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Bob Toll Does Not Front Run JP Morgan

Tyler Durden's picture




 

Yesterday Bob Toll sells 1.6 million shares of TOL. Today JP Morgan upgrades the stock, raising its recommendation from Neutral to Overweight, and stock price from $17 to $29.

What are the possible conclusions:

  1. Bob Toll is a hopeless fool who knows nothing about his company's business prospects (unlikely)
  2. Bob Toll does not have access to the JPM research reports "huddle" (likely)
  3. A Rorschach test of JP Morgan analyst Michael Rehaut using the picture below reveals an answer of "a diamond in the rough" (near certainty)

 

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Fri, 09/18/2009 - 11:41 | 73320 Hephasteus
Hephasteus's picture

Remember when people who tried to control and manipulate you actually cared enough to put some effort into it. Now its like watching McGyver and he's all like... Ok we take this string of belt fed ammo and shove it into this machine gun and pull the trigger.

Fri, 09/18/2009 - 11:52 | 73332 ZerOhead
ZerOhead's picture

Ah yes nostalgia... back then they used to kiss you before they fu#ked you too.

Those were the days my friend...

Fri, 09/18/2009 - 12:59 | 73404 Whizbang
Whizbang's picture

Did I read that right? JPM is expecting TOL to AVERAGE 23.6% growth over the next five quarters! With the final idiotgasms predicting 50% growth five quarters from now?! These guys aren't even trying to hide the fact that they're full of crap.

Let me try next:

TOL to experience growth of 1 gajillion percent over the next five quarters. Upgrade from overweight to obese.

Fri, 09/18/2009 - 13:59 | 73492 Anonymous
Anonymous's picture

I think Bob Tol is a real humanitarian. He's actually taking his hard earned stock and selling them back to the market so everyone else can share in his good fortune.

Fri, 09/18/2009 - 11:45 | 73322 zarrmax
zarrmax's picture

I don't know what you're thinking TD... I see nothing but value here..

disclaimer: I'm a mortgage broker for Countrywide

Fri, 09/18/2009 - 12:12 | 73351 Mediocritas
Mediocritas's picture

+1 haha

Fri, 09/18/2009 - 12:40 | 73376 Anonymous
Anonymous's picture

And, I'm pretty sure you could find a subprime somewhere willing to purchase with that $8k teaser from the Fed.

Shall we start the bidding at say $450K?

Fri, 09/18/2009 - 11:48 | 73325 nightfly
nightfly's picture

Sweet! I've been wanting to short TOL!

Fri, 09/18/2009 - 12:00 | 73330 Village Idiot
Village Idiot's picture

From the right angle - my appraiser could make that place work.  Disclaimer:  I WAS a Countrywide rep.

Fri, 09/18/2009 - 13:06 | 73378 deadhead
deadhead's picture

hmmm, speaks volumes about the "good guy" broker thing, eh?

Fri, 09/18/2009 - 14:12 | 73513 Village Idiot
Village Idiot's picture

Yeah, that was a joke.  I hate unscrupulous brokers too. Oh, and don't forget investment advisors. I really hate one in particular.

Fri, 09/18/2009 - 11:53 | 73333 SV
SV's picture

Bob Toll smells what's coming in the wind from the fan...

Fri, 09/18/2009 - 11:59 | 73337 HEHEHE
HEHEHE's picture

"Oh sh*t Toll just filed a Form 4, get Rehaut on the phone we need to dump this sh*t"

Fri, 09/18/2009 - 12:20 | 73355 Mediocritas
Mediocritas's picture

That's more like it.

Dev boys need to insert a clause into JPM-BOT:

(ask == "Toll") ? sell() : buy();

Fri, 09/18/2009 - 12:02 | 73341 bullwinkle
bullwinkle's picture

What are the possible conclusions:

  1. Bob Toll is a hopeless fool who knows nothing about his company's business prospects (unlikely)
  2. Bob Toll does not have access to the JPM research reports "huddle" (likely)
  3. A Rorschach test of JP Morgan analyst Michael Rehaut using the picture below reveals an answer of "a diamond in the rough" (near certainty)

I pick answer #1.  The stock is up 3%.  He just lost out on a million bucks.  And he runs a company?

