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m22au's journal
- Thread starter m22au
- Start date
Quote from Daal:
http://www.valor.com.br/brasil/2918408/uniao-pode-rever-parte-das-indenizacoes-diz-tolmasquim
Government might review financial compensation for utilities. I went long to bet on squeeze
Was way too slow, could have gotten in at 3.36 but waited till price reached 3.40s
"Brazil Boosts Utilities Compensation 50% to $14 Billion"
http://www.bloomberg.com/news/2012-...utilities-compensation-by-9-87-bln-reais.html
"Brazil is increasing compensation by 50 percent to utilities that agree to cut power rates after an initial offer caused the companiesâ to lose as much as half their market value.
"The government is offering an additional 9.87 billion reais ($4.7 billion) to utilities that accept President Dilma Rousseffâs plan to renew electricity license with lower rates, on top of 20.04 billion reais announced Nov. 1, a government official said yesterday. "
UPDATE 2-Brazil utilities force gov't to accept smaller rate cut
www.reuters.com/article/2012/12/05/brazil-energy-concessions-idUSL1E8N4AIL20121205
*******
I have no position in FCX, MMR or PXP, but FCX shareholders have every right to be upset with management about these takeovers:
* Why are they paying such a high premium for MMR?
* Why are they paying such a high premium for MMR so soon after MMR's bad news which saw its bonds decline noticeably, and one analyst put a $0 price target on the shares?
* Why are they buying two companies at the one time?
* Notwithstanding the above issues relating to premium paid for MMR, FCX shareholders should also ask themselves about how bad the future prospects of FCX are, given management have decided to pay money, time and effort into these acquisitions. This is especially true given they are going after two companies at the one time.
In summary, the acquisitions stink.
www.reuters.com/article/2012/12/05/brazil-energy-concessions-idUSL1E8N4AIL20121205
*******
I have no position in FCX, MMR or PXP, but FCX shareholders have every right to be upset with management about these takeovers:
* Why are they paying such a high premium for MMR?
* Why are they paying such a high premium for MMR so soon after MMR's bad news which saw its bonds decline noticeably, and one analyst put a $0 price target on the shares?
* Why are they buying two companies at the one time?
* Notwithstanding the above issues relating to premium paid for MMR, FCX shareholders should also ask themselves about how bad the future prospects of FCX are, given management have decided to pay money, time and effort into these acquisitions. This is especially true given they are going after two companies at the one time.
In summary, the acquisitions stink.
Some interesting ideas from Saxo Bank, even if I don't agree with some of them:
"Saxo Bank's 10 Outrageous Predictions For 2013"
http://www.zerohedge.com/news/2012-12-18/saxo-banks-10-outrageous-predictions-2013
http://www.scribd.com/doc/117246187/Outrageous-Predictions-2013
"Saxo Bank's 10 Outrageous Predictions For 2013"
http://www.zerohedge.com/news/2012-12-18/saxo-banks-10-outrageous-predictions-2013
http://www.scribd.com/doc/117246187/Outrageous-Predictions-2013
"Bernanke's Legacy Problem" Bruce Krasting
http://www.zerohedge.com/contributed/2013-01-05/bernankes-legacy-problem
I don't have a strong opinion regarding Krasting's "legacy thesis".
However, he makes an interesting point about different asset classes' reaction to the Fed meeting minutes.
"There are two schools of thought on the Fedâs QE activity:
"- All of the Fed Governors (specifically, Bernanke and Yellen) have stated their belief that it is the size of the Fedâs balance sheet that matters when it comes to measuring monetary stimulus. The vast number of folks who opine on the Fed, also believe this is the case. So the markets, and the Fed believe that âneutralâ means that the Fedâs balance sheet remains static.
"- A small, but vocal minority, lead by Tyler Durden at Zero Hedge, see it differently. This group believes that it is not the size of the Fedâs balance sheet that is the issue. It is the daily, weekly, monthly flows that the Fed creates with QE that is the critical metric when measuring monetary policy.
"The two different views are remarkably divergent in their conclusions. And only one camp will be proven right.
"I happen to agree with Durden. Itâs the flow, not the size. We have a capital market that has a $20B âbidâ in it every week. With each POMO buy, the primary dealers have cash money in their pockets, and they have to spend it. So they buy âstuffâ. The stuff they buy with the loot from QE ranges from Treasuries, to junk, to equities. I believe that the constant demand from the Fed is the gas that makes these transactions happen. I believe that when POMO stops, so does the merry-go-round.
"The Fed will not stop QE abruptly. There will be a 3-6 month wind-down of the POMO buys. We have been here before, with QE1. Well before the Fed stopped buying, markets started to react to what was then perceived to be the end of the QE party.
"To a significant extent, this question, and how the markets answer it, will resolve the fate of the markets, the broader economy and Bernankeâs legacy. So this is a very big deal.
"The view of the Fed, that it is balance sheet size not flow that matters, is supported by 95% of the market today. So when Steve Liesman tells you that the Fed is moving to âneutralâ, and thatâs not a big deal, be wary. The "consensus view" is rarely right in these matters. I think the Fedâs neutral is going to feel as if we are in reverse, and moving backwards pretty fast."
****
It appears that the equity market thinks that earnings and/or valuations won't be hurt by a reduction in QE. However ZeroHedge and Krasting believe that it's the flow that counts, especially with regards to the P/E multiple that one places on equities.
