Displaying items by tag: Reggie Middleton

Thursday, 07 January 2010 00:00

Someone Is Paying a Lot for High Priced Doo Doo

In reviewing the banks that were originally included in the Doo Doo 32 (a list of likely doomed banks created in the spring of 2008), I decided to have a team take the devil's advocate perspective (an exercise that we normally pursue) and attempt to build a bullish case for the sectors that I viewed bearishly yet have outperformed the S&P and escaped profitable shorting during the last three quarters. The results are illuminating.

Below is a list of shortlisted banks that have reported higher returns relative to S&P 500 between the period March 9, 2009 and January 5, 2010 - the bear market rally of 2009. The methodology that we followed for this short listing is as follows:

·         We took out a list of banks that are domiciled in the US and have market capital of more than $500 million and current share price of more than $10.

·         Next we calculated returns for each bank and S&P 500 between period March 9, 2009 and January 5, 2010.

Thursday, 07 January 2010 00:00

Someone Is Paying a Lot for High Priced Doo Doo

In reviewing the banks that were originally included in the Doo Doo 32 (a list of likely doomed banks created in the spring of 2008), I decided to have a team take the devil's advocate perspective (an exercise that we normally pursue) and attempt to build a bullish case for the sectors that I viewed bearishly yet have outperformed the S&P and escaped profitable shorting during the last three quarters. The results are illuminating.

Below is a list of shortlisted banks that have reported higher returns relative to S&P 500 between the period March 9, 2009 and January 5, 2010 - the bear market rally of 2009. The methodology that we followed for this short listing is as follows:

·         We took out a list of banks that are domiciled in the US and have market capital of more than $500 million and current share price of more than $10.

·         Next we calculated returns for each bank and S&P 500 between period March 9, 2009 and January 5, 2010.

I read through the usual suspects in the mainstream media yesterday after the Case Shiller numbers were released and see headlines such as "Home Prices Flatten in October After 5 Months of Gains" and "Mortgage insurers rally after housing data" and wonder just how many of these reporters and analysts actually bothered to look at the data versus repeating sound bites. This has been a bad three quarters for the fundamental bears, but there is absolutely no macro or fundamental reason to turn bullish. As a matter of fact, the only reason I can see to buy stocks is that the stock prices are going up. That, in and of itself, should give one pause.

Let's take a close look at the "raw" Case Shiller numbers, not the seasonally adjusted ones for which I cannot source the method of adjustment for seasonality. Don't worry, if one looks at the data over a long enough time frame, you can easily recognize the patterns of seasonality, and more importantly notice how dramatic they have become, leaving open to question how effective the seasonal adjustments are, whatever they are.

  Starting with a bird's eye view of key markets over two decades you can see that the housing boom was enormous and the crash was severe, but nearly all major markets ticked up significantly over the last few months, although we are still at roughly 2003 pricing levels, having lost about 7 years appreciation. The question is why. Well, the US government has put more money and resources into re-blowing the residential housing bubble than any other time in its existence.

I read through the usual suspects in the mainstream media yesterday after the Case Shiller numbers were released and see headlines such as "Home Prices Flatten in October After 5 Months of Gains" and "Mortgage insurers rally after housing data" and wonder just how many of these reporters and analysts actually bothered to look at the data versus repeating sound bites. This has been a bad three quarters for the fundamental bears, but there is absolutely no macro or fundamental reason to turn bullish. As a matter of fact, the only reason I can see to buy stocks is that the stock prices are going up. That, in and of itself, should give one pause.

Let's take a close look at the "raw" Case Shiller numbers, not the seasonally adjusted ones for which I cannot source the method of adjustment for seasonality. Don't worry, if one looks at the data over a long enough time frame, you can easily recognize the patterns of seasonality, and more importantly notice how dramatic they have become, leaving open to question how effective the seasonal adjustments are, whatever they are.

  Starting with a bird's eye view of key markets over two decades you can see that the housing boom was enormous and the crash was severe, but nearly all major markets ticked up significantly over the last few months, although we are still at roughly 2003 pricing levels, having lost about 7 years appreciation. The question is why. Well, the US government has put more money and resources into re-blowing the residential housing bubble than any other time in its existence.

