Thursday, June 26, 2008

Investors see higher risk of GM default: Financial News - Yahoo! Finance

Things are getting messy out there.  It used to be that $33k or $66k would have been okay for swap insurance.  Then it was $100k.  Risk-free borrowing was virtually, well, free.

Now it costs over $3 million to borrow $10 million? 

Not gonna happen.  Money no longer grows with CDS.  How does it work?

The cost to insure GM's debt with credit default swaps rose to 33.5 percent upfront, or $3.35 million per year for five years to insure $10 million in debt, plus annual payments of 500 basis points, according to Markit.

Investors see higher risk of GM default: Financial News - Yahoo! Finance

The Fed Overnight rate has gone from an average of 3.94% in January to it's current rate of 1.98%... or free money... however it's not going to last.  The hold on Fed funds caused a plunge in the markets that could cause another "cry wolf" scenario over the weekend and someone to bail.

Will it be GM?  GE?  Boeing?  Oshkosh B'gosh?

Libor spike could be the cause of this too... or the opposite?

Some large caps with low P/E's

Altria - smoking will probably go up after today.
Barclays - Nobody wants a bank stock in this day and age... even if it yields 14%.  Down by half 52wk.
ING Groep - Your money?
Lloyds TSB - Nobody wants insurance... Even if it yields 14%?  Down just below half 52wk.
National Grid - What's wrong with UNG & electricity in the UK & US?

Interesting to note that ADRs are the lowest P/E.... probably due to the premium in holding them.

Other low P/E - high Yield stocks... according to Google Stock Screener.


Company Name Symbol  Market Cap  P/E Ratio  Dividend Yield (%)  52w Price Change (%)  
Aircastle Limited  AYR 622.98M 4.13 11.42 -79.40
Anthracite Capital Inc.  AHR 501.18M 4.64 15.29 -37.61
Arbor Realty Trust, Inc.  ABR 203.16M 2.36 24.08 -61.48
Bank of Ireland (ADR)  IRE 9.44B 3.45 12.54 -53.92
Barclays PLC (ADR)  BCS 40.19B 4.65 14.72 -58.42
Capital Trust, Inc.  CT 415.33M 3.96 12.74 -41.69
Gramercy Capital Corp.  GKK 624.75M 2.22 18.78 -56.45
KeyCorp  KEY 5.51B 5.72 13.01 -68.56
Lloyds TSB Group plc (ADR)  LYG 35.28B 5.40 14.82 -44.49
MCG Capital Corporation  MCGC 317.60M 4.59 25.47 -74.31
Northstar Realty Finance Corp.  NRF 529.59M 2.66 16.25 -30.64
Universal Insurance Holdings, Inc.  UVE 140.26M 2.63 12.38 -55.06

Aircastle - +Gas price = -AYR

Anthracite - Dividend increased, along with going to the market? Sounds fishy...

Arbor - Structured finance??? Who does that anymore?

Bank of Ireland - On strike.

I could go on... there's nothing that's of interest here though... except maybe Gramercy?

Keycorp raising 1.5B and halving dividend.

Lloyds buying a bank?

MCG Capital?  Too small to worry about.

How about Colonial BancGroup?  Last year?  $22/shr.  This year?  $4/shr.

Raises $333 million in the markets.

Robert Lowder has been CEO since 1981.  He's 65?  Time to retire? 

He probably wishes he did last year.

The second-largest bank in Alabama isn't doing so well, according to the share price.

Might be worth a look.

No comments: