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Sunday, November 29, 2009
Sunday, September 6, 2009
From uranium to contemporary art: Lehman's assets are sold off
Article here
The bank may be consigned to Wall Street history. But the rump of Lehman Brothers still employs a team of 600 people on the 45th floor of Manhattan's Time-Life building, who are methodically unwinding millions of trading contracts, tying up tax liabilities and processing claims from creditors.
At the time of its collapse with $613bn in debts, Lehman had a vast array of investments ranging from an interest in a luxurious Miami apartment block, Canyon Ranch, to a fleet of corporate jets and millions of dollars worth of contemporary artwork, which once adorned the walls of the bank's executive suite.
Liquidators even discovered that Lehman was sitting on a stockpile of enough mined uranium "yellowcake", which, if enriched, could power a nuclear reactor or, notionally, make a bomb. The substance, a legacy from an exotic commodities trading arm, is locked up in secure storage facilities in Canada.
In the US, creditors have until September 22 to file claims detailing what they believe they are owed by Lehman. In a highly complicated case, there are parallel administrators working on Lehman subsidiaries in London, Hong Kong, Singapore, Germany, the Netherlands, Luxembourg and Australia.
PricewaterhouseCoopers, which is winding up the bank's British operation, recently said creditors' claims on Lehman's UK businesses were likely to top $100bn. Transatlantic relations have become frayed as PwC has been reluctant to submit to a multilateral protocol for handling the estate, preferring to work to a British framework, to the dismay of its US counterparts.
At a creditors' meeting in July, the chief executive winding up Lehman, Bryan Marsal, said it could take as long as three years to unwind all of Lehman's derivatives contracts.
He expressed frustration at a lack of co-operation: "International protocol, what this is is trying to get receivers in various countries to work together so we can get out of this case before I die."
The bank's former president and chief operating officer, Joe Gregory, recently lodged a claim for $233m in stocks, options and remuneration which, he said, he is owed by Lehman.
Lehman presently has $12bn of cash and bit by bit, the bank's goods and chattels are being sold off – there is an official Lehman merchandise store, selling Lehman-branded sports bags, umbrellas, pens and baseball caps through eBay, the auction website. In November, Freeman's, a US auction house, will begin a series of sales to offload 650 artworks owned by Lehman's, kicking off with contemporary work by the likes of Bernar Venet, Willie Cole and Arturo Herrera.
The bank may be consigned to Wall Street history. But the rump of Lehman Brothers still employs a team of 600 people on the 45th floor of Manhattan's Time-Life building, who are methodically unwinding millions of trading contracts, tying up tax liabilities and processing claims from creditors.
At the time of its collapse with $613bn in debts, Lehman had a vast array of investments ranging from an interest in a luxurious Miami apartment block, Canyon Ranch, to a fleet of corporate jets and millions of dollars worth of contemporary artwork, which once adorned the walls of the bank's executive suite.
Liquidators even discovered that Lehman was sitting on a stockpile of enough mined uranium "yellowcake", which, if enriched, could power a nuclear reactor or, notionally, make a bomb. The substance, a legacy from an exotic commodities trading arm, is locked up in secure storage facilities in Canada.
In the US, creditors have until September 22 to file claims detailing what they believe they are owed by Lehman. In a highly complicated case, there are parallel administrators working on Lehman subsidiaries in London, Hong Kong, Singapore, Germany, the Netherlands, Luxembourg and Australia.
PricewaterhouseCoopers, which is winding up the bank's British operation, recently said creditors' claims on Lehman's UK businesses were likely to top $100bn. Transatlantic relations have become frayed as PwC has been reluctant to submit to a multilateral protocol for handling the estate, preferring to work to a British framework, to the dismay of its US counterparts.
At a creditors' meeting in July, the chief executive winding up Lehman, Bryan Marsal, said it could take as long as three years to unwind all of Lehman's derivatives contracts.