Tuesday, 29 December 2009 00:00

The next step in the GGP saga

Hovde has issued a reply to Ackman's second GGP presentation. These hedge funds put out more analysis than the bank analysts that follow GGP, SERIOUSLY! For those that need a recap: My responses to Ackman's presenations are CRE 2010 Overview and It was bound to happen. Reggie Middleton vs Ackman vs Hovde on GGP!

Here are the Ackman reports: Ackman's CRE presentation and pdf ackman_ggp122209_0 29/12/2009,14:58 1.18 Mb

This is the most recent one by Hovde: General Growth Properties - 2.pdf.

I also noted that Hovde is short Macerich. See my opinion on that company: A Granular Look Into a $6 Billion REIT: Is This the Next GGP?

 

Tuesday, 29 December 2009 00:00

The next step in the GGP saga

Hovde has issued a reply to Ackman's second GGP presentation. These hedge funds put out more analysis than the bank analysts that follow GGP, SERIOUSLY! For those that need a recap: My responses to Ackman's presenations are CRE 2010 Overview and It was bound to happen. Reggie Middleton vs Ackman vs Hovde on GGP!

Here are the Ackman reports: Ackman's CRE presentation and pdf ackman_ggp122209_0 29/12/2009,14:58 1.18 Mb

This is the most recent one by Hovde: General Growth Properties - 2.pdf.

I also noted that Hovde is short Macerich. See my opinion on that company: A Granular Look Into a $6 Billion REIT: Is This the Next GGP?

 

I am here to weigh in on the increasingly popular marketing battle over GGP's (General Growth Properties) value in, and out of bankruptcy. The players in question are large buyside institutions who own opposing positions on the stock. Ackman/Pershing square, who are long the company's stock, and Hovde Capital Advisors, who are short the stock, and Reggie Middleton, the original player!

For those who follow me regularly and are familiar with my dealings with GGP, skip down to the bottom of this post to download my latest GGP analysis. For those who are not familiar with me and the BoomBustBlog, I am (to the extent of my knowledge) the first investor/media concern to go public with a short thesis on General Growth Properties (GGP) with a warning on commercial property in general, and a specific short on GGP in the 4th quarter of 2007 (see "GGP and the type of investigative analysis you will not get from your brokerage house", BoomBustBlog professional subscribers can download the entire GGP composite history in .pdf format). I am a private investor that generates his own proprietary research. It is solid, independent, unbiased, and of extreme quality when compared to the highly conflicted sell side marketing fluff proffered as research, and apparently now stands out among the buy side as well. With all due respect to the successful investors referred to herein, there is a hint of "talking one's book" within the presentations. I have absolutely no problem with self promotion, but when it appears the promotion comes to odds with the validity of the analysis, it does tend to raise my brow, and apparently the brow of several institutions that have come to me for my opinion.

So, let's take an unbiased, empirical look at GGP from the guy who first pointed out the insolvency of this company in the first place. As for the self promotion aspect, I am now offering consulting services to those who desire independent, objective analysis. I will soon be releasing a very interesting study on real estate funds and residential mortgage related products from Morgan Stanley and Goldman Sachs, which will assuredly cause their clients to fall in love with them. More on that later, though.

I am here to weigh in on the increasingly popular marketing battle over GGP's (General Growth Properties) value in, and out of bankruptcy. The players in question are large buyside institutions who own opposing positions on the stock. Ackman/Pershing square, who are long the company's stock, and Hovde Capital Advisors, who are short the stock, and Reggie Middleton, the original player!

For those who follow me regularly and are familiar with my dealings with GGP, skip down to the bottom of this post to download my latest GGP analysis. For those who are not familiar with me and the BoomBustBlog, I am (to the extent of my knowledge) the first investor/media concern to go public with a short thesis on General Growth Properties (GGP) with a warning on commercial property in general, and a specific short on GGP in the 4th quarter of 2007 (see "GGP and the type of investigative analysis you will not get from your brokerage house", BoomBustBlog professional subscribers can download the entire GGP composite history in .pdf format). I am a private investor that generates his own proprietary research. It is solid, independent, unbiased, and of extreme quality when compared to the highly conflicted sell side marketing fluff proffered as research, and apparently now stands out among the buy side as well. With all due respect to the successful investors referred to herein, there is a hint of "talking one's book" within the presentations. I have absolutely no problem with self promotion, but when it appears the promotion comes to odds with the validity of the analysis, it does tend to raise my brow, and apparently the brow of several institutions that have come to me for my opinion.

