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| User Info | Dick Bove, Bear Stearns, and Controversey in forum [Ticker] | |||
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Genesis Posts: 66463 Incept: 2007-06-26 
Royal Flush! 
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http://market-ticker.denninger.net/2008/....
---------- I used to play flute; I wonder if I can play a fife? I incite prosecutors to create "Bubba Sausage Parking Lot" projects Darrell Issa has a middle finger and knows how to use it - Me 2008-03-21 16:29:28
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Etrade_refugee Posts: 4873 Incept: 2007-11-14 
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Awesome.
---------- Current best estimates (6/17/2009): CAR - 39 - 60 percent CFR - 2 - 10 percent Numbers are for the period 5/1/2009-4/30/2010 2008-03-21 16:35:33
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Watermelon Posts: 604 Incept: 2007-12-23
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a Good Friday gift. Thanks!
2008-03-21 16:36:59
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Asianbull Posts: 2125 Incept: 2007-09-03
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Every sell-side analyst plays the rating games, it isn't just Dick Bove. Putting a sell on a stock means an automatic black list from management, which makes the analysis even harder and it also means less commissions. The only people that can afford to risk ****ing off management is Goldman. For the record, I think Meridth Whitney and Dick Bove have done a better job of rating these companies than their collegues at other firms. ---------- The root cause of all the world's problems is inflation. The only sound money in the world is commodities. 2008-03-21 16:37:16
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Jkilkelly Posts: 1394 Incept: 2007-07-20
Mercer Island WA
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GEN - you nailed it - trying to hide behind the institutional client relationship and that CNBS and others "stole" my research work but then accepting free publicity from the same media sources is absolute height of hypocricy. I would respect him if he simply said I blew it and I changed my mind. But his attempts to defend his actions just solidifies the appearance of an intentional deception. Cant wait until we can rub his nose in it. ---------- “They say there are no atheists in a foxhole. Well, there are no libertarians in a financial crisis, either.'' Jeffrey Frankel, Harvard economist 2008-03-21 16:39:01
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Blumunki Posts: 93 Incept: 2007-09-18
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Impressive Nice work gents 2008-03-21 16:43:33
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Laswyguy Posts: 4901 Incept: 2007-07-25 
Orange County, CA
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VERY IMPRESSIVE INDEED..!!!
---------- "think Macro, invest Micro" "In a recession weak hands gets smoked and strong ones eventually prosper. In a depression everyone gets smoked." 2008-03-21 16:52:16
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Shrpblnd Posts: 1119 Incept: 2007-08-06
Los Angeles, CA
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I find it a positive development that Bove had the courage to discuss his ratings with his critics. Having read the report, I do agree that anyone that actually had the narrative in hand would have probably dumped this stock. Clearly it was a mistake to have maintained the Market Perform rating. I find it curious that Bove only has four ratings, Accumulate, Market Outperform, Market Perform, and Sell. I am surprised there is not a Market Underperform category. Since the definition of Market Perform is equal to the market plus or minus 5 points, and Sell is 15 points below the market, that creates a large gap. Where do you rank a stock that is expected to come in 10 points below the market? Since most analysts are reluctant to ever rank a stock as "Sell" it seems all to easy to put a stock that falls between the two categories in the higher one. That appears to be exactly what Bove did. 2008-03-21 16:52:43
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Eighty6thebs Posts: 644 Incept: 2007-06-26
It's contained to sub-prime!
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Gen, I liked the ticker. One thing I found very interesting was the 'disclosure' section on page 2 of the report about the percentage of companies they rate Buy, Accumulate, MP, and Sell. It says that 60% of the stocks they cover are rated as a Buy which by their definition means they will outperform by 15+ percent. This is amazing to me. How in the hell could this possibly be accurate. They go on to say they have another 35% at Market Perform and only 3.3% at sell.(accumulate is not being used from what I see) So are they saying we only cover average to good stocks? Or that we really don't use the sell rating. They way I read these ratings looking at how they use them is as follows. 1) We only have 2 ratings we use for stocks.....buy and market perform. 2) When we say Market Perform, that means sell but we don't want to say that. 3) Should we ever rate your stock as sell (very unlikely) it means we think they will be bankrupt tomorrow. This reinforced my beliefs on analysts and ratings in general. I liked your approach to by pushing him to say either a) you thought the market was going down by that much or b) your top line rating (forgetting the fine print), the one you knew would be picked up by the wires and the TV stations, was horse ****. Thanks Gen, good job. ---------- "Sounds to me like you guys are a couple of bookies" - Billy Ray Valentine 2008-03-21 16:56:29
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Coattails Posts: 178 Incept: 2007-08-28
Northwest In
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Hard to imagine, but bear in mind that people actually pay Dick Bovine and his ilk for this complete and utter nonsense. What a pudwack. Great job Gen.