He expressed frustration at a lack of co-operation: "International protocol, what this is is trying to get receivers in various countries to work together so we can get out of this case before I die."
The bank's former president and chief operating officer, Joe Gregory, recently lodged a claim for $233m in stocks, options and remuneration which, he said, he is owed by Lehman.
Lehman presently has $12bn of cash and bit by bit, the bank's goods and chattels are being sold off – there is an official Lehman merchandise store, selling Lehman-branded sports bags, umbrellas, pens and baseball caps through eBay, the auction website. In November, Freeman's, a US auction house, will begin a series of sales to offload 650 artworks owned by Lehman's, kicking off with contemporary work by the likes of Bernar Venet, Willie Cole and Arturo Herrera.
Wednesday, August 12, 2009
US TiO2 producer Tronox has many suitors - sources
By Larry Terry
HOUSTON (ICIS news)--Beleaguered titanium dioxide (TiO2) producer Tronox has no lack of potential suitors for its assets, market sources said on Tuesday.
Huntsman was reticent about its interest in the bankrupt TiO2 producer, but several producers have eyed Tronox assets, market sources said.
“Of course Huntsman has been … looking at the assets of Tronox,” said one large TiO2 buyer. “Frankly, everybody has.”
A major producer said that there are several candidates to acquire Tronox’s assets, “but with the rapidly changing business and economics environment, the negotiations tend to become more complex”.
“Some TiO2 producers cannot and some do not desire to bid for the whole of Tronox' assets,” the producer said, “but some bidders are willing to take it all. Whatever the outcome, buyers will be faced with a narrower choice of suppliers in the future.”
Tronox filed for bankruptcy protection in January.
Tronox is seeking a bidder for its plants and operating assets. Other than one less supplier into the TiO2 market, one buyer said, he anticipated no further impact on the domestic market whether Huntsman or another US producer acquires all or part of Tronox.
Another source said a foreign buyer, however, could significantly alter the marketplace.
“I think what has the major producers really worried is if Tronox ends up selling off its business to an Asian or eastern European equity group or some other owner,” a TiO2 buyer said. “There’s some intellectual property that’s held pretty tightly by the top couple of producers, and that would suddenly be available to the low-cost market,” he added.
“That would be a major upset,” he said, “a major shift in the TiO2 industry in terms of capability. I think that’s really what the big guys don’t want to happen.”
Most US producers employ the chloride process to produce higher-purity TiO2. Much of the European and Asian production is based on the sulphate process.
There are no inherent differences in durability between TiO2 pigments produced by either the chloride or the sulphate process.
“There is no shortage of investment dollars in Asia,” a TiO2 buyer said. “If someone truly believed they could build a next-generation plant there, they would do it.”
Most attractive to foreign interests, sources suggested, would be Tronox’s two US TiO2 plants - in Hamilton, Mississippi, and Savannah, Georgia - which employ the chloride process.
Globally, Tronox produces 14 grades of TiO2 pigment using the chloride process and 17 grades using the sulphate process.
Most North American producers did not respond to requests for comment on the future of Tronox assets.
As for Huntsman, a market player observed that the producer has no North American manufacturing site except its TiO2 joint venture in Lake Charles, Louisiana, with Kronos.
“I think it would be good for Huntsman to acquire some of Tronox,” the buyer said. He added that although Cristal appears to be the other most viable contender for Tronox assets, this is a chance for Huntsman to have a plant or plants of its own in the US.
Another large TiO2 buyer agreed that “if [Huntsman] could pick up one or two solid plants, they would love that”, he said. Of course every other producer would, too, he added.
Other North American TiO2 producers include Kronos, Cristal and DuPont.
