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  • TARP Is Bad for Dividend Investors
    I couldn't disagree more. It's not the TARP that's bad news for investors, it's the current economy and credit crisis. That State Street is using the TARP as its excuse for not raising the dividend is unsurprising, as it wants to maintain this "dividend aristocrat" reputation, but can't responsibly raise its dividend currently. There's nothing in what is quoted that indicates that the TARP means the end of dividends or dividend increases.

    The first paragraph is quite similar to language seen in any preferred share prospectus; the company may not pay dividends on common stock unless it pays dividends on the preferred, and in the case of cumulative preferred unless it has paid all dividends owed to date.

    The second paragraph says the Treasury must give consent for an increase in dividends. It doesn't sound at all that Treasury is putting undue restriction on dividend payments. Rather, it's making companies justify any dividend increases. Sounds logical to me.

    I don't think any company that's successful enough in this environment to increase its dividend would face a Treasury "veto." I also don't think rational investors should expect any company to increase dividends these days. I'd rather see companies conserving cash or making smart acquisitions.
    Dec 31 10:58 am |Rating: +5 -1 |Link to Comment |View article
  • Asset Sales May Weaken Teck Cominco - BMO
    Oh yeah, by the way, yes, I'm long TCK.
    Dec 11 13:18 pm |Rating: 0 0 |Link to Comment |View article
  • Asset Sales May Weaken Teck Cominco - BMO
    Interesting. Consider:

    Teck is trading at roughly 1/4 book value. Granted, book value has not fallen as much as it should to reflect current market conditions.

    Teck is trading at a forward PE of less than 1.5. Granted, these estimates are likely to come down somewhat, but the company has contracts in place that should provide some stability in earnings.

    Teck is expecting to pay half of the $5.8B bridge by the end of Q1 from cash flow and a big tax refund. At that point, their hedged contracts that pay them much higher than current market prices for copper and coal run out, and the rest of the year is much murkier.

    Teck has long talked of selling certain non-core gold-related assets; this is not a new development related to the bridge debt.

    Any management worth its pay will do contingency planning such as the potential Citi sale. This should be seen as an indicator of management's competence, not as one of the company's weakness.

    Credit markets continue to be horrific. If you expect them to continue to be so through October, perhaps Teck's got problems.

    My guess is that the Canadian government would back Teck's refinancing if it came to that, and might even extend the loan itself. This is a historically conservative company that made a mistake in purchasing the balance of Fording at the peak, but its long term prospects are still quite good - assuming copper and coal don't remain at 2002 levels indefinitely.

    As for Robson's comments, I wonder if you're providing a fair reading of them. I mean, you paraphrase him as saying "it will be difficult for Teck’s asset sales to match the roughly C$20-billion that it paid."

    Well, no kidding. Is this insightful? But more importantly, is it meaningful? Is there ANY indication that Teck might raise more case than is needed to meet the bridge debt obligation in October?

    Then: “Asset sales may weaken the company’s long-term cash generation capability and reduce future growth options.” Again, no kidding - did Robson write anything that's not intuitively obvious to the casual observer?
    Dec 11 13:03 pm |Rating: 0 0 |Link to Comment |View article
  • Schumer Is Way Off
    You write as if you think this capital infusion is the sum total of what's happening. Did you even listen to Neel Kashkari Monday morning?
    Oct 15 08:29 am |Rating: 0 0 |Link to Comment |View article
  • Hank Paulson: Smartest Man in the Room
    Read this: www.nytimes.com/2008/1...
    Oct 02 08:46 am |Rating: 0 0 |Link to Comment |View article
  • Hank Paulson: Smartest Man in the Room
    Another rather pathetic piece.

    You quote numbers from "a depression" as if there's a representative standard, rather than from THE great depression.

    You compare numbers from today, when NOBODY says we're in a depression, to numbers from the deepest depth of the great depression, as if this comparison shows that we shouldn't do anything. A more apt comparison would be now versus 1930, when the depression was just getting warmed up.

    You claim real GDP is growing at 3% per year, despite the fact that recent numbers have massively understated inflation.

    "Hank knew that the ‘sky is falling’ mentality would return this September..."

    If this was so predictable, why did hedge funds lose money this month?

    "This proposed bailout plan isn’t a bailout at all. It’s really a Superfund that will act as a mortgage security specialist to provide confidence and liquidity during housing cycles...Its ability to hold these beaten down assets and turn a profit over time will cause the legislation to become a permanent solution."

    Kind of like how RTC became a permanent solution? Oh, that's right. IT DIDN'T. No, this is not a solution that is envisioned to have a continuing life after this correction.

    "Hank planned the whole thing."

    Hank planned for overnight LIBOR to spike from 2.5% to 6.8% in one day? Hank planned for the effective federal funds rate to run more than 3 times the target rate? Hank planned for money market withdrawals that threatened to bring down the entire commercial paper market? Hank planned to force his old firm to change the nature of its organization and raise capital?

    "The next bull market is right around the corner."

    Suppose you got dropped at 7th Ave. and 57th St. in New York. You're told something is right around the corner and you start walking. If you've headed north, the corner's less than 100 yards away; if you've gone east, it's three times as far. But here's the catch - there's an open manhole between here and the next corner.

    Better to watch where you're stepping than to worry about where the corner is. You'll get there eventually, as long as you don't fall into the abyss.

    "Hank Paulson is the smartest man in the room."

    Though this is almost always true, when it comes to matters of the economy, you clearly don't believe it. Nobody even close to the smartest in the room would play chicken with the economy.
    Oct 02 08:31 am |Rating: 0 0 |Link to Comment |View article
  • History Suggests the Financial Bottom May Be Near
    "Reminds me of the character in Animal House who is yelling during the parade "everything is fine - everyone remain calm" while the riot ensues."

    That would be Kevin Bacon.
    Sep 16 12:18 pm |Rating: 0 0 |Link to Comment |View article
  • The Citi Plunge Continues
    You have a big head.
    Jun 26 21:58 pm |Rating: 0 0 |Link to Comment |View article

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