2008-03-21 17:06:04
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Nevertoolate Posts: 766 Incept: 2007-08-26
San Antonio de Bexar de runover with illegals, Texas
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Didn't someone have the email address for a producer at CNBS? If so, (with KD's approval) today's ticker should be emailed to them.
---------- Before you attempt to beat the odds, be sure that you can survive the odds beating you. The only true "Change YOU can believe in" will be when we get 535 new CONgresspeople. 2008-03-21 17:12:04
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Ksfq Posts: 1007 Incept: 2007-07-11
California
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Awesome. And his report does pretty much says "sell", but headline says "market perform". Now, I would like to see what was report when BSC had a "sell" rating. Is it possible to compare these two reports? If they are basically identical then there needs to be explanation why the rating has been upgraded to "market perform". 2008-03-21 17:15:46
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Darknight Posts: 3293 Incept: 2007-08-10
The Wicked Forrest
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But he nailed it on his second bullet point!Quote:Bear Stearns must adjust and it is probably going to be forced to find a merger partner. 
---------- The price of apathy towards public affairs is to be ruled by evil men. - Plato 2008-03-21 17:18:20
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Grumpy_bear Posts: 186 Incept: 2008-02-26
More SRS please Mistress!
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Eighty6thebs wrote..1) We only have 2 ratings we use for stocks.....buy and market perform. This needs to be taped to the computer whenever perusing stock recommendations! One other thing I've noticed: Strong Buy = Buy Buy = Market Perform Market Perform = Sell Sell = Well we just don't ever say sell now, do we.... This is the language of the pigmen, and just to show the unmitigated arrogance, I refer the kind reader to Dickie B himself, responding to Jkilkelly's email: Jkilkelly wrote..Investment professionals understand what this means even if you do not. KD, you rock, gotta scrounge up $150 NOW  ---------- Illinois.... "If it isn't the most corrupt state in the United States, it's certainly one hell of a competitor." - FBI Special Agent Robert Grant 2008-03-21 17:19:28
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Dubbya Posts: 518 Incept: 2007-12-30
Tent City, WA
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IMO, there is no difference than the games they play when: "upgrade a stock" when significant news is released or "downgrade a stock" when either significant drop or bad news hits the presses... The sad irony is that these usually occur at the market extremes: upgrading at the top and downgrading at the bottoms. I dont have a big account that requires this "specialized research" but I can only think the only benefits of this analysts rating system is that they tell their clients to preposition themselves prior to them announcing a change in their rating of a stock... I still remember the hey-day of CNBS during the tech boom when someone like QCOM had blowout earnings and then 4 analysis upgrade the stock and CNBS had a tape of the penguins all diving into the pond one after another... 2008-03-21 17:43:46
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Lunatic_fringe Posts: 5136 Incept: 2007-06-26
Location: Purgatory
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You guys need to read "Confessions of a Wall Street Analyst". It's a pretty good telling of the Worldcom fiasco and the role that Wall Street analysts played in it. If you read this book, you will never, ever believe a word that sell side analysts say again. That's not to say they may not be personally honest, it's just that their employers may have ulterior motives that will prevent them from ever issuing a sell signal. Until the SEC actually cracks down on the bull**** (meaning never), analyst ratings will be issued without a true scope of the viability of the company. Analyst ratings may be swayed by personalities, like/dislike for the executives of the company being rated or a method for earning future fees from the company being rated. You can get mad about these guys selling out or you can simply use their pumps for a better entry. I'm going to do the latter. XLF puts will soon be hitting my portfolio. ---------- --------- __o ------- _`<,_ ------ (*)/ (*) ****************** 2008-03-21 17:58:00
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Blackswan Posts: 3361 Incept: 2007-11-06
Execution Pit Online
