Carl Icahn's proposed Directors slate includes none other than Mr. Cuban. I am excited! I previously wrote about how Mr. Cuban had his eye on the ball:
http://willworkforjustice.blogspot.com/2008/05/mark-cuban-on-ceo-pay.html
What will happen if Mr. Cuban gets elected? Will he subject Jerry Yang to public criticism on a daily basis? Will he make Susan Decker work in a Dairy Queen for a day? With no commissioner to rein him in, this could be the beginning of a fun period at Yahoo...
I just realized Cuban might be at this year's shareholder meeting. I might wear my old Mav's Michael Finley jersey. "Fin" seems like one of the league's classiest players. He also majored in business management at University of Wisconsin.
"And if an epitaph be my story, I'd have a short one ready for my own: I had a lover's quarrel with the world." -- Robert Frost
Thursday, July 17, 2008
Joe Nocera Has a Blog
Barry Ritholtz pointed his readers to a new business blog that looks promising:
http://executivesuite.blogs.nytimes.com/
Joe Nocera is a business writer for the NY Times. Of course, his blog is not as good as Barry's, at least not yet:
http://bigpicture.typepad.com/
If you read one economics-related blog, read Barry's "The Big Picture."
http://executivesuite.blogs.nytimes.com/
Joe Nocera is a business writer for the NY Times. Of course, his blog is not as good as Barry's, at least not yet:
http://bigpicture.typepad.com/
If you read one economics-related blog, read Barry's "The Big Picture."
Stocks Update, July 17, 2008
It's been a wild week, so I thought it would be a good time for a stocks update. Colonial Bancgroup (CNB) skyrocketed around 50% within three days after I called a bottom in banking stocks, and I recovered my losses and ended up making 10%. JP Morgan upgraded CNB today, causing a 20% jump. It's fun knowing I beat J.P. Morgan to the punch. Too often, investment banks upgrade stocks after an already-large run-up in the price.
I also sold Embarq (EQ), not because I dislike the stock's fundamentals, but because of a potential political problem. Congress questioned EQ about customer privacy. Apparently, some Congressmen believe that EQ covertly tracked users' internet activity. While there have no proven allegations, and EQ deserves the benefit of the doubt, I'm not willing to take the risk of a political fallout, no matter how nice EQ's dividend is.
Pinnacle (PNK), my largest loss in terms of percentage in the "Closed Positions" category, jumped 20% today. I sold earlier because the actual dollar loss was small and the market was being irrational. I don't know if I'd jump back in just yet--the market seems to be indiscriminately devaluing casino and restaurant stocks.
My major positions now are in PFE and CCT, with much smaller amounts in BLV and DBV. Preferred shares took a bath this week. I still can't figure out why. I picked up more CCT as a result.
You'll notice that BLV, DBV and CCT are not listed below in "Open Positions." I bought these stocks prior to publicly disclosing my individual buys and sells, so old positions are "grandfathered" for purposes of this blog. Prior to the recent market lows, I reduced almost all my positions, including mutual funds. Now, I hold no individual position more than 6,000 dollars, not even mutual funds (although one international bond fund will probably exceed 6,000 dollars due to dividend reinvestment).
I also changed the format of the statistics below. I spoke with a friend of mine, who correctly told me the overall averages between categories made no sense, because they valued completely different items. In order to have a proper average, I would have to go through and add up each and every trade and then divide them by the total number of all trades. For now, I am listing averages in each category only. Clearly, my ability to predict the market in the short term is much better than my ability to discern where the market is going long-term.
Numbers below are based on mid-day prices on July 17, 2008.
Open Positions
EWM = -10.84
IF = -11.8
PFE = -4.38
[Average of "Open Positions": losing/negative average 9.0%]
Closed Positions:
Held more than seven days but less than one year (from May 30, 2008):
CNB = +10.0
EQ = -8.83
GE = -6.4
INTC = 0.0 (excluded from averages and overall record calculations)
PNK = -16.7%
PPS = -2.8
WYE = +2.4%
[Overall Record: Lost an average of 3.73%]
Held less than 7 days:
GE (1.0%); ICE (2.0%), MMM (0.5%), MRK (0.1%), PFE (1.3%), SCUR (15%)
[Overall Record: Gained an average of 3.31%]
Daytrades:
PFE = +0.5%
GE = +0.5% (Updated on July 14, 2008; bought at 27.15, sold at 27.30)
XLF = +4.3% (Updated on July 15, 2008)
[Overall Record: Gained an average of 1.76%]
Compare to S&P 500: losing/negative 9.5%
[from May 30, 2008 (1385.67) to mid-day July 17, 2008 (1254)]
The information on this site is provided for discussion purposes only and does not constitute investing recommendations. Under no circumstances does this information represent a recommendation to buy or sell securities or make any kind of an investment. You are responsible for your own due diligence.
