Here is a quick look at the Ackman short, O's covenant risk and a comparison to the cash shortage at American Campus Communities. ACC's issues are more imminent!
No matter where the stock market rises to, no matter what accounting shenanigans are being pulled, and no matter what program traders or momentos are pushing for the moment, sooner or later (usually sooner than many realize) the fundamentals come home to roost. Enter Wells Fargo...
The REIT space has seen share prices pop significantly in this extended bear market rally. This, along with a few financial shenanigans, seems to have masked the effect that a literal real estate depression has had on those entities which buy, sell, develop and hold real estate. The fundamentals and macro outlook are still horrendous, yet share prices have been elevated significantly. Ackman, from Pershing Square, has released his short thesis on the REIT Realty Income, and I throw my 22 cents in (it was 2 cents, but I levered up 10x), as well as offer another REIT with a greater cash flow problem...
In reviewing the last couple of quarter's results of Goldman Sachs operating results, I have come to the conclusion that Goldman is a Federally insured, publicly traded hedge fund!
I was perusing ZeroHedge the other day (a fine, rabble rousing rag after my own heart), when I came across a guest post accusing JP Morgan of some funny stuff.
Those that follow me know that I really believe JPM to be highly
overrated. In reviewing the authors allegations, he may actually be on
to something in regards to portions of the AML stuff. In order to truly
ascertain the extent, if any, I would have to dig a little further,
which I don't have the time to do right now.
Let me know the chances of the FDIC's absorbing a behemoth such as the CDO trading, CDS writing, off balance sheet VIE having, QSPE bulging, California and Florida Zero recovery 2nd lien sporting Wells Fargo in the case some of its arcane and non-performing assets really hit the fan. I am getting ahead of myself though. Let's take this from the beginning.
I, Reggie Middleton, challenge the mainstream media to think
independently. I challenge them to dig down, past the sterilized,
politically correct soundbites proffered by popular corporate
management, you know - the "in crowd". I challenge the MSM to pull out
a calculator, run through the reported numbers, and actually ascertain
if what is being proferred by managment actually correlates with the
numbers offered to the regulatory agencies. I know some of the finance
stuff can get arcane, but their are many objective parties to turn to
for assistance.
I have found evidence that this bank has $32 billion of naked (as in apparently unhedged) swaps on its books - just like AIG. The difference is this bank is bigger, probably has more exposure, and has already been bailed out - several times. Oh, did I mention the insured collateral is nearly half BBB rated or lower??? How about extreme management issues at the top, and I mean all the way to the top. A trunk full of junk, surrounded by drama! It should be an interesting conference call tomorrow when they report, that is if anybody decides to ask the right questions...
Here I show a direct comparison of my "on the street, grass roots" and "spreadsheet" observations to that of what is portrayed in the media. Let me know if you see any discrepancies...
Since I write for a diverse audience, I will start this off with an
overview of securitization. If you are in the industry or are just a
smart ass dude, feel free to skip down to the JP Morgan specific
section of what may lay off balance sheet below. I also have a 30 part series on this Asset Securitization Crisis for those who are interested in my take on this from the beginning. It is a lot of reading, but it tells it like it is - at least from my perspective.
One of the quandaries of running a subscription service is that
when you have some really juicy stuff, you inherently limit the
audience that you are able to reach. Normally, this isn't that big a
deal. When you believe that there is a mass cover up aiming to prop up
the largest cadre of zombie, insolvent companies in modern history it
becomes a much bigger deal. This leads me to distribute a significant
amount of research for free.
The JP Morgan forensic preview is now available. Remember, this is
not subscription material, but a "public preview" of the material to
come. I thought non-subscribers would be interested in knowing what my
opinion of the country's most respected bank was. There is some
interesting stuff here, and the subscription analysis will have even
more (in terms of data, analysis and valuation). As we have all been
aware, the markets have been totally ignoring valuation for about two
quarters now. It remains to be seen how long that continues.
For those that believe mark to market rules are useless (I know
they make it hard to goose your share price in a deflationary market,
see "Charting the Truth"), I bring you the collapse of a bank last week that wasn't even on the FDIC's troubled bank list. To add misty eyes to
