Thursday, May 7, 2009

Home - Hot and Humid

Compared to the unbelievable weather in Los Angeles and Pasadena the exit off the airplane was to be expected - it was like a damp mop hit me. Of course that is how I know I arrived back in Texas.

First and foremost - I am working through a mountain of emails that got ignored while I was traveling. If you sent me something I am supposed to respond to and you don't hear back from me in the next 24 hours, please email me again.

Outside of the business aspect, while in LA I went to an improv comedy club (it was awesome) and hung out at Hermosa Beach and Manhattan Beach (which was awesome). Very good times.

I thought this Value Investing Congress was one of the best I have ever been to (been to three in NYC before this one, never to the West Coast meeting). I felt like speakers had more diverse overall views than normal. I was also intrigued with every speakers presentation but one. I liked going to one at a hotel versus the AOL center in NYC. In general the conference had an overall bearish tone but it was offset by a couple of mild bulls. Soma Asset Management had a presentation that indicated the end of the world was coming. Passport Capital gave a presentation on serious inflation and how China plays into the next few years. M3 funds (who I had never heard of) also gave a presentation. They invest in only banks - 50% long and 50% short. Last year they made 1.3% on their long banking book. That is incredible!!! Anyway, they know banks. They agreed with alot of what Soma said and in general agreed the banking system is insolvent (regardless of what the government and/or stress tests says). There were 3 presentations and 5 ideas on P&C insurance and reinsurance. Also, three investors talked about gold.

I could talk alot more about the Congress and I may mention stuff here and there over the next few days but I recommend visiting the Manual of Ideas blog. I met Zain who was there from Manual of Ideas and they lived blog the presentations. Some good notes on what was overall discussed.

Hope everyone had a good week. In some ways mine is just starting.


Mrs. Watanabe said...

Yeah, they're pretty much insolvent all right, but "no more Lehmans."

You just have to connect the dots between these two articles:, no more Lehmans. Perhaps Weimar, instead.

Mrs. Watanabe said...

Sorry, I guess Bloomberg's articles are down right now...

Anyway, the stories were both from April 30. In the first story, FASB was saying that they were going to change a rule regarding off balance sheet accounting. It would bring $900 billion from the 19 sorta stress tested banks onto their balance sheets.

The second story, also from April 30, reported auction results for a SIV called Whistlejacket Capital, LTD. The haircuts were 33%.

Market Seer said...

Yeah, I couldn't get the links to work either.

Not suprised at all. Brings up two thoughts. One if they ahve to bring this 900 billion on to the balance sheet, the average bank (and this includes local banks so the numbers are skewed conservatively) are 13x levered. So keeping up with that, they would need another 70 billion to bring 900 billion on the balance sheet.

The other thought is it once again shows how insolvent our systems is. The first 25 banks that failed in 2009 avearaged a 42.60% loss on their assets. These banks weren't even closed to solvent. Does not surprise me at all concerning a 33% loss on an SIV.