Category Archives: stocks

Will Bond and Stock Prices Ever Converge?

Posted on February 20, 2008 by Felix

I feel I’ve been having this conversation for over a year now: are bonds too cheap, or are stocks too expensive? Yves Smith points out today that the FT is on the case, with John Authers taking the view that … Continue reading →

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The Microsoft-Yahoo Merger-Arb Plays

Posted on February 15, 2008 by Felix

The New York Post says that Yahoo’s board is splitting into factions, with one group taking its fiduciary duties seriously, and the other, more emotional, group supporting CEO Jerry Yang’s attempts to rebuff the Microsoft takeover bid. It also reports … Continue reading →

Posted in stocks, technology | 1 Comment

MBIA Fires Back at Ackman

Posted on February 14, 2008 by Felix

As Congress holds hearings on bond insurers, it’s worth reading MBIA’s official response to Bill Ackman. There’s nothing in there about “the unscrupulous and dangerous market manipulation of short-sellers,” as Herb Greenberg feared. Rather, it’s a pretty sober analysis, which … Continue reading →

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The Arithmetic of the Microsoft-Yahoo Bid

Posted on February 12, 2008 by Felix

Dan Gross, looking at Yahoo’s share price, says that investors assume the Microsoft-Yahoo deal won’t happen. Which is weird, because Yahoo’s share price has actually been gaining on Microsoft’s bid ever since the announcement was made. I think Gross is … Continue reading →

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Exxon Mobil Plays Hardball With Venezuela

Posted on February 8, 2008 by Felix

Did you have any idea that the bonds of PDVSA, the Venezuelan state oil company, are trading at just 65.7 cents on the dollar? I didn’t, but are now, partly because of an injunction that Exxon Mobil has managed to … Continue reading →

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Justin Wolfers is $20 Richer

Posted on February 7, 2008 by Felix

I found myself in the middle of an interesting debate between Barry Ritholtz and Justin Wolfers this afternoon. Barry was advocating the idea of trend-following, when it comes to stocks, while Justin is more of a believer in the random … Continue reading →

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How to Beat the Market with Mutual Funds

Posted on February 5, 2008 by Felix

Cam Hui seems to have found a simple and low-risk way of outperforming the S&P 500 by 6% a year. If you want to try this at home – and I wouldn’t recommend it – here’s what you do: At … Continue reading →

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Goldman Gets Downgraded

Posted on February 5, 2008 by Felix

Has Goldman Sachs run out of special sauce? According to Meredith Whitney of Oppenheimer, yes:. In 2008, she says, "Goldman Sachs will probably deliver results that will not be substantially better than its peers," and as a result she’s downgraded … Continue reading →

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Getting Used to Stock Market Volatility

Posted on February 5, 2008 by Felix

Are you shocked or worried that the stock market is down 2% this morning? If you are, then maybe the best thing is that you stop looking at what the stock market does on an intraday basis. We’ve left the … Continue reading →

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Superbowl Ads as Sell Signals

Posted on February 4, 2008 by Felix

When I saw that an ad for E*Trade Bank had made Jeff Bercovici’s top six ads of the Superbowl, I thought I’d do a quick back-of-the-envelope calculation. The ad is for the E*Trade savings account, so I thought I’d take … Continue reading →

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MBIA: Triumph of the Techocrats?

Posted on January 31, 2008 by Felix

In the battle of Bill Ackman vs MBIA, the market seems to be speaking quite clearly: MBIA is winning, if only by sheer force of boredom. Ackman’s manifesto might be forcefully written, but MBIA’s stock has soared from an opening … Continue reading →

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What Hope for Sears?

Posted on January 28, 2008 by Felix

With the news that Sears has now lost Aylwin Lewis, its nominal CEO (the de facto CEO remains its owner, Eddie Lampert), I took the opportunity to ask Jesse Eisinger a few questions via IM about what is going on … Continue reading →

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ADS Takeover Hopes Collapse

Posted on January 28, 2008 by Felix

Busted merger-arb trade of the day is the acquisition of Alliance Data Systems by Blackstone. Blackstone agreed to pay $81.75 per share for ADS, but the market didn’t believe it: on January 18, ADS shares were trading only at $52.82. … Continue reading →

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Everything You Ever Wanted to Know About the Buy Side

Posted on January 26, 2008 by Felix

This is eight different kinds of genius.

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When a Merger Arbitrage Goes Sour

Posted on January 25, 2008 by Felix

The first rule of merger arbitrage is simple: Don’t Try This At Home. If you’re a retail investor and one of your stocks spikes after it agrees to be taken over, sell the stock. Don’t get greedy and wait for … Continue reading →

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SocGen: The Cause of Monday’s Sell-Off?

Posted on January 24, 2008 by Felix

Was a single 30-year old French equity-derivatives trader directly responsible for the emergency 75bp rate cut that Ben Bernanke announced on Tuesday morning? It’s entirely possible. The fraud at Societe Generale was uncovered over the weekend, at which point the … Continue reading →

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What Stock Market Volatility?

Posted on January 24, 2008 by Felix

The WSJ has a great little interactive feature today – or at least it would be great if it didn’t start talking at you the minute you opened it and every time you click on a new tab. Turn your … Continue reading →

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What if the Bears are Right?

Posted on January 24, 2008 by Felix

Let’s say – just for the sake of argument – that the bears are right, and that we’ve finally come to the end of a long capital-markets boom. Global equity markets are going to fall dramatically, thanks to falling corporate … Continue reading →

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Merger Arbitrage Site of the Day

Posted on January 23, 2008 by Felix

No more relying on Dana Cimilluca to find failed merger-arb trades! It turns out that a chap called Plamen Tsolov has created Arbitrage View, a web page with a continually-updated list of arbitrage opportunities in pending merger deals in the … Continue reading →

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Four Myths About the Stock Market

Posted on January 23, 2008 by Felix

1. Global stock markets plunged this week (until the Fed rode to the rescue) "on recession fears". You can argue the "decoupling" toss as much as you like, but there was absolutely no correlation between the degree that any given … Continue reading →

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MBIA: The Longs Fight Back

Posted on January 22, 2008 by Felix

Have you read anything positive about MBIA recently? The short-sellers – principally Bill Ackman, of course, but also Whitney Tilson – have been dominating the conversation, and since they’ve also been making a huge amount of money one can understand … Continue reading →

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Value-per-Employee Datapoint of the Day

Posted on January 21, 2008 by Felix

Sun has bought MySQL – a company which gives its main product away for free – for $1 billion, or about $2.5 million per employee. Which is pretty much exactly the same valuation per employee as the market puts on … Continue reading →

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Ken Lewis’s Call Option on Countrywide

Posted on January 18, 2008 by Felix

The most recent deal not going according to the merger-arb playbook is Bank of America’s acquisition of Countrywide. The takeover takeunder is valued at $6.47 per share, but Countrywide is trading at only $5.11. How come? Well, have a look … Continue reading →

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Telco Merger Datapoint of the Day

Posted on January 18, 2008 by Felix

Dana Cimilluca: When Sprint and Nextel agreed to combine in a “merger of equals” at the end of 2004, they were worth $70 billion together. The current value of the combined Sprint Nextel after the bleak news today from the … Continue reading →

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Why Merrill’s Falling

Posted on January 17, 2008 by Felix

I liked the Merrill Lynch earnings call this morning, and when I posted my take on it just after the markets opened, it seemed as though the bank’s stock would avoid much in the way of punishment for its enormous … Continue reading →

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