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Awesome. Check out this article. How wrong is his thesis? Look at those bullet points. Wow. http://seekingalpha.com/article/67831-di.... Dick Bove Says Banking Is Sound - Time to Buy Financials? posted on: March 10, 2008 | about stocks: WFC Font Size: PrintEmail Punk Ziegel's bank analyst Dick Bove has issued another strikingly rational report that provides tasty food for thought. This one is entitled "Wait! Stop! Think!". In it he argues that the media is fomenting hysteria about the situation in the banking industry, which in reality remains quite sound. Bove's been around long enough to have seen this before as an analyst during the 1990 bank debacle. While the media and government figures continued to predict dire outcomes and questioned the viability of the banking industry, bank stocks actually bottomed in late 1990 and appreciated smartly thereafter. Is today's crisis worse than 1990? Bove points out several issues that were present then that aren't now: Developing countries were nearly bankrupt LBO's were failing Commodities were deflating Commercial real estate was in over-supply due to a change in the tax laws The credit derivatives market was in dire straits mainly due to the junk bond fiasco. THOUSANDS of banks and thrifts failed. The only direct parallel today is the credit market implosion. The other conditions don't exist. Only 76 of 8233 banks are on the FDIC watch list. Hence, it would be up to the credit market collapse to take the system down, which Bove says requires an implosion in the single-family mortgage market. He estimates that if 50% of the sub-prime mortgages behind the credit derivatives market fail, and the collateral value of these loans is reduced to the land only (the houses are worth zero), that the total write down might be about $500B. Although painful, this would represent only 1% of the total debt outstanding in the US economy. It would easily be absorbed by the system. There are other issues weighing on bank stocks: A recent accounting change requires banks to value assets based on "comparables" rather than predicted cash flows. A variety of indexes were created to support this pricing requirement, yet the indexes lack liquidity and can be (and Bove believes are being) manipulated. The index which represents Commercial Mortgage Backed Securities is reflecting a default ratio of 6%, while actual defaults are at 0.27%. Yet banks must mark some of their assets to these indexes whether they reflect reality or not, deflating their balance sheets for no good reason. Bank cash flows and true capital (as opposed to accounting entries which reflect a variety of non-cash adjustments) are actually in good shape. The current liquidity crisis is being caused by institutions unwilling to lend to one another, not by a true lack of funds. As opposed to a crisis where funds simply don't exist, a "fear of risk" based crisis will cure itself as interest rates adjust. Bove believes this is underway and may resolve itself soon.Bove picks apart yesterday's article in the Journal entitled "New Spasm Jolts Credit Markets" which made the following statement:"Rates banks charge each other remain elevated" - false because 3-month LIBOR has dropped (from 5.34% to 3% over the past 12 months) faster than Fed Funds signaling banks' willingness to lend to each other. "The Price of insurance against bank debt default is soaring" - The point the journal makes here is that such insurance costs 20x what it did last summer. As Bove points out, that means it was one lousy forecaster of default last summer, so why should we believe it is a good indicator now? It is in fact a lagging, not a leading, indicator. Interest rates on a variety of instruments are being "pushed up" - Then why is it that six months ago, 30 yr mortgages were 6.46% vs. 4.88% now, and AAA bonds were at 5.73% vs 5.48% today?"Banks are constrained for capital" - actually, common equity+reserves as a percentage of assets is just below an all time high. Bove believes the Journal (much like other media outlets, as I have previously commented) wants to sell bank panic just as it did in 1990. He notes that when he is quoted by reporters lately they highlight the negatives and ignore the positives. Bove concludes: "There is a financial panic underway fed by a definable problem; a steady flow of misinformation; bad accounting rules; manipulated indices; a lack of understanding of bank cash flows and capital; a demand for higher risk-adjusted returns; and a lack of financial leadership." He believes that bank stocks in general should be bought. None other than Warren Buffet agrees, as he bought shares of Wells Fargo (WFC) last quarter (I own WFC in some of my managed accounts). I know that when most everyone is leaning one way and sentiment becomes extreme in one direction, my gut instinctively tells me it's overdone and that the smart thing to do is be a contrarian. At the very least, be wary of taking media reports and market zeitgeist at face value. Conversely, I pay close attention to the few rational intelligent voices willing to go against the herd. Disclosure: I own shares in Wells Fargo. ---------- The market can crash further then you can remain short. Trade the moon cycle not the tape you want. 2008-03-21 18:04:46
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Ruffcut Posts: 1784 Incept: 2007-07-07 Mushagain
