Tuesday Morning – Updated Catalyst List

135 thoughts on “Tuesday Morning – Updated Catalyst List”

1. Analyst Watch:

   HAL – Morgan Stanley reiterating Overweight rating and $60 target.

   MMR – JPM cuts target from $19 to $17.

2. tph recomending pxp today

   swap into PXP ($32.27 – B)
   Can look at next 3-4 years for ~70% production growth (secured by hedging) taking 2014E cash flow to ~$12/share (before Lucius)

3. From JPMo Sector Summary on Energy

   Energy
   Morgan Stanley ups energy, cuts material sector – Morgan Stanley upgraded the energy sector to OW based on sector-specific and macro factors that were more supportive for energy than materials, which it cut to neutral. Within oil and gas, MS likes the super majors in Europe (Total and BP). Reuters
   Transocean starts trading on SIX Swiss Exchange – Transocean, the world’s largest offshore oil and gas driller started trading on the SIX Swiss Exchange Tuesday. The stock will be included in the benchmark Swiss Market Index and the 30-company Swiss Leader Index. Bloomberg
   Gloucester Coal to review Noble shareholder vote – Gloucestor Coal is reviewing its position following a rejection from its shareholders at Noble Group regarding the merger with Macarthur Coal and Gloucestor. Reuters http://www.reuters.com/article/idUSSGE63I0N820100419?type=marketsNews
   Australia Macarthur: no proposal from Xstrata – Xstrata looks to be staying on the sidelines for Macarthur Coal, despite talk that the company would enter with a competing bid. That leaves Peabody as the top bidder. Reuters http://www.reuters.com/article/idUSSGE63J00O20100420
   APA upgraded to outperform from N at Macquarie.
   HK upgraded to outperform from market perform at FBR Capital.
   WFT reports 1Q earnings – WFT reported earnings of 8c ex-charges (st 9c) on revenues of $2.34B (st. $2.544B) for 1Q. No guidance for FY10 was given and the company will hold a CC to discuss at 9AM ET. Bloomberg

4. WFT – not sure what people are liking in the WFT miss, maybe margins on the international side. Conf call at the top of the hour.

5. I’d note the Majors look to be taking a turn higher here, last couple of days. It could be that investors dipping a toe back in the water will go with what they perceive as a safer play with the Majors, especially the domestics, XOM/CVX/COP instead of the indie refiners which continue to have trouble holding up despite the improvement in spreads.

6. … and XOM has been slowest to move, perhaps because of the XTO buy. Sort of interest to look at the moves at CVX / COP (gassier domestically pre XTO buy at XOM) and think that maybe it is time, given oil and product prices that the market starts to give XOM a little better multiple.

7. RIG getting a good mark up on its Swiss exchange listing and likely future inclusion in the Swiss version of the S&P500.

8. Tidbit from a broker note on HAL that I missed on the call yesterday, proppant prices are creeping back up. Good for CRR.

9. Bill – I think I saw PXP upping their hedge positions yesterday, have not looked at the size of the increase or the levels yet.

   WFT call started.

10. Z- I would surmise its not a crowded field…but is CRR what you’d call “best of breed”? thanks,K

11. Analyst Watch:

    HAL – Stephens taking EPS up 5% this year and 10% next year (to $2.20/sh). Target stays at $40.

    Kaman – I think best of breed is a good title for CRR. Will ask Wyoming for the dark horse name.

12. Whisper on WFT was well below the street, plus they actually released a balance sheet. Not great quarter but not a total disaster.

13. WFT Call Notes

    North America “made the quarter”

    International was hurt by weather

    NAM margins are far from their peak, room to grow.

    International was weak due to weather (Russia and China saw extreme cold), seasonality (Q1 is normally weak).

    Seeing improvement in managed pressure drilling, stimulation has been strong, artificial lift doing well.

    NAM – 2H10, activity expected to flatten out through 2011. Stimulation will stabilize but not much more improvement expected. Expect pricing trends to improve despite the flattening activity.

