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Thanks Hank. Glad you dropped by. I like the open format of the board and I think you will too. Dedicated boards for longs only are not for me. I may drop by one of those dedicated boards here and there but not like the old days.
Thanks. I've been following along. Just waiting for some clarity. We should get some next week.
FGOCQ: Picked up some shares this week in anticipation of the court decision on whether to convert the Chapter 11 reorganization to a Chapter 7 liquidation. Court hearing was this past week but no related docs have been released to the docket on PACER. The threat of a Chapter 7 conversion has created some selling pressure. If Firstgold is allowed to continue to reorganize as a stanadalone company there may be a nice pop in the price. If it goes Chapter 7, the equity will be zeroed out and most creditors will be receiving a huge haircut.
Not sure if i'd go long for any other purpose than for the momentum. This company has some headwinds with departing executives and its inability to resume production for many months at its main mining operation. Also, the small DIP loan it received was ridiculously lucrative for the insiders who extended it to the company (400% annualized return). Many of the debtholders and unsecured claimants are stockholders because they were equitized in lieu of receiving payment for services rendered. I generally do not like this because if the company executives were really bullish on the stock then they would be incentivized to do anything within their power to avoid dilution due to simple operating expenses. They were giving the stock out like candy in the months leading up to bankruptcy, so you make your own judgment as to its value in the eyes of management...
This one ain't for "momma" but might yield a nice return in a short timeframe. This is an event-driven situation, not a buy and hold proposition.
I wrote a short case summary a few months ago if anyone is interested in looking at it, see the link below.
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=46526855
Thanks Jax. Appreciate your diligence efforts, as always.
I am not sure that the "seized" part is quite as bad as it sounds. I believe that operating as a Debtor in Posession within the German bankruptcy system is not as common as it is in the U.S. My understanding of the way it works in Germany is more like when a Trustee is appointed in a U.S. case to administer the bankruptcy proceedings in the stead of current management. As a debtor in posession one has more administrative control over the company while operating inside a bankruptcy proceeding. In any event, the return to full operating capacity should bode well for a sale or in the event that the German sub reorganizes as a standalone company.
Tronox German TiO2 plant hits capacity
According to the publication, Industrial Minerals, Tronox Pigments GmbH ramps up production to meet stronger demand and is at full capacity. I do not have a subscription, if someone does, please give us an update. All I have to go on is the teaser, but it is enough for me to assume that there might be some value remaining in that venture that was written off 100% not too long ago.
http://www.indmin.com/Article/2472997/German-TiO2-plant-hits-capacity.html
SIXOQ: The Trustee, the Unsecured Creditors, the SFO committee, HSBC Bank and Resilient Capital all filed objections to the current plan of reorg yesterday for varying reasons. Some were outright ojections and some were limited objections. The link to the docket is below. Resilient Capital still contends that the PIERS are entitled to a 100% recovery and that management should not be given a 15% stake in the newco while the PIERS (SIXOQ) are offered no recovery. They cite recent precedent within the Delaware bk district that precludes substantial equity being given to management if shareholders are zeroed out. The largest recently approved stake for management is apparently 10% in the Delaware district. There may yet be nuisance value and perhaps more for the Six Flags PIERS.
http://www.kccllc.net/Docket/SearchResults.asp?T=1343
I am not sure that the issue is settled, but I am also not 100%sure that there is an issue. I have to do some work on this but my understanding is that those properties were originally purchased/acquired from the Department of Defense and that there were certain indemnities granted in connection with that transaction. If this is true then it would explain why the company disclosed in the footnotes of the MOR that they expect to eventually record a receivable for a substantial portion of the $55 million charge recorded in March.
Thanks for following up on this and sharing your findings.