The following lists Tronox's sites as included in the company's annual report for the 2007 fiscal year
Site
Capacity
Process
Hamilton, Mississippi
225,000
Chloride
Savannah, Georgia
110,000
Chloride
Kwinana, W Australia (jv) *
110,000
Chloride
Botlek, the Netherlands
90,000
Chloride
Uerdingen, Germany
107,000
Sulphate
TOTAL
642,000
* Tronox operated the Kwinana site under a 50-50 joint venture.
HOUSTON (ICIS news)--Beleaguered titanium dioxide (TiO2) producer Tronox has no lack of potential suitors for its assets, market sources said on Tuesday.
Huntsman was reticent about its interest in the bankrupt TiO2 producer, but several producers have eyed Tronox assets, market sources said.
“Of course Huntsman has been … looking at the assets of Tronox,” said one large TiO2 buyer. “Frankly, everybody has.”
A major producer said that there are several candidates to acquire Tronox’s assets, “but with the rapidly changing business and economics environment, the negotiations tend to become more complex”.
“Some TiO2 producers cannot and some do not desire to bid for the whole of Tronox' assets,” the producer said, “but some bidders are willing to take it all. Whatever the outcome, buyers will be faced with a narrower choice of suppliers in the future.”
Tronox filed for bankruptcy protection in January.
Tronox is seeking a bidder for its plants and operating assets. Other than one less supplier into the TiO2 market, one buyer said, he anticipated no further impact on the domestic market whether Huntsman or another US producer acquires all or part of Tronox.
Another source said a foreign buyer, however, could significantly alter the marketplace.
“I think what has the major producers really worried is if Tronox ends up selling off its business to an Asian or eastern European equity group or some other owner,” a TiO2 buyer said. “There’s some intellectual property that’s held pretty tightly by the top couple of producers, and that would suddenly be available to the low-cost market,” he added.
“That would be a major upset,” he said, “a major shift in the TiO2 industry in terms of capability. I think that’s really what the big guys don’t want to happen.”
Most US producers employ the chloride process to produce higher-purity TiO2. Much of the European and Asian production is based on the sulphate process.
There are no inherent differences in durability between TiO2 pigments produced by either the chloride or the sulphate process.
“There is no shortage of investment dollars in Asia,” a TiO2 buyer said. “If someone truly believed they could build a next-generation plant there, they would do it.”
Most attractive to foreign interests, sources suggested, would be Tronox’s two US TiO2 plants - in Hamilton, Mississippi, and Savannah, Georgia - which employ the chloride process.
Globally, Tronox produces 14 grades of TiO2 pigment using the chloride process and 17 grades using the sulphate process.
Most North American producers did not respond to requests for comment on the future of Tronox assets.
As for Huntsman, a market player observed that the producer has no North American manufacturing site except its TiO2 joint venture in Lake Charles, Louisiana, with Kronos.
“I think it would be good for Huntsman to acquire some of Tronox,” the buyer said. He added that although Cristal appears to be the other most viable contender for Tronox assets, this is a chance for Huntsman to have a plant or plants of its own in the US.
Another large TiO2 buyer agreed that “if [Huntsman] could pick up one or two solid plants, they would love that”, he said. Of course every other producer would, too, he added.
Other North American TiO2 producers include Kronos, Cristal and DuPont.
The following lists Tronox's sites as included in the company's annual report for the 2007 fiscal year
Site
Capacity
Process
Hamilton, Mississippi
225,000
Chloride
Savannah, Georgia
110,000
Chloride
Kwinana, W Australia (jv) *
110,000
Chloride
Botlek, the Netherlands
90,000
Chloride
Uerdingen, Germany
107,000
Sulphate
TOTAL
642,000
* Tronox operated the Kwinana site under a 50-50 joint venture.
Saturday, August 8, 2009
Sold out of Financials
Out of UYG (ProShares Ultra Financials) @ $5.67 for a gain of 40%
I am feeling that the rally is nearing death. I do not believe this is a new bull market. I still remain firm that this is a bear market rally. Unemployment numbers will dip again, we are still getting handfuls of banks each Friday being taken over by FDIC, and the Treasury Bond Ponzi scheme may be nearing bust. I still think the dollar collapses and we retest 6k level on DOW. I remain long some positions but am trying to prudently unwind those and move into commodities based stocks.
