-flying housing market. Some investors aimed to focus on mortgage-backed securities, hoping to buy in at pennies on the dollar so just a few bond payments would reap sizable returns. Others, however, delved into the realm of whole loans, buying troubled mortgages from floundering banks.
As noted in the Wall Street Journal this morning, an investment strategy that seemed like a slam dunk on paper -- buying distressed mortgages on the cheap, and working out equitable arrangements with borrowers -- has proven extremely difficult to execute.
The prevailing wisdom was that, as delinquencies rose, and banks amassed a seemingly limitless portfolio of troubled loans, the likes of JP Morgan Chase (JPM), Bank of America (BAC) and Citigroup (C) would be forced to unload assets at firesale prices. Because they were buying at super-low prices, investors expected to have the necessary cushion to forgive principal, lower interest rates, or otherwise get borrowers back on track. They would, of course, earn a hefty profit for the effort.
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Posted
May 12 2009, 09:59 AM
by
Minyanville
Rating:
Money Blog: Top Stocks Blog - MSN Money
Not surprisingly, and very wisely, it isn’t just banks raising equity these days. I’m not the biggest fan of Tim Geithner, but I’m starting to think he’s a heck of a trader. Some of the biggest shots around would've been proud to have engineered his short-squeeze (formally known as a “stress test”), into which banks like Wells Fargo (WFC) and Capital One (COF) have been selling. Geithner seems to have understood the performance anxiety he could generate, and to have taken full advantage. Frankly, he deserves a lot of credit for pulling it off.
OKy, let me stop digressing. Smart companies (like Bank of New York (BK) and Morgan Stanley (MS)) are taking advantage of this arguably artificial rally to raise equity without difficulty. A couple of months ago, some of these firms might not have been able to sell stock at any price, let alone today’s prices. It’s yet another testament to the power of like-minded thinking by portfolio managers: I’ll buy it if you’re buying it, but not otherwise. (Now comes another shameless plug for my upcoming book, "The Undoing of Cowardice," which talks about this tendency and suggests ways for investors to recognize and profit from it.)
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Posted
May 11 2009, 09:10 AM
by
Minyanville
Money Blog: Top Stocks Blog - MSN Money
During my days as a convertible hedge-fund manager, one of the humorous, though important, regular events was the pricing of a new deal. I say humorous because a remarkably small amount of the time spent discussing the new deal went into the deal’s actual merits.
Far more important -- if you were a convertible manager -- was how the deal was going.
“Oh, it’s three times oversubscribed already, let me put you in for $100 million if you really want $10 million." That was the mantra of the convertible salesman.
“But I don’t want $100 million. I only want $10 million.”
“Everybody else is going in for 10 times what they really want.”
“Not me.”
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Posted
May 05 2009, 02:22 PM
by
Minyanville
Rating:
Money Blog: Top Stocks Blog - MSN Money
To believe some in the press, this week’s stress test carries comparable weight to President Franklin D. Roosevelt’s bank holiday in 1933; that is, the test will signal the bottom of our current banking crisis.
With all due respect to the parties involved, as Mae West would say, “I may have been born yesterday, but I’ve been up all night.” You can fool me once, maybe twice. But if I use Citigroup (C) as the sample, announcing the stress test as the bottom would be, by my count, the eighth time.
This morning, just for fun, I went back and looked at all of the capital-raising done by Citigroup over the past 18 months and the comments from management. And while a lot has changed in the economy over this period of time, unless the regulators announce hundreds of billions in new capital going into Citigroup and the other major banks in the system, it's very hard for me to see how Thursday night’s announcement will be anything more than yet another insufficient, albeit needed, step in the process.
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