Introducing the Grant’s Supermodel Credit Portfolio
Credit is what we are bullish on--cast-off residential mortgage-backed securities, senior bank loans, convertible bonds and corporate debentures, high-rated and middling. And it's credit that fills the new Grant's model portfolio. Expectantly, we call it our Supermodel Portfolio. May it deliver superior returns for 2009 and beyond.
A discussion of the Treasurys and gold...
The 2008 Investor of the Year award goes to a man who, through December 8, earned 26.9% by investing in exactly those assets on which Grant's is most bearish. . .
‘Intelligent Investor’ redux
The bear market has coughed up the names of eight companies that meet the exacting criteria that Benjamin Graham laid out in 1973 for stocks that a defensive investor might buy with confidence. To scan the requirements--seven in all--you wouldn't suppose that a single company could measure up. They are (1) adequate size, (2) a good balance sheet--current assets greater than two times liabilities, (3) 10 consecutive years of net profits. . .
Unprecedented, according to an electronic search of the financial press, is the frequency of the use of the word "unprecedented" to describe the crisis on Wall Street. Living eyes have never seen the likes of it. And no observer, living or dead, has ever witnessed a greater scale of intervention by any government to refloat a sinking economy than the one being mounted in Washington.
Now begins an attempt to see the crack-up of 2008 as our financial descendants might eventually see it. . .
"Some investors are so keen on [Middle Eastern] economies that they think the currencies have nowhere to go but up." So speculated The Wall Street Journal back in May, a time so distant that the oil price was actually rising. As 2008 deflates to a close, the currencies of Saudi Arabia, the United Arab Emirates and Qatar (as expressed in quotations on their one-year forward swap rates) are tipped for slight depreciation rather than moderate appreciation. Let it be said, however, that one Middle East currency is still chugging higher against the dollar. The readers of Grant's will not gasp to learn that it's . . .
House prices in Detroit had fallen by 12.5% from their 2005 peak when I visited in September 2007 in search of value-laden real estate. Prices have since dropped by another 18.6%. The declines are remarkable.
All year, central bankers have been saving the world by inflating their assets, often in new and imaginative ways. The holidays can't come soon enough for them. In the past 12 unforgettable months (just try to forget them), the Federal Reserve's assets grew by 146%, the European Central Bank's by 58% and the Swiss National Bank's by 74%. But the Bank of England puts them all in the shade with year-over-year growth of 158%.
Opportunities in derangement
A discussion of opportunities in the fixed income market.
An obituary for Karl Hill.
A summary of Jim Chanos’s presentation at the Grant's Fall 200 Conference.
A discussion of commercial real estate.
Questions for Mr. Klarman
Time for value investors to remove hedges and play offense.
Cheap options to protect against future inflation.
Leon Cooperman’s reasons that investors can be optimistic today.
Bye-bye, then, $500 billion
Simon Mikhailovich updates the CDO market.
Malthus’s scarcity thesis may prove correct 30 years after it was popular.
Ivy Zelman presents the case for continued troubles in the housing markets.
A discussion of sovereign credit.
Eat my bread, sing my song
Compares the government’s investment in nine major banks with depression interventions.
A discussion of the leveraged loan market.
Keywords: leverage loans, high yield
'Dry powder,' reconsidered
Revisiting a company too expensive six months ago that has been become substantially cheaper.
An update on a cheap company that has become cheaper.
A comparison of Congressional hearings today and in the depression.
A discussion of monetary policy.
On the subtlety of the obvious
A discussion of what value investing is and what it isn’t.
A discussion of transaction dependent real estate companies.
The carry trade is in full force despite economic stress in countries with high yielding currencies.
Merrill's mortgage blowout
A discussion of Merrill Lynch’s CDO sale and the distressed CDO opportunity.
A summation of mortgage exposure on Wall Street.
A discussion of inflation.
The trouble with Prosperity
A guide to investing in leveraged financial institutions in the eye of a credit storm.
A discussion of a restaurant that recently completed an acquisition that has resulted in a leveraged balance sheet.
A comparison of central bank balance sheet growth.
A comparison of 2005 and 2007 RMBS deals.
A discussion of the last 25 years in the U.S. Treasury market.
A discussion of inflation in countries with currencies tied to the U.S. dollar.
A comparison of two large capitalization companies that have their immediate futures tied to house prices.
A progress report on three failed leveraged buyouts.
A reader submits a riddle via e-mail.
Another refinery is acquired with high leverage.
Ways to make a bearish bet on Treasurys.
'Inflation' by any other name
Inflation continues to be imported.
