persistentone3

You had some great ideas here. I missed MHY by a few days but may still bite at that to grab the last part. Did you have any estimate for recovery on the debentures in MMF? What is the easiest way to get a disclosure of all of the holdings of a Canadian fund like MMF?

My favorite example from recent weeks is a social media company symbol MEET. As I read their disclosures, they are paying something around 10% of their market cap per year to the executives as stock-based compensation, then they very conveniently create a bogus non-GAAP "Adjusted EBITDA" valuation measure that takes out that stock based compensation. Why is this kind of thing even legal. It's disgusting and it is theft from shareholders in plain sight. Maybe one way to raise awareness of this problem would be to have a regulation that requires a company that uses a non-GAAP earnings metric to *always* include the GAAP metric side by side. That way if they use their bogus "Adjusted EBITDA" measure 100 times in a filing, the true GAAP EBITDA will appear 100 times as well, immediately next to the bogus reference. Retail investors will be more likely to ask questions about how to reconcile the two numbers if they see both side by side many times. Take away the power of companies to use lies - exclusively - in their public filings.

canoils does this. bmo as well. For full report including research disclosures: http://research-ca.bmocapitalmarkets.com/documents/4e1eabf2-db3d-46e2-8531-25c20eb931ce.pdf I don't suppose you have a link to an updated version of that BMO report? That's a staggering amount of detail. It's scary how many of those oil companies need $70 oil to just break even.

Are there any good web sites that put up "cliff notes" summaries of all of the key essays written by Warren Buffett?

I am looking for a data provider who can give 1P and 2P reserve data over time, as well as financial metrics calculated from that. I need this for many markets, but most importantly the Canadian and US markets. So far I am having to get this data out of filings and it's extremely time consuming and tedious work.

Is there any data vendor with a subscription service that gives you five and ten year return on equity values for both US and international equities? Ideally I would want to be able to download raw data for a given ticker to do my own calculations from software I write. I would also like for the service to have a search engine that lets me write complex and expressive searches.

I love that chart. Does any vendor maintain a WTI or Brent chart that is long-term historical in any constant dollar? I'm looking for something that constantly updates, not a snapshot.

I don't trade copper, but two minutes looking at the Feb 2015 High Grade Copper contract: http://www.barchart.com/interactive_charts/futures/HGG15 suggests to me there was moderate support at $2.95. It broke sharply from that around late November. I trace all of the current selloff to that event. If I were trading that market, after commodity broke sharply (with volume!) from the support price, I would have sold every copper holding I owned within days. (Yes, there will always be exceptions to the general rule, but it would have needed to be some extraordinary situation.)

I think you are distorting what I said. I think the market did NOT have inside information. I think the market did not even care where oil price would settle. Professional money simply knew that oil needed to reset within the next few years, and once the price broke support they all abandoned the market within days. Yes, it was pure herd behavior, and I was describing the technical conditions that the herd was watching to trigger the stampede. Don't argue this on subjective grounds. Just look at the commodity chart pricing, in this case the Feb 2015 WTI contract: http://www.barchart.com/interactive_charts/futures/CLG15 Put that on a 3 year view and it is obvious that oil was trading in a very technical range, around $82 support. Now - once that support is broken - see how the market quickly sells off. That is pure ignorant "herd" behavior, and the point of my post was to explain the reasoning of the herd. Look at any underfinanced smallcap oil stock, and they all begin a massive selloff 50% or more corresponding to the break in that oil support. The lesson for us would be to understand the price channels commodities trade in, and to understand - whether we believe it is rational or not - that once a commodity sharply breaks down in price that this can result in a stampede. Commodity markets break down quickly, much more quickly than people can rationalize or understand logically. I would say you are committing a fundamental error in trying to "reason" about what the price of oil needs to be or should be. Wait for the oil price to stabilize before re-investing in the sector. THEN you can reason about why price needs to be higher in a few years. And I don't think anyone - investor, producer, or country - has a clue where oil will trade in the future. Guessing commodity prices is a fool's game.

What happened with oil is really not that hard to understand: 1) If you look at the EIA statistics for supply and demand, 2015 year-end is the magic tipping point where US motor gas demand peaks, and then projects to head down in 2016. Against overall barely-growing demand, you have rapidly expanding domestic supply. http://www.eia.gov/forecasts/steo/tables/?tableNumber=9# 2) It's a fools errand to predict a commodity price, but I think this backdrop had insiders knowing that price of oil needed to settle lower than $80 within the next few years. Markets simply played with the price within support levels for the last year, no one willing to make a firm call about timing for lower pricing. 3) The price finally did break support around $82, at which point every professional investor in that sector understood immediately that the day of reckoning was here, so they just sold. EVERYTHING. IMMEDIATELY. It's not that anyone believes the price will be $40 in the long term. It's more the sound of professional money leaving the room and just not caring what the price settles at. They will come back only after the dust settles. What happened to oil is a perfect example of why I hate commodity investments. People who watch their investments once every few weeks woke up one day to see their smallcap oil companies down 60% to 80%. These markets never have organized and slow market downturns that give casual investors time to react. When the party ends for a commodity, all the professional investors are out in a few days time, and the momentum of all of that money quickly leaving devastates the commodity, the illiquid smallcaps, and the entire sector prospects for a few years. The only way to navigate this market would have been if you had realized the overall supply/demand dynamic and had been watching futures contracts for oil like a hawk with an alert set to $82. And then you would have to have the discipline to exit at losses quickly as the stampede developed. All of this argues against the success of the small investor in these markets, who typically does not understand the industry supply-demand dynamic, does not like to admit mistakes, and does not like to cut losses quickly.