Largest position is now Virgin Mobile (due to the Sprint buy-out offer) and Chemtura. Chemtura's has been a beast the last few weeks. I am currently up approx 141% and am looking for 500-1000% gains in the coming months. Although I have not added to my positions I maintain various holdings in Lehman Brothers capital trusts and traditional preferreds. I may be looking to add to those in the short term. This month will be make or break for Lehman as they announce a complete list of current assets.
Best of luck.
I am feeling that the rally is nearing death. I do not believe this is a new bull market. I still remain firm that this is a bear market rally. Unemployment numbers will dip again, we are still getting handfuls of banks each Friday being taken over by FDIC, and the Treasury Bond Ponzi scheme may be nearing bust. I still think the dollar collapses and we retest 6k level on DOW. I remain long some positions but am trying to prudently unwind those and move into commodities based stocks.
Largest position is now Virgin Mobile (due to the Sprint buy-out offer) and Chemtura. Chemtura's has been a beast the last few weeks. I am currently up approx 141% and am looking for 500-1000% gains in the coming months. Although I have not added to my positions I maintain various holdings in Lehman Brothers capital trusts and traditional preferreds. I may be looking to add to those in the short term. This month will be make or break for Lehman as they announce a complete list of current assets.
Best of luck.
Monday, August 3, 2009
Palladium Boom?
Cash for Clunkers Could Be a Boon for Palladium
by: Brian Kelly August 03, 2009
On CNBC Friday we spoke about North American Palladium as a play on the cash for clunkers program. At the same time the U.S. government was doing some juicing of its own, it was revealed that members of our beloved Red Sox had “unwittingly” used performance enhancing drugs.
The cash for clunkers program has been a remarkable success. In less than a week the program actually ran out of money after dealers sold over 200,000 cars. Politicians know a popular program when they see it and by Friday afternoon had approved another $2 billion for the program. Anecdotal dealer reports have suggested even customers without a clunker are returning to the showrooms. For every customer that trades in a clunker there has been at least one more customer who simply buys a new car.
A quick “back of the envelope” calculation indicates that if a total of $3 billion is allocated toward the program then 600,000 clunkers will be turned in for 600,000 new cars. Adding the new buyers drawn to the showroom at a ratio of 1 to 1 implies the cash for clunkers program could generate 1.2 million new car sales. This should bring the year total of new car sales above the 10 million cars.
Moreover there is evidence of a structural change in the economy that can be seen in the GDP numbers. For the first quarter of 2009, auto manufacturing reduced GDP by 1.69%. However, in Q2 09, auto manufacturing added 0.2% to GDP.
As automakers ramp up production they will need more catalytic converters which can be manufactured with palladium. This was the “catalyst” for our purchase of North American Palladium (PAL). Currently, the company’s palladium mine is closed due to low palladium prices. However, an increase in auto manufacturing could change its status as palladium prices rise.
On Monday, auto manufacturers release sales data for July. The focus will certainly be on the last week when the cash for clunkers program formally began. Furthermore, it is likely that the market will look through any weakness in July as new money is approved for the program.
by: Brian Kelly August 03, 2009
On CNBC Friday we spoke about North American Palladium as a play on the cash for clunkers program. At the same time the U.S. government was doing some juicing of its own, it was revealed that members of our beloved Red Sox had “unwittingly” used performance enhancing drugs.
The cash for clunkers program has been a remarkable success. In less than a week the program actually ran out of money after dealers sold over 200,000 cars. Politicians know a popular program when they see it and by Friday afternoon had approved another $2 billion for the program. Anecdotal dealer reports have suggested even customers without a clunker are returning to the showrooms. For every customer that trades in a clunker there has been at least one more customer who simply buys a new car.
