Okay, the pain and agony of loosing [sic] absurd amounts of coin in [[VLY]], [[WABC]] and [[HDB]] shorts is wearing off. I will be doing research for the next 20 hours straight, with little need or desire for food or sleep. In other words, while you jackoff crying a river in your bullshit jacuzzi, “The Fly” will be readying his counterattack, in order to “resack” lost coin.
Aside from [[CLNE]], I ponder whether to pressure bank shorts into the same fate I found myself today: poor house, or go eat another hot dog.
There are a number of synergies that need to be exposed, in order to evaluate what banks can be bought, or chased here. For example, there are a number of banks with low price to book ratios, compared to their peers, that will be flagged and bought by asshole dip buyers.
Layering on top of that data, and taken into consideration, are fpe ratios and percentage of shares sold short.
Keep in mind, the following names are potential trades, not suitable for long term investment. I still fucking hate the banks.
Here is my short list of potential long trades:
[[UMPQ]], [[WBS]], [[PHH]], [[SNV]], [[ZION]], [[EWBC]], [[HAFC]], [[CMA]], [[WB]], [[STI]], [[SOV]]and [[MI]].As of now, if a gun were put to my head and a pointed piece of metal was put in the chamber, I’d say: “go long STI, with impunity, based upon egregious valuation.”
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CNBC is in full pump mode for banks.
kudlow was just doing his bit about free market capitalism and optimism and said, ‘i don’t care if nobody believes me. whatever.’
other notables:
‘the banks have charged off more than the values of houses have gone down’
‘oil and gas are going lower’
JPM, BAC, WB, WFC, USB – all being pumped with impunity, because of their ‘big deposit base’. it’s like dick bove sent them a script.
*edit: add ZION and dennis gartman to the pump script
Aren’t we supposed to say something like, “Fly, what the fuck are you drunk?”, the next time you try going long banks?
I wouldn’t try chasing shit like some fucking leprechaun’s pot of gold, you always lose.
I don’t like this idea.
WB had a huge run today. People might be a lil afraid of JPM buying them but not here ffs.
MI trades like shit but they are not going away.
Check out CIT that would be my pick here.
Grab a Homie like KBH or HOV in case congress passes the housing bill.
As for myself I’m sitting out with 95% cash. I have a ton Sept XLF calls, C and XHB leaps that I wrote off 2 weeks ago and are now green, fucking unreal. I also started grabbing some CHK, UNG and puts in CF.
Can’t wait to hear your ideas in the next couple days.
As far as banks are concerned I’ve liked RBCAA for a while now. It is just breaking out making new highs.
WB is down, ETFC is down.
The Fed is not to be fucking trifled with — that’s the lesson here. They can tap into unlimited monies and buy whatever the fuck they want at any time and hide everything because M-3 data has been discontinued. Don’t fuck with Paulson! He will rip you all a new asshole. And every other ultra-rich powermonger across the globe is on his side. Nobody wants FNM to shit the bed. So that’s that.
This rally is based on stupid shorts who are basing their bets on facts. Fuck facts. Nonetheless — banning shorts from FNM, et. al. is going to bite them in the ass. The next drop — which should be much slower of course — is not going to pop 28% in one day. FNM is not going to jump 100% in a few day either next time around.
It’s going to be a slow death which is a small victory for the Fed. They know America is fucked but it behooves them to slow down the rate of destruction via spending other people’s money (that’s always the fucking trick, isn’t it?). They don’t have anything to lose if they’re wrong. If they’re right, they’ll be heroes. If not, retire and go start a hedge fund.
RIG is actually starting to firm up now. It should be the first one out the gate when OIH is back in favor which it sure as hell isn’t right now. But I’ll join RIG for a run soon.
you really need to stop pressing buddy. you will achieve hotness again with some distance.
Nuggin futs!
Don’t chase… pace!
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LVS right at that 38.2% retrace, Calvin. Sold off to it in AH.
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You’re getting your vengeance on CRM too, I see.
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Kiwi — you some kind of Pitino fan?
RBCAA is a nice short at $32. That’s the 61.8% fib extension off the previous highs… “the golden ratio.”
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Last time I brought them up you said same thing about a good short and they did nothing but sit there through all the days other banks were getting gang raped and they are now breaking out.
And no, fuck Louisville.