I am trying to do a market analysis of how many investors worldwide have a net worth from $500K to $5M. Understanding any characteristics of those investors, like how many accounts they manage on average, which countries they are located in, etc, would be highly desirable. Does anyone have thoughts on where to find such information?

Does anyone know of a newsletter specializing in high yield preferred stocks, focusing on credit quality of sub-par issues? I've noticed that occasionally there will be an issuer of preferred who once or twice every year issues more of the preferred at a steep discount. Those can be great times to pick up the preferred at a steep discount to par and high yield, as long as you are certain the dip does not represent a pending liquidity crisis. There are many other such situations and it would be great to have an analysts who focuses on that as an income-investing niche. I wouldn't mind finding a newsletter that focuses on high yield bonds as well, but I find the liquidity on bonds for retail investors to just be a joke. The 10% bid-ask spreads and inconvenient process to set up anything resembling a limit order normally make this an investment to just avoid.

I wouldn't object to trading against the foreign symbol in a foreign market. Probably the US listed banks will be some of the better quality ones. Some of those US listed entities have fairly high dividends.

Exactly right. The trick is I want a vehicle for trading the idea that is low cost. I could stomach a 2% fee per year to just short a pool of European mid-cap banks at this point. Unfortunately EUFN carries a 10% short fee, and I think the banks it comprises are some of the largest that will probably escape touch recap requirements?

That's not entirely true. Florida does not have non recourse loans. They are full recourse in Florida. Florida had one of the biggest housing disasters. And who were the buyers in Florida at the high end of the market? Try South Americans with lots of money, probably buying through investment vehicles like partnerships and corporations, all backed by offshore entities. A large number of those buyers were effectively non-recourse. It does not matter in any case, because that is one state out of 50.

How can you say that Parsad? It's the single most liquid investment idea you have in this group. You sell Aussie Dollars in favor of US Dollars on a platform like Interactive Brokers, and hold the virtual currency position as a trade. It's not different in concept from shorting a specific stock. You are shorting a currency pair, and the AUD.USD currency pair is one of the most liquid with huge daily volumes and absolutely trivial bid / ask spreads. The "Investment Ideas" section is so that others can use it as a library of sorts and find historical information or discussion on a specific stock...thus the ticker symbols at the beginning of each title. Your idea would be difficult to track and find over time in that section, thus it doesn't belong. I don't like wasting my time moving these threads to the "General Discussion" board, so please don't post non-ticker stock ideas in that section. Cheers! Could I have posted this with the subject "Sell AUD.USD Currency Pair"? How is tracking the Australian dollar on a daily basis any different than tracking a stock symbol? Just track the symbol FXA and you will get the approximate correct value, and you will certainly follow the direction of the trade. In principal, this is no different than any stock trade, and contrary to your claim it is a more liquid trade than a stock trade, not a less liquid trade. The bid ask spreads on a currency like this are less than 1/10th of 1%.

I followed the 2011 euro crisis closely. Here is my 2 cents: Why would the regulators say anything different this year vs 2011? Many European countries rely on their banks to buy their government debts in order to finance at a reasonable rate. By telling the capital market that these same banks are under capitalized, which they are, those countries would be shooting themselves on their own feet and cause them to pay higher rates for any new debts. Similar to Japan, there is not enough political will to enact substantial fundamental changes to the economy and social policy. The financial game that they play will buy them time and years of painfully slow growth. Government and banks are both complicit in their attempts to maintain the status quo. This is the key question. But what is different now than then is government rates normalized because the ECB said they would backstop them and "do whatever it takes". So now, unlike then, there is a window of opportunity where the market will keep country rates low, but they can start to force some of the banks to recap. And my reading of this is that the bondholders won't take any hits and the countries that theoretically backstop their own banks won't be asked to backstop. It will all get dumped on equity. The related question is how many banks will be asked to recap, and how fast? It's Europe, so I guess a snail's pace won't surprise me.

The specific investment idea is: Buy the October 2014 $27 Put on symbol EUFN. And the corresponding question is: can someone come up with a better vehicle for the trade than EUFN?

How can you say that Parsad? It's the single most liquid investment idea you have in this group. You sell Aussie Dollars in favor of US Dollars on a platform like Interactive Brokers, and hold the virtual currency position as a trade. It's not different in concept from shorting a specific stock. You are shorting a currency pair, and the AUD.USD currency pair is one of the most liquid with huge daily volumes and absolutely trivial bid / ask spreads.

