Daily Archives: October 13, 2007

Citigroup’s (C) Insane To Plan To Improve Balance Sheet

In a far-reaching response to the global credit crisis, CitigroupInc. and other big banks are discussing a plan to pool together andfinancially back as much as $100 billion in shaky mortgage securitiesand other investments. So says The Wall Street Journal.

The paper adds: The Citigroup plan would create a "superconduit," a fund backed by someof the world’s biggest banks that would issue short-term debt and serveas a buyer of assets currently held by funds with illiquid or devalued securities affiliated with theparticipating banks.

The new fund represents a way for Citigroup and other banks to "outlastthe current market conditions that are so dry right now," says JaimePeters, an analyst at Morningstar Inc.

Perhaps it is not clear on the face of it how perverse this program really is. The banks plan to roll-off their worst assets and then make short-term loans to support them within the market, hoping that their value will eventually rise. That may look good, at least for a brief time.

However, if the valuation of mortgage-backed instruments drops, as many press and pundits predict, the final result will be to flush more money into a dying sector of the market.

Such brilliance is why CEO-for-life Chuck Prince is able to keep his job at Citi, no matter how many investors want him out.

Douglas A. McIntyre

Posted on: October 13, 2007 – 12:41 pm in Banking,

Biogen Idec (BIIB) Puts Itself On The Block

Biotech firm Biogen Idec (BIIB) has put itself on the block, another victim of shareholder activist by Carl Icahn. The company said that several firms had expressed interest. According to The Wall Street Journal, "Shares of the Cambridge, Mass., company traded at $69.43, up 3.4%, in 4 p.m. Nasdaq Stock Market composite trading Friday and after the company’s announcement jumped to $81.60 in after-hours trading."

Not a bad gain for a day. That puts the company’s market cap at over $23 billion

Mr. Icahn has suggested the best buy would me a mega-pharmaceutical company.

Biogen has forecast 2007 earnings of about $600 million. Analysts are predicting about $3.1 billion in revenue.

Biogen is growing fairly quickly, but selling biotech drugs can be a risky and competitive business. The FDA can halt trials and block sales at the drop of a hat.

The price tag, at over $82 a share, or about 8x, is, frankly, too rich. The credit environment makes the a deal even more dicey.

Mr. Icahn may want to make money, but, at these prices, a buyer won’t

Douglas A. McIntyre

Posted on: October 13, 2007 – 8:40 am in Biotech,

This Week on Stockhouse October 8 to 12

How prosperous are you? How about our neighbours? In the latest edition of an ongoing series examining how statistics can change outcomes for the stock market, littleguy123 looked at core inflation statistic (http://beta.stockhouse.com/Community-News/2007/October/8/Turning-straw-into-gold).

Liverless, meantime, referenced an article by Gary North in an examination of how the recent actions by the U.S. Federal Reserve may affect the recent credit crunch (http://beta.stockhouse.com/Community-News/2007/October/9/The-Fed-is-deflating-).

Chartist Roy Martens said that the U.S. dollar is going to continue to be mired in a slump, while precious metals (http://beta.stockhouse.com/Community-News/2007/October/9/Sector-wide-technical-analysis-gold-silver-oil ) like gold look positive.

Nwatson, for one, is thrilled about shorter days and colder nights (http://beta.stockhouse.com/Community-News/2007/October/10/Preparing-for-the-historical-high-season ), because autumn has traditionally been the best time for markets.

Stacey Laliberte was also waxing nostalgic for the euphoria of the nuclear age. But wait: is nuclear power (http://beta.stockhouse.com/Community-News/2007/October/11/Nuclear-power-finds-new-friends ) becoming friendly again?

Sean Mason debuted his U.S. small and microcap stock report this week, focusing on companies such as tiny biotech (http://beta.stockhouse.com/Breaking-Financial-News/2007/October/10/Biotech-stock-skyrockets-on-licensing-agreement ) with a soaring share price.

