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Strategies & Market Trends : Waiting for the big Kahuna -- Ignore unavailable to you. Want to Upgrade?

To: carranza2 who wrote (87207)	4/13/2009 7:12:26 PM
From: HammerHead	Respond to of 94695

I think we will find out by Q4. I have been bearish since August 2007 until last month, so I am still carefully watching...

To: carranza2 who wrote (87207)	4/14/2009 9:04:52 AM
From: carranza2	Respond to of 94695

How Goldman Did It or Why is GS Selling Shares If Things Are So Good? The stock sales coupled with a terrific quarter made absolutely no sense. There was a smelly log in the soup bowl somewhere. Here it is. Keep your eye on the ball: From today's call: 7:25 a.m.\| A.I.G.: Guy Moszkowski of Merrill Lynch wants to know if they made money from the now-famous government-financed American International Group transactions. The answer is cautious.Most of the impact was in December. For the first quarter, the total A.I.G. effect on earnings was, in round numbers, zero. So what was the A.I.G. effect in December? They did not say. Is it possible the loss then would have been larger without the A.I.G. bailout? We’ll see if any analyst asks. ******** Goldman Sachs reported a profit of $1.8 billion in the first quarter, and plans to sell $5 billion in stock and get out of the government’s clutches, if it can. How did it do that? One way was to hide a lot of losses in not-so-plain sight. Goldman’s 2008 fiscal year ended Nov. 30. This year the company is switching to a calendar year. The leaves December as an orphan month, one that will be largely ignored. In Goldman’s earnings statement, and in most of the news reports, the quarter ended March 31 is compared to the quarter last year that ended in February. The orphan month featured — surprise — lots of write-offs. The pretax loss was $1.3 billion, and the after-tax loss was $780 million. Would the firm have had a profit if it had stuck to its old calendar, and had to include December and exclude March? We’ll see if they discuss that. ******** 7:50 a.m.\| Call Over: The call ended quietly with little additional talk about December. norris.blogs.nytimes.com There's more, from Big Picture: ritholtz.com Leave it to the clever boys at Goldman Sachs to turn dross into gold: They have come up with a way to hide massive losses so clever, it requires special comment: The Orphan Month. Yesterday, we noted that the bulk of their profits had come from AIG transfer payments — the theft from taxpayers AIG 100% payouts funded via bailout monies that saw Goldie as one of the largest recipients. Floyd Norris notes that most of the AIG effect was in December. “For the first quarter, the total A.I.G. effect on earnings was, in round numbers, zero.” How is it possible that this occurred? Isn’t GS on a December to February calendar? Well, there is a small asterisk about that. It seems that GS is moving from a December to a quarterly calendar. Meaning their latest Q is January thru March. But what of December, with all t he AIG monies and the comparison to the strong December 2007 and all? In a word, Orphaned: Goldman’s 2008 fiscal year ended Nov. 30. This year the company is switching to a calendar year. The leaves December as an orphan month, one that will be largely ignored. In Goldman’s news release, and in most of the news reports, the quarter ended March 31 is compared to the quarter last year that ending in February. The orphan month featured — surprise — lots of writeoffs. The pre-tax loss was $1.3 billion, and the after-tax loss was $780 million. Would the firm have had a profit if it stuck to its old calendar, and had to include December and exclude March? Truly astounding . . . the word Chutzpah simply does not do it justice . . . Macro Man gets it, too: macro-man.blogspot.com Meanwhile, back in the US, Goldman recorded super earnings in the first part of the current fiscal year, announcing Q1 earnings of $3.39 per share, well above the consensus expectation of $1.64. Except that they didn't. Buried in the small print, it appears that as the Easter Bunny was delivering candy and eggs to children all over the world, he also desposited a small turd in the GS income statement. In December, which magically falls outside the aegis of any reporting period (falling through the cracks, as it were, in the transition from investment bank to bank holding company) , the firm lost $2.15 per share. Add that to the Q1 earnings figure, and you get a result that is comfortably lower than consensus. More telling was the GS announcement of their intention to sell shares to the public. While Macro Man occasionally takes Goldman to task, he will happily concede that, individually and collectively, they are some of the smartest guys on the street. And when a smart guy offers to sell you something in an industry that has more than doubled in value over the past month....well, judge for yourself what the appropriate response is. All of this has left Macro Man wistful, slightly bitter, and more than a little jealous. His carefully-laid plan to reach a P/L summit this month has ended with his portfolio nursing a broken leg back in base camp. Adding insult to injury, he doesn't work for an institution where he has the option of valuing his book using a model derived from those titans of modern finance, Andersen, Grimm and Grimm And Naked Capitalism's reporting on WFC's stress tests suggests it cannot withstand the upcoming direness: nakedcapitalism.com All of which points to the possibility that very juicy profits shorting fianancials are still very possible, esp. at current levels.