****
The above post follows from similar discussion in Daal's Global Macro journal here:
http://www.elitetrader.com/vb/showthread.php?s=&postid=3715473#post3715473
http://www.zerohedge.com/contributed/2013-01-05/bernankes-legacy-problem
I don't have a strong opinion regarding Krasting's "legacy thesis".
However, he makes an interesting point about different asset classes' reaction to the Fed meeting minutes.
"There are two schools of thought on the Fedâs QE activity:
"- All of the Fed Governors (specifically, Bernanke and Yellen) have stated their belief that it is the size of the Fedâs balance sheet that matters when it comes to measuring monetary stimulus. The vast number of folks who opine on the Fed, also believe this is the case. So the markets, and the Fed believe that âneutralâ means that the Fedâs balance sheet remains static.
"- A small, but vocal minority, lead by Tyler Durden at Zero Hedge, see it differently. This group believes that it is not the size of the Fedâs balance sheet that is the issue. It is the daily, weekly, monthly flows that the Fed creates with QE that is the critical metric when measuring monetary policy.
"The two different views are remarkably divergent in their conclusions. And only one camp will be proven right.
"I happen to agree with Durden. Itâs the flow, not the size. We have a capital market that has a $20B âbidâ in it every week. With each POMO buy, the primary dealers have cash money in their pockets, and they have to spend it. So they buy âstuffâ. The stuff they buy with the loot from QE ranges from Treasuries, to junk, to equities. I believe that the constant demand from the Fed is the gas that makes these transactions happen. I believe that when POMO stops, so does the merry-go-round.
"The Fed will not stop QE abruptly. There will be a 3-6 month wind-down of the POMO buys. We have been here before, with QE1. Well before the Fed stopped buying, markets started to react to what was then perceived to be the end of the QE party.
"To a significant extent, this question, and how the markets answer it, will resolve the fate of the markets, the broader economy and Bernankeâs legacy. So this is a very big deal.
"The view of the Fed, that it is balance sheet size not flow that matters, is supported by 95% of the market today. So when Steve Liesman tells you that the Fed is moving to âneutralâ, and thatâs not a big deal, be wary. The "consensus view" is rarely right in these matters. I think the Fedâs neutral is going to feel as if we are in reverse, and moving backwards pretty fast."
****
It appears that the equity market thinks that earnings and/or valuations won't be hurt by a reduction in QE. However ZeroHedge and Krasting believe that it's the flow that counts, especially with regards to the P/E multiple that one places on equities.
****
The above post follows from similar discussion in Daal's Global Macro journal here:
http://www.elitetrader.com/vb/showthread.php?s=&postid=3715473#post3715473
Quote from Daal:
Shorted some STP
http://seekingalpha.com/article/109...gh-bond-yields-suggest-imminent-dilution-risk
Adam Gefvert's brilliant article includes a link to a good study on the irrational pricing of bankrupt companies:
"Dead Stocks Walking: Investor Irrationality in Worthless Stocks"
http://business.utsa.edu/wps/fin/0028FIN-088-2012.pdf
Interestingly enough, a search for the paper title in Google gives a result of a blog that mentions STP:
http://www.creditbubblestocks.com/2012/12/market-anomaly.html
Quote from m22au:
Adam Gefvert's brilliant article includes a link to a good study on the irrational pricing of bankrupt companies:
"Dead Stocks Walking: Investor Irrationality in Worthless Stocks"
http://business.utsa.edu/wps/fin/0028FIN-088-2012.pdf
Interestingly enough, a search for the paper title in Google gives a result of a blog that mentions STP:
http://www.creditbubblestocks.com/2012/12/market-anomaly.html
That study refers to another study that I initially thought would be interesting but found that it was almost completely worthless due Ivory Tower mentality
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1572733
They find that shorting selling bk stocks produce negative returns and this 'limit' to arb explains the market anomaly. There are severe flaws with the study
-They used a sample of ONLY NYSE, Amex and Nasdaq listed stocks not Pink stocks. They dropped the stock from the sample after the stock was delisted (and assumed NO abnormal return in the stock after the delisting, they didn't even bother to check what the data showed)
-They assume a 4% commission rate for stocks bellow $1. Which of course is completely ridiculous. It's likely to be less than 1% in most situations
-Their bid-ask spread is also likely to be wrong, no one has to hit large spreads. You can always wait for it to tighten and trade at the moment
-They drop from the sample stocks that were delisted, I had to mention this twice since it is just so ridiculous. This should miss a lot of cancelled stocks from the return calculations
Quote from Daal:
It is also totally bizarre that they only found a drop of -25% on the Chap 11 announcement day before and after. In my experience Chap 11 is usually good for a drop of anywhere between -50% and -90%
I think it really depends on the individual company.
Well-known names with lots of assets (like GM) seem to attract a lot of "investors" who are very reluctant to sell their shares.
STP (and LDK and TSL) are interesting situations because they are Chinese companies and there could be the possibility that both
(1) they get government bailout(s) and
(2) there is no shareholder dilution as a result of the bailout(s)
Quote from m22au:
Adam Gefvert's brilliant article includes a link to a good study on the irrational pricing of bankrupt companies:
"Dead Stocks Walking: Investor Irrationality in Worthless Stocks"
http://business.utsa.edu/wps/fin/0028FIN-088-2012.pdf
Interestingly enough, a search for the paper title in Google gives a result of a blog that mentions STP:
http://www.creditbubblestocks.com/2012/12/market-anomaly.html
More on STP from creditbubblestocks:
http://www.creditbubblestocks.com/2013/01/suntech-power-bonds-due-in-two-months.html