Continue reading CIT Group to Repay 'High-Cost' Debt

CIT Group to Repay 'High-Cost' Debt originally appeared on BloggingStocks on Tue, 09 Feb 2010 09:20:00 EST. Please see our terms for use of feeds.

CIT Group

Continue reading Taxpayers are, once again, the biggest losers in the CIT bankruptcy

Taxpayers are, once again, the biggest losers in the CIT bankruptcy originally appeared on BloggingStocks on Mon, 02 Nov 2009 11:00:00 EST. Please see our terms for use of feeds.

CIT Group is one of the largest lenders to small- and medium-sized businesses in the U.S. But it has been plagued with financial troubles for nearly a year now. Last year the firm received $2.3 billion in federal bailout money. That helped them stave off bankruptcy for a while. Then this past July it received another $3 billion loan from some of its largest bondholders.

Apparently these stimulus packages are not enough to keep CIT Group Inc. (NYSE: CIT) afloat. The root of the problem is $30 billion dollars of outstanding debt. The latest maneuver would be to offer bondholders a stake in the company. This move would eliminate 40% of its outstanding debt, according to a Wall Street Journal report.

The key sticking point here is that by turning over control to bondholders, common shareholders would be wiped out. In addition, the $2.3 billion in federal stimulus money would go up in smoke.

Continue reading CIT is on the brink of collapse. Will it survive?

CIT is on the brink of collapse. Will it survive? originally appeared on BloggingStocks on Thu, 01 Oct 2009 09:30:00 EST. Please see our terms for use of feeds.

As if there weren't sufficient causes already to refer to CIT Group (NYSE: CIT) as "beleaguered," the list just got longer. This morning, the financial services firm delayed filing its second-quarter report with the Securities and Exchange Commission (SEC), citing the ongoing restructuring of its debt as a mitigating factor.

Specifically, CIT told the regulatory agency that it could not meet Monday's 10-Q deadline "without unreasonable effort and expense," since executives have been spending most of their time lately attending to restructuring needs. The company is expecting a second-quarter loss in excess of $1.5 billion, thanks in large part to a loss totaling $2.1 billion from its discontinued home-lending operations.

Continue reading CIT Group plummets on going concern doubts, Chapter 11 threat

CIT Group plummets on going concern doubts, Chapter 11 threat originally appeared on BloggingStocks on Tue, 11 Aug 2009 09:50:00 EST. Please see our terms for use of feeds.

CIT Group (NYSE: CIT) is recently trading at 55 cents in pre-open trading, above its close of 41 cents. CIT is in discussions with regulators on liquidity solutions. CIT August 1 straddle is priced at 90 cents, October 1 straddle is priced at $1.10, January 1 straddle is priced at $1.15 according to Track Data, suggesting large price movement.

ISE Sentiment Index (ISEE) closed at 137 on 7/16/09. ISEE 10-day moving average is 117.

August front month equity options expire on August 21.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

Options Update: CIT Group options expensive on financing discussions originally appeared on BloggingStocks on Fri, 17 Jul 2009 09:00:00 EST. Please see our terms for use of feeds.

As each month passes, more and more companies get into the kind of trouble that pushes them toward Chapter 11 or insolvency. Some of the companies that hit that point several months ago include Sirius XM (NASDAQ: SIRI) and Charter Communications (NASDAQ: CHTR).

In the next several months two or three large companies could be added to the list.

Advanced Micros Devices (NYSE: AMD) posted a narrow loss last quarter compared with the same quarter a year ago, but a third of its revenue disappeared. If PC and server sales get worse, its sales could shrink faster than the company can cut costs. The firm's gross margins are dropping fast and AMD has long term debt of over $4.7 billion.

Citigroup (NYSE: C) still faces the prospects that it could be nationalized if it posts more huge losses in the first quarter. Last week, its market cap dropped to $17 billion. A massive capital investment from the Treasury could wipe that equity out.

General Motors (NYSE: GM) may seem like an obvious choice, but its shares could go to zero faster than investors think. If the UAW or creditors walk away from restructuring talks, GM's attempt to cut its costs to get more government assistance based on a plan to be submitted on March 31 would be ruined.

Douglas A. McIntyre is an editor at 24/7 Wall St.

Stock prices headed toward zero originally appeared on BloggingStocks on Sat, 24 Jan 2009 06:01:00 EST. Please see our terms for use of feeds.

Continue reading The beggars of Wall Street

The beggars of Wall Street originally appeared on BloggingStocks on Mon, 06 Oct 2008 10:58:00 EST. Please see our terms for use of feeds.

Continue reading Stocks to consider under $10 from CNBC

Stocks to consider under $10 from CNBC originally appeared on BloggingStocks on Thu, 19 Jun 2008 16:57:00 EST. Please see our terms for use of feeds.