14. Thanks Jat. Right, they miss often now so a smaller miss is a beat in the eyes of the Street.

15. Wizard – please check your email.

16. TechTrader is a helpful 50/50 for today.

    HeadTrader would continue to buy pullbacks, using the financial sector as your Sherpa… and paying particular attention to the price action of The Mothership (GS).

17. ATPG – rapidly going from doghouse to penthouse.

18. GS headlines crossing, no intention of changing charter, no other talks with the justice dept re other charges, were not told in advance by SEC of charges, … stock moving off the post EPS release lows.

19. bot wll before next weeks earnings

20. re 19 – added that deep in the money call for earnings, continuing to hold the name in the ZLT.

21. can it be.. sd up for once

    atpg did a debt deal so there is no risk of them running out of casj

    pxp did buy puts on some of their production

22. BOP – Did you know of the reason behind the CIGX stock offering?

23. WFT Call Q&A – positive tone, much of international issues behind them. All of the weather, some of the political instability (Algeria), Golden Goose to come from Iraq in time … anyway, good call so far.

24. ram — CIGX is not a stock offering. It merely registers the private placement shares issued last March (buyers included the CEO, Tradewinds [largest shareholder], and Roskamp [of the Roskamp Institute]). Registering the shares makes them easier to sell at some point in the future. So, it shouldn’t be either 1) new news, or 2) bad news. But there ya go.

25. GS red now, not yet killing the market.

26. Thanks for the info.

27. ram — no problem!

28. WFT – “whatever growth capital we have to spend will be less than the growth we have in 2010 and 2011”

29. WFT –

    NAM – could see some price based increases in the second half.

    Int’l – all volume based growth, not pricing related.

    Still a good call going on here.

30. Analyst Watch: HAL

    GS raised their target $1 to $43, took estimates for 2010 to 2012 up 4 to 6%. 2011 is well above the Street at $2.45. (Street is at $2.10).

31. ZTRADE – ZIM – HAL

    Sold both sets of calls with the stock at $32.40.

    HAL – Sold the 20 $32 May Calls for $1.34 up 33%

    HAL – Sold the 40 $33 May Calls for $0.85, up 26%.

    The ZIM is back to 100% cash.

32. HeadTrader reiterating his call to “follow the Mothership!”

33. Nice trade on the HAL Z, tks

    JB voted

34. ZCAT may adopt a more ZIMish tone (wait, then strike) through earnings season.

35. BB – anytime! Again, I left the name a little early it appears but I’m liking the hit and run strategy of the ZIM too much to worry about that. Next candidates are NBR and ECA tomorrow (not going to trade before I see their numbers).

    EOG mounting a nice resurgence, earnings May 4 should provide a little more detail as per catalyst list.

36. SSN down 13% on profit taking. Not ready to turn loose of my ZLT shares. I would imagine that the stock will start moving again in a couple of weeks just before they announce the next Bakken well has been spud.

37. VQ – was there a more specific catalyst I was supposed to add to the table aside from the May analyst meeting.

38. Z – HK question – those black hawk/red hawk wells – do you remember if they said anything about them at IPAA? I ahve been trying to get their presentation to open from there but i can’t get it to go at the moment. I remember a slide with the map of the play but can’t recall the details

39. 1520 – yes, they did. First mentioned the first Black Hawk well at Howard Weil, then added an additional well there at IPAA. Both near 1,000 barrels condensate per day plus some associated gas. Three rigs running at Black Hawk now. Over at Red Hawk they have 1 rig running and are a little less enthusiastic about Zavalla county at the moment. Acreage at both is large.

40. Gold has moved nicely off of major support between 1120-1130 and felt resistance at 1145. A break above 1145 before some more consolidation would be extremely strong and the perfect setup.

41. Yield names continue to rally, WHX approaching $21.

42. Nicky – got levels?

43. 39 – thanks – that strikes HK from the catalyst list for the time being?