A quick “back of the envelope” calculation indicates that if a total of $3 billion is allocated toward the program then 600,000 clunkers will be turned in for 600,000 new cars. Adding the new buyers drawn to the showroom at a ratio of 1 to 1 implies the cash for clunkers program could generate 1.2 million new car sales. This should bring the year total of new car sales above the 10 million cars.
Moreover there is evidence of a structural change in the economy that can be seen in the GDP numbers. For the first quarter of 2009, auto manufacturing reduced GDP by 1.69%. However, in Q2 09, auto manufacturing added 0.2% to GDP.
As automakers ramp up production they will need more catalytic converters which can be manufactured with palladium. This was the “catalyst” for our purchase of North American Palladium (PAL). Currently, the company’s palladium mine is closed due to low palladium prices. However, an increase in auto manufacturing could change its status as palladium prices rise.
On Monday, auto manufacturers release sales data for July. The focus will certainly be on the last week when the cash for clunkers program formally began. Furthermore, it is likely that the market will look through any weakness in July as new money is approved for the program.
Sunday, August 2, 2009
Cash for clunkers math doesn't add up
http://www.kitco.com/ind/nadler/jul312009.html
"Platinum climbed $24 to $1205.00 bid, and palladium was seen adding $5 at $262.00 per ounce. Automotive world news show that Americans are sitting on a huge pile of clunker cars. More than $1 billion worth of old guzzlers have been turned in thus far during the Obama C-4-C program, exhausting the money rather quickly. Like, in six days (!)
The entire program is now in jeopardy, after having resulted in the sale of nearly 23,000 better cars to former clunker-drivers. Just think: between new, shiny, efficient cars, a mandatory national weight-loss program, plus a recommended living will in every safe, America may yet emerge victorious out of the real estate mess it got itself into. If only all the recovery ducks were lined up and ready to take fight in sync. May we have some more, (dollars) please, Sir?"
I am thinking that Mr. Nadler must have forgotten to carry a zero on the number of new cars sold. My simple arithmetic indicates that $1,000,000,000 / $4,500* = 222,222. That is 222k new cars financed by trading in a clunker assuming the higher $4,500 allowance.
It should therefore be expected that another $2B would equate to no less than another 444k new car purchases.
Its no wonder that Pt and Pd are on the rise.
"Platinum climbed $24 to $1205.00 bid, and palladium was seen adding $5 at $262.00 per ounce. Automotive world news show that Americans are sitting on a huge pile of clunker cars. More than $1 billion worth of old guzzlers have been turned in thus far during the Obama C-4-C program, exhausting the money rather quickly. Like, in six days (!)
The entire program is now in jeopardy, after having resulted in the sale of nearly 23,000 better cars to former clunker-drivers. Just think: between new, shiny, efficient cars, a mandatory national weight-loss program, plus a recommended living will in every safe, America may yet emerge victorious out of the real estate mess it got itself into. If only all the recovery ducks were lined up and ready to take fight in sync. May we have some more, (dollars) please, Sir?"
I am thinking that Mr. Nadler must have forgotten to carry a zero on the number of new cars sold. My simple arithmetic indicates that $1,000,000,000 / $4,500* = 222,222. That is 222k new cars financed by trading in a clunker assuming the higher $4,500 allowance.
It should therefore be expected that another $2B would equate to no less than another 444k new car purchases.
Its no wonder that Pt and Pd are on the rise.
Thursday, July 30, 2009
Tuesday, July 28, 2009
Sprint-Nextel-Virgin
On 16 June 2009 I posted that I held Virgin Mobile at an average cost of $3.99. At that time I was down 4.5% [here].
All that changed today when Sprint Nextel Corp. said it will buy Virgin Mobile USA Inc. in a stock deal valued at $483 million. [here].
