Daily Archives: October 20, 2007

Greenspan Questions Huge Bail-Out Fund (C)(JPM)(BAC)

According to the FT, former Fed chief Alan Greenspan says that the $75 billion plus fund to buy the assets of troubled investment vehicles is a bad idea. The leaders in the push for the idea are Citigroup (C), Bank of American (BAC), and JP Morgan (JPM)

He is quoted in the newspaper as saying: "What creates strong markets is a belief in the investment community that everybody has been scared out of the market, pressed prices too low and there are wildly attractive bargaining prices out there.” He added: “if you intervene in the system, the vultures stay away. The vultures are sometimes very useful.”

Warren Buffett and Bill Gross of Pimco has made similar comments

Douglas A. McIntyre

Posted on: October 20, 2007 – 5:07 pm in Banking, , ,

Chinese Companies Seize Top Of List Of Most Valuable Global Companies (PTR)(CHL)(LFC)

The New York Times was good enough to run a list of the world’s 20 most valuable companies ranked by market cap in 1989, 1999, and 2007.

Japan owned the list in 1989. Most Americans would not even recognize the names. NTT (NTT) was on there. But, so were Mitsui Bank and Daichi Kangyo Bank. The Nikkei Index traded close to 39,000 then. It dropped to half of that by mid-1990. So much for their turn on the "world’s most valuable companies" list.

In 1999, most the list was taken over by tech companies. Microsoft (MSFT), Cisco (CSCO), and Intel (INTC) were among the top 10 companies. Oracle (ORCL), AOL, and IBM (IBM) were in the top 20. In early 2000, the Nasdaq traded above 5,100. A year later it dropped below 1,800.

Now, China is having its turn. A look at the top 20 companies by market cap today includes eight Chinese companies. PetroChina (PTR), China Mobile (CHL), and China Life (LFC) all have market caps over $200 billion. The US has only seven companies on the list. Most of the tech companies are gone.

PetroChina has a market cap of $429 billion. Last year, it had revenue of $88 billion. Exxon’s (XOM) market cap is $525 billion. Last year, its revenue was $378 billion. Similar comparisons can be made between Chinese and US financial, energy, and telecom companies that have $200 billion plus market caps.

A slowdown in the world economy will have particularly acute effects in China. Its massive export machine will be undercut by falling demand. Markets will slow there. Energy costs will rise. Share prices will fall ,and, they could collapse.

Then, it will be someone else’s turn on the list.

Douglas A. McIntyre

Posted on: October 20, 2007 – 12:48 pm in China, , , , , , , , , ,

October Short Interest For NYSE Stocks

Following is the short interest in stocks of major companies traded on the NYSE. Figures are as of October 15 and compare to numbers on September 28, 2007. Most of the large increases and total short positions were in home builders, mortgage companies, and retailers.

Major telecom companies saw share sold short fall.

Largest Short Positions

Company                                         Shares Sold Short

Ford (F)                                           171.8 million shares short

Countrywide (CFC)                            79.8 million

Qwest (Q)                                         78.3 million

AMD (AMD)                                      75.9 million

Time Warner (TWX)                           69.9 million

Best Buy (BBY)                                64.9 million

EMC (EMC)                                      64.0 million

GE (GE)                                           62.3 million

Washington Mutual (WM)                  59.2 million

GM (GM)                                          56.2 million

Micron (MU)                                      54.4 million

Home Depot (HD)                              54.2 million

Altria (MO)                                        52.4 million

Sprint (S)                                          51.3 million

Largest Increases In Short Position

Company                                          Increase In Shares Sold Short

Washington Mutual                            12.5 million increase

EMC (EMC)                                       11.2 million

Target (TGT)                                        5.7 million

Pulte (PHM)                                        5.4 million

Beazer (BZH)                                      5.2 million

Time Warner                                       5.0 million

Largest Decreases In Short Position

Company                                           Decrease In Shares Sold Short

Wells Fargo (WFC)                             9.2 million decrease in shares short