44. 1520 – I took them off because their asset sales were done and those wells hit. They will have several more wells to talk about on the call but nothing I’d call catalytic … maybe more catalytic since the stock is below the announcement levels now in a really confounding way. Things haven’t looked this bright, with capital discipline large and in charge (recall they cut capex and shifted to more liquids what they kept), growing > 30% and yet still the market no likey. Not the Street, mind you, as the Street has been upping their opinion on them. I think if they turn in a string of what would have been good IP Bakken wells 12 months ago at Blackhawk this stock snaps into the upper $20s at least but that’s probably in the second half of this year.

45. Z: Have you come across anything re IO – ION Geophysical in your travels? Good bad or indifferent. Thanks.

46. Tom – nope.

47. #44 – I couldn’t agree more. Having followed them for a while I can’t remember a time when they looked as good to me from a grow thru the drillbit with good cash flow (albeit from some big asset sales but that is a heck of a lot better than watering everybody down — again) perspective. I go back to the weighing maching vs. voting machine idea…

48. Several questions. BEXP up on no news? WLL and EOG following the oil bounce.
    Follow the mothership. GS seems to be doing abysmally given the stellar earnings report. BOP, any comments on that? SPY is doing way better than GS. I had had the impression that the financial downside to the suit was quite limited. Thanks.

49. ZTRADES – ZCAT – BEXP

    Sold the May $15 BEXP Calls for $3.20, down 7% and uprisked into the

    May $20 BEXP Calls for $0.45, added (30) bringing my total to (40). Expecting more well news here this week or next.

50. Dij – BEXP see 49 and the catalyst list, the time is drawing near for more updates there. I’m confident they will have news soon as its a good idea post deal to get more out the door on the same kind of time frame as they had been before the door.

    WLL and EOG – people liking higher oil but also getting ready for earnings. EOG has a number of wells they could talk about including Caret that could be very important for the name. Part of the reason I took the higher strike BEXP calls is that if EOG says good things about that east Montana Bakken well it is very good for BEXP’s Ghost Rider acreage. BEXP has a well set to drill not far from there. If Ghost Rider proves good for Bakken/ Three Forks then BEXP will have 3 areas to run in (Ross, Rough Rider, and Ghost Rider) and that’s a big deal.

51. Thanks, Z. Unlike some I did read the catalysts. I guess it is just moving on in the week.
    EOG earnings are 5.4, WLL 4.28. We await a good time to sell the EOG position, certainly doing well today.
    It is eating away at the July ’08 descent.

52. EXO has a real problem south of Shreveport got a gas kick and put gas in the Wilcox aquifer. Tested water wells and gas is turning up. They were drilling at 2100 feet on a second well on a super pad

53. dij – I have not doubt that everyone here reads everywhere word and sentence fragment I babble on about. I think you have some post deal digestion going on with BEXP, was off big yesterday early, then bounced late and then today a run for no reason. My sense is well news is around the corner and maybe one or two guys are touting the name in front of EOG’s comments.

    EOG has news out today but it is from a source I don’t get.

54. What is EXO ? Is that XCO?

55. Sorry XCO

56. That’s pretty shallow, guessing on the way down to the Hayensville (say another 9000 feet). Guessing they case it off and pay a fine and get sued some.

57. I had that problem few years ago you have to remediate the reservoir. That is the main water well source for this area.

58. OK, bigger deal than I was thinking. Um, got a link to a story on that?

59. 43- HK has Fayetteville on the block

60. Good morning:

    Why is EXXI so weak today ?

    Z: Where on the site can I find the latest and greatest write up on EXXI.?

    Thx

61. #60 Don’t know but I just bought some

62. Reef – thanks, will put it back up there. Would be a boon for them if they could get of that position, not a lot of upside for them, better to have SWN or CHK on it than them.

    Packman – EXXI getting a little follow through on MMR from yesterday, don’t see any comments but maybe someone cut expectations there. Latest and greatest is in the daily flow, don’t think I’ve written anything on them in a post since the last quarterly conference call. I didn’t get a whole lot out of their IPAA presentation last week.