I also sold Embarq (EQ), not because I dislike the stock's fundamentals, but because of a potential political problem. Congress questioned EQ about customer privacy. Apparently, some Congressmen believe that EQ covertly tracked users' internet activity. While there have no proven allegations, and EQ deserves the benefit of the doubt, I'm not willing to take the risk of a political fallout, no matter how nice EQ's dividend is.
Pinnacle (PNK), my largest loss in terms of percentage in the "Closed Positions" category, jumped 20% today. I sold earlier because the actual dollar loss was small and the market was being irrational. I don't know if I'd jump back in just yet--the market seems to be indiscriminately devaluing casino and restaurant stocks.
My major positions now are in PFE and CCT, with much smaller amounts in BLV and DBV. Preferred shares took a bath this week. I still can't figure out why. I picked up more CCT as a result.
You'll notice that BLV, DBV and CCT are not listed below in "Open Positions." I bought these stocks prior to publicly disclosing my individual buys and sells, so old positions are "grandfathered" for purposes of this blog. Prior to the recent market lows, I reduced almost all my positions, including mutual funds. Now, I hold no individual position more than 6,000 dollars, not even mutual funds (although one international bond fund will probably exceed 6,000 dollars due to dividend reinvestment).
I also changed the format of the statistics below. I spoke with a friend of mine, who correctly told me the overall averages between categories made no sense, because they valued completely different items. In order to have a proper average, I would have to go through and add up each and every trade and then divide them by the total number of all trades. For now, I am listing averages in each category only. Clearly, my ability to predict the market in the short term is much better than my ability to discern where the market is going long-term.
Numbers below are based on mid-day prices on July 17, 2008.
Open Positions
EWM = -10.84
IF = -11.8
PFE = -4.38
[Average of "Open Positions": losing/negative average 9.0%]
Closed Positions:
Held more than seven days but less than one year (from May 30, 2008):
CNB = +10.0
EQ = -8.83
GE = -6.4
INTC = 0.0 (excluded from averages and overall record calculations)
PNK = -16.7%
PPS = -2.8
WYE = +2.4%
[Overall Record: Lost an average of 3.73%]
Held less than 7 days:
GE (1.0%); ICE (2.0%), MMM (0.5%), MRK (0.1%), PFE (1.3%), SCUR (15%)
[Overall Record: Gained an average of 3.31%]
Daytrades:
PFE = +0.5%
GE = +0.5% (Updated on July 14, 2008; bought at 27.15, sold at 27.30)
XLF = +4.3% (Updated on July 15, 2008)
[Overall Record: Gained an average of 1.76%]
Compare to S&P 500: losing/negative 9.5%
[from May 30, 2008 (1385.67) to mid-day July 17, 2008 (1254)]
The information on this site is provided for discussion purposes only and does not constitute investing recommendations. Under no circumstances does this information represent a recommendation to buy or sell securities or make any kind of an investment. You are responsible for your own due diligence.
Karachi Exchange
In America, when stocks plunge, we look for a bailout. In Pakistan, they let the market work out the kinks: "Investors have to learn to bear losses as they do gains," says a Pakistani money manager. See
http://www.bloomberg.com/apps/news?pid=20670001&refer=home&sid=a_.8H0oQOemI
One downside of free markets is someone bears the brunt of inequality. Here, the bourse had to call the police to protect it from unhappy investors: "investors broke windows, threw plant holders in the parking lot of the building and at least one protester was injured."
Pakistan's stock market has declined around 30% this year.
http://www.bloomberg.com/apps/news?pid=20670001&refer=home&sid=a_.8H0oQOemI
One downside of free markets is someone bears the brunt of inequality. Here, the bourse had to call the police to protect it from unhappy investors: "investors broke windows, threw plant holders in the parking lot of the building and at least one protester was injured."
Pakistan's stock market has declined around 30% this year.
Wednesday, July 16, 2008
Colonial Bancgroup (CNB), July 16, 2008 Earnings
These last few days, I knew exactly how Gordon Gekko felt as he was getting screwed by Bud Fox on the Bluestar deal. Colonial Bancgroup (CNB) kept dropping for no reason, unfounded bankruptcy rumors swirling around it. But now, after a 40% (now around 30%) jump in CNB's price in just two days, having sold most of my position, I hopped in Bud Fox's shoes when he switched sides and worked with Sir Lawrence Wildman. In fact, I am so pumped, if someone gave me Daryl Hannah's phone number right now, I'd make that call, and I'd close the deal.
