Sunday, December 30, 2007
Going to the Wall (Street):Merrill Lynch
I'm pretty excited about 2008.Observing Carnage in the financial sector is a very entertaining way to pass time.As Yogi Berra used to say,you can observe a lot by watching.
As you're aware l have taken a keen interest in Merrill's slow decline over the past months.I'm hoping things will only get worse for them.In the last downturn in 2001-3 there was a feeling that Stan cut into muscle ,not just trimming fat.In the ensuing months l would like to see it de-boned and made into a stew.The employees should start getting used to smell of Napalm in the morning.I think the major write downs and consequent lay offs around the corner.
It's true just before Christmas Temasek,the Singaporean state investor, bought a stake in Merrill.They injected $4.4 billion into the company.The share price reacted by going down.Why,well Temasek paid around $48 for their stake,a 13% discount to the market price.Not a confidence builder is it.Just because a share is cheap doesn't mean it's good value.Value and price are different metrics.
I read today that John Thain is desperately trying to get further cash injections,as a financial engineer he probably has some notion of true exposure.Scared, he should be.He's basically running a giant black hole of a balance sheet masquerading as an investment bank.
I can't wait for the 4th Quarter results.I've pencilled in writedowns around $12-15 billion.Bear in mind these will not be the full and final write downs.It's the amount they can quantify in that reporting period.
In the end l'm hoping for one of two outcomes in 2008.Chapter 11 filing,which would actually crack me up with laughter.It couldn't happen to a nicer investment bank,or an ignominious opportunistic bid from a cash rich bidder.Like Wal-Mart,or Krispy Kreme.Hey Everyone's diversifying these days.
Happy new year to all.A special message the Merrill Readers.Hope you go under.
RB
As you're aware l have taken a keen interest in Merrill's slow decline over the past months.I'm hoping things will only get worse for them.In the last downturn in 2001-3 there was a feeling that Stan cut into muscle ,not just trimming fat.In the ensuing months l would like to see it de-boned and made into a stew.The employees should start getting used to smell of Napalm in the morning.I think the major write downs and consequent lay offs around the corner.
It's true just before Christmas Temasek,the Singaporean state investor, bought a stake in Merrill.They injected $4.4 billion into the company.The share price reacted by going down.Why,well Temasek paid around $48 for their stake,a 13% discount to the market price.Not a confidence builder is it.Just because a share is cheap doesn't mean it's good value.Value and price are different metrics.
I read today that John Thain is desperately trying to get further cash injections,as a financial engineer he probably has some notion of true exposure.Scared, he should be.He's basically running a giant black hole of a balance sheet masquerading as an investment bank.
I can't wait for the 4th Quarter results.I've pencilled in writedowns around $12-15 billion.Bear in mind these will not be the full and final write downs.It's the amount they can quantify in that reporting period.
In the end l'm hoping for one of two outcomes in 2008.Chapter 11 filing,which would actually crack me up with laughter.It couldn't happen to a nicer investment bank,or an ignominious opportunistic bid from a cash rich bidder.Like Wal-Mart,or Krispy Kreme.Hey Everyone's diversifying these days.
Happy new year to all.A special message the Merrill Readers.Hope you go under.
RB
