Daily Archives: December 15, 2007

Goldman Sachs Likes Citigroup (C) Bonds

Normally taking extra risk onto a bank balance sheet and getting a debt downgrade would not be considered good news. Citigroup (C) brought $49 billion of SIV debt in-house and, for unrelated reasons Moody’s cut its rating for Citi.

Goldman Sachs thinks that the moves make Citi bonds a good investment. In other words, things are better than they appear, and the debt will outperform similar investment.

According to Reuters: "Goldman said it believes the newly appointed Chief Executive Vikram Pandit will take appropriate action to raise capital levels in the first quarter either through additional third-party investments, dividend cuts or reduced risk-weighted assets."

Goldman and Moody’s can’t both be right.

Douglas A. McIntyre

Posted on: December 15, 2007 – 3:11 pm in Financial Stocks,

Will MBIA (MBI) Lose It “AAA” Rating?

Moody’s is having a look at the "AAA" rating carried by bond insurance firm MBIA (MBIA).

MarketWatch writes that "Bond insurers agree to pay principal and interest when due in a timely manner in the event of a default. It’s a $2.3 trillion business that offers a credit-rating boost to municipalities and other issuers that don’t have AAA ratings."

Unfortunately, MBIA and its peers have guaranteed a lot of paper for pools with subprime mortgages, and their stocks have reflected that with big drops.

It’s hard to a bond insurance company to insure a bond that does not have a "AAA" rating when the bond insurance firm does not have one itself.

Douglas A. McIntyre

Posted on: December 15, 2007 – 3:04 pm in Financial Stocks,

VMWare (VMW) Gets A Challenge From Microsoft (MSFT)

Microsoft (MSFT) is beginning to show  beta of its virtualization technology, called Hyper-V. Some in the industry think this will put it on a collision course with market leader and recent IPO VMWare (VMW).

Microsoft is expected to launch is finished product in the first half of next year. As MarketWatch points out "While VMware is considered the leader in virtualization, and has a head start of several years over many of its competitors, the entrance of Microsoft is seen as something that can’t be ignored, even if it may be a year or more before the company shows signs of taking a significant part of VMware’s market share."

VMWare has a market cap of $36 billion, so some success by Microsoft in virtualization could mean a lot for shareholders.

But, no so fast. An analyst from Citigroup had a look at the new beta  The firm, quoted at Alley Insider wrote

"We believe VMware’s competitive position remains unchallenged. MSFT’s Hyper-V will initially lack features such as moving live virtual machines on the fly, dynamic load balancing, and advanced power resource management…  We also believe customers will question Microsoft’s management of virtualized Linux servers."

If Citi is write, the MSFT launch may be more of an embarrassment for the firm that a success. A bit like the Zune but for a much more sophisticated market.

Douglas A. McIntyre

Posted on: December 15, 2007 – 2:55 pm in Software, ,

This week on Stockhouse December 10 to 14

A U.S. Federal funds rate cut on Tuesday failed to brighten spirits or market indices this week. The quarter point cut was followed by a plan by central bankers to inject global banking systems with liquidity, but investors fretted that such remedies wouldn’t provide immediate relief.

On Monday…

Not much has changed with the uranium spot price recently, as Luke Brocki reported in Spot prices stalled. The report was also filled with company-specific news from the uranium sector, including developments with a Colorado mine.

Danny Deadlock revisited three mining plays (all past picks) amid tax loss season in Junior resource triple threat.

Littleguy123 took on the big guy – Goldman Sachs (NYSE: GS, Bullboards) to be specific – in a look at why the powerhouse financial firm would be recommending that investors sell gold. Read more in Goldman Sachs says, “Short gold!”

Currencies are tough to value when compared with each other, wrote Matt Stiles in Has the U.S. dollar bottomed? But if you compare them to the price of gold, the picture starts to get a little clearer.

A new daily column called Buzz on Commodities sampled the opinions of Stockhouse contributors across a spectrum of publishing forums, including blogs, articles and Bullboards. Read the premiere installment, For Canadians, gold priced in U.S. dollars can be deceiving.

For news about small stocks that made big moves in Monday trading, please read the Stockhouse Canadian Small and Micro-cap Stock Report and the Stockhouse U.S. Small and Micro-cap Stock Report.

On Tuesday…

The Aden sisters pointed out a number of economic and political issues that they are monitoring closely as the gold bull continues to gear up in Soaring markets.

Boris Sobolev, of the Resource Stock Guide, joined Stockhouse, and presented an interesting analysis of why junior exploration companies have been underperforming of late – and it’s more than the credit crunch. Read more in Junior mining company credibility in question.

The Alberta royalty program hasn’t been the best thing for the stock prices of a number of oil and gas companies, and Buzz looked closely at one in Alberta Clipper Energy cannot be bought.

In more Bullboards news, Buzz examined the prospects for a new diamond discovery in the Northwest Territories in Sanatana Diamonds powers up on discovery news.

In Tuesday’s Buzz on Commodities, members pontificated on the sideways-grinding action of their favorite stocks in Chins up in gold, silver, uranium and more.

For news about small stocks that made big moves in Tuesday trading, please read the Stockhouse Canadian Small and Micro-cap Stock Report and the Stockhouse U.S. Small and Micro-cap Stock Report.

On Wednesday…

Greg Silberman dove into the subject of bonds and why they haven’t been performing as expected in Where have the bond market mavens gone?

Stacey Laliberte found more than a few things wrong with the financial soundness of everyone’s favorite mortgage lender in Is Fannie Mae beyond economical repair?

Dan Wong saw evidence of a turn-around for a long-dormant photography giant in Kodak back on the horse?

If a rising tide floats all boats, what does a receding tide do? There’s a company that’s been sailing free and clear of the market for the past three months, and Buzz paid a visit to the Bullboard in Pan Orient Energy scores again.

Buzz on Commodities found investors weighing in with thoughts on gold, silver, uranium and molybdenum in Sentiment ranges on gold, silver, uranium and moly.

For news about small stocks that made big moves in Wednesday trading, please read the Stockhouse Canadian Small and Micro-cap Stock Report and the Stockhouse U.S. Small and Micro-cap Stock Report.

On Thursday…

Greg Silberman joined us again, this time with a look at how the U.S. government’s plan to “freeze” mortgage rates for five years might not go exactly as planned, in What the market nose.

Buzz on the Boards dug up a junior gold producer that’s done very well for Stockhouse members lately, in Detour Gold drives straight up.

Some dark and dirty commodities, including iron ore and coal, compete for the limelight as Buzz on Commodities made the rounds in What are the last great commodities?

For news about small stocks that made big moves in Thursday trading, please read the Stockhouse Canadian Small and Micro-cap Stock Report and the Stockhouse U.S. Small and Micro-cap Stock Report.

And finally on Friday…

Buzz on the Boards followed up Thursday’s Detour Gold piece with a look at one of the company’s majority shareholders in Investors cheer Pelangio Mines.

Posted on: December 15, 2007 – 2:43 pm in Uncategorized