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Bank Of America Criticizes Credibility, As Its Own "Goes Out The Door"
The facts:
On July 31, a research report by Bank Of America, titled "Credibility goes out the door, lower PO to $15 [from $20]", slams Spirit Aerosystems with the following harsh report:
On September 15, less than a week before Spirit Aerosystems announces a $300 million bond offering to repay a credit facility whose Joint Book Runner (read, bank most on the hook for) is Bank of America, and which development we already discussed previously, the same analyst comes out with the following price target increase.
Spirit AeroSys-A (SPR; C-1-9; $16.36)
Our P.O. of $19 is based on a DCF analysis using an implied growth rate of 2.8%, a 12.7X continuing value multiple and a 10.6% equity discount rate. Risks are before its aquisition by ONEX there is little financial history for SPR as a profit center. Investors cannot depend on the historical data of Boeing Wichita. Spirit, Boeing, and Onex are defendants in a lawsuit filed by former Boeing employees who were not re-hired by Spirit. The plaintiffs seek an unspecified amount in compensatory damages and more than $1.5bn in punitive damages. We believe an unfavorable ruling could result in material changes to our forecasts for Spirit. Revenues are heavily dependent on Boeing: 97 percent of revenues are derived from the commercial OEM market and 90 percent of Spirit's revenues are currently derived from Boeing. A material change in the cycle or Boeing could negatively impact Spirit. The majority of sales are OEM, and there is little aftermarket, which could prove problematic if the civil aircraft cycle turns dramatically. Higher oil prices would likely derail air traffic growth, and therefore aircraft demand, resulting in a downturn in commercial aviation. Given that aircraft are priced in dollars, an unexpected rapid devaluation in the dollar could significantly impact order activity.
In a month and a half all the negativity has been forgotten and the company round trips its BofA Price Target from $20 to $15 back to $19. Ironically even while the follow on note (no pun intended) is rather cautiously worded, it somehow merits a 22% increase in the stock price even though not even one earnings report has been issued since the prior note. Way to stay ahead of any change in fundamentals.
Summary: Bank of America pays down its revolver via a new $300 million senior note (whose underwriter is still unknown, but ZH staff is willing to short GS stock and thus take on the Federal Reserve itself, that the lead manager will be either Goldman Sachs or Bank of America, or likely both). As for credibilty it does indeed "go out the door," however the credibility addressed is not that of SPR, but Bank of America itself.
And, in a tried and true tradition, we present Bank Of America's various conflicts of interest in SPR.
- The company is or was, within the last 12 months, a non-securities business client of MLPF&S and/or one or more of its affiliates: Bombardier Inc., General Dynamics, Spirit AeroSys-A.
- MLPF&S or an affiliate has received compensation for investment banking services from this company within the past 12 months: Bombardier Inc., General Dynamics, Spirit AeroSys-A.
- MLPF&S or an affiliate expects to receive or intends to seek compensation for investment banking services from this company or an affiliate of the company within the next three months: Bombardier Inc., General Dynamics, Spirit AeroSys-A.
- MLPF&S together with its affiliates beneficially owns one percent or more of the common stock of this company. If this report was issued on or after the 10th day of the month, it reflects the ownership position on the last day of the previous month. Reports issued before the 10th day of a month reflect the ownership position at the end of the second month preceding the date of the report: Spirit AeroSys-A.
- MLPF&S or one of its affiliates is willing to sell to, or buy from, clients the common equity of the company on a principal basis: General Dynamics, Spirit AeroSys-A.
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Gold nosediving.
Yeah, that was an impressive run by the BBs there. Net commercial short at 36.6 million oz last time I checked, which represents an insane 42% of annual gold production, especially insane given that we've already seen peak gold (mining).
http://goldnews.bullionvault.com/gold_mining_output_2008_china_south_afr...
Huge short run-up of late is 1:1 in proportion to the run up in non-commercial long.
Real flashpoint building up here...
Don't gold options expire today? If so, interesting the $25 dive took place in the final hour of London trading and sent it back below $1000. Manipulation anyone?
Yes you are right,, it's at $ 999.20, the dollar is at 76.65, the ecconomy is doing fine, there is peace in the valley all is well,, go back to sleep. ( what are you smokeing ) dollar nosediving, a 2% move is not nosediving, NOSEDIVING is 14,000 to 6,500, thats nosediving, and this phony bear market ralley will retest if not swamp that low, no doudt.
speaking of BAC/ML, their new chief equity strategist Bianco has u.s domestic banks with an overweight and a leading sector out of our economic malaise per his published report of September 18 (i'll hang on to that one for a bit). he must be quite the contrarian based on Merrill Lynch's own survey of fund managers in regards to bank valuations. please see paragraph number 10 in this Financial Times story.
http://www.ft.com/cms/s/0/f05358fe-a60b-11de-8c92-00144feabdc0.html
Silly Tyler Durden, tricks are for kids. Besides, a lot can happen in a few months. Can't B of A change its mind? Are you saying a financial conflict of interest might actually sway their opinion?
Never!!!!!
Bankers are pure as driven snow. Particularly those bankers of the central variety.
I love foreign proverbs. Here is one,rough translatin"if you feel no shame,then do whatever you like"...........
P3 of Elliot wave notwithstanding,the recent conversation was heared by a fly on the wall:TG to BF:what the f is going on?yesterday a drop of 20 points in an hour?and today another 10 points in half an hour?what happened to all the trillion we gave you guys?. BF to TG:well body what can we do?those euros wants to play with our pays,and then we have that old man saying that we can't have the coffers and make as much as the efficient market we run allow us to make,so my poor traders scared that they gonne lose their porches,are selling to make sure that in case you guys don't do something,they can retire early.TG to BF:No wait,we still run the world,don't worry about it,I will make sure nothing of that takes place. BF to TG:yeh make sure of that. In the meantime we will just play a little,just in case you guys give us the shaft.
If ZH is going to take on the FED Reserve by shorting GS to find out who the lead manager is, then I have to make a donation.
This type of action is worth paying for.
Never forex trade blind,this is texas holdem rules, the pots about full.The schnitzel is in the patch or is it the Goldman log left by Bernanke?
CALL YOUR REPRESENTATIVE TODAY! VOTE ON THE HOUSE FLOOR IS TOMORROW...AUDIT THE FED! THEY HAVE NEVER BEEN AUDITED SINCE ITS INCEPTION!! ITS TIME, LETS SEE WHERE OUR MONEY WENT!! HR. 1207 CALL WASHINGTON AT 202-225-5516 IT TAKES 2 MINUTES.
Andrew Jackson for President http://mises.org/story/3632
Hi i wanted to use your article for school, but i needed your credibility's. (like what your college was and what you studied in collage).