Posts Tagged ‘financing’

InterOil: What The InterOil Math Teaches Us

InterOil: What The InterOil Math Teaches Us


In the world of finance theory, a credible suggestion that you are being forced to raise cash at exorbitant rates or are internally valuing your assets sharply below where the market appears to value them is traditionally a death sentence for your share price. The reasons for this are straight forward enough: Investors hate desperation but not as much as they hate making an asset play and being wrong on the value of the assets.

Then there is InterOil.

A Cairns, Australia- and Houston, Tx-based oil and gas producer that has been touting in one form or another a potentially epic find in the wilds of Papua New Guinea for more than a decade now, it recently raised cash at exorbitant rates and appears to be internally valuing its assets way below what the market appears to think they are worth.

Yet all is well in the share price department.

The story is none too complicated: InterOil, a company whose shares are seemingly made of titanium, is paying rates for cash that only credit cards aimed at those with bad credit can obtain. Better still, the person pulling InterOil’s eyeballs out is its long-time sponsor and key investor, Clarion Finanz AG and its controversial chief, Carlo Civelli.

[Civelli’s record as a broker, investor and promoter of a series of often troubled energy enterprises drives skeptics somewhere north of berserk. He and InterOil have loudly proclaimed that he is little more than an investor and advisor, although the power dynamics of this picture would seem to indicate otherwise. When having your company feted at the NYSE, it is customary to have the CEO or the company’s founder/guiding spirit ring the bell at the opening. Civelli, in the picture, is the one reaching over to ring the opening bell.]

To call InterOil a battleground stock is to be droll. The dispute over the proper level of its valuation and prospects in every sense of the word is analogous to the sanguinary trench combat of the First World War’s Western Front. Short-sellerscritics and investigative reporters raise more and more questions about management disclosures and candor but the stock continues to enjoy robust support. To follow through on…
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Ponzi “Shark Loans” Fuel China’s Housing Bubble; Home Sales Plunge 44% in Xiamen; Bubble Busts in Tianjin

Ponzi "Shark Loans" Fuel China’s Housing Bubble; Home Sales Plunge 44% in Xiamen; Bubble Busts in Tianjin

Courtesy of Mish

BEIJING - JUNE 25: Salespeople sit unoccupied during the 2010 Beijing Summer Real Estate Trade Fair onJune 25, 2010 in Beijing, China. A new policy introduced in April restricts families from buying more than one additional home, and prevents non-local residents from buying an additional home unless they have worked in Beijing for more than a year. In the declining real estate market several new housing developments have seen no sales so far this month. (Photo by Feng Li/Getty Images)

China’s property bubble is now on the verge of collapse. Transaction volumes are significantly down and declining volume is how property bubbles always burst. In simple terms, the pool of greater fools eventually runs out.

In China’s case, the pool of fools is heavily involved in "loan shark" schemes where speculators hope property values rise fast enough to cover the interest.

Ponzi Loan Shark Operations Fuel Bubble 

Please consider The Secret Engine Behind China’s Housing Bubble- The Ponzi Shark Loan Finance

In this article we will show how the ponzi shark loan scheme works and why we think the regime in China will fall. Our research is based on sources INSIDE CHINA

This is how this Ponzi scheme works:

Local officials, [required by] the government to produce double digit GDP growth numbers, give real estate developers permits to build housing projects in return for bribes. They also get bribes in return for allowing the shark loan companies to operate under their jurisdiction. Some of them are active partners in shark loan businesses. Every scheme has a ring leader whose job is to collect money from all the participants in the Ponzi scheme. When some of these Ponzi schemes blow up, the party leaders always get bailed out first.

Most of the funds that are collected in this classic Ponzi finance go to local land purchases and real estate development. Part of the funds are used in order to pay back the rolling loan. The short term interest rate in this black market is very high and ranges between 20%-150% annual rate. The sources of the Ponzi funds are diverse, as ordinary citizens, banks with corrupted bank officials, and state enterprises play the game.

A reader wrote to us this email two weeks ago, which triggered our in depth research:

“My hometown is Zhejiang, now I live in shanghai, my sister pledged her home to bank, she lived in Hangzhou, she bought her home around 500,0000rmb five years ago, now her home worth 2 million RMB, so she can get huge loan from bank, she gave this loan to a shark loan company with 30% return every year, she has been doing and living on this for 4 years, she is a middle school

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Are the Losses of Fannie and Freddie Now “National Policy”?

Are the Losses of Fannie and Freddie Now "National Policy"?