63. #61 Part of my new “act before understanding” strategy. We’ll see how that pans out 🙂

64. XLE challenging 2010 high…yeah baby

65. Z – with huge price targets on HAL, are you thinking of a possible ZLT? Looks to be in a rising channel having broken thru resistance at $32.83 from 17 March. Top of channel now around #33.75 (i.e. market almost got there already).

66. re 65. Have been mulling that, yes.

67. http://www.shreveporttimes.com will get you some of the story

68. re 67, thanks, short interest is very low, as they have been on an asset selling spree, stock not seeming to care about the news. Market has been taking issues at PVA in stride although this looks like more of a problem than a simple frac fluid spill.

69. re68 my only fear is the gas in the water arguement even though it has nothing to do with frac

70. Market seems to like NOV as a follow-on play from HAL. Earnings before bell Tuesday April 27.

    A bit difficult with it up 4%, but just putting it on the radar.

71. Excerpt from Reuters Wire

    “Bank of Canada sets stage for rate hike, a G7 first
    1 hour ago – Reuters
    Bank of Canada sets stage for rate hike, a G7 first
    By Louise Egan

    OTTAWA (Reuters) – The Bank of Canada signaled on Thursday it may raise interest rates as soon as June, making it the first G7 central bank willing to unwind emergency stimulus measures as the economy roars back after the recession.

    The bank kept its benchmark rate at 0.25 percent, the record low level it has been at for the past year. But after surprisingly high inflation and growth numbers, it abandoned a conditional pledge to hold the rate at that level until the end of June.

    “With recent improvements in the economic outlook, the need for such extraordinary policy is now passing, and it is appropriate to begin to lessen the degree of monetary stimulus,” it said in a statement.

    “The extent and timing will depend on the outlook for economic activity and inflation, and will be consistent with achieving the 2 percent inflation target.”

    The central bank next sets interest rates on June 1, and then on July 20. It previously said it would hold rates steady until the end of the second quarter, unless inflation strayed off course. But all bets are now off.

    “This is a more hawkish than expected statement,” said Doug Porter, deputy chief economist at BMO Capital Markets.

    “Quite simply, June is definitely on the table as a possibility for the bank to begin hiking rates.””

72. Z – how does the shift from NG to oil focus in E&P affect NBR?

73. Dman – rigs turning either way, maybe a bit long on the job on the oil wells, everybody thinking you’ll see a small decline to flat level of gas rigs from here on this year, more than offset by a continued rise in gas. NBR is tomorrow, stock running hard in advance. SLB on Friday also worth watching.

    WFT – treading water post call, I think I’m going to pass there.

    CRR continues to run on the HAL comments and along with a strong market today. I don’t see playing with options, big fat spreads are unattractive.

74. MMR can’t get out of its own way despite all the reiterated Buys today (and lowered targets).

75. Selling pressure in ATH looks like it’s coming back after a rally from a low of nearly 13 to 15.

76. V – meanwhile SU announces new gas production and is really moving off that bottom.

77. MCF jumping up here, full fledged breakout, approaching $60.

78. That EOG article I didn’t have was a WSJ Heard (Herd) on the Street column.

79. Whatever the WSJ piece said, EOG really, really, wants to break out.

80. Re 79, it was a piece on NGL’s, only tangentially related to EOG.

81. Test

82. Couple of comments seem to have been lost as my host changed our server out.

    VTZ – RE: 75 – Not only gas: gas from Syria… Whatever though. I’ll take it!

    Nicky – Good afternoon to all. 1207 spx is the 78.6% retrace off the 1183 low, really the maximum allowed for a wave ii retracement and if this is going to resolve to the downside.

83. Thanks Nicky, so you’re calling a top at 1207 OR we are done with the dip?

84. Can someone comment so I know if they broke the site or not? Thanks.

85. SSN giving up very little after the great run. Portends great things once the next few wells are punched.

86. Hellooooo

87. Well, BOP, I either caught a falling knife or not, CIGX at 1.82.
    Using profits from RIG calls (big thanks to Z)
    Always more fun to play with somebody else’s money- (hmm- maybe I should run for congress) 🙂

88. Thanks guys, was having a comment post issue, seems to have resolved itself. My host apparently bought some new friggin string to connect me to the internet. Sheesh.