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So next time Cramer calls you, please tape record it so we can really hear how retarded these pumpers and "fame" traders really are... Maybe he did the rating to go on the boob tube, because they had a desire to be "fair and balanced". Even CNB**** may be running out of pumpmonkeys to fill in the day. **** it, Karl. How about a petition to this CNBS ****work, for them to report news, instead of a ****load of bogus opinions. ****ing massive opinions are worthless. Speaking of worthless, I had not seen dennis the menace kneale for a couple days. Good, now I don't have to wash my underwear TWICE! ---------- If *******s could fly, then DC and wallstreet would be airports. "I'm sick of being sick about this ****" J0nx 2008-03-21 18:43:36
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Mondocondo Posts: 3071 Incept: 2007-12-03
Miami
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KD, you are correct that, if the ratings have any meaning at all, Bove should have given Bear a sell rating based on his report. When Bove says "Investment professionals understand what this means even if you do not", he is stating the sad truth about Wall Street research: It's all written as a coded message that only the big boys understand, and the big boys know you have to cover your own ass and can't ever say what your really think. Dan Reingold's book "Confessions of a Wall Street Analyst" lays it all out (by the way, I highly recommend it to everyone who hasn't read it yet). Nothing has changed since the dot com fiasco. What I take away from Reingold's confession and Bove's implicit reiteration of it, is that: 1) if your not a big boy, you should ignore everything the analysts have to say, because you don't speak the same language and cannot translate it; and 2) if your not a big boy (or at least have the smarts to do your own research, like the folks on TF), you should not even play the game, because it's rigged against you. This second point is really troubling, and is going to come back to bite the big boy's in the ass after the impending crash, because the big boys are going to need the little guy to participate to get the market moving again. 2008-03-21 18:46:52
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Akula Posts: 1796 Incept: 2007-10-01
Moscow
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From Bove's Report: Current Price $59.73 Target Price $45 I don't know about you guys but when the target price is 25% below the current price I expect to see "SELL" in 16 point bold from anybody that I am paying research. I can understand if the target price was plus or minus maybe 5%-10% from the current price but 25%? Sheesh. 2008-03-21 18:59:31
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Pinal Posts: 699 Incept: 2007-08-16
Chicago
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I would not pay for that report. As people already mentioned, if the target price is 25% less than current price, the proper advice would be to sell the stock and buy in later at a lower price. I guess these clients are so rich that a few million here, few million there don't really make a difference. Either that or he is advising people who invest with a really long term horizon. Regardless, you are dead in water now on that Bear Stearns call. Last modified:
2008-03-21 19:08:55 by pinal
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Quads4444 Posts: 1281 Incept: 2007-11-09
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Well written, Gen. This reminds me of the Robert Prechter denials in 1987. They don't want to take responsibility for bad calls. 2008-03-21 19:09:04
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Etz3l Posts: 8658 Incept: 2007-06-26
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Quote:I also pointed out that should he be wrong on his latest call of a "generational buy" that he's likely to get much more hate email than he did from this one!I think he'll be calling Karl again for a copy of Spamblock  ---------- I could slit my wrists and people would cheer - L. Blankfein.  http://www.youtube.com/watch?v=p8jm61vk2.... 2008-03-21 19:09:15
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Truthseeker Posts: 1883 Incept: 2007-10-07
NW US
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Nice work, Karl. And thanks for posting the pdf (I couldn't figure how to do it...) I'm DELIGHTED to hear that the passel of emails from tickertypes got to him. I could tell by his defensive nonsense in reply to mine that he was hooked. He's an idiot, and apparently doesn't like hearing it. Sorry chump. At the very least, I hope he invests a serious amount of HIS OWN money in the financial sector. Gotta have somebody on the other side of these trades... ---------- "The remarkable persistence of the rally pales in comparison to the confidence of those people who had no idea there was anything wrong with the global financial system 2 years ago - and who now proclaim that everything has been fixed." " ~ Jeff Cooper@Minyanville 2008-03-21 19:14:41
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Jkilkelly Posts: 1394 Incept: 2007-07-20
Mercer Island WA
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One word for Bove that should send chills down his analyst spine: BLODGET As in Henry Blodget of Amazon.domb fame. You know the banished analyst. ---------- “They say there are no atheists in a foxhole. Well, there are no libertarians in a financial crisis, either.'' Jeffrey Frankel, Harvard economist 2008-03-21 19:27:30
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