Courtesy of Trader Mark, Fund My Mutual Fund 

fannie and freddieBarry Ritholtz and Dean Baker discuss a concept I’ve advanced – effectively Fannie and Freddie (or as we call them around here, FanFredron) are being run for loss to create a false housing economy via subsidization. They do put forth an additional point that I have not harped on as much: one added benefit of this ‘policy’ is our financial oligarchs win…. again.

If we ever do get back to a world where the private sector is truly a part of financing the housing market it is going to be mighty interesting to see what true mortgage rates will settle at, now that ‘strategic default’ is part of the American lexicon. The higher risks involved will create an increase in costs to every future mortgage due to this exciting new fad. But with government now supporting some 95%+ of all financing this is an issue that won’t face us for many years. Thankfully the government does not price in any risk and gleefully backs mortgages of almost any kind (still). Until some far in the future reform date, more below market rates offered by the 2 institutions that can gladly lose money forever – ponzi style.

(Amazing fact I heard the other day, Fannie Mae has lost more money the past 2 years than it made the previous 30 years. Chew on that for a moment before you move onto the next paragraph. Thankfully there is no such thing as a clawback in corporate America.)

6 minute video


The Senate on Tuesday rejected a Republican sponsored measure that would effectively cut off support to Fannie Mae and Freddie Mac in two years. The government-sponsored enterprises, now in conservatorship, have already cost the government about $145 billion.

And there’s no limit to how much more they can ask for for the next two years!

Fannie Mae lost $11.5 billion in the first quarter while Freddie Mac lost more…
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First, Let’s Kill the Angels

First, Let’s Kill the Angels

Cupid holding heart box of Valentine candy

Courtesy of John Mauldin 

First, Let’s Kill the Angels 
Equal Choice, Equal Access, Equal Opportunity 
Some Quick Thoughts on Goldman 
La Jolla and Dallas

When you draft a 1,300-page "financial reform" bill, various special interests get language tucked into the bill to help their agendas. However, the unintended consequences can be devastating. And the financial reform bill has more than a few such items. Today, we look briefly at a few innocent paragraphs that could simply kill the job-creation engine of the US. I know that a few Congressmen and even more staffers read my letter, so I hope that someone can fix this.The Wall Street Journal today noted that the bill, while flawed, keeps getting better with each revision. Let’s hope that’s the case here.

Then I’ll comment on the Goldman Sachs indictment. As we all know, there is never just one cockroach. This could be a much bigger story, and understanding some of the details may help you. As an aside, I was writing in late 2006 about the very Collateralized Debt Obligations that are now front and center. There is both more and less to the story than has come out so far. And I’ll speculate about how all this could have happened. Let’s jump right in.

First, Let’s Kill the Angels

I wrote about the Dodd bill and its problems last week. But a new problem has surfaced that has major implications for the US economy and our ability to grow it. For all intents and purposes, the bill will utterly devastate angel investing in the US. And as we will see, that is not hyperbole. For a Congress and administration that purports to be all about jobs, this section of the bill makes less than no sense. It is a job and innovation killer of the first order.

First, let’s look at a very important part of the US economic machine, the angel investing network. An angel investor, or angel (also known as a business angel or informal investor) is an affluent individual who provides capital for a business startup, usually in exchange for convertible debt or ownership equity. A small but increasing number of angel investors organize themselves into angel groups or angel networks to share research and pool their investment capital.

Angels typically invest their own funds, unlike venture capitalists, who manage the…
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Centaur Value Fund Adds To Cognizant On FCPA News Dip

By Rupert Hargreaves. Originally published at ValueWalk.

The Centaur Value Fund produced a return of -0.8% net to partners for September. Investors may have been disappointed with this performance but year-to-date the fund is up 8% gross and 7.5% net compared to 7.8% for the S&P 500. Over the longer term, the fund has whipped the index producing a gross total return of 466.1% (346.3% net) since inception (August 1, 2002) compared to the S&P 500’s total return of 217.5% over the same period.

Hedge Fund Letters To Investors

According to the fund’s letter, a copy of which has been reviewed by ValueWalk. reported a net market exposure of 50.3% at the end of September. The fund was 59% long at the end of the quarter, and 11.9% short. The t...

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Zero Hedge

Q3 GDP Jumps 2.9% On Rise In Inventory And Exports, Offset By Weak Consumption And Investment

Courtesy of ZeroHedge. View original post here.

For once it appears that the Atlanta Fed, with its 2.1% Q3 GDP nowcast was overly pessimistic - although perhaps the November 8 election may have had something to do with it - and moments ago the BEA reported that in the third quarter, US GDP increased at an annual rate of 2.9%  according to the first "advance" estimate released up more than double from the Q2 real GDP of 1.4%, and beating Wall Street consensus of a 2.6% rise in the quarter. The move higher was driven by a jump in inventory accumulation and exports, while consumption disappointed, as...

