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- EnerSys Inc. F2Q09 (Qtr End 9/28/08) Earnings Call Transcript
- PolyOne Corporation Q3 2008 Earnings Call Transcript
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- iMergent, Inc. F4Q08 (Qtr End 10/31/08) Earnings Call Transcript
- Fuel Systems Solutions, Inc. Q3 2008 Earnings Call Transcript
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CrossProfit
572 Comments
The IEA Annual Report: A Dire Picture of Energy Supply and Demand
There could be two reasons for the inaccuracy in the forecasts:
1) IEA analysts don't compensate for technology improvements for both production/consumption and pollution.
2) IEA analysts can not allocate government interventions that have yet to take effect.
When all is said and done, oil at $50 to $65 is where it should have been all along as stated in articles about a year ago. The 'financial crisis' is just an excuse for it to come down now that GS can no longer pump it up to $140.
As for the future; the next time we hit $140 it will be for real and won't come down again. Unless a viable substitute is developed, it is just a matter of time. Will it be 2030? It is hard to say as it may be well before.
Just like oil above $85 today threw the U.S. economy into recession (before the financial crisis hit), likewise should oil fall below $35 it will ignite a backlash that will cut off production and prices will spike.
Too high is no good and the same holds true for too low. Perhaps now Chavez, Putin and others will start listening to the Harvard educated Saudis' who were constantly warning about oil going over the $100 mark. The Saudis' attempted to 'talk' the price down. It's too late for this time, but let's try to remember for the next time!
CrossProfit
Toronto Stock Exchange Displaying Strength
As for the volume paradox; congrats on noticing this, however, conclusion is a bit off. Sometime 2009, oil will retest the $100 mark or thereabouts. Recession or no recession, it's going to happen for a number of reasons. How and when is dependent on so many variables that stating a possible scenario now is equivalent to buying a lottery ticket. The TSX is reflecting this and basically has turned into a giant option put/call machine with an emphasis on oil and gas with other commodities playing second fiddle.
When it finally happens, then and only then will the TSX part from following the rest. (Australia is similar yet very different components, also less dependent on U.S. economy.)
Be careful how you place your bets as options have a tendency to expire worthless!
CrossProfit
Asian markets drop as investors refocus on the economy: Nikkei -6.5%. Hang Seng -6.8%. Shanghai -2.5%. BSE -3.9%.
As other Asian markets show little movement today, Japan's Nikkei rises 6.3% to a two-week high as investors buy back exporters in the face of a softer yen and show relief over a quiet three-day weekend.
The market is fully aware of the fact that no matter the outcome of the election, nothing starts to change until January 17, 2009. Even then it will take two to three months for the new President to set priorities and direction. Then, and only then will we get the markets true reaction to the new President.
In short, nothing has changed...this is still a traders market.
On Nov 04 04:20 AM Y.I. wrote:
> V helpful comment, CrossProfit -- thank you. What are your thoughts
> on today's US market?
As other Asian markets show little movement today, Japan's Nikkei rises 6.3% to a two-week high as investors buy back exporters in the face of a softer yen and show relief over a quiet three-day weekend.
The percentage gain actually indicates caution, as if to say we are not out of the woods yet. Had the Nikkei flown to 9700, then you would have a leading indicator. It didn't happen.
More on TARP and the Insurance Industry
As an aside, there are two new competitors on the block, Buffett and Citadil. If ABK's future is the reason for your 'spike and leave' conclusion, it may be premature to make such a call.
CrossProfit
Picking Some Stocks to Survive This Market
Once there is more visibility or stability (as in a lower VIX), then going back to a long term horizon would seem to be more sustainable. However, if you really do intend to stick with your previous strategy, then perhaps you should be looking at companies that have already taken advantage of this mess and are doing so with a longer time horizon in mind.
A good example would be comparing BAC with JPM. BAC has taken a long term approach, whereas JPM has taken the quick return approach. Not saying that banks are up your alley, just pointing how two companies seem to be taking advantage of the current situation and the different ways they do so.
Should you decide to be more short term focused, as we believe is currently advisable, then an attempt to find the short term winners of the 'national bailout' should prove very lucrative. One possibility is some of the Monolines. Perhaps some energy stocks that have been beaten down so much that their future earnings at - shall we say - $50 a barrel are going to eventually force a 30% PPS increase. Be careful though as not all will jump after reporting earnings.
Besides, there is a very good chance that oil will be up 20% sometime in 2009. The logic is simple. If the 'national' and now 'global' bailout succeeds to stabilize the markets and world economy, then as evident throughout the downturn, every time there was a hint of a recovery, oil started to regain lost ground. On the other hand if the bailout fails, then no stock on the stock market is safe. In other words, if your buying anything, you are betting on the success of the bailout. If such is the case, then why not bet on the stocks that have already proven that they go up when the future is promising?
