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Leveraged Buyouts Running Amok


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#1 wndysrf

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Posted 08 September 2006 - 03:25 PM

Every week we get a story of "unlimited finance" or "unquenchable thirst" in debt securities.

Today, Justin LaHart talks about the LBO Boom going on.

Easy money raised at the drop of a hat.

Excerpts from today's WSJ:

Hollow Legs

By JUSTIN LAHART

Investors have shown a tremendous appetite for newly minted bonds this year. That could feed an already unprecedented leveraged-buyout boom.

In August, usually beach month for the bond market, companies issued $58.4 billion in bonds, according to Dealogic, up from $51.5 billion in August 2005. Despite the Labor Day holiday, already more than $13 billion of investment-grade and junk bonds have been issued this month.

Typically, bond investors might balk at so much supply, and demand higher yields as compensation for taking it on. But that hasn't been the case.

"At some point, you begin to think we're reaching a level where portfolio managers say enough," says Fifth Third Asset Management chief investment officer Mitchell Stapley. "But there seems to be good international demand and portfolio managers continue to buy."

The LBO boom is part of the bond boom, because debt helps finance buyouts. More than $200 billion in deals to take companies private have been announced this year, including $22.5 billion for hospital operator HCA and $9.5 billion for Spanish-language television network Univision. These buyouts, largely financed by debt, account for nearly a quarter of the dollar value of U.S. mergers and acquisitions this year, according to Thomson Financial. In 1988 -- the peak year in the 1980s leveraged-buyout boom -- buyouts accounted for 14% of M&A deals.

The bonds of firms acquired in leveraged buyouts typically are riskier than other companies'. Bond managers could decide to turn cautious. But it doesn't look like it's going to play out that way. If September's issuance of bonds -- which could approach $80 billion -- gets swallowed by investors without pushing yields much higher, private-equity firms are likely to be emboldened to aim higher, bidding up the values of bigger companies, confident the bond market will help finance their offers.

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#2 wndysrf

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Posted 08 September 2006 - 04:07 PM

Hard to believe that the market wants to go up right away.

In case it does, two stocks I'm eyeballing.

TGT blew through the 50-day and 200-day in one fell swoop.

PNC is about to bust to new, all-time, lifetime highs.

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#3 jickiss

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Posted 08 September 2006 - 04:49 PM

jickiss is back!

and

amock

amoron

amazing

for sure, it is all most annoying, but, as your jickiss has mentioned, over and over, as long as da Zomie bears the yield that it bears,

da Boyz are in control.

but, with the mills of the gods grinding slowly
but exceedingly fine,

who, which one, show us da Man, find the Wise Man, bring in the Buddha,
find the one who can draw back the curtain or pull the strings,

and reveal, and name, the Moment when SOMETHING WILL FINALLY HAPPEN.

by means of spin, them running, or, (dare we say it????), Front Running the Markets have, in the view of your jickiss,

gotten to the point where they believe in themselves totally.

what is that word???

Hubris?

who knows and who cares....it is all about numbers at this juncture.

here is a 10 day chart of TRE, presented in the spirit of helping all them that are following along, for, better than most, your jickiss Knows well that to Win the Race, only the picture at da Wire counts, and no money is paid for leading during any particular part of the contest...

jickiss!!!!!

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  • TRE_09_08_06_10_days_hourly_COVER.PNG

"Every Bubble ends in fear and panic. This one will too." --Machinehead, March 29, 2005

On September 06, 2006, TRE closed at $6.50.
On September 19, 2006, CDE closed at $46.30 (adjusted for reverse split)
.


On Oct. 17, '06, Goldman (GS) closed at $183.07 (jickiss Sell) whilst Newmont (NEM) closed at $43.24 (jickiss Buy).

"Politics in America has become a playground of fictions. The politicians tell the public what the public wants to hear. Whether the question is social security, education, budget deficits or national security, the public wants to believe that things aren�t so bad." --Written by J.R. Nyquist, December 8, 2006.

"Private sector employees will never retire, they will work literally to death, dying sick broke and busted with absolutely no hope whatsoever." -- Shorty, on March 15, 2009.

"Luck is the most precious commodity in the world." Brisbane Bear, October 25, 2007.

"Luck favors the prepared mind." Mr. James Dines, back in the 80s, in "The Dines Letter."

"With Luck, anything is Possible, but without Luck, virtually nothing Good ever happens." --- The jickiss Mantra, sad but True.