Sprint will convert each publicly traded share of Virgin Mobile into the equivalent of $5.50 worth of Sprint stock. VM closed at $5.28 which represents a nearly even 33% gain on my position. I intend to close out the position shortly.
All that changed today when Sprint Nextel Corp. said it will buy Virgin Mobile USA Inc. in a stock deal valued at $483 million. [here].
Sprint will convert each publicly traded share of Virgin Mobile into the equivalent of $5.50 worth of Sprint stock. VM closed at $5.28 which represents a nearly even 33% gain on my position. I intend to close out the position shortly.
Monday, July 27, 2009
Fraudulent Fed
Visit msnbc.com for Breaking News, World News, and News about the Economy
The Record of the Federal Reserve by Erik Voorhees [here]
Let's talk about The Federal Reserve. Consider the following facts:
A) From 1776 to 1912 (136 years), the value of the dollar, relative to the Consumer Price Index, increased by 11%. A dollar could buy 11% more goods in 1912 than in 1776. Thus, if in 1776, you sat on your savings pile of $1,000,000 for 136 years, it would then be worth $1,110,000 in purchasing power (it will have appreciated in value by 11%). A loaf of bread for Thomas Jefferson cost the same as a loaf of bread for Lincoln 50 years later and again the same for J.P. Morgan 50 years after that.
B) The United States Federal Reserve was created in 1913. The stated purpose of the Fed, by its own definition taken from its website, is to "conduct the nation's monetary policy by influencing money and credit conditions in the economy in pursuit of full employment and stable prices." Note that "stable prices" is another way of saying "stable dollar," they are two sides of the same coin (couldn't resist the pun).
C) Then after The Fed's creation, from 1913 to 2008 (95 years), the value of the dollar, relative to the Consumer Price Index, decreased by 95%. A dollar could buy 95% fewer goods in 2008 than in 1913. Thus, if in 1913, you sat on your savings pile of $1,000,000 for 95 years, it would then be worth only $50,000 in purchasing power (it will have depreciated in value by 95%). One would now need to pay about 20X more than J.P. Morgan for one's bread. Ask my mother how much the price of milk has increased just in the last ten years alone.
In other words, the value of the dollar remained extremely stable for 150 years, then The Fed was created in order to "stabilize the value of the dollar" and the result has been a 95% devaluation of the dollar in less than 100 years following its creation. Below is a graph of this history, which I've marked with the year 1913 so you can see the change. The graph is also marked with the years of decoupling from the gold standard, as no examination of dollar value would be sound without such mention.
While we all take inflation as a "given" - as something that "just happens" in the economy - we would do well to remember that this belief is utterly incorrect. Inflation, which is the loss of value in your saved dollars, is caused by The Federal Reserve through its management of the money supply. Next time you see Ben Bernanke on the television, telling you that they "will take the necessary steps" to help the country, consider their track record so far, and their dismal failure at their stated objective - preserving the value of America's money.
Outrage doesn't even begin to describe what Americans should feel in response to this. Yet, Americans aren't very upset, and indeed the vast majority has no idea about any of this information. I would wager that this is because Americans are educated in Government schools, which barely teach basic accounting, let alone macroeconomic monetary theory. In public school I was forced to memorize the names of every country in Africa, yet never was there a discussion of the nature of money. Half the nations of Africa have been renamed since, but the economic principles which cause such political turmoil remain the same.
The Federal Reserve System is fraudulent. Whatever its stated purpose, its effective purpose is to create a mechanism of deficit spending by politicians, through the insidious invisible taxation of monetary debasement (aka inflation). With printed money, the Government can buy services for its voters before the effects of inflation are felt. It is then the voters whose money buys less the following year, as the new money has raised prices, and they are none the wiser.
Obama is now mandating that The Fed is to have more oversight, more authority and control over the markets of the United States. If we can learn anything from The Fed, it's that the best way to succeed as a politician is to stretch one's failure over a long enough period that people won't remember it.
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