Tronox March 2010 MOR Spread
http://tronoxequity.blogspot.com/2010/04/tronox-march-2010-monthly-operating.html
The Tronox March 2010 MOR was released today. The report showed $14.3 million in EBITDA which marks a post-petition high. On an annual basis, this last month’s performance would yield LMA EBITDA of $171.6 million. In addition, the company achieved the highest level of net sales ($65.5 million) and highest gross profit margin (20.92%) in the post-petition era.
To the casual observer the $55.6 environmental reserve allocation is unappetizing but the report footnotes indicate that the Company expects a substantial portion of that reserve to be refunded from insurance proceeds although they have not yet recorded a corresponding receivable. It should also be noted that this report excludes the performance of the non-debtor subs. Perhaps we will see a 2015.3(a) report in the future to shed some light on the financial condition and results of operations from the non-debtor subs so that the true value and cash position of the company may be revealed.
Tronox March 2010 Monthly Operating Report Spread
http://tronoxequity.blogspot.com/2010/04/tronox-march-2010-monthly-operating.html
The Tronox March 2010 MOR was released today. The report showed $14.3 million in EBITDA which marks a post-petition high. On an annual basis, this last month’s performance would yield LMA EBITDA of $171.6 million. In addition, the company achieved the highest level of net sales ($65.5 million) and highest gross profit margin (20.92%) in the post-petition era.
To the casual observer the $55.6 environmental reserve allocation is unappetizing but the report footnotes indicate that the Company expects a substantial portion of that reserve to be refunded from insurance proceeds although they have not yet recorded a corresponding receivable. It should also be noted that this report excludes the performance of the non-debtor subs. Perhaps we will see a 2015.3(a) report in the future to shed some light on the financial condition and results of operations from the non-debtor subs so that the true value and cash position of the company may be revealed.
Whatever Happened to Tronox’s 2015.3(a) Report?
New blog post
http://tronoxequity.blogspot.com/2010/04/whatever-happened-to-tronoxs-20153a.html
Whatever Happened to Tronox’s 2015.3(a) Report?
New blog post
http://tronoxequity.blogspot.com/2010/04/whatever-happened-to-tronoxs-20153a.html
CEMJQ Chemtura Submits March 2010 Monthly Operating Report
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=49050573
Book value might come into play in a chapter 7 liquidation but in a reorganization proceeding, the generation of cash and earnings, is king. The Supreme court has defined reorganization value to be "the expectation of income" from the reorganized debtor. In addition, another definiton used by the courts is "present value of future anticipated earnings".
There are a couple of methodologies that might be used, one is the comparable company analysis and the other is the discounted cash flow method. In some cases both methodologies would be employed and perhaps the entity value might be struck from a combination of the two. The comparable company analysis will give credence to what other similarly situated companies are valued at based on their performance and the DCF method is largely concerned with the ability of the reorganized company to generate cash to pay its obligations, reinvest back in the business, or return something to the equity holders.
In either event, the EV is largely derived from the cash flows (EBITDA or Free Cash Flows) of the business and not the balance sheet. The balance sheet reflecting positive equity may come into play if the company has significant cash on hand or if it has positive working capital because these can be used as sources of funds to reduce the debt. You can't assign value in this methodology to an asset that will not be liquidated into cash. Doing so reverts the valuation methodology to one that might be used in a chapter 7 liquidation. These restructurings are more appropriately viewed as one might value a buyout situation.
One caution against payning too much attention to a balance sheet showing only marginal equity value is that any Goodwill will likely be written down to zero. Also, one has to pay attention to other assets that may be written down. In MESAQ's case, it is highly unlikely that the planes are worth their book value so there is probably some impairment to be taken at some point. The 20 planes that were rejected and returned to the secured lenders were worth about $18 million less than what Mesa owed on them. The book value of the rejected planes was $14 million and the liabilities associated were $32 million. You can project that across the remaining fleet.
Also, as I mentioned before, don't ignore the effects of the plane lease rejections. Those are not currently in the liabilities section of the balance sheet. They are currently "off blance sheet". As each plane is rejected, there will be an associated liability injected on the balance sheet for which there will be no corresponding increase in an asset. This event will erode the equity by the amount of the allowed rejected claim.