#4 wndysrf

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Posted 08 September 2006 - 05:02 PM

Still short NEM and TRE, by far the weakest gold stocks.

So far, working out great.

I'll cover them when I get a reversal signal on gold.

Most likely, I'll add to my longs to those gold stocks which were GREEN today:

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#5 FranciscoTheMan

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Posted 08 September 2006 - 05:14 PM

KBX has some bad news, Pooplava in a disagreement with the rest of the board.

"Kimber reports that the Board of Directors of the Company has received a letter from legal counsel for Mr. Jim Puplava, a director and significant shareholder of Kimber, advising that Mr. Puplava intends to commence a proxy battle and that he will be moving forward with the objective of replacing the majority of the Board of Directors and current management of Kimber. Management will oppose Mr. Puplava's proxy solicitation."

From yahoo.
One day sometime in the future he'll [Cramer] come blubbering and whimpering on air half naked and smeared with his own feces. It'll be the buy signal of the decade. --PhatBubble
One thing I think is certain. The more the world's central banks act to suppress the cost of long term capital, the more of it the market will demand, thereby keeping upward pressure on yields until the CBs have no choice but to relent. At that point we should see a massive final blowoff similar to that which occurred in 1980 and 1981. --Doctor Stool
In a topsy turvy world, growing more and more insane by the minute, terminal eccentricities, like buying Fanny, are barely noticed--Beardrech
"[George W. Bush] is Woodrow Wilson on amphetamines." --Patrick J. Buchanan
"I simply don't know where the money is." --John Corzine

#6 mmoy

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Posted 08 September 2006 - 05:26 PM

Weekend report should be fun. They should be back from vacation by now.

#7 wndysrf

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Posted 08 September 2006 - 05:39 PM

Weekend report should be fun. They should be back from vacation by now.

<{POST_SNAPBACK}>



Yeah, will be funny to hear them explain the utter collapse in oil prices immediately after they told their listeners "you must be in oil stocks!!".

Maybe they will have that guy Matt Simmons on

:lol: :lol: :lol: :lol:
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#8 wndysrf

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Posted 08 September 2006 - 05:42 PM

KBX has some bad news, Pooplava in a disagreement with the rest of the board.

"Kimber reports that the Board of Directors of the Company has received a letter from legal counsel for Mr. Jim Puplava, a director and significant shareholder of Kimber, advising that Mr. Puplava intends to commence a proxy battle and that he will be moving forward with the objective of replacing the majority of the Board of Directors and current management of Kimber. Management will oppose Mr. Puplava's proxy solicitation."

From yahoo.

<{POST_SNAPBACK}>



That's not bad news. Most likely, its going to put the company into play.

Puplava will not be able to replace those guys in time, the company will probably be sold.

Reason enough to believe that the stock did not move down the last two days.

Sharks are circling. Shorts may be in big trouble.

Check out the map. GLG, GRS, AEM, MFN all have properties nearby.

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#9 wndysrf

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Posted 08 September 2006 - 06:06 PM

Watch the rotation out of oil into retail, tech stocks, or whatever....

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#10 BusKow

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Posted 08 September 2006 - 07:50 PM

Groups of the day.

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Prudence, indeed, will dictate that governments long established should not be changed for light and and transient causes, and accordingly all experience hath shown that mankind are more disposed to suffer, which evils are sufferable, than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations , pursuing invariably the same object, evinces a design to reduce them under absolute despotism, it is their right, it is their duty, to throw off such government, and to provide new guards for their future security.

#11 BusKow

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Posted 08 September 2006 - 07:51 PM

Groups of the week.

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Prudence, indeed, will dictate that governments long established should not be changed for light and and transient causes, and accordingly all experience hath shown that mankind are more disposed to suffer, which evils are sufferable, than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations , pursuing invariably the same object, evinces a design to reduce them under absolute despotism, it is their right, it is their duty, to throw off such government, and to provide new guards for their future security.

#12 BusKow

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Posted 08 September 2006 - 07:51 PM

Groups of the month.

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Prudence, indeed, will dictate that governments long established should not be changed for light and and transient causes, and accordingly all experience hath shown that mankind are more disposed to suffer, which evils are sufferable, than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations , pursuing invariably the same object, evinces a design to reduce them under absolute despotism, it is their right, it is their duty, to throw off such government, and to provide new guards for their future security.

