February 6, 2009|Posted By Adam Sharp
Wow! Today JP Morgan said that GE’s dividend and AAA credit rating are unsustainable. I read it something like this:
“sorry dude. we tried, but this whole thing has gotten a little ridiculous. get ahold of yourself, and try to pay off that godforsaken pile of debt! have some self-respect! This hurts us more than it hurts you”.
Now if only they would change that “hold” recommendation on GE to a “SELL”. JPM reduced their GE target to $9, and today it trades at around $11.00. Unless you’ve been holding GE since 1995, the last time it traded this low, you don’t have any cap gains to worry about. Sell that crap and buy it lower.
Disclosure: long GE puts
February 1, 2009|Posted By Adam Sharp
From CNN. Banks haven’t put many of their forclosed housing inventory on the market yet. That means the inventory of unsold houses is probably much higher than the 4.2 million number that’s being reported.
But banks might hold back listings in areas where they already have lots of homes for sale in order to avoid flooding the market, according to Michael Youngblood, a financial analyst and founder of Five Bridges Capital, an asset management company, “If lenders have a significant number of properties in a limited area, they may want to stagger putting them back on the market,” he said.
Not good for homebuilders or homeowners.
Disclosure: short CTX, long a house
January 29, 2009|Posted By Adam Sharp
The bankruptcy and liquidation of all KB Toys stores was announced over a month ago. But I just found out how much exposure Simon Properties (SPG) has to them. I was searching around Simon.com and found out that Simon has 40 KB Toy Stores in their properties.
Note: I can’t link to this page. To see it for yourself, you need to go to simon.com, click on “find a store”, then search for “k b toys”.
The KB liquidation itself probably won’t have a huge material impact on Simon’s bottom line. But it’s certainly worth noting, and SPG reports before the open tomorrow. I haven’t seen this info anywhere else, but that’s understandable. Most wall-street analysts don’t have search-engine skills like me.
Starbucks announcing the closure of 300 additional stores yesterday can’t help the Commercial Real Estate situation either. Not to mention that a lot of these malls have lost their “anchor” stores like Macy’s. That means other tenants may be able to ditch their leases without penalty.
Disclosure: Short SPG.
Side note: Also bought TBT (ultrashort 20 year treasury bonds) today at $25.58. Looks like a good risk/reward here, with the Fed only threatening to buy treasuries (so far).
January 25, 2009|Posted By Adam Sharp
“Good Guy” banks that received taxpayer dollars are under increasing pressure to eliminate or reduce their dividend. Here’s a guess at some of their defenses:
We did not want these billions. We took them against our will, and in the spirit of cooperation. If we refused, our more troubled brethren would have been singled out as possibly “insolvent”.
Furthermore, refusing a big cash injection would have left us at a competitive disadvantage. Besides, we never needed or wanted it. Even though the government’s terms were much better than any private source would have offered to us.
Will they keep paying big dividends while receiving taxpayer money? Mr. Obama has signaled strict, transparent, and less favorable bailout terms. We’ll see how it plays out soon. Next week should be another interesting one for financial stocks.
There’s also the seizure of First Centennial to consider, which was announced after the close Friday. Estimated cost to the FDIC: $227 million. Not a huge chunk, but still worrying. And there’s something… dishonest about Friday-evening press releases that makes me skittish.