CEMJQ Chemtura Submits March 2010 Monthly Operating Report
Chemtura Corp and related Debtors in Posession released their March 2010 MOR today. The Debtors reported a net loss of $25 million and EBITDA of $15 million, net of one-time charges. The EBITDA does not consider the effects of the operations of the non-debtor subs which are not consolidated on a court filed MOR. The investment in sub account increased by $7 million and equity in earnings of sub came in at $5 million.
The debtors reported a net decrease in Liabilities Subject to Compromise of $28 million which was largely attributable to a $45 million reduction in post-retirement medical benefit obligations. The Debtors also reported that $4 million of the depreciation and $4 million in charges related to asset retirement obligations was on an accelerated basis due to the idling of the Flame Retardant plant in Eldorado, Arkansas.
http://chemturaresearch.blogspot.com/2010/04/chemtura-submits-march-2010-monthly.html
CEMJQ March 2010 MOR is out on PACER
Net Sales: $223 million
Operating Loss: $8 million
Net Loss: $25 million
EBITDA (net of D & A and Items): $15 million
I don't believe Gallen would be selling. If I remember correctly, he is the representative of AHAB capital that is on the equity committee. Those shares should be locked up as he has gone "over the information wall".
In looking at the last 2 MORs, MESAQ looks to have EBITDA of $9.8 million for those 2 months. This would project out to be $58.6 million on an annualized basis. Now apply a generous multiple of 8 times (current multiple for non bankrupt competitor RJET) and the EV would be $469 million. This also happens to be the reported EV on Yahoo finance as of 04/15/10.
With total liabilities of $850 million which includes liabilities subject to compromise of $536 million, the EV of $469 million just doesn't quite get there even with a generous multiple. Keep in mind that these numbers don’t reflect the lease rejections claims that are currently “off balance sheet”. Still worth watching to see how the future MORs might shape up but I don’t think the prospects are as favorable as a PGPDQ, GGP, CEMJQ, or TRXAQ situation.
MESAQ lease rejection estimation
The following statement comes from the article linked at the bottom of the page
“11 U.S.C. 502(b)(6) fixes the damages that may result when a debtor-tenant rejects a lease. The lease rejection damage claim is calculated based on the remaining term of the lease and is limited to the greater of the rent reserved for (i) one year or (ii) 15 percent of the remaining lease term, but no more than three years…”
Here is a back of the napkin calculation on what the obligations under the rejected leases might be assuming they would be responsible for 3 years worth of lease payments. Bear in mind I looked at this a few months back so I have not followed the case for a while. It is a very rough sketch at this point. I cannot find in the 10-k or any 10-q's where the company breaks out its lease expenses into its constituent components but it does appear that the lease expense is included in "Flight Operations." I necessarily make some assumptions below and have not accounted for any related benefit they would receive, expense wise, from the plane rejections. The amounts below are in millions.
($80) Quarterly Flight Operations costs (per 06/30/09 10-Q)
($64) 80% assumed to be lease related
($256) Annualized lease expense
($85) Rejecting 1/3rd of leased fleet (about 50 planes)
($256) 3 years worth of obligations on rejected leased fleet
So the estimated claims on lease rejection under this estimate would be about $250 million. Based on this estimation the company will have to negotiate a much better deal than the standard 3 years worth of obligations in order to preserve value to equity even if they win the Delta lawsuit. I encourage anyone/everyone to shoot holes in the assumption so we can get to the actual numbers.
Link to Lease Rejection Article:
http://www.lowenstein.com/files/Publication/608edb76-c593-4610-90b3-19eb24d3e1bb/Presentation/PublicationAttachment/d4d398f1-4e13-4653-90c6-1d6650fda49a/NJLJ%20-%20IL%20&%20BB%2002-04-02.pdf
Right, looks like the arbitrage play is back on for a couple of weeks.