What about long duration, out of the money puts (LEAPs) on Australian banks? I can't find any Australian bank that does not a) pay high dividends b) have high borrow rates for shorting It's just impossible to climb over the 8%+ per year hurdle of these things together. Also, it's important to realize that the US collapse in banking was because the US got financially lazy and allowed people to use non recourse loans. Australians cannot default on mortgages without financial consequences long term. So it's much more likely to be a slow steady slide. Banks will have plenty of time to recapitalize during that process.

Has anyone found a good vehicle for going short Europe's *worst* capitalized banks? Maybe there is a liquid index that represents a diversified set of European mid-cap banks? I'm aware of EUFN but that appears to be just a select group of top tier banks, including some British ones, and some of these may have already recapitalized. The basic thesis here is that European banking authority is going to later this year do the first *real* stress test, and any capital shortfalls from that exercise will significantly impair the equity of affected banks. The worst case would be that Europe lies (once again) and tells us their banks are just fine and don't need more money.

This looks like a decent place to go short the Austalian Dollar, in favor of the USD. The basic thesis is that continued weakness in the iron ore market will become a catastrophe as Chinese steel mills start to go belly up. Trade should settle in the 60 to 70 cent range Aussie to US within two years. Can someone argue against the trade, and what about the timing? Are there any short term factors that might give a boost to the Aussie in the next six months?

I didn't make clear in my original post that I am not invested in this currently. I rode it from 60 cents to $2.90 and sold as soon as earnings went negative around $1.80. I like banks like this when they can earn their way out of the hole. And I hate banks like this when earnings go negative. The purpose of the current question was to just get a sense of how to value a bank with negative book and earnings. Most bank purchases are geared to tangible common equity or tangible book, and I was simply interested in getting a sense of where value would be to an acquirer when those formulas are not available. I wouldn't touch this until earnings go positive, and they may get seized before that happens.

Regarding what I called "preferreds", look at page 52 of the last 10Q. Do not confuse the Trust Preferreds that the bank issued for its own capital needs with the Trust Preferreds that they have purchased as investments. "In the past, to further our funding and capital needs, we raised capital by issuing Trust Preferred Securities through statutory trusts (the “Trusts”), which are wholly-owned by First Mariner Bancorp. The Trusts used the proceeds from the sales of the Trust Preferred Securities, combined with First Mariner Bancorp’s equity investment in these Trusts, to purchase subordinated deferrable interest debentures from First Mariner Bancorp. The debentures are the sole assets of the Trusts. Aggregate debentures outstanding as of both June 30, 2013 and December 31, 2012 totaled $52.1 million." "The Trust Preferred Securities are mandatorily redeemable, in whole or in part, upon repayment of their underlying subordinated debentures at their respective maturities or their earlier redemption date at our option. All redemption dates have passed and we have not opted to redeem any of the junior subordinated interest debentures." "In 2009, we elected to defer interest payments on the debentures. This deferral is permitted by the terms of the debentures and does not constitute an event of default thereunder. Interest on the debentures and dividends on the related Trust Preferred Securities continue to accrue and will have to be paid in full prior to the expiration of the deferral period. The total deferral period may not exceed 20 consecutive quarters and expires with the last quarter of 2013. First Mariner is currently prohibited from paying such interest under the terms of the agreements with the Federal Reserve Bank of Richmond (“FRB”). (See discussion of the agreements below under “Capital Resources”)." "First Mariner Bancorp has fully and unconditionally guaranteed all of the obligations of the Trusts."

Without providing a lot of detail, here is my 10K foot view of Australian real estate: 1) There was an unprecedented boom in commodity values based on Chinese capital expenditure spending. This resulted in a huge economic boom, but more important to Australian real estate this resulted in unprecedented employment. Senior mining techs were routinely earning over $200K/year AUD. 2) Rich salaries meant that there was huge competition for real estate, with the result being that the real estate became a large bubble. 3) The mining boom is over. China got smart about its spending and unrealistic capex spending, and that is all being drawn down slowly. Commodity prices are unwinding, and there are many Australian mining firms and mining supply firms that took on too much debt and will go bust. 4) As the mining sector in Australia unwinds, employment levels and salaries for those employed will decline. That will result in less money for real estate and declining consumer real estate prices. Unlike in the US, where the boom was due to an incredible fraud within the financial industry, the boom in Australia is from people who really intend to own real estate long term. They typically have a 20% minimum downpayment, so they have too much invested to easily walk away, and none of that debt is non recourse debt. I believe that the unwinding of real estate pricing in Australia is unlikely to be in a sudden collapse. Rather, it will be a long-term drawn-out secular event that might take six or more years to work out. I suspect that shorting a bank is likely to be a very painful experience, because the banks pay high dividends and it's not clear that you will see any major price movements down in the next two years. I feel that shorting mining companies and mining service companies on ASX is a better strategy. There has been a big recovery in values of those firms from their collapse earlier this year. Would love to see any work that anyone has done on that, or better yet identify a high quality newsletter that focuses on ASX shorts. I would be looking for mining services firms in gold and copper and coal sectors that took on lots of debt that cannot be serviced in a long term secular decline of the mining sector.