Archive for June, 2006

  • Lehman’s Profits Up 48%
    , June 12th, 2006 at 9:19 am

    The company earned $1.69 a share, nine cents more than estimates.

  • Carrie Rings the Opening Bell
    , June 12th, 2006 at 7:10 am

    And flees.
    SJP.jpg

  • The Golden Bear
    , June 12th, 2006 at 6:38 am

    In less than one month, gold has dropped over $110 an ounce. Here’s the contract for June delivery:
    Gold.gif
    The XAU (^XAU), which is an index of 15 miners, is off nearly 24%.

  • Lehman’s Earnings
    , June 12th, 2006 at 6:22 am

    Tired of being one-upped by Goldman (GS), Lehman Brothers (LEH) is reporting its earnings Monday before the bell. Here’s a preview:

    OVERVIEW: The New York-based securities firm has spent the past few years expanding its reach globally, and has since captured a larger share of merger and acquisitions advisory deals. Like others in the industry, Lehman has also seen record profits during the past 12 months _ leaning on a stronger performance of its equity capital markets business in both the U.S. and abroad, and has made inroads in the prime brokerage business.
    BY THE NUMBERS: Lehman reported a 25 percent rise in profits during the first quarter, which set a record for quarterly results. The firm is expected to have an equally strong performance this time around.
    Wall Street projects a profit of $1.60 per share on $4.19 billion revenue, according to analysts polled by Thomson Financial.
    ANALYST TAKE: “We generally expect second quarter broker results to be good,” said Prudential Securities analyst Michael Mayo. “There has been little to no decline in deal activity. International revenues should continue to grow. Volatility has probably helped certain trading activities.”
    Lehman isn’t the only broker to report during the week. Also on tap are Goldman Sachs Group Inc. and Bear Stearns Cos.
    WHAT’S AHEAD: Analysts will be looking to see how Lehman will continue to expand its M&A business, which has helped fuel all of its rivals on Wall Street to historic results in recent quarters. Moody’s Investors Service on Thursday raised its outlook for Lehman’s long-term debt, citing strides the firm has made to expand that business in the past 18 months.
    “Specifically, through a disciplined build-out in select product areas and geographies, Lehman has made steady share gains in primary equities, global advisory, and investment banking, and has been a lead adviser on an increasing number of marquee M&A transactions,” said Moody’s analyst Blaine Frantz in a report.
    For 2006, Chief Financial Officer Dave Goldfarb said Lehman will focus on increasing its mortgage business in Asia as well as better serving hedge fund clients and expanding its nascent global energy trading arm. The company will also introduce new private equity funds and increase its small business loans globally.
    STOCK PERFORMANCE: Lehman shares closed the quarter at $66.61 on the New York Stock Exchange, down 9 percent for the quarter. The stock — which has traded in a 52-week range of $46.21 to $78.84 — closed Friday at $65.61, remains up about 2.4 percent for the year, after falling from its high hit in April.

    Here’s how the Big 5 have done since October 2002:
    Big 5.bmp
    Not bad. One of the reasons why brokerage firms have been so profitable: Outsourcing.
    By looking at the chart, you can see why there was a shareholder revolt at Morgan (MS), aka the blue line. Lehman has definitely been the top-performer, even though its stock is off about 16%.

  • Fun with the SEC Search Function
    , June 11th, 2006 at 10:08 pm

    I noticed this too but wasn’t going to post it. Since Paul Kedrosky did, I guess that makes it okay (his has a Ph.D, people). It also shows you where our minds are.
    In any event, Alex Kintner’s mother makes a rather unexpected appearance in an SEC filing:

    RESOLVED, a description of such 6% Non-cumulative Perpetual Preferred Stock, Series E, including the preferences and other rights, voting powers, restrictions, limitations as to dividends, qualifications, and terms and conditions for redemption, all as set by the Board of Direc you fucking new when i asked you liartors of the Corporation, is set forth in the attached Certificate of Designation Establishing the 6% Non-cumulative Perpetual Preferred Stock, Series E and Fixing the Powers, Designations, Preferences and Relative, Participating, Optional and Other Special Rights, and the Qualifications, Limitations and Restrictions, of the 6% Non-cumulative Perpetual Preferred Stock, Series E.

    That’s exactly how the text appears. I blame the cut-and-paste fuction. This is why I write all my letters to the editor in longhand. I have to admit that I’m dying to know the back story here.

  • Best Credit Card Ever
    , June 11th, 2006 at 9:42 pm

    At least, according to this guy.

  • Submerging Markets
    , June 11th, 2006 at 7:23 am

    Since the second week of May, emerging markets are down 16%. The Economist takes a closer look:

    Emerging economies have been strikingly successful in raising equity finance in the form of foreign direct investment, which accounted for almost half of the private capital they imported in 2005. They have also attracted the attentions of private-equity firms in recent years. But their record in wooing portfolio investors, who want to buy shares not companies, has been patchy. Foreign punters flirted with local stockmarkets in the year before the Asian financial crisis, for example, but were then embarrassed by the losses they incurred. As one money manager put it, “We did not go very deep, and we did not stay very long.”

  • A Look at the Long-Term
    , June 10th, 2006 at 6:21 pm

    In this week’s Barron’s, Mike Santoli looks at the long-term cycles of the Dow. The really long-term. Here’s the chart from Rydex:
    Rydex.gif
    You can see that there are several long cycles to the Dow (flat, up, flat, up, flat, up). This chart is a favorite of Barry Ritholtz‘s, and he even has his own, and I think, better version.
    There’s an important lesson here: Investors need to have long time horizons. There have been long periods where the markets have been flat. I’m glad I wasn’t a professional investor in the 1930s or 1970s.
    However, I don’t think all hope is lost. Here’s a chart of the total return of the market since 1925 (data is from Ibbotson). The blue line is the market. The two black lines are upper and lower trend lines, and the red line is a “best fits” trend line.
    image489.png
    Unlike the Rydex chart, this includes dividends. That makes a big difference. It’s also much broader than the Dow 30. Keep in mind that if the editors at Dow Jones hadn’t have taken IBM out the index in 1939, the Dow would have broken 1,000 in 1961 instead of 1972. The Dow underperformed the rest of the market for decades.
    Even after all the pain of the last six years, the Wilshire 5000 Total Return Index (^DWCT) came within inches of a new all-time high just a few weeks ago. Bottom line: I think we’re sitting in the dead center of the long-term trend.
    Update: Sam Stovall at S&P lists what he calls “bull market corrections” since 1970.

  • Shariah-Grade Investing
    , June 10th, 2006 at 3:47 pm

    Ganesh Sahathevan looks at the growth–and abuse–of Islamic financing in Malaysia.

  • There Will Always Be an England
    , June 10th, 2006 at 3:29 pm

    The New Yorker used to say, “There will always be an England.” I thought of that as I read the opening paragraph of the Times‘ coverage of England’s 1-0 World Cup win over Paraguay:

    Seventy sunny, soporific minutes had elapsed when Frankfurt resonated to the sound of 40,000 anglo-saxon voices chanting Wayne Rooney’s name, and how England need their convalascent talisman. With Michael Owen out of sorts and substituted, it took an own-goal by Paraguay’s captain, Carlos Gamarra, to prevent the opening match in the World Cup from becoming yet another false start.

    Beautiful.