RGCIQ press release from this morning:
Regent Communications Announces Court Confirmation of Its Plan of Reorganization
PR Newswire
CINCINNATI, April 13
CINCINNATI, April 13 /PRNewswire-FirstCall/ --
Regent Communications, Inc. (Pink Sheets: RGCIQ) announced today that the United States Bankruptcy Court for the District of Delaware has confirmed the Company's Plan of Reorganization (the Plan).
"The reorganization plan will allow Regent Communications to emerge from Chapter 11, after only sixty days, with the financial flexibility necessary to ensure the continued pursuit of our strategic objectives," said Bill Stakelin, Regent's President and CEO. "This new capital structure will allow us to continue to invest in our operations and maximize our growth potential in the recovering advertising marketplace."
Regent Communications expects its Plan to become effective on or about April 27, 2010, once all closing conditions have been met.
All outstanding shares of the Company's common stock will be extinguished on the Plan's effective date. As provided in the Plan, the Company expects that stockholders of record holding shares on that date will receive a distribution of approximately $0.128 per share by early to mid May.
On March 1, 2010, Regent Communications and its subsidiaries filed voluntary joint petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the District of Delaware. Additional information surrounding the Company's restructuring, including copies of the Plan and Confirmation Order, will be available at www.regentcomm.com.
About Regent Communications
Regent Communications, Inc. is a radio broadcasting company focused on acquiring, developing and operating radio stations in mid-sized markets. Regent owns and operates 62 stations located in 13 markets. The Company's shares are traded over the counter under the symbol "RGCIQ.PK".
This press release includes certain forward-looking statements with respect to Regent Communications, Inc. for which it claims the protections of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve certain risks and uncertainties and include statements preceded by, followed by or that include words such as "anticipate," "believe," "plan," "estimate," "expect," "intend," "project" and other similar expressions. Although Regent believes expectations reflected in these forward-looking statements are based on reasonable assumptions, such statements are influenced by financial position, business strategy, budgets, projected costs, and plans and objectives of management for future operations, as well as the process the Company is undertaking with its reorganization and emergence under Chapter 11 of the U.S. Bankruptcy Court. Actual results and developments may differ materially from those conveyed in the forward-looking statements based on various factors including, but not limited to: changes in economic, business and market conditions affecting the radio broadcast industry, the markets in which we operate, and nationally; increased competition for attractive radio properties and advertising dollars; increased competition from emerging technologies; fluctuations in the cost of operating radio properties; the Company's ability to manage growth; the Company's ability to effectively integrate its acquisitions; potential costs relating to stockholder demands; changes in the regulatory climate affecting radio broadcast companies; cancellations, disruptions or postponement of advertising schedules in response to national or world events; and the Company's ability to regain and maintain compliance with the terms of its credit facilities or to refinance or restructure such obligations. Further information on other factors that could affect the financial results of Regent Communications, Inc. is included in Regent's filings with the Securities and Exchange Commission. These documents are available free of charge at the Commission's website at http://www.sec.gov and/or from Regent Communications, Inc.
SOURCE Regent Communications, Inc.
I believe he means most popular on IHUB as opposed to this particular message board ;)
Iggles, This isn't directed at you, I am just piggybacking off your post because yours is the type of post I am trying to draw out and encourage.
My hope is that we can get some alternative ideas in here and maybe some new names. The "golden age" of distressed equity will not last forever. We will one day have to adapt to a changing economic and market climate. If we can build a board that is primarily composed of good ideas and research as opposed to pumping then this little corner of IHUB will offer something value added. If not then it will devolve and become, at best, a collection of posts consisting of stock symbols and "to da moon" references devoid of any substance.
Since there is plenty of that out there already, I thought we could try something different and that might involve entertaining questions and responding to posts that would get lambasted on other boards.