    Eli – agreed. Again, not falling in love but that was a big kahuna well for such a little company.

    Skimo – you’re way too smart to go for that job. As one of my favorite quotes goes … “all I’d need is a lobotomy and a pair of tights”

89. 88 ok I won’t run- y’all really do NOT want to see me in tights! LOL

90. Seeing some big chunks of HAL crossing. Stock coming off highs. Personally I like to see them run on days like this and put in a little top that I know the shares can then take out in the near term again. Maybe on SLB’s earnings on Friday.

91. re 89 = LOL. I promise not to as well.

92. If you experience problems with the site later today I am told you should clear your browser’s cache.

93. #33 bondbuddha…thanks much for the vote…

    EXXI holding at about the long term lower daily channel trendline as I write this…this also correspodes with the 20/50 SMA…

    BHI prints a new P&F buy signal at $51…

    DPTR continues to form an interesting consolidation triangle right at 200 SMA resistance…check out the daily chart….

94. I’ve activated the Backup site today as many people can’t get in here.

    http://zmanbackup.wordpress.com/2010/04/20/tuesday-backup-post/

95. No prob w/ the site on this computer …

96. Dman … 61 … I like that strategy !

    I bought some EXXI today as well. Everything that I had was called away at $20 due to covered call sales; so oppty to reload a bit.

97. Thanks Pack, it works for some and not for others. Friggin nice. What a bunch of numb nuts.

98. Thanks for the updates, JB.

    WHX through $21.

99. EXXI…a close back above $19.50 seems to keep intact the longer term channel support, otherwise the shorter term support at $18 is the next line in the sand… charts updated..

100. Thanks JB, really not understanding the slugging EXXI is taking.

101. EOG breakout continues, new 52 week high. CFPS for 2010 of $13.65, 2011 at $19.80 means the name is still not expensive.

102. Z: EXXI had filed a shelf offering a while back. Weakness today are rumors of a secondary equity shortly.

103. Tom – Hmmmm, thanks.

104. ARD moving. Will someone else bid for the company now that it is in play?

105. me thinks ARD has another bid/higher price by SD to close

106. Occam – ARD could be moving because SD is moving. I would not be surprised at all to see a competing big though, I just bet it won’t be a lot higher or you get into pricey reserve territory for ARD.

107. Crude – the front month closed up $2 on its final day but the rest of the strip was less zealous, up only about 70 cents at the close. June takes over tomorrow as the front month contract and is trading at 83.89.

108. restarting helped me. Where is BOP? Knocked out?

109. Z – I can see the site now using my backup ISP.

     Does EXXI need a secondary?

110. I’m back on main site, thanks

111. BOP is out running errands.

     EXXI – I don’t think so yet.

112. RS – great, glad to hear that, lemme know over there if you get kicked off over here again.

113. Haven’t lost you but maybe I have. Very slow!

114. VTZ, how’re you thinking about valuation and target ranges on ATH? I’ve spent a lot more time on Canadians with actual proved/probable, haven’t done a lot on these near 100% contingent resource plays… Also, do you have any idea when the next resource update is coming?

115. beerthirty.

116. Well, keep in mind it’s only classified as proved/probable because they haven’t drilled a well yet and aren’t producing. I would call it reserves (in the Dover, MacKay and Hangingstone areas). There is no uncertainty whatsoever here. Maybe you could argue about recovery factors although you can find similar projects (ie Suncor/PetroCan Mackay and other Hanginstone and Dover projects).

     The only truly unproven reserves in my books are the carbonates.

     As a Baseline, the Dover and MacKay properties could be put to PetroChina if they don’t work out for ~2 billion $ then they would be able to develop the remainder of their properties. Keep in mind that their balance sheet is already in very good condition.

     Ultimately there is no rush to buy it though, as I don’t believe their development timelines. That being said, these are quality assets!!!