Notice how the term 'bet' is used and not 'invest'. Reflecting current market conditions is a contagious 'healthy' approach!
As an aside, you must find it ironic that Mr. Buffett advises to buy stocks now (or miss the spring as he put it) as he himself is doing. Now if only Merkel and every other investor could buy preferred with a guaranteed 10% coupon...we would all probably say the same!
Good luck.
CrossProfit
DRS Update: The Company's Acquisition Could Be Sensitive
Not a bad guess for the closing date. Based on today's info, this could close before the end of October if all the financing gets done in time.
One other item: These types of transactions are immune to markets falling as they are pretty much insulated from market swings and recession. It takes forever to put this type of a deal together and the time horizon (expected return) is over a decade, not 'three years and sell' that private equity deals work on. It's always nice to have a government (Italian in this case) interested in the deal going through.
The dip to $75 two weeks ago was an ARB's wet dream (pardon our Italian!).
CrossProfit
Bargain Buys For Patient Investors - Barron's
To the best of our knowledge, Andrew Barry does not claim to have done any in depth analysis, nor is he claiming that he has consulted with analysts prior to writing these articles.
The purpose of these type of articles is just to highlight that certain companies are sitting on a ton of cash or are trading at historically low P/E's. It doesn't tell you what the cash is for or why the P/E is so low, yet suggests that there may be a buying opportunity.
Do your own DD, nothing more. Most importantly, just because the name 'Barron's' appears on the article, doesn't make it any better or worse than any other article appearing on Seeking Alpha.
CrossProfit
Chasing Unicorns: The Cycle Gods Are Still Playing with Us Mere Mortals
"Nonetheless, we think it's premature for investors to buy equities on the assumption that the economic troubles are now passed."
1) This is meaningless unless you give your criteria for when it WOULD be time for investors to buy equities, such as a 200 MDA pass percentage or something else.
2) Without the above, you are "invariably backward looking"!
All in good spirits!
CrossProfit
WaMu Shows, Again, Smart Money Can Be Wrong
Disagree.
1) This sweeping advice would have been true a year ago and still true three months ago.
2) Should a 'national bailout' package go through, there are several financial stocks that will benefit directly and others indirectly.
3) There may even be a few that could appreciate over 100% within a few days!
Just because WM went under doesn't mean that the rest of the troubled financial stocks have the same coming. It all depends on how the 'bailout' is structured.
CrossProfit
Leverage 101: The Real Cause of the Financial Crisis
Not sure why you included AIG in this list. A CDS is a totally different instrument, basically an insurance policy on debt.
A 'credit default swap' pays out when the bond or debt issuer can not repay. AIG's problem is that it sold CDS's to anyone who wanted to buy whether or not they actually were holding the bonds.
As an example, Company A sold $100M bonds on the market. Mr. Smith who didn't buy any bonds came to AIG and wanted to bet that Company A would default on the bonds. Mr. Smith bought $200M (yes, even more than the outstanding bonds!) worth of CDS coverage from AIG and paid $2,500,000. Now Company A can't repay the bond or is being liquidated etc. and bond holders receive only 50%. Mr. Smith, who never actually purchased a single bond, goes to AIG and says that on the $200M worth of CDS, real bondholders are getting only 50% so you owe me $100M! That's the problem...it doesn't take many defaults for the numbers to add up quickly.
AIG sold these 'policies' because it thought in the aggregate it would make money on the premiums. In reality, long term it might be true. However, a short term hiccup can create a serious cash outflow. AIG simply did not have enough cash reserves to cover its current obligations. This is why it needed $28B in a hurry.
CDS is insurance, not classified as leveraging though investors will use a CDS to leverage and offset - that's a different story.
CrossProfit
Bank of America: Bank on This Opportunity
BAC is not overpaying for MER, at the same time it can be said that BAC is not underpaying as well. This is why this deal will go through. The price is about right.
On the other hand, the AIG deal is an unbelievable steal for the Treasury. There you have to watch out. Whenever a deal is too good to be true, meaning that one party is partying at the expense of the other, expect the deal to either fall through, be replaced by another or renegotiated with the same parties.
CrossProfit
If You Think the Dow Did Well Today, You're Wrong
This type of article is best left to the Bespoke Investment Group that syndicates on Seeking Alpha as well.
See: bespokeinvest.typepad..../
Statistical comparisons is their expertise and they offer clients a lot more useful and comprehensive information at the push of a button.
Your insights in other areas are much appreciated.
Thank you,
CrossProfit
AIG Buyout: In the Long Term, We'll Pay For This
Please explain in plain English, exactly what you mean and how this will come about. Also, please explain exactly how the $45T in CDS is a $45T loss. Perhaps you are attempting to say something else? It is not very clear from the above that you understand how a CDS works.
CrossProfit