All I ask of everyone is patience. I hold down a full-time job in addition to my distressed research. I also have a wife and 3 kids. If I don't respond quickly to someone's question directed at me then you will all know why. Also, if I haven't heard of a stock or haven't done any research on it then it will take me a while to get up to speed. If I am going to research something, I will spend hours or days on it, not just a few minutes glancing at the chart. Burning it at both ends of the candle wears me down at times so if I disappear for a few days, you will all know why.
My hope is that we can all learn from each other by sharing ideas but I am not a philanthropist. If it gets too one sided where it is me talking to myself with no valuable feedback then I probably disappear. I don't expect that to be the case because I have shared phone calls or emails or PM's with a ton of really smart people who I hope will participate more actively in an environment where they are free to speak their minds and ask tough questions.
With all that said...
Best wishes
Thanks Iggles. Nice to have you.
Nice to see you as well, Josh.
Re: FGCIQ Equity Committee Motion Denial
Judge Gross appears to take a hardline stance based on some of his past decisions and he held true to form in this case. There is a key hurdle that any equity committee movant must get past in order to gain approval, the question is which will it be?
1. The burden of proving the debtor is not hopelessly insolvent; or
2. The burden of proving that the equity constituency has a "substantial liklihood" of a meaningful recovery.
Burden #2 is much more difficult to get past in the early stages of a bankruptcy case because performing a valuation on the debtors estates at a forward date of 12 to 18 months down the road is not always possible because of market uncertainties, size of the claims pool, environmental claims, litigation, etc. In short the picture is unclear in the early going, so burden #1 is perhaps the most prudent standard at that point in time. The subtleties of which argument to take will always be on a case-by-case basis and largely hang on which side of the argument one is on.
Since this case had a valuation in hand and the equity committee movant did not provide their own but had an opportunity to cross examine the preparer, the court held to burden of proof standard #2 which, given the facts and circumstances of the case, was probably the most prudent decision.
Anyone contemplating an equity committee formation in a case presided over by Judge Gross will also want to take note of the following:
"The Court first observes that Resilient did not first request that the Office of the United States Trustee ("OUST") appoint an equity committee. The OUST did not object to the Motion and the Court accepts Resilient's explanation that it did not have the necessary time because of Debtors' timetable."
http://www.kccllc.net/documents/1010632/1010632100412000000000002.pdf
Looks like the EC was denied and the POR was approved. The documents are out on PACER.
RGCIQ: I just checked PACER and the EC was denied. There is also a document entitled "Findings of Fact and Conclusions of Law and Order Confirming the First Amended Joint Plan of Reorganization of Regent Communications, Inc. and its Debtor Affiliates."
We welcome the Faustian wisdom anytime, whether it be from Mr. or Mrs. ;)
TRXAQ bonds have traded as high as $115 today.
http://cxa.marketwatch.com/finra/BondCenter/BondDetail.aspx?ID=ODk3MDUzQUIw
Thanks Pinky. Keep the ideas coming.
If you see interesting options develop for Cedar Fair (FUN) let us know. There is a wide gap between the current stock price and where strong chart support might come into play if the stock price rolls over. With the $11.50 bid scenario off the table I am interested to see if the price support holds up. I will have to look further into the fundamentals of the company before taking any position.
I know that there have been a number of really great folks working really hard on ABWTQ to protect their interests by building a dedicated blog and trying to get actively involved at the court level. I applaud their efforts and don't wish to be disparaging in the least. I looked at it as being a long-shot and just devoted my attention elsewhere. In addition, it is an extremely large company with a lot of moving parts and I didn't need another complex case, lol. There are limitations regarding time and available funds that we all operate under and the universe of distressed stocks was absolutely overwhelming during 2009. I will have to take a deeper look at ABWTQ.
I haven't followed MESAQ closely in a while but I will look at it again tonight. At the time that stock broke into the "Q" land I had a nice position and it began to run like crazy during a time that TRXAQ was getting extremely attractive and I opted to shift funds to Tronox.
The issue I couldn't get my arms around regarding MESAQ is some estimate the final lease rejection claims number. There are/were $1.6 Billion in off balance sheet leases and it was unclear to me, at that time, as to the dollar amount that would come onto the balance sheet as "liabilities subject to compromise". I will look to see if there is more clarity on that at this point. One thing is for sure, that stock has tremendous retail support.
We should be getting close to seeing some 13f-hr and other institutional holding reports that will be "as of" some date that is beyond the bankruptcy petition date. Any of those holding reports that have an "as of" date that is prior to the bk filing will be of little use or value. I want to see who held through that date, what amount did they hold and who acquired post petition. My guess is that not many held through that date because the entire float turned over about 125% in the 7-10 days following the petition date.
Cheeyeow, I have not looked at the merits of the ABWTQ case recently so I can't speak to anything beyond the available financials. I briefly glanced at its December 31, 2009 10-K. It shows a negative equity of over $1.97 Billion or negative $34.12 per share of book value equity. For the 12 months ended Dec. 31, 2009 they had losses of $26.91 per share. The way I see it, they are technically insolvent from a balance sheet perspective and one might have a strong argument for hopeless insolvency. Also, at first glance, I don’t see any significant institutional ownership. This doesn’t mean that there isn’t a catalyst for recovery; I just don’t know what it would be because I haven’t looked for it.
This is one that I cannot get behind because of the financials and I have to stay true to my methodology even if it means missing out on a nice trade. I am a fundamentalist first but I do pay homage to the technicals in the interim period between changes in the underlying fundamentals.
I know the Monthly Operating reports tell a different story for ABWTQ, but one has to be very careful when using Monthly Operating Reports. They are best used for the income statement portion on a standalone basis, if they are used at all. Use the balance sheets of an MOR only when comparing one MOR to another to track the CHANGES only, never rely on the balance sheet of an MOR by itself. In the absence of an SEC filed financial statement, the only thing you have to go on is the MOR but in ABWTQ''s case you have 10-Q's and 10-Ks, so they are the best source.
The information available on the 10-Q or 10-K is more reliable as it is consolidated and is in conformance with GAAP. When you see the "investment in sub" account on any balance sheet (like the MOR) it is one signal that the financials are not consolidated and therefore cannot be relied upon in making an investment decision because we do not know exactly what the eliminations are. In ABWTQ’s case, the Investment in Sub account on the MOR is/was 3.1 billion, I haven’t looked in a while. You can establish useful trends (like I do with CEMJQ & TRXAQ) in comparing one MOR or one unconsolidated financial report to another but to view them as a snapshot in time as a true measure of the value of the firm is futile. If you want to see what the true remaining equity is, look at the 10-K.
In summary, I don’t see any meaningful recovery for the common shares of ABWTQ based on what we know of the financials and the bond pricing. The bonds may have moved recently but the highest price for any of the senior bonds is 46 cents on the dollar and the lowest of the junior debt is 15 cents on the dollar. For the common shares to have any value upon emergence, all of the bonds would have to have a recovery in full. The bond market typically is made up of much more sophisticated investors than the equity markets and the bond market is pricing in an extremely large haircut for both the senior and junior debt. This outlook and opinion won’t be popular here on IHUB but this is how I see it.
If anyone knows of some catalyst for recovery that allows equity to overcome the near $2 Billion in negative equity, please pass it along. Before I get deeply involved in a case I have to see an SEC filed financial statement that shows equity is either “in the money” or close to the money or I have to know of some other catalyst at play (like WAMPQ/WAMKQ). I am intrigued by the recent rally in the ABWTQ stock price and would be interested to know if there is any news behind it.
I believe the participation in that market is probably limited to institutional and other high net worth participants. I feel sure I can't execute such a transaction on Ameritrade, lol.
I just put the link out there as another thing for folks to watch for. With these distressed plays, one of the best and most meaningful catalysts is for an institution to get involved post-petition, like CEMJQ, GGP and RGCIQ.