     Market cap today is $5.8B CADs. Add in the cash and put options and then you have an enterprise value of much lower.

     I’m going to sort through their financials that they issued yesterday.

117. MHR on Z’s Catalyst List. Just like sending your child off to college!

118. Massive beat at AAPL

119. 8.75 mm iphones vs 7.5 mm target

120. Eli – See … I listen.

121. hey!! so sorry to drop the ball today. Had some stuff that kept me away much longer than planned.

     WTF with EXXI? Rumor of a 2ndary would explain the drop. But unless they are planning on buying something, I don’t see where they need it. I mean, it sucks to be a tiple-C credit… but if you have hedges and free cash flow, it’s liveable. I would LOVE it if they did another acqtn like the Mitsui deal… which was accretive from the git-go. But, can’t think of why else.

     Will have to nose around.

     GS closed down for the day. So much for HeadTrader’s touch-stone. I don’t think anybody in the credit world thinks the GS charges hold water… but, equities were looking for reasons to sell off, after they got tired of kicking Greece around. So, the SEC charges were as good an excuse as any.

     Meanwhile, earnings continue to roll in and not stink. Bond spreads are verging on the point of not being all that compelling any more… making equities the best asset class in town right now… even if some people are thinking we will have a 10 or 20% or more correction. Ha. I am not in that group. There’s always the chance of a meteorite hitting Wall Street, or something, of course.

122. Forecaster WSI ups hurricane season forecast

123. EXXI CEO Schiller has stated on several occassions that he sees some tasty GoM properties out there and sees EXXI as a “consolidator” on the shelf. Maybe he found a shiny bauble that is just too compelling. Thing is, he does know how to drive a good bargin (ref: Mistui acqtn). However, his currency has appreciated… and I hope he doesn’t go all Loosey Goosey on us, buying up stuff Just To Get Bigger.

     The BOP Spy Network is out there, trying to get to the bottom of this. Chances are, could be true… but better be coupled with a HECK of a nice asset acqtn at the same time. (Last time they did a 2ndary, the stock digested it for about 2 weeks — due to the asinine issuance of a convertible preferred at the same time — then began it’s upward trajectory. Can’t claim the same will happen this time, but the right acqtn at the right price is not necessarily a BAD thing. Just whacks the stock price upside the head for a bit. Which is always an experience one would like to avoid… but comes with the territory too.)

     I know… ramble, ramble, ramble.

124. Please keep rambling.

125. The Spy Network has circled back with an answer. No 2ndary.

     Two aggessive Asshole Banks (but i repeat myself) were pitching a deal, trying to drum up Underwriting Fees. But, no go. Schiller doesn’t need to push out bond maturities and he doesn’t need the money right now. Bottom line = being told he AIN’T gonna dilute us little people (or the really really smart private funds who hold the majority of his equity).

     So, there was fire, under the smoke of that 2ndary rumor… but it sounds like Schiller stomped it out. And the i-bankers went home empty-handed.

     (Have I mentioned recently that I still haven’t forgiven Schiller for issuing that 7.25% Perpetual Convertible Perferred? One should bring it up to him, as often as possible, least he forget and do something that stoopid again.)

126. AAPL Makes you want to give up the energy markets! I have to admit selling to reposition has been very tough as it is hard to get any good entry points.

127. Ha! And just to put the Cynical Cherry On Top… I would not be surprised if the Trading Desks of said Asshole Bankers were actually shorting the stock today. “That’s not legal!” you cry. Ha. Double-HA. I hope the stock snaps back in their nasty little short faces tomorrow morning.

     Rant (and reporting) over.

128. Thanks much BOP, good dd.

129. API’s were pretty bullish. Last week they ran opposite to EIA so this may be a bit of a true up.

130. #125-“Asshole Banks (but I repeat myself)”

     Classic!!!!

     Z, I think BOP should be awarded a cap, t-shirt, or coffee cup for the comment of the month.

131. BedTime Market Strategist

     Resume Rally or Sellable Snapback?