Better go back to bangin some 2 by 4's together Bob.

TOL - All in!!!  Yeah baby!!

Fri, 09/18/2009 - 12:29 | 73369 Assetman
Assetman's picture

4. Bob Toll has 10 million more shares to sell in Toll Brothers stock before the fecal matter hits the wind vortex.

Fri, 09/18/2009 - 12:41 | 73377 bullwinkle
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Does that mean my all in on TOL is not fiscally prudent?

Fri, 09/18/2009 - 12:45 | 73382 deadhead
deadhead's picture

assetman is correct.

actually, it is not inconsistent that Bob T is selling even though jpm thinks his company may rise....Toll has been selling for some time now and it certainly made sense back in early 2009.  even the current selling with the amount of shares he owns is pretty simple risk diversification from my viewpoint. 

Fri, 09/18/2009 - 12:56 | 73399 bullwinkle
bullwinkle's picture

Thanks for the advice deadhead.  (Actually, my wife cracked me upside the head with her curling iron before I manged to hit the buy button)

Fri, 09/18/2009 - 12:58 | 73403 deadhead
deadhead's picture

well, if you see her pulling out a gun, then you know she is hedging your trades for your life insurance.

Fri, 09/18/2009 - 13:07 | 73414 bullwinkle
bullwinkle's picture

Hmmm....wives and guns.  Sounds like something robotrader should do an exposé on.

Fri, 09/18/2009 - 13:26 | 73440 Green Sharts
Green Sharts's picture

Risk diversification?  Surely at some point when Toll has cashed in $50 million or $500 million or $1 billion in his own stock and put it into other assets he has achieved the purpose of diversification, which is to be able to maintain his standard of living even if Toll stock gets wiped out.

When companies hand over stock options to executives it is allegedly to "align management's interest with shareholders".  Then when management cashes out the options it is for "diversification purposes".  What a crock.

Fri, 09/18/2009 - 12:03 | 73342 msorense
msorense's picture

Another commenter (Gilgamesh I think) posted this about JPM:

http://boombustblog.com/Reggie-Middleton/1143-An-Independent-Look-into-JP-Morgan.html

As an uber-bear that has taken his licks with this rally, I'm beginning to get excited!  I smell blood in the water!

Fri, 09/18/2009 - 12:06 | 73347 HEHEHE
HEHEHE's picture

Why do you think the I-banks have such rosey projections?  They have sh*tloads of overpriced shares they need to dump on the unsuspecting retail investors.

Fri, 09/18/2009 - 12:43 | 73381 Careless Whisper
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Is it true that JPMorgan has $80 Trillion (yes Trillion) in derivatives?  Anyone? Because I don't understand how that can be.

Fri, 09/18/2009 - 12:53 | 73393 SDRII
SDRII's picture

gross number as opposed to net number. Net is much less i.e. offsetting. The problme is one has to assume the netting is perfectly hedged or close to perfect. Not likley.

Fri, 09/18/2009 - 13:13 | 73421 Whizbang
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It seems high, but that is notional value. They could be holding derivatives on both sides of a trade that would eventually cancel. These values can approach the level of lunacy. Economist reports that there is approximately 400 Trillion dollars of derivatives (notional) in the interest swap market alone.

Fri, 09/18/2009 - 13:36 | 73459 msorense
msorense's picture

I agree that the notional value is meaningless.  See

www.usdebtclock.org

and you can see the total notional outstanding in the middle.  But there is no doubt that JPM and WFC are on the hook for CDS and may have to put up additional collateral soon as CMBS really starts to tank.  I believe S&P is downgrading large swaths of CMBS next month?  Somthing like 90% of that issued in 2007, 60% of 2006, and 40% of 2005.

