iBankCoin
18 years in Wall Street, left after finding out it was all horseshit. Founder/ Master and Commander: iBankCoin, finance news and commentary from the future.
Joined Nov 10, 2007
22,296 Blog Posts

Fly Buy: REW

I bought 2,000 [[REW]] @ $59.90

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Fly Sells: LM, Mi, CATY, PZN

I sold short 5,000 Legg Mason, Inc. [[LM]] @ $41.45, 5,000 Marshall & Ilsley Corporation [[Mi]] @ $15.10, 2,000 Cathay General Bancorp [[CATY]] @ $20.05 and 500 Pzena Investment Management, Inc. [[PZN]] @ $9.22.

Disclaimer: Shorting stocks is for river boat gamblers.

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Who’s Holding the Bag?

Bill Miller from Legg Mason, Inc. [[LM]] is, owing more than 79 million shares of Freddie Mac [[FRE]] .

If the Government cheese makers decide to nationalize Fannie and Freddie, a whole mess of low IQ money managers, who erroneously control billions of dollars worth of investors money, will be annihilated.

Here are some notable holders of Fannie Mae [[FNM]] , in dollars:

Fidelity: 476 million

Citigroup Inc. [[C]] – 376 million

Barclays PLC (ADR) [[BCS]] – 344 million

Merrill Lynch & Co., Inc. [[MER]] – 329 million

State Street Corporation [[STT]] – 274 million

Pzena Investment Management, Inc. [[PZN]] – 170 million

T. Rowe Price Group, Inc. [[TROW]] – 138 million

Janus Capital Group Inc. [[JNS]] – 76 million

Here are some notable holders of Freddie Mac [[FRE]] , in dollars:

Legg Mason, Inc. [[LM]] – 400 million

Pzena Investment Management, Inc. [[PZN]] – 195 million

Citigroup Inc. [[C]] – 169 million

Barclays PLC (ADR) [[BCS]] 155 million

Fidelity- 130 million

Morgan Stanley [[MS]] – 125 million

State Street Corporation [[STT]] – 125 million

Here are some notable holders of SLM Corporation [[SLM]] , in dollars:

Barclays PLC (ADR) [[BCS]] – 317 million

Fidelity- 330 million

T. Rowe Price Group, Inc. [[TROW]] – 290 million

Goldman Sachs Group, Inc. [[GS]] – 246 million

Aside from the above names, Dodge and Cox, Lord Abbett and a variety of mutual fund companies have massive exposure to FNM/FRE/SLM. What stands out, in my opinion, is little ol’ Pzena Asset Management, with their 650 million market cap, coupled with their obscene exposure to the financials. I can’t help but think, they are in serious trouble here.

So, I delved into their holdings and dug up some interesting, yet startling facts.

Those people are out of their minds. Aside from FNM/FRE, they have exposure all over the place. Here is a small list of stocks on their sheets, in dollars:

C– 776 million

Alcatel-Lucent (ADR) [[ALU]] – 688 million

Capital One Financial Corp. [[COF]] – 683 million

The Allstate Corporation [[ALL]] – 555 million

The Home Depot, Inc. [[HD]] – 548 million

Bank of America Corporation [[BAC]] – 503 million

Wachovia Corporation [[WB]] – 392 million

MS– 321 million

J.C. Penney Company, Inc. [[JCP]] – 298 million

Comerica Incorporated [[CMA]] 234 million

Lehman Brothers Holdings Inc. [[LEH]] – 187 million

Level 3 Communications, Inc. [[LVLT]] – 173 million

JPMorgan Chase & Co. [[JPM]] – 152 million

Conclusion: The managers from PZN are wildly insane, holding so many risky investments. I can understand taking down a few banks, in order to bet on a recovery. However, these guys have bet the franchise on it.

Essentially, if you want a super charged gamble on the banks, get long PZN. My guess, investors will continue to pull money out of their funds, effectively wiping them off the map—providing the financials continue to struggle.

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Watch Lehman

A monster pre-announcement by Lehman Brothers Holdings Inc. [[LEH]] is all the rage on Wall Street this morning. Look for the sub-par investment bank to open their big stupid mouths this week, admitting to more write downs.

Very soon, you will begin to see the dastardly bastards from banks raise capital. There will be so many banks going to market with secondaries, it might make your head pop off.

With my money, I am shorting more Morgan Stanley [[MS]] , Merrill Lynch & Co., Inc. [[MER]] , Cathay General Bancorp [[CATY]] and Vulcan Materials Company [[VMC]] —as you read this.

Just know, “The Fly” is poised for greatness, one way or another. Any miscellaneous complaints or bellyaching over the quality of his commentary is always disregarded; because it is a lie.

I can tell you, with a certain amount of certitude, my market gains will be chockfull over the next 2 weeks.

Prepare to witness “The Fly” do it again, while the rest of you just look at your filthy computer screen, in awe, as if you just witnessed Michael Phelps win a 9th gold medal.

Top pick: [[SKF]]

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An Early Peak At iBC’s Godly Service

For months, the Godly folks at iBC have been developing a service that will auto rank stocks and screen them, using select parameters (things I deem important). Like I said before, this software, whenever we are done tweaking it, will replace my brain, effectively rendering me useless. You can kill me and no one would care, basically.

Anyway, the formula is sort of complex and will get even more complicated, the deeper we get into it. I’ll show you what the system is saying about each Dow component in a second. Before I do, just know, these are NOT recommendations. The purpose of the software will be to identify strong stocks and protect the user from buying retard names. As a point in fact, many of my positions are marked as “Sells” or even “Strong Sells.” Reason being: it rewards strength. Bottom fishing in stocks is always a risky endeavor, but can be quite rewarding if timely. Nonetheless, it is not for everyone and should not be practiced by rookies.