     The S&P 500 today was a session of respectable upside follow through to the bounce following Friday’s selloff. For only the 3rd session since September Slaughter of 2008, the S&P 500 closed above the 1200 level. Even more impressive is that today’s gains were registered despite some high profile blue chip companies trading off post earnings. As a result, the Dow Industrials underperformed the S&P 500 by 58 basis points and the Russell 2000 by 120 basis points. The real question investors are asking themselves is now that the SEC Goldman Sachs* story has had a couple of sessions to be digested, can the rally resume or is this simply a technical snapback that should be sold? If an equal standard were applied across Wall Street with respect to synthetic CDO’s, then most banks should expect similar suits. The rise in the Financials today indicates that at least for now, the market is anticipating that this will remain a problem unique to Goldman. Despite the market’s interpretation, a risk, or at a minimum, uncertainty, remains. On the other hand, it appears as though Energy may be emerging as a new leadership sector. Crude continues to toil with the $85 level, but the S&P 500 Energy Sector posted a new closing high and is poised to breakout above the 453-458 resistance levels of the October and January peaks. The key determinant as to whether this is a resumption of the rally or a sellable snapback is how quickly the S&P 500 gets back above, and stays above, 1210. A gap-up opening in Apple does not do much to help (it probably hurts) the sustainability of a move above 1210 tomorrow.

     Victim’s Rights.

     It is still hard to get over the sympathy for some of the alleged “victims” of the subprime crisis. Now there is concern in Washington that AIG was taken advantage of. Remarkable, the company had a Trillion Dollar derivatives book, but people are worried they were taken advantage of. As you know, similar concerns were recently expressed for ACA and IKB, two firms whose businesses centered around derivatives. In February 2004, Risk magazine published an article by Nicholas Dunbar titled “Conservative Mittelstand lender IKB has transformed itself into Germany’s biggest investor in structured credit – with a taste for riskier deals.” Apparently, IKB was not a novice in the land of synthetic CDO’s. “In April 2000, for instance, the bank had issued a €500 million balance-sheet synthetic collateralized debt obligation (CDO) arranged by Deutsche Bank, and subsequently two €3 billion synthetic CLOs with KfW.” They were among the pioneers in using “credit enhancement” by having the bank provide a liquidity backstop to their SIV Conduit dubbed “Rhineland.” Dirk Röthig, who built the business at IKB, explained how advanced they were. “Thus while Rhineland contains CDOs with exposure to Enron, WorldCom and most recently Parmalat, the effect does not constitute a loss,” says Röthig. “We’ve seen a few downgrades. But the structures could cover even these kinds of losses without being really affected in a way that could see losses in the tranches we are holding,” IKB insiders were not the only ones impressed by their acumen. “Since IKB is known to have heavily invested in mezzanine-level CDO tranches, do the bank’s steadily improving investment performance numbers prove that IKB’s risk taking has paid off? The rating agencies think so. ‘It sounds like quite a profitable strategy,’ says Moody’s Lautier. Bankers concur. One Frankfurt-based structured credit salesman at a major bank says, ‘They’re very sophisticated and smart investors. They can price a CDO to the last basis point’.” Interestingly, a Fortune article from 2007 after IKB imploded notes that Röthig left IKB in early 2006 as he clashed with his superiors, over among other things “his dispute involved a refusal by superiors to allow him to back off his aggressive strategy.” The level of sympathy being extended to the players who nearly blew up the system is astounding.

132. ZCAT and ZIM updated:
     http://zmansenergybrain.com/subscriber-data/holdings-wiki/

133. Hopefully the site will be working better tomorrow. Good night.

134. Seems to me the GS thing IS vaguely about Victim’s Rights only. It is not about whether GS lost $ on the deal (irrelevant), whether the buyer was sophisticated (irrelevant), whether the buyer knew there was a seller (duh) short or not (irrelevant). It is about whether GS owed more disclosure to the buyer as a party (third party or some form of principal) to the trade which was not disclosed. But hey, what do I know? The issue is disclosure.

135. Great – now I can log on.

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