The close of the era of peace and quiet
The era of disinflation caused by globalization is nearing its end.
The International Association of Financial Engineers announces a meeting on the need for a second generation structured products pricing model.
An update on Western Refining.
The credit crisis has not yet produced compelling absolute value in the CLO market.
The latest investment fad has been around since the 1920s.
The euro has come under pressure on lower than expected inflation reading in Germany.
It was the storage business, after all
The credit excesses of the previous cycle are still unwinding.
David Abrams attributes Bear Stearns downfall to leverage.
An examination of three Chinese companies discussed by Richard Chilton and Murray Stahl.
A company in a position to benefit from increased capital spending in the utility industry.
Steve Miller describes that the leverage loan market is pricing in excessive losses.
Marty Cohen discusses the credit contraction and commercial real estate.
A discussion of why gold and Treasurys are on the new high list together.
Globalization taketh away
Globalization has now become an inflationary force.
A short treatise on good intentions
The Federal Reserve’s recent actions, dropping its target rate by 3% and accepting dubious assets onto its balance sheet, has unintended consequences around the world and on its currency.
A proposal that the U.S. Government purchase prime mortgages outright.
The private sector is de-leveraging while government sponsored enterprises are being asked to re-lever with troubled assets.
Two California S&Ls are struggling with non-performing loans issued during the height of the recent real estate speculation.
Bonfire of the currencies
The world’s central bankers can all agree on one thing – the desire for a weaker currency.
Hoover without the Depression
Historical review of how America’s monetary and financial arrangements have led to Depression-like distress without a depression, and how one might profit from the inevitable attempts to set things right.
Fannie Mae is ‘adequately capitalized’ according to OFHEO, but that is a result of preferred stock issuance not the performance of the underlying business.
Bladex is a supranational trade-finance bank headquartered in Panama with a conservative balance sheet trading below its book value.
The Federal Reserve Bank credit has been growing 2.2% annually. The ECB is growing its balance sheet at an annual rate of 22.3%.
Prior to the Federal Reserve, productivity growth led to lower prices. Today, lower prices resulting from productivity are confronted by monetary stimulus.
‘Essentially stale money’
Newmont Mining shares have not participated fully in the gold price rally and cheap compared to its peers.
AIG announced further market valuation writedowns in its insured multi-sector CDOs creating another opportunity to invest in a great company at a reasonable price.
The CMBX triple-A 4 has been sold by banks to hedge other risks and by hedge funds to speculate on deterioration in the commercial property market. Selling of the index has carried beyond the underlying fundamentals.
The deterioration in ACE Securities 2005-HE5 continues in this update.
Gulf countries have declined to remove their pegs to the U.S. dollar despite rising inflation. Hungary removed the forint’s trading band against the Euro.
The people’s wrath-delayed
The lack of a backlash against Wall Street is surprising given the scope of the current credit crisis.
AIG’s recent announcement of a material weakness in it’s accounting has created an opportunity to invest in a great company at a reasonable price.
description: Eastern European banks have continued to offer mortgages in low interest rate currencies adding currency risk for borrowers.
Non-cumulative preferred stock issuance has risen, but interest payments are at the board’s discretion.
The most leveraged financial institution in New York is the Federal Reserve Bank of New York and it is accepting low-rated CDO tranches at 80 cents on the dollar as collateral.
Many countries, one interest rate
The FED and the ECB set one interest rate for multiple countries. The FED ignores the 'dollar bloc' countries at the risk of inflation.
This company. was set to be acquired for $31.50 a share. The deal fell through and now investors can buy one business and receive 2 other businesses for nothing.
This company was set to be acquired for $34.50 a share. The deal fell through and now investors can buy the company at 6 times forward earnings.
This company was set to be acquired for $120 a share. The deal fell through and now investors can buy the company at two-thirds off.
Shad Rowe relates how Boone Pickens has used his belief in peak oil to compound returns in BP Capital.
Improbable sources of strength
The weak dollar ahs led exports to account for a large proportion of GDP.
Value restoration at a gallop
Market volatility may yet produce investment values as the ideas of the recent bull market – decoupling, the Great Moderation, and “inflation vigilantism” – retreat.
Grant’s discusses a profitable timber company. The company is selling at a discount to its peers and has a more conservative balance sheet.
A CDO squared recently sold at a large discount. As investors realize the complexity of the structures, expect the discounts to get larger.
Old Europe creaks and groans
description: Club Med countries have seen the sovereign CDS spreads widen and the sovereign debt widen versus German bunds.