About a year ago, CIT Group Inc. (NYSE: CIT)'s shares were trading at about $61. Now, the stock price is at a lowly $8.33. In fact, in today's trading, the stock price is down about 28%.

CIT is a commercial finance company, handling such things as asset based loans, secured lines of credit, leveraged leases and so on. But with the credit crunch and the ailing economy, the business is under lots of pressure. Actually, Moody's Investors Service and Standard & Poor's downgraded CIT's debt.

The upshot: it's becoming tougher to manage short-term financings (within the commercial paper market). What's more, the credit-default swap market is much more expensive.

To deal with this, CIT has drawn down its $7.3 billion credit line. No doubt, this is a red flag. Also, the company is exploring the sale of assets.

In light of the Bear Stearns Cos. (NYSE: BSC) meltdown, investors are certainly not asking many questions. Instead, it seems the thing to do is just to dump stock.

There is some good news, though with the Dow holding up quite nicely. Perhaps it's a sign that markets are beginning to stabilize and getting out of the panic mode.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates DealProfiles.com.

Investors bomb CIT originally appeared on BloggingStocks on Thu, 20 Mar 2008 14:53:00 EST. Please see our terms for use of feeds.

CIT Group (NYSE: CIT), a commercial and consumer finance company, closed at $20.36 Wednesday.

Keefe, Bruyette and Woods says: "Adjusting Q108 estimate for likely student loan write-down."

CIT April option implied volatility of 89 is above its 26-week average of 62 according to Track Data, suggesting larger price movement.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

Option update: CIT Group volatility elevated as shares approach five-year low originally appeared on BloggingStocks on Thu, 06 Mar 2008 10:30:00 EST. Please see our terms for use of feeds.

We are holding by the strikes, so typical of expiration week. You get a floor on Intel (NASDAQ: INTC) (Cramer's Take) for certain, maybe catch a bounce. Obviously, people listened to Intel last night when it said PCs weren't a problem, but it traded at $42 last night and I fear that it could trade lower and would be trading lower if it weren't for the $45 tug.

I don't like the tape and feel that we are underestimating the CITs (NYSE: CIT) (Cramer's Take) and the Ambacs (NYSE: ABK) (Cramer's Take) and overestimating the power of a JPMorgan (NYSE: JPM) (Cramer's Take) or a Wells Fargo (NYSE: WFC) (Cramer's Take) to make a stand.

Here's what I am watching, though: Coke (NYSE: KO) (Cramer's Take), MO (NYSE: MO) (Cramer's Take) and the Drug Index, the DRG. As soon as everyone knows we are in a recession, then these will be bought again. I pick those because they have the least inflationary pressures. Allergan (NYSE: AGN) (Cramer's Take) holds up and Schering-Plough's (NYSE: SGP) (Cramer's Take) trying to bottom; good signs, again.

Continue reading Cramer on BloggingStocks: Find some bull markets in the bear maw

Cramer on BloggingStocks: Find some bull markets in the bear maw originally appeared on BloggingStocks on Thu, 17 Jan 2008 09:12:00 EST. Please see our terms for use of feeds.

Someone of some responsibility has to say, "Enough."

I mean, how is it possible that CIT (NYSE: CIT) (Cramer's Take) is going to be able to issue common stock shares to pay preferred stock dividends and interest? But they will get away with it. After all, companies come public because they have too much debt and then use the common stock proceeds to pay down the debt.

So CIT will be "able" to do it. But here's a question: would you ever want to own the stock of a company that does that? How bad can it be there that they can't pay the dividends on recently issued paper?

Of course, though, the goal is to stay alive, to play for another day, because no one ever merges -- other than that pathetic deal that Bank of America (NYSE: BAC) (Cramer's Take) made because it had to and was on the hook. I call it pathetic because, ask yourself, if you didn't have any money "in" Countrywide (NYSE: CFC) (Cramer's Take) or had lent to them wouldn't you just want them to go under?

That's what this CIT move looks like. Desperation.

Continue reading Cramer on BloggingStocks: CIT's shameful offering

Cramer on BloggingStocks: CIT's shameful offering originally appeared on BloggingStocks on Wed, 16 Jan 2008 09:05:00 EST. Please see our terms for use of feeds.

Purchased HELOC.

Get that term into your head. Home equity loans that were purchased from other originators are the scourge of the system. Any piece of paper backed by these second liens that were issued by pure mortgage originators is just a goner.

This is the paper that was generated by Fremont General (NYSE: FMT) (Cramer's Take) and NovaStar (NYSE: NFI) (Cramer's Take) and New Century Financial and American Home Mortgage and so many of the other bankrupt and walking-dead companies. It was mostly no-documentation loans paper and served as another way to tap money that was meant to be paid back when you flipped a home. It was predicated on the continued increase in value of your home.