Wachovia (WB)                                   8.4 million

McDonald’s (MCD)                               6.6 million

AT&T (T)                                             6.1 million

Qwest (Q)                                           6.1 million

Ford (F)                                              5.8 million

Pfizer (PFE)                                        4.5 million

Kraft (KFT)                                          4.4 million

Merrill Lynch (MER)                             3.8 million

GE (GE)                                             3.6 million

Data from NYSE and WSJ

Douglas A. McIntyre

Posted on: October 20, 2007 – 9:29 am in Short Interest, , , , , , , , , , , , , , , , , , , , , , , ,

This week on Stockhouse October 15 to October 19

Lackluster earnings reports and bad news from the U.S. housing sector weighed all week on the markets, as oil pushed to record highs, the Canadian dollar climbed and the Dow sank for five days in a row.

The recent credit crisis is serious for the average American and for the broader American economy said Littleguy123. He warned that the U.S.’s so-called Goldilocks economy http://beta.stockhouse.com/Community-News/2007/October/15/Goldilocks-is-dead! is no longer.

After years of price increases that stem from a serious supply crunch, nickel is expected to show surpluses in 2007 and 2008, according to the International Nickel Study Group. Liverless looks at the implications (http://beta.stockhouse.com/Community-News/2007/October/15/Nickel–Demand-destruction-or-destocking-) of the report.

Philippine journalist Redempto Anda warned that a Canadian junior miner with communications troubles looked like a disappointing déjà vu (http://beta.stockhouse.com/Community-News/2007/October/16/Will-MBMI-Resources-go-belly-up-).

While a lot of attention – and Bullboards comment – has been paid to recent discoveries by Noront Resources (TSX: V.NOT) in the James Bay Lowlands of Ontario, High2 and Tinman wrote that investors shouldn’t discount a certain platinum explorer (http://beta.stockhouse.com/Community-News/2007/October/17/Platinum-find-looks-good) working nearby.

The recent report recommending that Alberta charge its oil companies higher royalty revenues provoked many oil companies to announce drastic cuts in spending in the province. Why (http://beta.stockhouse.com/Community-News/2007/October/18/No-tears-for-oil-barons) should that be, wondered Dr. M.H. Rajabally.

Stacey Laliberte still likes the look of molybdenum http://beta.stockhouse.com/Community-News/2007/October/19/Stockhouse-Community-News--Roca-Mines-ready-to-ROK despite the commodity’s big gains, as long as it’s being produced by Roca Mines (TSX: V.ROK, Bullboards). http://beta.stockhouse.com/Bullboards/SymbolList.aspx?s=ROK&t=LIST Read why in Roca ready to ROK.

Writer HHappy urged investors in junior mining companies not to jump the gun before proper, lab-tested assay results http://beta.stockhouse.com/Community-News/2007/October/19/Don-t-believe-the-hype are available, in Don’t believe the hype.

Stockhouse presented Thom Calandra as you’ve never seen him this week. We previewed two excerpts from his novel, “Pablo by Numbers,” the story of a newsletter writer, peripatetic financiers and a global chase for capital during the market “melt up.”  The first (http://beta.stockhouse.com/Columnists/2007/October/16/Pablo-by-Numbers) piece introduced narrator Robbie Thom and the fast paced world of stock market newsletter writers. The second (http://beta.stockhouse.com/Columnists/2007/October/18/Pablo-by-Numbers) excerpt was a melancholic look back by the narrator at some of his professional and personal losses.

Faced with credit woes and uncertainty in many commodities markets, many Stockhouse contributors pointed to gold as the best hedge against portfolio declines.

Greg Silberman reported that based on his Fibonacci extension (http://beta.stockhouse.com/Columnists/2007/October/15/Whisper-targets-for-the-Amex-Gold-Bugs-Index) calculations, gold is only going to go up.

From his perspective down under, Troy Schwensen of the Global Speculator suggested that the September rally in precious metals (http://beta.stockhouse.com/Columnists/2007/October/16/Stick-to-your-guns) is likely to continue.