Fri, 09/18/2009 - 14:05 | 73493 Careless Whisper
Careless Whisper's picture

OK but how do we find out the derivatives number that isn't meaningless?

Thanks for that link, but very scary.

Fri, 09/18/2009 - 15:07 | 73598 msorense
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I hope sooner than later that the market discovers that that the derivative portfolios of these banks are going rotten fast.  Then you can be assured of the following:

JPM = WFC = AIG = 0

But right now with this Fed induced insanity, these institutions are headed to the moon.  Either the market is allowed to correct or expect a currency crisis shortly.  Somethings going to give in the next few weeks which is why I'm getting excited.

 

Fri, 09/18/2009 - 14:18 | 73525 Green Sharts
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If they're holding derivatives on both sides of the trade with one counterparty they would be netted out to zero and cancelled.  If the derivatives are with two different entitites they have counterparty risk.  If one major player can't honor its obligations it will roll right through the system.  Which is why the government jumped in and paid off AIG's losing bets.

Fri, 09/18/2009 - 14:28 | 73538 Careless Whisper
Careless Whisper's picture

Yeah but the (notional) number is $80 Trillion; so don't they have to disclose somewhere what their exposure is?  Why are we just guessing?

Fri, 09/18/2009 - 14:48 | 73570 Green Sharts
Green Sharts's picture

Disclosure to derivatives has been mandated in the last year.  Fitch did a report on derivatives exposures earlier this year after digging through 10-Qs.  Their study appears to be limited to U.S. based companies; the total numbers would be a lot bigger with the major overseas banks included.

http://www.cfo.com/article.cfm/14113089/c_14113574?f=home_todayinfinance

 “Concentrated, in fact, among a mere handful of financial-services giants. About 80% of the derivative assets and liabilities carried on the balance sheets of 100 companies reviewed by Fitch were held by five banks: JP Morgan Chase, Bank of America, Goldman Sachs, Citigroup, and Morgan Stanley. Those five banks also account for more than 96% of the companies' exposure to credit derivatives.”

 “For the report, the rating agency reviewed first-quarter 2009 filings of the companies, which come from a range of industries and represent almost $6.4 trillion in aggregate outstanding debt. The companies also recorded a total notional amount of derivative positions of more than $296 trillion.”

Fri, 09/18/2009 - 15:13 | 73605 Careless Whisper
Careless Whisper's picture

Thanks for that link. Interesting. Who would have guessed that Exxon has no derivatives exposure? But I'm still confused because where do I find the $ amount of derivatives exposure for JPMorgan or any other bank (as opposed the notional number)?

Fri, 09/18/2009 - 15:23 | 73618 Green Sharts
Green Sharts's picture

I think the notional numbers are in 10-Qs but know if they will disclose any type of "net" exposure.  Even if they do, it would be based on their assumptions about how effective their hedges really are (i.e. if they have 2 OTC derivatives that are not perfectly matched, what if relationships and correlations change and the hedge isn't effective?) and would assume away counterparty risk.  I don't think any net derivatives exposure number provided by one of the major financial institutions could be relied on.

Fri, 09/18/2009 - 15:56 | 73697 Careless Whisper
Careless Whisper's picture

You must be right. I can't find net exposure numbers anywhere either. But the notional numbers are so... Zimbabwe. I don't get it, doesn't anyone care about the risks? Seems like no one is focused on this.

Fri, 09/18/2009 - 19:54 | 74064 Anonymous
Anonymous's picture

Notional is just a fake thing used to get the deltas you want. If I have a trillion notional on something that can never move more than 1% (not saying this is the case, just setting it up people) then the most I can lose is 10 yards (bil). The number may be one trillion, but the risk is only the same as having 10 mil in AIG stock. Of course when that 1% is assumed and doesn't hold there are problems, but most of these are on things like verticals on curve options, they are bound risks, even though the notional might be massive. (own a low call, sell a high call, on a trillion of bonds, the real risk or gain is only the value you paid for options or the difference in strikes.