I will get the system to spit out potential bottom fishers too, in special screens. However, overall, it will identify healthy stocks.

We are using Price Performance, Relative Strength, Accumulation/Distribution, Volume and Volatility to rank securities. Eventually, it will include factors such as oil, gold, natty and bond price movements too.

1-2: Strong Sell

2-3: Sell

3-4: Buy

4-5: Strong Buy

Dow 30 Rank Recommendation
IBM 3.05 Buy
CVX 1.95 Strong Sell
XOM 1.75 Strong Sell
MMM 1.95 Strong Sell
PG 3.4 Buy
JNJ 3.2 Buy
CAT 2.05 Sell
UTX 2 Sell
BA 1.9 Strong Sell
MCD 3.1 Buy
WMT 2.45 Sell
KO 2.4 Sell
DD 2.2 Sell
HPQ 2.25 Sell
AXP 2.5 Sell
JPM 2.05 Sell
MRK 2.1 Sell
VZ 2.05 Sell
DIS 2.7 Sell
AA 1.55 Strong Sell
T 1.55 Strong Sell
BAC 2.8 Sell
GE 2.2 Sell
MSFT 1.6 Strong Sell
HD 1.9 Strong Sell
INTC 3.1 Buy
AIG 1.85 Strong Sell
PFE 2.5 Sell
C 1.3 Strong Sell
GM 1.55 Strong Sell

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The Summer Rally is Coming to an End

This is your final warning. Dollar strength has rejiggered asset allocation models, throughout the globe, causing U.S. equities to spike. However, keep in mind, these same ham and eggers were long “BRIC” in size, just prior to its swift execution.

This is a light volume summer rally. Like previous summer rallies, in the midst of a bear market, it will fail (miserably), causing upright walking pigs, in tight neck ties, to wish they took up a different field of business.

With my money, I bought some more [[SKF]] at the bell. At the present, I have a decent blend of long/shorts. However, I am prepared to sell most of my longs, in order to benefit from the inevitable leg down, whenever it commences.

I am not really a big geopolitical fan. I think people who waste their time with politics and “world news” are mentally ill and may pose a risk to small pets. However, it’s worth noting, the insanity of investors, totally ignoring Russia and their stupid tanks, is impressive and appalling at the same time. On the bright side, the military-industrial complex is benefiting— in a big way.

Top picks: General Dynamics Corporation [[GD]] , Lockheed Martin Corporation [[LMT]] , AeroVironment, Inc. [[AVAV]]

UPDATE: Barry touches on a point I have been making for months: municipalities are in trouble.

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Let’s Be Clear

I do a lot of talking on this here internets. God willing, some of you can take my wisdom and translate it into cogent financial decisions. I do this, not for the love of man or to help random slobs over the internet. If you ask around, “The Fly” is all about himself and acquiring “internet billions” through sheer force (if needed), similar to Russian tanks in Gori.

Long story short, this is a very difficult market. But, it is not exclusive in its level of trickery. If the market was easy, all of you morons would be “The Fly,” throwing idle cannon balls at your neighbors barking dog.

Let’s say I tripped over 250k, in unmarked bills, ready to invest. This is how I would deploy it, right now:

Long exposure: 60%

Banks: (10% or 25k)- Wachovia Corporation [[WB]] , Assurant, Inc. [[AIZ]]

Energy: (10% or 25k)- National-Oilwell Varco, Inc. [[NOV]] , Arena Resources, Inc. [[ARD]] , Ultra Petroleum Corp. [[UPL]] , Clean Energy Fuels Corp. [[CLNE]] and VeraSun Energy Corporation [[VSE]]

Tech: (zero)- overbought

Industrials: (10% or 25k)- Lockheed Martin Corporation [[LMT]] , General Dynamics Corporation [[GD]] , AeroVironment, Inc. [[AVAV]] , American Science & Engineering, Inc. [[ASEI]] , L-3 Communications Holdings, Inc. [[LLL]] , Northrop Grumman Corporation [[NOC]] , Textron Inc. [[TXT]] , KB Home [[KBH]] , The St. Joe Company [[JOE]]

Consumer Discretionary: (5% or 12.5k)-  Barnes & Noble, Inc. [[BKS]] , Starbucks Corporation [[SBUX]] , Chipotle Mexican Grill, Inc. [[CMG]] , J. Crew Group, Inc. [[JCG]] and NutriSystem Inc. [[NTRI]]

Consumer Staples: (10% or 25k)- The Clorox Company [[CLX]] and Colgate-Palmolive Company [[CL]]

Materials: (5% or 12.5k)- Freeport-McMoRan Copper & Gold Inc. [[FCX]]

Healthcare: (10% or 25k)- Gilead Sciences, Inc. [[GILD]] , Auxilium Pharmaceuticals, Inc. [[AUXL]] , Valeant Pharmaceuticals International [[VRX]] and Pfizer Inc. [[PFE]] .

Short exposure 30%

Inverse ETF’s: [[SKF]] , [[SRS]] , [[REW]] , [[DUG]] , [[FXP]]

Equity shorts: Lehman Brothers Holdings Inc. [[LEH]] , TCF Financial Corporation [[TCB]] , Cathay General Bancorp [[CATY]] , Goldman Sachs Group, Inc. [[GS]] , Morgan Stanley [[MS]] , Merrill Lynch & Co., Inc. [[MER]] ] , East West Bancorp, Inc. [[EWBC]] , First Horizon National Corporation [[FHN]] , [[FED]] , Marshall & Ilsley Corporation [[MI]] , Zions Bancorporation [[ZION]] , Pzena Investment Management, Inc. [[PZN]] , Legg Mason, Inc. [[LM]] , Capital One Financial Corp. [[COF]] and Continental Airlines, Inc. [[CAL]]

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