But it all comes down to gold stocks, which are likely to continue appreciating, forecast Dave Galland of Casey Research, given the Federal Reserve’s unsurprising decision to boost liquidity in the face of the credit crunch. http://beta.stockhouse.com/Columnists/2007/October/19/What-s-going-on-with-gold-

Looking at a different kind of hard currency, Danny Deadlock revisited a small diamond explorer (http://beta.stockhouse.com/Columnists/2007/October/15/Microcap-Monday–Diamond-stock-set-to-sparkle) with management who have top experience with major diamond companies, and activity in several African countries.

How much do you know about dry cleaning (http://beta.stockhouse.com/Columnists/2007/October/16/Consolidator-promises-big-revenue-gains)? The CEO of a consolidator in the business explains how the company expects to grow to a $100 million run rate in the next 18 months, in the latest CEO interview from Microcap Spotlight.

Steven Saville, meanwhile, noted that investors should watch for the bottom in the U.S. dollar (http://beta.stockhouse.com/Columnists/2007/October/17/Commodities-and-the-crack-up-boom), which he expects will foreshadow a drop in commodities prices.

And oil, that black gold (http://beta.stockhouse.com/Columnists/2007/October/18/Qatar-Energy-Minister-Oil-Should-Already-be-100), surged this week on tensions between Turkey and Iraq, and the U.S. and Iran. Qatar, an OPEC country with depleting reserves, has one of the world’s most important natural gas fields in the world, reported Luke Burgess.

Investors worried that the market has hit a top might be interested in Harry Boxer’s short picks (http://beta.stockhouse.com/Columnists/2007/October/18/Weekly-Wizards–Boxer-shorts).

Given that the credit crunch has affected markets globally, Nancy Zambell of Financially Fit examined the pros and pitfalls of investing in emerging markets. http://beta.stockhouse.com/Columnists/2007/October/19/Financially-Fit–Too-late-for-emerging-markets-

Posted on: October 20, 2007 – 9:11 am in Uncategorized

The Calls For A Lynching of Countrywide’s (CFC) CEO Increase

The Wall Street Journal writes "CtW Investment Group, a pension-fund advisory group affiliated with seven big labor unions" has sent a letter to the board of Countywide Financial (CFC) asking it to sack CEO Angelo Mozilo.

The SEC has begun to look into the pattern of Mr. Mozilo’s stock sales before the collapse of the sub-prime mortgage market and the CFC stock. The company’s business practices have been called into question in a number of quarters including a series of articles in The New York Times.

While no one seems to like Mr. Mozilo, there is a question of whether throwing him out would be "right". Obviously if the issues involving his stock sales or company policy are correct, the board will have to remove him, but none of this has been proved yet.

Although it is probably hard to believe, Mr. Mozilo’s crime may be stupidity. He may not have seen the title wave coming in sub-prime. Clearly some very smart people at America’s largest banks and investment firms missed the signs. And, they have paid for their lack of foresight by taking billions of dollars in write-offs.

Mozilo may go, but it is still not clear that he is any more responsible for Countrywide’s problems than an airline CEO is when fuel prices rise.

Douglas A. McIntyre

Posted on: October 20, 2007 – 7:50 am in Management Change,

An AT&T (T) Suit, The Death Of Vonage (VG)

AT&T (T) became the third big telecom company to file a patent suit against Vonage (VG). It follows actions by Sprint (S) and Verizon (VG). Those suits have been settled at a price of over $100 million and royalty deals that are going to cut the gross margins at the VoIP company.

Vonage will probably have $250 million on the books at the end of the third quarter, but it had an operating loss of $33 million in Q2. With the new royalty formulas, it is easy to see that making money will be even harder.

The AT&T suit is likely to cost a great deal in legal fees. If Vonage loses the suit or settles, there will probably be another lump sum payment, and, perhaps, more future royalties. According to The New York Times: The single patent in question, filed in 1996, appears to broadly describe the idea of routing telephone calls over data networks like the Internet.

It is time to shut Vonage down. One of the large cable companies might well buy the customers.With another several quarters of losses almost inevitable, the reasons or keeping the company open have gone away. With shares at just above $1, common shareholders might just get some money back in a liquidation.

Vonage may have been early to the market, but its stepped on too many intellectual property toes.

Douglas A. McIntyre

Posted on: October 20, 2007 – 7:35 am in Telecom, , , ,