And look, you’ve got a few more bucks before they’re a short at $32, so what the fuck are you getting so pissy about? You think a bank that lives off of mortgage lending and paycheck scam loans is going to “weather out” this imbroglio without “a little taste?”
No, you’re probably right. It’s “off to par” from here. Clear sailing ahead.
(these fucking mommonis! Sheesh!)
PS — I am a Pitino fan, so go fuck a lampost.
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You phuckers still ain’t figgered it out yet? This is a “jam the shorts” rally. It ain’t going to stop ’til every one of you city Phuckers is broke, and eating cow pies for dinner. 17 K on the DOW by Labor Day. Just as sure as Chickens shit in a hen house.
Fuck you Howard.
I don’t take breaks.
Aris poof of IndyMac may be the best thing I’ve ever witnessed on this site (other than Fly’s egregiously high IQ)
this WM thing just doesn’t jive.
so they had a 7B cash injection in april, yet they only have 6B in cash ‘provisions’, and they’ve still got 14B of sub-prime on the balance sheet? possibly going to catch a downgrade from moody’s, bad loans are still rising, etc.
this seriously is larry kudlow investing.
‘just buy it now; it will be higher in 15 years.’
i’d rather work at a grocery store, while intoxicated each day, than have anything to do with this market any longer.
Not pissy, just stating.
In a market that is acting out of whack to what you would expect, I think the best bet is to go with what is trending. And since he is looking for banks in particular I named one that seems to be weathering it alright.
I went with the paycheck scams because I was betting a lot of the people that needed or will be needing the money were oblivious to the whole scam making that part of the business at least somewhat safe in the near term.
And as far as mortgages they are not in a bad ‘bubble’ area so again another way I saw it as “safe”, as far as banks go, in the near term.
Just my thoughts on it.
No problemo, Kiwi, I was just “giving you some shit” in the first place.
The “Pitino fan” thing was me doing “congenial.”
I took that company public, back in the day, fwiw. Nice family runs it. Not so sure how much more time they’ll have in the paycheck lending arena, though.
And $32 really is the fib extension. It’s a logical target.
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True, Aris, that was some excellent photoshoppy-ing. I gotta learn how to do that.
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thanks. here’s a good, entertaining way to learn photoshop:
http://www.youtube.com/watch?v=U_X5uR7VC4M
(i have no idea how to embed it on this page)
aris… to embed you have to post the comment, then edit the comment and add the embed code.
“PharmPhucker Says: 17 K on the DOW by Labor Day. Just as sure as Chickens shit in a hen house.”
Now that’s some funny shit.
If you’re right, I won’t know it cuz they’ll have repo’d my computer.
All the same, I’ll wager your a complete fucktard.
Fly, its great that you have the objectivity to step back and figure out whether you are misreading the mkt, but i’m not sure i would buy many of the regionals after this huge run. Aftere the BS bailout on 3/17, the financials rallied for 6 days representing a 14% return. Since 7/15, XLF has rallied 28% over 5 trading days. I think this rally lasts another day or 2 tops. i wouldn’t be a buyer here, however, if this housing bailout is made a big deal in the media and/or oil continues to sell off, XLF could have more steam in it.
Interesting reading posts! I think S and P tops tomorrow
not much higher than here! How long===do not know! But enough to make $ on short side! If U follow this advice a turtle will grab your weinie while swimming! Poof it is gone!
While we gather our logic and assemble our game plans, I thought this piece from John Mauldin’s newsletter would be good reading for all.
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How do you spell short-selling rally, gentle reader? In this week’s Outside the Box we look at several short items (pardon the pun) from various sources, which paint a not pretty picture. The first hit my inbox this morning from Art Cashin (of CNBC fame and also Head Floor Trader for UBS).
“Deconstructing The Rally – The sharp rally that sprang from the new short sale restrictions has been spiky and, in several ways, very powerful. The impact of the short rule change was evident. As Barron’s notes, the 150 stocks with the heaviest short interest rallied a stunning 15%. The stocks with the smallest short positions rose only 2%. That may be a function of existing shorts scrambling to cover to pass the new, belated, scrutiny. That thesis got added weight from a couple of areas. The Merrill Lynch results got mostly panned by several analysts and TV pundits. Nonetheless, the stock closed 24% above its lows for the week. Also, the financial sector ETF rose nearly 25% from the lows.
