Allan Young’s Incoherence

Bear Stearns plunges amid trade risk worries - Bear Stearns (BSC) was a pathfinder in the securitization of mortgages, but its over-reliance on mortgage-backed securities led to big losses in a couple of its hedge funds. Now external hedge funds, clients of its prime brokerage, are fleeing in droves for fear the bank lacks sufficient cash or liquidity. Oh how our mighty investment banks have fallen. Funny how the top in these stocks coincided with record numbers of MBAs coming out of our business schools to join the likes of Goldman Sachs (GS), Merrill Lynch (MER), Morgan Stanley (MS), and Lehman Brothers (LEH).

DCP Midstream Prices Public Offering - Not all is well in the energy sector. DCP Midstream Partners (DPM), a producer and marketer of natural gas, is selling shares in the company at a time when the stock price is hitting new lows. Management is in a quandary because operational results have been poor but cash is running low while debt remains high.

Sigma Designs Q4 earns miss market view; shares fall - Anyone want to tell me that the shorts are wrong? They’re practically skipping to the bank. Sigma Designs (SIGM) makes chips that control television set-top boxes and Blu-ray players. The company reported strong earnings but missed estimates; check the earnings call transcript here. Since Blu-ray has essentially won its war against HD-DVD, Sigma should be a turnaround candidate.

Air Methods 4Q net earnings beat Street expectations - The world’s largest air medical transportation company in the world is expanding its fleet and beating the Street’s estimates. Air Methods (AIRM) stock has taken a hit lately and has a sizable short contingent.

S&P: Write-downs may be halfway done - This little tidbit has coincided with a big turnaround in the stock market. What started out as a huge down day has reversed and the markets are in positive territory. The more important question is how reliable is Standard & Poor’s Ratings Services (MHP) given that it did not see the subprime meltdown in the first place? What are the fatal flaws in their analysis? Has any consideration been given to the possibility that prime mortgages could fail if real estate prices continue to fall nationwide?

Categories: Investing, Linkfest
Tags: Air Methods, AIRM, Bear Stearns, Blu-ray, BSC, business school, DCP Midstream Partners, DPM, Goldman Sachs, GS, HD-DVD, Hedge Funds, investment banking, LEH, Lehman Brothers, MBAs, McGraw-Hill, MER, Merrill Lynch, MHP, Morgan Stanley, mortgage-backed securities, mortgages, MS, natural gas, prime brokerage, prime mortgages, real estate, S&P, SIGM, Sigma Designs, Standard & Poor's Ratings Services, Standard & Poors, subprime mortgages, television set-top boxes