Fri, 09/18/2009 - 12:55 | 73395 Anonymous
Anonymous's picture

we know you posted the link for the Dick Bove link, but we're just salivating at the thought of a cage match to the death between Brooklyn Bust Reggie & Queen Jamie DimonD on a barge in the middle of Newtown Creek (sponsored by Exxon of course).

Fri, 09/18/2009 - 12:11 | 73350 Anonymous
Anonymous's picture

Uh... CEOs are almost always lousy traders of there own stock (see Michael Dell). If you think about it for a minute, it almost has to be true.

Given that the most stocks probably flucatuate +50%/-30% from a LT average EVERY YEAR. Then IF a CEO or corporation could properly buyback / issue with good timing... they would have a license to create money.

But, oh they dont. They all do extra buying and buybacks in 06 and 07... and then they "raise capital" in 08 and early 09.

Its hilarious.

Fri, 09/18/2009 - 13:03 | 73407 Gilgamesh
Gilgamesh's picture

It would have been a much better report by JPM if they said the reason was: 

 

"Bob just sold more stock, and since we know that CEOs trading their own stock have the worst track records in history - you should be doing the opposite.  Therefore, TOL = Buy.

 

Signed,

CFA

Fri, 09/18/2009 - 14:35 | 73547 Anonymous
Anonymous's picture

officers also often have scheduled sells in advance, so they do not create the appearance of trading on inside knowledge. (of course they do have lots of inside knowledge, but whether that translates to something that is worth acting on is not always a given). but the large number of know-nothings here would not know that.

you're missing the point anyway ... which is regardless of whether he lost a little bit, he and many other top execs are given huge numbers of stock options, which has had the effect of focusing many of their activities on the short-term rather than onging sustainable business performance.

Fri, 09/18/2009 - 12:25 | 73362 Anonymous
Anonymous's picture

Come on guys, who do you think bought that block from him? You think he just logs into Etrade and hits market sell?

Fri, 09/18/2009 - 12:46 | 73385 deadhead
deadhead's picture

good, very good.

Fri, 09/18/2009 - 12:47 | 73387 Anonymous
Anonymous's picture

(Possibility #4)

Geithner says to his buddies at JPM, "Hey listen, this Toll jackass is liquidating his position and it's going to tank the whole sector -- and that could bring the whole market down. Do me a favor and get one of your chimps down there in equity research to slap a Strong Buy on his company and stop the bleeding."

JPM lackey responds, "Mmmrf, garble, mrlmf"

(It's hard to talk with Geithner's cock in your mouth)

Fri, 09/18/2009 - 14:04 | 73500 Anonymous
Anonymous's picture

OMG- POST OF THE DAY!!!

Earl!! Clean up on Isle 6--

Fri, 09/18/2009 - 14:05 | 73505 Anonymous
Anonymous's picture

LMAO!!

Fri, 09/18/2009 - 13:46 | 73471 JohnKing
JohnKing's picture

Home builders need to enjoy a recovery, it is a vital industry for illegal aliens. This is more Obama/JPM machinations.

JPM: Hey Obama who do you want to "recover" today?

Fri, 09/18/2009 - 14:22 | 73528 Anonymous
Anonymous's picture

You can never go back,
and the answer is "no"
And wishing for it only makes it bleed

Fri, 09/18/2009 - 21:50 | 74155 Shamwow
Shamwow's picture

Good 'ol JPM.  I still have the "conviction buy" report on RIM from the day after it hit its all time high (before tanking).  Had this research hit our brokerage in paper form, our toiletpaper expense would have fallen dramatically.

The only reports worth reading from JPM were academic pieces and they caused confusion as, if followed, they suggested their equity analysts were waaaay out to lunch!

Sat, 09/19/2009 - 00:07 | 74226 Anonymous
Anonymous's picture

You're all missing a very important point over the past year of methodical selling. ADIA is a major shareholder. Any of you want to guess what their current investment posture in US equities is (given the state of CRE globally)?

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