Tuesday, November 18, 2008
Ken Lewis and Jerry Lewis... A Death of a Thousand Cuts... Staying Short...
Jerry Lewis or Ken Lewis... Is there a difference?
Long-time comedian Jerry Lewis must have a long-lost brother by the name of Ken! While Ken runs the Bank of America, it is obvious that he is working on a stand-up routine. Ken Lewis has continued to tickle the funny bone of people on Wall Street... and for some, this is just what they needed to hear... for others, it is what they wanted to hear. One thing is for certain. Ken Lewis does not have a reputation for being a straight shooter, but more along the lines of a snake oil salesman. Some of Ken Lewis' quotable quotes have been "We have no need to downgrade our earnings forecast." Bank of America downgraded earnings two months later. (1) Then there is the issue of dividends. "I see no need to cut the dividends." Months later Bank of America cut dividends. (2) Now Ken Lewis is tauting that the United States should "see an economic recovery by the second half of next year (2009). But, it may feel like a recession until then." That's just like saying it feels like it is raining, but you are not getting wet! (3)
A Death of a Thousand Cuts
The Big Three testimony on Capitol Hill this evening should be one for the history books. Senators grilled the auto giants for well over an hour. It has been a while since I have seen grand-standing like this take place. Here are some the questions I remember from the testimony.
"If business is so bad, why are you building plants in Russia?"
"If you are truly global companies why don't you use profits from divisions that are making money?"
"Is it true when you make a plant idol, 80% of the workers still show up for work...and get paid?"
I am certain that some type of arrangement will be worked out. They will get their money this time. And I will bet anyone that the Big Three will back at Congress with their hats in their hand once this money is hemmoraged!
Keep the Shorts...
As I recommended last post, commercial real estate could well represent the last bastion where prices could potentially tumble into nothing!!!! Retail is in for their worst Christmas in 30 years. Since a number of retail businesses are on their way to financial oblivion, it triggers issues in commercial real estate as well.
Tiger Coach likes Puts on the following:
1. Ryland -12.75 EPS is UGLY... Homebuilder, Mortgage Finance, and Home Design sets this play up as a loser!!!
2. Simon Property Group EPS 1.74 and FALLING! This lovely specializes in commercial real estate property. This company has the distinction of owning 168 regional malls, and premium outlet centers. To make matters worse, they also
have exposure to Europe...
3. VNO 4.07 EPS and shrinking... 30 million square feet of property in NYC... Short this stock and you short Toys R Us for FREE!!!