The Credit Crisis Financial Stocks Short Journal

Quote from Daal:

I actually think GS will gap up monday, $5b offering doesnt seem much dillution and it seems implicit that if they are going after this then the stress test told them they dont need capital, plus the tarp payback should get everyone happy
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Goldman Sachs Share Sale to Repay U.S. Aid May Force Rivals to Follow Suit

U.S., Banks at Odds Over Return of Bailout Funds

As the Obama administration completes its examinations of the nation’s largest banks, industry executives are bracing for fights with the government over repayment of bailout money and forced sales of bad mortgages.
 
Looks like my suspicion that WFC was lying about their reserve needs is confirmed by the #1 ranked US bank analyst Paul Miller from FBR
http://www.bloomberg.com/apps/news?pid=20601014&sid=aLo7f1AKca.o&refer=funds

Wells benefited from not having much in 'securities' but mostly loans that they can decide how much they will lose, since they have been under reserving for so long there is a big hole growing in their balance sheet that needs to be filled

With the sp500 and financials having posted such a massive performance its a bit too late to do 'risk management', now you just ought to hang in there.

My 'risk management' involved taking bullish positions which interestinly enough I got a lot of criticism for, I was told how wrong I was and how C was going to lose $500b and every bank was going under. stocks and corporates were not worth it, of course that was at the exact low. My mistake was not buying more of them, ILFC bonds are soaring, that wasnt enough to compensate to prevent a 8-10% or so drawdown(Fortunally I had a profit cushion from the start of the year plunge) but it sure heck it frigging helped
 
wow. GS revenues are plunging across the board, ibanking, equity trading/commissions, asset management except for FICC(Fixed Income, Currency and Commodities from Trading and Principal Investments section) where they had a $9b+ swing from Q4 2008, this pretty much accounted for their 'great earnings'. How much did they got from AIG?$12b or so, looks like those rumors were true
I remain short here and I like what I see, I dont care if this stock rallies
 
Unless I'm mistaken the GS ex-items earnings for Q1 2009 is -$8.61 a share.

This is a massive number. I arrived at this by taking the AIG benefit $12.9b - 50%(usual compensation GS pays to employees), -$800m(tax bill, since GS would have lost money without the AIG thing they would pay no tax) = $5.6B = $12 a share
-$3.39 = -$8.61 core earnings for Q1

Of course its funny how the market cares about earnings without one time items when the bank is having writedowns and the reported figure looks bad but when it gets good stuff people look at the reported figure without much problem :D
 
Apparently GS reported their dec 08 results in a standalone basis not on Q4 and not Q1. Their loss there is -$2.15($24 a share annualized!$6 a share in quaterly basis, so my -$8 estimate doesnt look far off the mark), the FICC without the help from AIG had a loss of $320m
http://www2.goldmansachs.com/our-firm/press/press-releases/current/pdfs/2009-q1-earnings.pdf

GS is probably one of the better shorts out there right now, they might not go under but in a earning basis the stock is probably only worth $70. People seem to think the bubble revenue will come back at the slightest uptick in GDP
 
Just listened to the GS conf call. They said AIG had no impact on their pnl in Q1, of course they didnt mention how much it had of impact in Q4 last year. Their total earnings from Q4 + dec + Q1 is -$3.64, if you remove a $12 a share AIG benefit, their core earnings were -$15

They essentially tried to sell the same thing, they are the smartest guys in the room and their FICC record revenues will offset their plunging revenues everywhere. Nevermind the fact that they lost money there in Q4 and dec 2008
 
JPM reported $2.1b in net income, $1.6 came from Investment Banking, mostly from their fixed income division. Meredith theory is that banks played the carry trade borrowing cheaply and buying agency debt/mortgages and making the spread and the capital again as the fed bought that stuff. Looks like a one time thing, that same IB division lost $2.3b in Q4 last year
 
JPM describing their record revenues in IBanking
"Fixed Income Markets revenue was a record $4.9 billion, compared with $466 million in the prior year. The increase was driven by record results in credit trading, emerging markets and rates, combined with strong results in currencies and gains of $422 million from the widening of the firm's credit spread on certain structured liabilities. "

This stock doesnt deserve a big earning multiple, they are running a hedge fund like GS, and in this case the fund was helped by the fed. All of their other business either lost money or they had earnings going down
 
Looks like the ILFC(AIG subsidiary) bonds I bought are pretty much guaranteed by the Feds now. "We have been advised by AIG that AIG will continue to support our short-term liquidity needs through the earlier of our sale or March 2010", I have the april 2010 bond. They were yielding 33% YTM, they were priced to deliver an almost 40% return in a little more than a year, I was wrong they were going to keep access to the Fed commercial paper but this AIG connection increased the chance the bonds would be good, yet the market though it was just the opposite. They are at 11.6% YTM after this language in the 10-K.
There are some huge bargains out there in junk bonds
 
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