But wait--people forget Bud Fox didn't exactly have a happy ending. He got greedy and overconfident. That's why, after seeing CNB jump 40%, I sold most of my shares. The earnings release was not terrible--although CNB lost money (five cents a share), the bank still appears to be well-capitalized. The main information I wanted to see was the following: "Foreclosed assets rose by $94 million, bringing bad loans to 2.62 percent of loans and other real estate." A bad loan ratio of 2.62% is still far from the informal 5% threshold that indicates a bank won't be able to pay out a dividend or will need to take active measures to shore up capital.
I will wait until after the ex-dividend date, and then decide whether to hold the remaining shares. For now, however, it's good to be king, having correctly called a short-term bottom in well-capitalized bank stocks.
But wait--people forget Bud Fox didn't exactly have a happy ending. He got greedy and overconfident. That's why, after seeing CNB jump 40%, I sold most of my shares. The earnings release was not terrible--although CNB lost money (five cents a share), the bank still appears to be well-capitalized. The main information I wanted to see was the following: "Foreclosed assets rose by $94 million, bringing bad loans to 2.62 percent of loans and other real estate." A bad loan ratio of 2.62% is still far from the informal 5% threshold that indicates a bank won't be able to pay out a dividend or will need to take active measures to shore up capital.
I will wait until after the ex-dividend date, and then decide whether to hold the remaining shares. For now, however, it's good to be king, having correctly called a short-term bottom in well-capitalized bank stocks.
Colonial Bancgroup (CNB) Update on July 16, 2008
Two days after I called a bottom in CNB (and most other bank stocks), CNB went up over 40%. I sold some of my position, and I am waiting for CNB to release earnings in about 30 minutes. These are exciting, volatile times. I do like being right, and it looks like I was one of the few nationwide to correctly call at least a short term bottom in financial stocks.
For fun, check out Barry Ritholtz's post today titled "Idiots Fiddle While Rome Burns." I'm not saying it's as entertaining (true) as Cramer's famous meltdown on CNBC, but it comes damn close:
http://bigpicture.typepad.com/comments/2008/07/idiots-fiddle-w.html
Even Robert Reich is getting into the act:
http://robertreich.blogspot.com/2008/07/modest-proposal-for-ending-socialized.html
For fun, check out Barry Ritholtz's post today titled "Idiots Fiddle While Rome Burns." I'm not saying it's as entertaining (true) as Cramer's famous meltdown on CNBC, but it comes damn close:
http://bigpicture.typepad.com/comments/2008/07/idiots-fiddle-w.html
Even Robert Reich is getting into the act:
http://robertreich.blogspot.com/2008/07/modest-proposal-for-ending-socialized.html
Tuesday, July 15, 2008
Colonial Bancgroup (CNB) and How to Value a Bank
A reader made a comment to the post below, indicating that CNB might be worse off than its total debt and total cash numbers indicate. He is correct--almost all banks are difficult to value today, because it is almost impossible to determine what percent of the debtors will be able to pay back their loans. The reader pointed me to the following link:
http://yahoo.brand.edgar-online.com/displayfilinginfo.aspx?FilingID=5754137-104895-280327&type=sect&dcn=0001193125-08-037476
He believes that CNB is a risky investment because much of its debt is mortgage-related. Banks hold many different classes of assets--student loans, mortgage loans, small business loans, life insurance policies, home equity lines, and so forth. His analysis relies on an assumption that today, any bank holding significant mortgage-related or property-related loans in markets such as Florida, Nevada, and California will be distressed. I don't dispute that analysis; however, I also do not believe CNB deserves to be trading at 3 dollars a share, even with its risks. CNB will probably not collapse and as a result, five years from now, when property values recover, CNB will be lauded for being in high-growth areas.
In any case, CNB accelerated its earnings release to July 16, 2008. We will have a better idea of where the bank stands tomorrow. I can't imagine CNB would have accelerated its earnings release if there was worse-than-expected news involved, but common sense doesn't always apply in this panicked market.
http://yahoo.brand.edgar-online.com/displayfilinginfo.aspx?FilingID=5754137-104895-280327&type=sect&dcn=0001193125-08-037476
He believes that CNB is a risky investment because much of its debt is mortgage-related. Banks hold many different classes of assets--student loans, mortgage loans, small business loans, life insurance policies, home equity lines, and so forth. His analysis relies on an assumption that today, any bank holding significant mortgage-related or property-related loans in markets such as Florida, Nevada, and California will be distressed. I don't dispute that analysis; however, I also do not believe CNB deserves to be trading at 3 dollars a share, even with its risks. CNB will probably not collapse and as a result, five years from now, when property values recover, CNB will be lauded for being in high-growth areas.
In any case, CNB accelerated its earnings release to July 16, 2008. We will have a better idea of where the bank stands tomorrow. I can't imagine CNB would have accelerated its earnings release if there was worse-than-expected news involved, but common sense doesn't always apply in this panicked market.
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