“All of the above suggests that the rally is based on the two pronged government move. First, put a safety net under the financials, especially Fannie and Freddie. Second, restrict opportunities to sell the financials short. We’ll wait to see if those efforts have further legs this week.”
Then let’s look at this column written today about, among other things, past attempts at messing with the short rules. In short, it just doesn’t work for very long. This is a Taking Stock column by Spencer Jakab for the Dow Jones Newswire.
The Mother Of All Short Squeezes May End Badly
By SPENCER JAKAB
In the words of the notorious 19th century speculator Daniel Drew: “He who sells what isn’t his’n must buy it back or go to pris’n.”
The rules governing short selling — borrowing shares to bet on price declines — are vastly more stringent than they were in the era of robber barons like Drew, Jay Gould and Jim Fisk, but one thing hasn’t changed much: When markets decline, those who profit are seen as un-American, even evil, and the weight of the authorities is brought down against them with devastating, but usually temporary, results.
That pattern may be playing out now after Securities and Exchange Commission Chairman Christopher Cox shocked the market by announcing at a Banking Committee hearing Tuesday vague new emergency restrictions against “naked short selling” to begin four trading days later. Though almost none of the 19 financial firms targeted were on Reg SHO lists in place since 2005 that highlight firms with failures to deliver borrowed shares, his comments had explosive results after many of them had hit multiyear lows.
Fannie Mae (FNM) and Freddie Mac (FRE), which also received additional credit lines, each rallied by over 96% from Tuesday’s intraday low through Friday’s close while major firms with no government safety net like Bank of America Corp. (BAC) and Lehman Brothers Holdings Inc. (LEH) surged 49% and 59%, respectively, with some troubled regional lenders like Huntington Bancshares Inc. (HBAN) doing even better.
What does it all mean? Asked just hours after Cox’s testimony, one dedicated short hedge fund manager had a sarcastic reply: “This means the financial crisis is over,” he said, going on to clarify that nothing at all had changed fundamentally in his opinion. Of course many shorts like him suffered stinging losses and reduced capital, but the other side of the coin is that there are now far more shares to borrow at much higher prices than a few days ago. Financial stocks may well retrace at least part of their recent gains as the shock of Cox’s step wears off.
Past Examples Not Encouraging
The fact that the initial results were spectacular, particularly for financial stocks, shouldn’t be too encouraging. Consider what happened in April 1932, at the depth of the worst-ever bear market. Upon the announcement of a cumbersome new rule that required written permission from each shareholder before a broker lent out his stock, the Dow Jones Industrials rallied 3.51%. By the time the rules were instituted weeks later, the short covering was over and the slump had resumed.
More recently, attempts by authorities in the U.K. to force disclosure of short positions in financial firms undergoing capital raising have had mixed results as mortgage lenders Bradford & Bingley PLC (BB.LN) and HBOS PLC (HBOS.LN) traded near the prices of deeply discounted rights offerings. Nudgem Richyal, a fund manager at JO Hambro in London, said some secretive hedge funds pulled back in order not to leave themselves open to a short squeeze or bad publicity.
“The last thing you want is your name splashed all over the FT,” he said.
An extreme example comes from Pakistan where the local SEC responded to a stock slump last month by banning short selling and limiting daily price declines to 1% while allowing them to rise by 10%. The initial reaction was a massive 8.6% one day rally followed by 15 straight days of slumping prices amid extremely low turnover, the worst such period for that market in several years. As rioting investors stormed the Karachi Stock Exchange last week, the rules were rescinded.
Shorts Help In Price Discovery
Aside from such extreme examples, a lack of price discovery because shorting is banned can sometimes hurt the most vulnerable investors. For example, when Palm Inc. (PALM) had its initial public offering in early March 2000, the initial pricing range was $14-$16 a share, reflecting bubble era valuation sensibilities, but the deal was so hot that it was issued at $38 and traded as high as $165 the first day as retail investors bought and those well-connected enough to get IPO stock sold. Since most of the equity was still owned by 3Com Corp. (COMS), the subsidiary was worth $54 billion and the parent at $28 billion. As a result, 3Com’s other businesses were briefly worth negative $60.78 a share according to Spinoff Advisors LLC, making a short sale or put buying of Palm a no-brainer but prohibitively expensive with such a small float.