This week Darin Diehl interviewed MarketWatch founder and former newsletter writer Thom Calandra in a wide ranging, two (http://beta.stockhouse.com/Breaking-Financial-News/2007/October/9/Taking-Stock-of-Thom-Calandra ) part (http://beta.stockhouse.com/Community-News/2007/October/8/Turning-straw-into-gold ) discussion that touched on the latter’s resignation and SEC settlement as well as his current writings.

Pure molybdenum producers (http://beta.stockhouse.com/Columnists/2007/October/8/Moly-to-the-MAX ) are few and far between. Institutional Research Partners spoke with Scott Broughton, CEO of Roca Mines, in their continued series of interviews with chief executives.

What are you going to do when the cheap oil runs out? Dan Sweeney had some suggestions (http://beta.stockhouse.com/Columnists/2007/October/11/Post-peak-operational-strategies ) for consumers and company managers.

And for those who are investing in gold as a hedge against uncertain times for equities and the economy, Luke Burgess wrote that China is becoming an important site of new gold discoveries (http://beta.stockhouse.com/Columnists/2007/October/11/Found–Largest-Gold-Deposit-Ever-in-Shaanxi-Provin).

While there are some promising developments at Hollis Eden Pharmaceuticals, the Bio Check columnists, Leon Hamerling & J. Paul cautioned against too much enthusiasm, as the company’s results are very preliminary (http://beta.stockhouse.com/Columnists/2007/October/11/New-Promise-at-Hollis-Eden-Pharmaceuticals-Inc- ).

Steven Saville charted the historic effect of Federal Reserve rate cuts on the U.S. dollar, and found that there’s no immediate and correlating decline (http://beta.stockhouse.com/Columnists/2007/October/12/Fed-rate-cuts-and-the-US$), although there have often been precipitous declines.

What are you getting for your mutual fund fees? To determine whether you’re getting quality or not, the Financially Fit team outlined the origins of those fees. (http://beta.stockhouse.com/Columnists/2007/October/12/Financially-Fit–Mutual-Fund-Fees )

If a small maker of shoe scanning devices can clear the paperwork for approval with the Transportation Safety Administration at the U.S. Department of Homeland Security, it could be a major boost for its revenue, said Leon Hamerling and J. Paul. (http://beta.stockhouse.com/Columnists/2007/October/12/Totally-Technology–Airport-Security-Scanning )

Posted on: October 13, 2007 – 8:30 am in Uncategorized

Nasdaq Short Interest (LVLT)(MSFT)(SIRI)(INTC)

Below is the short interest for selected stocks traded on the Nasdaq. The figures are as of September 28 and compare to numbers as of September 14, 2007.

Largest Short Positions

Company                                         Shares Short

Level 3 (LVLT)                                  128.0 million shares short

Charter Comm (CHTR)                        91.0 million

Microsoft (MSFT)                                82.9 million

Sirius (SIRI)                                        82.4 million

Intel (INTC)                                         72.3 million

Sun (JAVA)                                        64.9 million

Yahoo! (YHOO)                                   51.8 million

Comcast (CMCSA)                              50.5 million

Cisco (CSCO)                                     46.0 million

Oracle (ORCL)                                    41.6 million

Amazon (AMZN)                                 36.8 million

Largest Increases In Short Position

Company                                           Increase In Shares Short

BEA Systems (BEAS)                        8.5 million increase

Level 3                                               6.0 million

Dell (DELL)                                        3.9 million

Amgen (AMGN)                                 3.6 million

Novell (NOVL)                                    2.9 million

Largest Decreases In Short Position

Company                                          Decrease In Shares Short

Comcast                                           52.0 million share decrease

Take-Two (TTWO)                               8.1 million

Sun                                                   4.6 million

Charter                                              4.4 million

Data from Nasdaq and WSJ

Douglas A. McIntyre            

Posted on: October 13, 2007 – 7:55 am in Short Interest, , , , , , , , , , , , , , , ,