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Category Archives: stocks
Sallie Mae: Now You Can Buy a Mandatory Convert!
On February 22, Sallie Mae is contractually obliged to pay Citigroup almost $2 billion for 44 million of its own shares, at $45.25 apiece. That’s despite the fact that the shares are currently trading at less than half that level. … Continue reading
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Merry Christmas, Apple Shareholders!
For those of you who like round numbers, Apple shares broke the $200-a-share barrier today. 18 months ago, in July 2006, they closed at $50.67. Which I think works out to an annualized growth rate of about 250%. Nice.
Posted in stocks, technology
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How to Avoid Jinxing a Conference Call: Don’t Show Up!
Did Jimmy Cayne learn a lesson from Al Lord’s disastrous earnings call on Wednesday? Lord was largely responsible for a 20% fall in his company’s share price after he was overly aggressive with analysts. Yesterday, Cayne, who’s not exactly noted … Continue reading
Your Guide to SWF Bank Investments
Here’s a handy cut-out-and-keep guide to SWF bank investments, in the wake of the latest speculation about Merrill Lynch selling a stake to Singapore’s Temasek. Date Bank Fund Country Size March 06 Standard Chartered Temasek Singapore $4 billion November 07 … Continue reading
How Negative Earnings Don’t Seem to Matter
When it comes to earnings, Wall Street wants guidance. Here’s the cri de coeur from Societe Generale’s Bill Kavaler Cavalier, during the notorious conference call with Sallie Mae’s Al Lord yesterday: We’re trying to put together projections here, Al. We’re … Continue reading
Is Cramer Advocating Index Funds?
One of the most effective ways to sell anything is to tell your mark that he’s special, and that your product isn’t suitable for just anyone, you know. The masses? The great unwashed? They can make do with mass-market products. … Continue reading
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Albert Lord: The Deathwatch Begins
How did Albert Lord become CEO of Sallie Mae? He hardly showered himself in glory during the whole debacle with Chris Flowers, during which time he was so busy refusing to negotiate on the sale price that (a) the entire … Continue reading
Posted in defenestrations, stocks
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Morgan Stanley: What Did CIC Know, and When Did They Know It?
Tinbox, in the comments to my last Morgan Stanley post, makes a very good point: that China Investment Corp must have been given lots of material non-public information in advance of Morgan Stanley’s Q4 earnings announcement. I don’t know how … Continue reading
Morgan Stanley: Yet More Proof That Stock Moves Make No Sense
I puzzled yesterday over the question of why Goldman Sachs fell in the wake of spectacular earnings. Today, it’s the other way around: how on earth is Morgan Stanley’s stock rising in the wake of losing $3.56 billion last quarter? … Continue reading
Morgan Stanley: Eminently Stoppable
Morgan Stanley’s Q3 earnings were bad. "Mack Smacked" was the Portfolio headline, reacting to a lower profit (just $1.54 billion, John Mack’s first quarterly earnings decline) and a nasty $940 million write-down on bad loans. Ah, those were the days. … Continue reading
Why David Viniar Didn’t Cause Goldman’s Shares to Fall
Any given stock, on any given day, even if that day sees the release of an earnings report, moves in an essentially random direction. If you want to see what’s happened to Goldman Sachs shares, don’t look at where they closed today compared to where they closed yesterday: look at where they are now compared to a month, or a quarter, or a year ago.
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Lufthansa: No Savior for JetBlue
In the wake of Lufthansa’s $300 million investment in JetBlue, it’s worth looking at how JetBlue CEO David Barger is doing after just over six months on the job. If you recall, he replaced founder David Neeleman in May, mainly … Continue reading
Citigroup Should Cut its Dividend Now
Morgan Stanley thinks Citi will cut its dividend. CIBC thinks Citi will cut its dividend. And according to Alea, the markets think Citi will cut its dividend, too: Based on implied forward prices derived from options markets, a 40% dividend … Continue reading
Why Apple’s Right to Sit on its Cash
The Apple share price seems never to go down. It did have a nasty lurch last month, when the price dipped to $153.76 on November 12 from its high of $191.79 on November 6 – that’s a fall of almost … Continue reading
Posted in stocks, technology
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Financial Innovation of the Day: E*Trade’s Springing Lien Notes
Peter Eavis has dug up E*Trade’s 8K relating to the Citadel investment, and has discovered something rather weird. Citadel’s E*Trade bonds mature in 2017. And it seems that they are pari passu with all the rest of E*Trade’s debt until … Continue reading
Posted in bonds and loans, stocks
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Euro Disney Datapoint of the Day
From Floyd Norris, all figures split-adjusted: Share price of Euro Disney in 1992: €2,500 Price per share paid by Prince Walid bin Talal of Saudi Arabia when he rescued Euro Disney in 1994: €152 Share price of Euro Disney today: … Continue reading
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How Lucrative Are Repos?
As 130/30 funds and other long-short plays become increasingly popular, the quantity of short-selling going on in the stock market is only likely to increase. That, in turn, means that the amount of stock lending (repos) going on is going … Continue reading
Do Stock Prices Reflect Economic Growth?
What would Nouriel Roubini do if he was faced with the choice between writing something short and writing something bullish? Today he spends almost 5,000 words wondering what will happen to stocks if the US economy goes into a recession. … Continue reading
At Google, Shareholders Have No Clout
Robert Cyran is unimpressed with Google’s push into clean energy: The company risks spreading itself too thin — chasing everything from personalized biotechnology to space flight. Its shareholders probably don’t want Mr. Page and other executives spending their time, or … Continue reading
Posted in governance, stocks, technology
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In Praise of Cutting Dividends
What is the relationship between a stock’s dividend and its price? Complicated, obviously. The best-performing stocks and companies often have no dividend at all – Microsoft paid out $0 from the date of its IPO all the way through to … Continue reading
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Countrywide Datapoint of the Day
Countrywide is now trading at a price/book ratio of 0.39. The collapsing share price now looks increasingly like a self-fulfilling prophecy: the number of entities willing to lend Countrywide a few billion more, when its entire market cap is now … Continue reading
Meme of the Week: Breaking Up Financials
Financial supermarkets sure are out of favor these days. In the wake of an FT report that both Citigroup and Merrill are considering issuing shares in their brokerage arms, the NYT today says that H&R Block could be broken up, … Continue reading
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How Can Index Funds Beat the Market?
Ben Stein loves Dimensional Fund Advisors. They "run the most amazingly successful, low-cost, unmanaged but somehow deep-value index funds I have ever found," he says, adding that "their returns are amazing, and they charge almost nothing." It’s a bit weird: … Continue reading
Ignore Short-Term Market Moves
Accrued Interest today has a great post about what really drives markets over short stretches of time. He uses the phrase "technicals", by which he means not drawing lines on charts, but rather the simple dynamics of how traders make … Continue reading
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Why Newspapers Should Ignore Stock-Market Volatility
I get very irritated when newspapers splash one-day stock-market movements all over their front page for no good reason. Every time the Dow drops 300 points or more, it seems, there’s some kind of rule saying that big panicky headlines … Continue reading