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Kimble Charting Solutions

Amazon; Potential bearish reversal pattern, says Joe Friday

Courtesy of Chris Kimble.

Without a doubt, Amazon (AMZN) remains in an uptrend (higher highs and higher lows) over the past decade plus. Last nights earnings does NOT change this trend!

Below updates the pattern on Amazon and highlights that this week, it is could be creating a pattern it has seldom created, over the past 10-years.


As mentioned in the chart, a few t...

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Phil's Favorites

Cybersecurity's weakest link: humans


Cybersecurity's weakest link: humans

By Arun Vishwanath, University at Buffalo, The State University of New York

There is a common thread that connects the hack into the sluicegate controllers of the Bowman Avenue dam in Rye, New York; the breach that compromised 20 million federal employee records at the Office of Personnel Management; and the recent spate of “ransomware” attacks that in three months this year ha...

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Market News

News You Can Use From Phil's Stock World


Financial Markets and Economy

Investors are fleeing stock funds at the fastest pace in over 5 years (Business Insider)

Retail investors seem to have cooled on the stock market.

According to a note from Bespoke Investment Group, equity mutual funds have experienced their largest weekly outflows since August 2011.

Deutsche Bank's earnings call was the most brutally honest, angsty thing we've heard in a long time (Busines...

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Digital Currencies

Needham Raises Bitcoin Price Target To $848: Here's Why

Courtesy of ZeroHedge. View original post here.

With bitcoin breaking out of its recent trading range as Chinese buyers once again flock to the currency as the Yuan slides (as we predicted over a year ago they would), even Wall Street analysts are starting to pay attention, and in a recent report by Needham's Spencer Bogart, the analyst has raised his price...

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Members' Corner

Heil The Candidate?

Courtesy of Nattering Naybob.

Remember the 2016 Presidential Election is only thirteen days away. During this election campaign, both 2016 election candidates and the incumbent President, have been amongst other things, vilified as Hitler-esque.

Above Heil Hitlary! courtesy of LULZY T-Shirts

Above Heil Trump! image...

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Chart School

Tech Hold Breakout,.but S&P Wedge Bound

Courtesy of Declan.

It was a mixed day for indices. Large Caps remain bound by wedge support/resistance, but Tech broke upside yesterday from similar wedges and held those breakout today.

There was little change for the S&P over the last couple of days. The one technical change was the MACD trigger 'buy' as other technicals stayed on the bearish side.

Meanwhile, the Nasdaq cleared wedge resistance yesterday, and was able to hang on to the breakout despite today's loss. It too enjoyed a MACD trigger 'buy', but had an On-Bal...

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Swing trading portfolio - week of October 24th,2016

Reminder: OpTrader is available to chat with Members, comments are found below each post.


This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...

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Mapping The Market

The Most Overlooked Trait of Investing Success

Via Jean-Luc

Good article on investing success:

The Most Overlooked Trait of Investing Success

By Morgan Housel

There is a reason no Berkshire Hathaway investor chides Buffett when the company has a bad quarter. It’s because Buffett has so thoroughly convinced his investors that it’s pointless to try to navigate around 90-day intervals. He’s done that by writing incredibly lucid letters to investors for the last 50 years, communicating in easy-to-understand language at annual meetings, and speaking on TV in ways that someone with no investing experience can grasp.

Yes, Buffett runs an amazing investment company. But he also runs an amazing investor company. One of the most underappreciated part of his s...

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Epizyme - A Waiting Game

Reminder: Pharmboy is available to chat with Members, comments are found below each post.

Epizyme was founded in 2007, and trying to create drugs to treat patient's cancer by focusing on genetically-linked differences between normal and cancer cells. Cancer areas of focus include leukemia, Non-Hodgkin's lymphoma and breast cancer.  One of the Epizme cofounders, H. Robert Horvitz, won the Nobel Prize in Medicine in 2002 for "discoveries concerning genetic regulation of organ development and programmed cell death."

Before discussing the drug targets of Epizyme, understanding epigenetics is crucial to comprehend the company's goals.  

Genetic components are the DNA sequences that are 'inherited.'  Some of these genes are stronger than others in their expression (e.g., eye color).  Yet, some genes turn on or off due to external factors (environmental), and it is und...

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All About Trends

Mid-Day Update

Reminder: Harlan is available to chat with Members, comments are found below each post.

Click here for the full report.

To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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