#13 shorty

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Posted 08 September 2006 - 07:55 PM

"would you like fries with that, Sir?" :P

Shank Diego beanie baby CONstruction CONpany Hallmark CONmunities laid-off half their staff

"We used to have amazing food in our break room for free," Carter said. "Starbucks every morning with choice of five different creamers." He also remembers the Greek food and other catered meals the staff would enjoy for lunch meetings. Now, he said, it's pizza once a month and Folgers instant coffee in the break room.


no Stankbucks? the Big Man would be pleased -- he knew that joint wasn't right soon as he walked in

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#14 beardrech

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Posted 08 September 2006 - 07:57 PM

Stoolies
This is the gist of a converation I had recently with that commodities shtunk I talk to evry once in a while--I didn't get all of is remarks but for what its worth here are some of his remarks which I relate rawly unedited --he nade a ton in nickel

You'll notice some patronising remarks he makes to me but try to disregard them--Hes made tons of $$$$$ and finds me amusing,one of the reasons he tolerates me..... I think hes wrong in some instances, but who wins when arguing against large sums of $$$ in the vault

Beardrech
"The best estimate I can get is a flatteming of GDP, a dropping of gasoline prices till election,then each day after a runup after that of about a nickel a month rise except a nickel cost abou 6.5 cents to produce(joke)

and a turning off of ATM charecteristics of home ownership that will flatten GDP close to zero in about 6 months.

I dont see a fed runup this go around probably %25 at year end but not sure--dont see banks going busto; I suspect they've palmed off most of the risk to others

The metals are in a consolidation phase that will last a few more months--the metals will than start to go up again-we're about a third of the way up in price this time;

The market doesn't move linearly but in fits and starts along with retracements of previous advancements and declines

Look at the site LME to get multiyear history of prices for metals[london metals exchange]you'll see the charts,they're all milling around, the nickel shorters sold thousands of tons short at around 6 to 8 dollars a pound and had their heads handed to them; and nickel is now about 14 dollars a pound--I haven't researched the metal mining companies yet recently

Gold is in the same situation as the base metals --

Wait-- Dont act foolishly


I almost forgot he has looked at thousands of charts TA in his lifetime-so hes both a TA and funnmental guy
General Comments about trading-------------------

I spent twenty years reading about this stuff at work--I just put together a lot of anecdotal information into a framework of along with a lot of what I already know about the plants in the various industries and connect the dots

I have a long memory about the history of 35 years of the oil and metals along with industrial statistics along with a lot of planr and refinery tours when i was with xxxxxx

When new anecdotal data comes in, I put it into a deeply thought out context so that what is noise to you is significant to me about how the big players are thinking and acting;It doesn't come easy

I see some of my friends making tons of money and trading looking at the same stuff I do; and they see things I still dont see after 47 years in the market

beardrech :ph34r: :ph34r: forty years from now i'll be trading in my harp--shoveling my daily dozen tons of coal

#15 LeeWhee

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Posted 08 September 2006 - 07:58 PM

"would you like fries with that, Sir?" :P

Shank Diego beanie baby CONstruction CONpany Hallmark CONmunities laid-off half their staff

<{POST_SNAPBACK}>



"Alan Gin, an economist at the Burnham-Moores Center for Real Estate at the University of San Diego, predicted a year-end slowdown for the local San Diego economy due, in part, to a deceleration in employment rates."

"During this big boom, a lot of people went into real estate," Gin said. "I think there's likely to be a shakeout there."

Ya think? Guess that's why this guy makes the big bucks.
"I'm not a real estate bum. I wear diamonds and Rolexes. I'm a classy Realtor™."--- Liz "Flaming Orange" Seither, Clearwater, FL, who owes lenders millions of dollars in debts.

"Men do not desire to be rich, but to be richer than other men."---John Stuart Mill (1806-1873)

"When the music stops, things will be complicated. But as long as the music is playing, you've got to get up and dance. We're still dancing..."---Citigroup CEO Chucky "Master of Timing" Prince, 7/9/07

"Wall Street is a graveyard of geniuses."---Chriss Street, Treasurer, Orange County, CA, 7/27/07

"It was never my thinking that made big money for me. It was my sitting. Men who can be both right and sit tight are uncommon. I found it one of the hardest things to learn."---Jesse Livermore

"You can kill a sheep just once, but you can fleece him 100 times."---Jeff Macke

"Stocks are no longer the weather glass of fortune, but a part of the mask employed to disguise the nation's own face to itself." ---Horace Walpole, 1782





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