I ordered Reminiscences of a Stock Operator along with Liar's Poker and it is next on my list. It is a shame I have not read either of those books sooner. Reminsicences has been recommended to me by 3 different people so I felt it was time to act on it.
That is an excellent question. Unfortunately the complete answer might be more appropriately answered in a book as opposed to a post on a message board.
If you are looking simply for the starting point or "what do I do once I have a stock symbol?" I would first look to the financial statements. Preferably begin with SEC filed financials. In most bankruptcy cases, the debotrs are insolvent from a balance sheet perspective. Those that are "hopelessly insolvent" I will typically bypass. For those that show to be "in the money" or just slightly "out of the money" from a balance sheet perspective, I will look to some or all of the following (in no particular order) in search of potential catalysts for recovery:
Recent news regarding what led to the bankruptcy
Affidavit in support of first day motions
Prepackaged plan of reorganization
DIP financing existence, terms and approval
Other court documents
Institutional Equity ownership
Bond & Equity Ownership turnover after bk announcement
Post-petition acquisitions
Bond pricing and ownership
Short Interest
Monthly operating reports
Analyst Coverage or Institutional reports
Chart support and 52 week High/Low
Trading volume
Retail support and interest (Stock message boards & Blogs)
Other research as avaliable and applicable
Many who do not understand distressed investing and/or fear owning a company in bankruptcy probably dismiss or fear because they have not taken the time to understand it or are not disciplined enough to do the required research or don't trust themselves enough to go to sleep at night owning a stock for which the only available analysis is what is in their head. In this world, there are very few people putting the information out there, for free or for pay, in an understandable format. With the absence of such available information, one is often left to their own devices or they might band together in message boards such as this one to bounce their ideas off of others. I find that there is often much more available information about bankrupt companies and it is made available with greater frequency than it would be were the company not in bankruptcy.
The trick is to learn where to get the information, how to get it fast, and how to process it, understand it and act on it faster than the rest of the market. Those who both acquire these skills and posess the discipline to process the information on a daily basis will be able to get ahead of the vast majority of the market sometimes by a matter of hours, days or even weeks.
Total Return Swaps TRORS
Here is a good introductory article on the subject of Total Return Swaps. There are several reasons an institution might utilize these financial vehicles and one of the main reasons is leverage. In entering a swap agreement, one party agrees to allow another party to "borrow" a security in return for a set payout (usually some rate of interest). The other party effectively takes a long position without actually owning the underlying security, thereby preserving liquidity and increasing leverage. They have effectively rented the underlying security and will participate in the upside of the security that is over and above the rate of interest paid in order to borrow it. At the end of the term the borrower may agree to purchase the stock, enter the borrowing ageement again or move on to another trade.
By using TRORS, back in January 2009, Bill Ackman and Pershing Square cobtained exposure to 52 million shares of General Growth Properties (GGP) in addition to the 22 million it beneficially owned.
http://www.financial-edu.com/total-return-swap-trs.php
Financial Podcasts: Here are a few that I listen to regularly. These are all of a financial nature. You can follow the links or subscribe to these for free in itunes. I recommend listening to all of these regularly if you want to keep up with the pulse of the markets. There are many different perspectives that are presented and that is why I like to listen to them all.
DH Unplugged (John C. Dvorak & Andrew Horowitz)
http://www.dhunplugged.com/
The Disciplined Investor (Andrew Horowitz)
http://www.thedisciplinedinvestor.com/blog/category/podcasts/
S & A Investor Radio (Frank Curzio)
http://www.arobinsonproduction.com/podcast/
Stocks & Jocks (Tom “The Chief” Haugh & Jon "Dr. J" Najarian)
http://www.stocksandjocks.net/
Wall Street Unspun with Peter Schiff
http://www.europac.net/radioshow.asp
I’ll add these to the IBOX. If anyone has any others they can recommend, please do so.