given2invest

wow judging by this poll BoA is pretty worthless ;)

The problem is you can't expect a capital raise to happen at these prices. It's a chicken/egg thing and there is no easy way around it. If they try to raise $25b they stock will plummet. Further, people will wonder if another $25b is around the corner, not to mention they have said no capital is needed. Point being, it's impossible to just double the share count and say it's still cheap.

It is true what Munger says. I made a fortune on BoA and Merrill TruPS in the spring of 2009 and I believe I risked very little. They would have been converted into common stock before the bank was nationalized, they set a precedent with the C transaction. Buying bank common stock is kind of crazy. Leveraged beast.

Which is a teeny tiny amount of the outstanding shares and just 1/3 of today's trading volume. Damn shorts!

http://jmckinley.posterous.com/dc-earthquake-devastation

Agree, I was being hyperbolic ;) But in 2002 to 2003, he was sitting on a market cap that was 80% cash and was not burning cash and never bought back a dollar of stock ahead of the greatest stock run of the decade. Imagine if he optimized the capital structure?

I'm not sure I understand this. I mean, I get why the CDS spread and the interest rates for the underlying credits would move in the same direction. But why is it the case that the corporate bond market actually prevents CDS spreads from getting out of whack on a temporary basis? Is it because there is some sort of rapid arbitrage going on? Does anyone who has actually traded a CDS want to chime in? Yes, you can arb it. But I'll let someone who actually trades CDS corroborate this.

I don't know if they are terrible but I'd halt most cap ex and tech spending and just enjoy it for what it is.

Not at any of the firms I worked at :(

Can anyone with access to bloomberg tell us where their bonds are trading? CDS are just the cost to insure debt so by definition the debt will trade at the same levels as the CDS. CDS did not put AIG into insolvency nor did they put any banks under. Insolvent banks are insolvent. By the way, I have never purchased a CDS. I'm just a regular dude with a yahoo finance account.

The CDS market moves hand in hand with the bond market which is obviously huge. BAC's credit default awaps can't widen to those levels without their corporate bonds widening to the same levels. So it's hard/impossible to manipulate in this case.

http://www.zerohedge.com/news/bank-america-cds-hits-escape-velocity

we could probably solve our fiscal problems by filming it and putting it on PPV

Looks like it was a cold day in new york....don't you wear a bra to court?

I would agree, and again I think it's deservant. I usually shy away from tech, but I bought GOOG in June and sold quickly after the Motorola acquisition. It's back to my first buy price but I will not be buying. Even the great semi-predictable (long term) tech firms that don't have the lightining quick product cycle, like EBAY and GOOG, are a wildcard when it comes to capital allocation. And they both produce a ton of cash. When EBAY used to trade at low multiples, I would fantasize about using my billions to take them out and just handle the cash flow myself. It's a great business with terrible people. In any case a valuation of these cash rich tech firms demands a severe or total discount of the net cash. Totally agree. Paypal and eBay are fantastic businesses that should have little R&D and pay a fat dividend. But if you are willing to discount all the net cash on their balance sheets, why wouldn't you discount all the future cash too? We're saying the same thing.

Yes, that's part of the reason it trades at the current multiple. I strongly believe Apple, along with many Tech stocks, trade at discounts due to the bozo things we saw GOOG and HPQ do last week though.

Never thought of Medallion has the first HFT shop. Makes a lot of sense now, could definitely be true.

Steve Jobs is an awful capital allocator. He has absolutely no idea how to optimize a balance sheet nor does he see value in a way that a good investor does. He is one of the great inventors of all time, but those are two very different things. The fact that he has generated a good ROIC is simply a result of his master at creating great products, it says little about his allocation of capital. In fact, if he used his excess cash to buyback stock the last 5 or 10 years, his ROIC would have been multiples better. Why do you think Apple get's such a low multiple? People have no faith the cash will be used wisely.

Interesting take... Which public corporation CEO would you say fits this mold the best? Perhaps Steve Jobs? Jobs is an awful capital allocator.

that was awesome, thanks

ditto this. really glad i was able to change to see more pages w/o having to click next page. also, i added an avatar of my dog!

what an improvement

agree. vc's are funny people.

I'd rather own DELL or RIMM at the same valuation. HPQ management is awful and this acquisition is even worse. This is exactly why you can't value $1 of tech FCF at $1. They spend the money on the stupidest shit. 60+% market premium so they can diversify into a better business? WTF?

I know a very smart guy (and his fund) that are very long RBS prefs so he agrees with you. Has been involved for 2 years or so.