Needless to say, many saw only the price and were sucked in at or near the top, losing over 99% on a split-adjusted basis if they still held it today. There is no record of the SEC warning these retail investors of their folly. Intervention is popular only in bear markets.
And what about the view that short sellers target and destroy otherwise healthy companies? Ignoring the possibility that banks could be hurt by illegal false rumors, it is hard to understand how the operations of most businesses can be affected by the simple act of selling their stock while legitimately borrowing it. Legendary hedge fund manager Michael Steinhardt weighed in on this subject last week.
“If one looks back and finds those stocks that have been picked upon by shorts, that have been the subject of all this sort of talk, and find out what ultimately occurs to the price of those shares, overwhelmingly, one will find that the shorts were right,” he said in comments to CNBC.
Is it possible though that Cox’s actions, however unnecessary, marked the ultimate bottom for banks? They do seem cheap by historical measures, but the widespread euphoria last week looks more like a bear market rally than classic capitulation.
Investment strategist Barry Ritholtz wrote in his blog that one reason to doubt that the bottom is in for bank stocks is that The New York Times, The Wall Street Journal and Barron’s (the latter two sharing an owner with this newswire) all produced prominent articles on Saturday suggesting the worst was over for financial stocks.
“Can you recall the last time three major media players all picked the bottom in a market or sector on the exact same day — and were all proven correct?” he asked.
And now let’s look at a few paragraphs from Bill King’s daily epistle which is really The WSJ: SEC Short-Sale Rule Gets Negative Reviews In a letter to Mr. Cox, the American Bankers Association, a trade group that represents the interests of 8,500 banks, said it fears short sellers will now focus on banks not covered by the new rules, many of which are already big targets of short sellers… [Sorry guys, you’re not covered under the Crony Capitalism Act!]
On Friday, the SEC said market makers wouldn’t have to pre-borrow the stock, but they would still need to deliver it within three days. [This is the heart of last week’s rally. ‘Fails to deliver’ have been endemic for years.] http://online.wsj.com/article/SB121642263809866665.html?mod=hpp_us_whats_newsAnds
And this rather pointed editorial from the Economist (also courtesy of Bill King):
The Economist: Bear markets often involve bare-knuckle fights, but it is still a shock when the referee starts punching below the belt. The Securities and Exchange Commission (SEC) has intervened in the epic struggle between financial companies and the hedge funds that are short-selling their shares…The SEC’s moves deserve scrutiny. Investment banks must have a dizzying influence over the regulator to win special protection from short-selling, particularly as they act as prime brokers for almost all short-sellers…
The SEC’s initiatives are asymmetric. It has not investigated whether bullish investors and executives talked bank share prices up in the good times. Application is also inconsistent. The S&P500 companies with the biggest rises in short positions relative to their free floats in recent weeks include Sears, a retailer, and General Motors, a carmaker. Like the Treasury and the Federal Reserve, the SEC is improvising in order to try to protect banks. But when the dust settles, the incoherence of taking a wild swing may become clear for all to see. http://www.economist.com/finance/displaystory.cfm?story_id=11751227
John Mauldin thought: Deciding to actually enforce a rule already on the book is not going to make the profit picture at banks and other companies any better. They are still going to be shorted as soon as the dust clears. This just gives them (mostly banks) more room to fall. As noted two weeks ago, there may be as much as $1 trillion still to be written off by banks, brokers, insurance companies, pension funds and sovereign wealth funds. This is going to be ugly for at least a year. Those hoping for a bottom should look for it when the quarterly bleeding stops. Bill Gross said today that for Fannie and Freddie to raise capital it will need the help of the government. My side bet is that this will not be good for equity holders of Fannie and Freddie.
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http://www.frontlinethoughts.com/gateway.asp
ahh. thanks, recusancy.
a few days ago, the market cap of WM was a little over 3B. they have much more than that in cash, yet they didn’t buy back any of their stock, even though they could have bought the entire float.
if these banks are so great, why no buybacks?
what are people buying these things for? dividends? why hold a garbage bank for a dividend, when you can buy a utility like ED and get a bigger dividend with a fraction of the downside capital risk?
the whole thing reeks of emotional bottom-fishing.
If you’re right, I won’t know it cuz they’ll have repo’d my computer.
Me too, and worse. That shit was paid for and fully depreciated long ago, so it’d mean that I’d pawned it between now and September.
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