So, let's take an unbiased, empirical look at GGP from the guy who first pointed out the insolvency of this company in the first place. As for the self promotion aspect, I am now offering consulting services to those who desire independent, objective analysis. I will soon be releasing a very interesting study on real estate funds and residential mortgage related products from Morgan Stanley and Goldman Sachs, which will assuredly cause their clients to fall in love with them. More on that later, though.

I recently received a link to Ackman's (from Pershing Square) presentation basically pushing retail CRE malls (Ackman's CRE presentation). Several of my subscribers have commented on his success with GGP as well as the upward climb of REITs in general. I decided to go out of my way to create a comprehensive overview of the US commercial real estate market in order to illustrate exactly where my (more bearish than the consensus) views stem from. The following document started out as a reply to the Ackman presentation, but ended up as a full blown white paper. It is free to download here: pdf  CRE 2010 Overview 2009-12-15 02:39:04 2.72 Mb.

I invite all to read both documents thoroughly. It may take some time, but I feel it is definitely worthwhile for anyone with an economic interest in this space to review both the bull and the bear arguments from entities that actually invest in the markets. I welcome any and all "constructive" comments and feedback.

Here are a few choice graphs from the presentation...

gdp_components.jpg

Not to be a killjoy, but the bulk of the GDP boost came directly from government stimulus, which is apparently fading very quickly.

rre_cre.jpg

The fall in single family home values pales in comparison to the fall in CRE values... 

image041.jpg

The US and UK single family home price bubble have outsripped - by far - that of Japan. If real asset pricing bubbles contributed to the lost decade, one can only imagine what we are in for stateside!

image035.gif

image036.gif

For those who are interested, my first exposure to Mr. Ackman was after reading a similar Powerpoint presentation on the monolines. I was stunned at the assertions and the alleged misvaluations. After I and my team went over it, I too jumped on the bandwagon. The man had a very valid point and the stocks were trading in the stratosphere in relation to the risk they carried. That was in 2007 at roughly $80, and they are trading for pennies now. Ackman held his bearish stance for 5 years through some apparently nasty drawdowns, to ultimately have been proven right. Kudos to the man. See my work on the monolines that I shorted in 2007-8:

I recently received a link to Ackman's (from Pershing Square) presentation basically pushing retail CRE malls (Ackman's CRE presentation). Several of my subscribers have commented on his success with GGP as well as the upward climb of REITs in general. I decided to go out of my way to create a comprehensive overview of the US commercial real estate market in order to illustrate exactly where my (more bearish than the consensus) views stem from. The following document started out as a reply to the Ackman presentation, but ended up as a full blown white paper. It is free to download here: pdf  CRE 2010 Overview 2009-12-15 02:39:04 2.72 Mb.

I invite all to read both documents thoroughly. It may take some time, but I feel it is definitely worthwhile for anyone with an economic interest in this space to review both the bull and the bear arguments from entities that actually invest in the markets. I welcome any and all "constructive" comments and feedback.

Here are a few choice graphs from the presentation...

gdp_components.jpg

Not to be a killjoy, but the bulk of the GDP boost came directly from government stimulus, which is apparently fading very quickly.

rre_cre.jpg

The fall in single family home values pales in comparison to the fall in CRE values... 

image041.jpg

The US and UK single family home price bubble have outsripped - by far - that of Japan. If real asset pricing bubbles contributed to the lost decade, one can only imagine what we are in for stateside!

image035.gif

image036.gif

For those who are interested, my first exposure to Mr. Ackman was after reading a similar Powerpoint presentation on the monolines. I was stunned at the assertions and the alleged misvaluations. After I and my team went over it, I too jumped on the bandwagon. The man had a very valid point and the stocks were trading in the stratosphere in relation to the risk they carried. That was in 2007 at roughly $80, and they are trading for pennies now. Ackman held his bearish stance for 5 years through some apparently nasty drawdowns, to ultimately have been proven right. Kudos to the man. See my work on the monolines that I shorted in 2007-8:

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