Continue reading Cramer on BloggingStocks: Banks can't shoulder home equity burden

Cramer on BloggingStocks: Banks can't shoulder home equity burden originally appeared on BloggingStocks on Wed, 28 Nov 2007 09:09:00 EST. Please see our terms for use of feeds.

Treasury Secretary Henry Paulson, who not too long ago was trying to minimize the impact of the subprime mortgage mess, finally realizes we've got a problem, but still will not really come clean on the severity of that problem. As fellow blogger Peter Cohan posted last week, the costs for the meltdown vary from $104 billion to $4 trillion. Bush I's savings and loan crisis ended up costing us $240 billion. I predict Bush II's mortgage mess will far exceed that with a lot more individual homeowners, investors, banks, and other lending institutions hard hit.

Paulson keeps holding out for a soft landing and by making statements like he did at a conference in New Delhi, India, today like, "We haven't hit the bottom yet in housing." or "There is enough strength in the economy that we can grow through this," all he does is delay the inevitable. It's time for straight talking about how deep this crisis truly is and how long it's going to take to get out of this mess. Then, quickly announce initiatives for starting the healing process that will lead us out of this mess.

We've already seen the fallout at the highest levels with major losses for Countrywide (NYSE: CFC), Merrill Lynch (NYSE: MER), UBS (NYSE: UBS), Citigroup (NYSE: C) -- just to name a few and the list is growing daily as financial institutions decide to own up to their mistakes. Millions of homeowners are losing their homes to foreclosure and we're likely to see those numbers continue to climb for the subprime homeowners through the end of 2008. Then another, even bigger group of prime loan holders will be hit in 2009 and 2010. These are the folks who took Option ARMs, who I wrote about last week.

You don't even have to have one of these risky mortgage loans to fear being hit by this mortgage mess, people with mutual funds and money market funds may be exposed and not even know it.

Are you or someone close to you caught up in this mess? What do you think should be done?

Lita Epstein has written more than 20 books including the "Complete Idiot's Guide to the Federal Reserve" and the "Complete Idiot's Guide to Improving Your Credit Score" (due out in December).

Paulson: 'Not hit bottom yet' originally appeared on BloggingStocks on Tue, 30 Oct 2007 11:15:00 EST. Please see our terms for use of feeds.

MOST NOTEWORTHY:

• American Eagle Outfitters Inc (NYSE: AEO) was upgraded to Outperform from Market Perform at Wachovia, as the firm believes momentum from a strong Spring/Summer can carry into the fall/Holiday seasons.
  
• JP Morgan views CVS/Caremark Corporation (NYSE: CVS) as the most sophisticated healthcare offering, the largest PBM, and has first mover advantage. The firm upgraded shares to Overweight from Neutral.
  
• JP Morgan also upgraded shares of Office Depot Inc (NYSE: ODP) to Overweight from Neutral based on valuation and potential turnaround.
  
• Morgan Stanley upgraded WPP Group (NASDAQ: WPPGY) to Overweight from Equal Weight as they believe the company can still meet its profit forecasts and margin goals in a slowing global economy.
  
• Jefferies upgraded shares of Pixelworks Inc (NASDAQ: PXLW) to Hold from Underperform on valuation as they no longer believe the risk/reward favors shorting at these levels.

• Stifel upgraded Tempur Pedic International (NYSE: TPX) to Buy from Hold.
  
• Merrill upgraded Tyco Electronics (NYSE: TEL) to Buy from Neutral.
  
• BB&T upgraded Celanese Corporation (NYSE: CE) to Buy from Hold.
  
• CIT Group Inc (NYSE: CIT) was upgraded to Outperform from Neutral at Credit Suisse.

Analyst upgrades: AEO, CVS, ODP, WPPGY and PXLW originally appeared on BloggingStocks on Wed, 26 Sep 2007 10:48:00 EST. Please see our terms for use of feeds.

It is not gargantuan good news, but it is a positive data point.

That's how one analyst characterized CIT Group's (NYSE: CIT) announcement that it plans to sell $3.5 billion-$4.2 billion in mortgage-backed securities to Freddie Mac (NYSE: FRE).

In general, analysts interpreted the deal as a positive for both CIT Group and investors: CIT Group, which is exiting the residential mortgage business, gets an infusion of capital, and investors can also rest somewhat easier knowing that CIT has succeeded in its overture access funds in the short-term credit markets.

CIT is retaining a considerable portion of the mortgage risk associated with deal. CIT's shares fell 85 cents to $41.04 in late Thursday afternoon trading.

Investment Category: Despite the positive announcement, CIT remains a moderate-risk stock not suitable for low-risk investors. Moderate-risk investors seeking a financial stock should consider waiting to see if CIT maintains a price above $42 in the weeks ahead, before buying shares.

CIT Group to sell up to $4.2 billion in bonds to Freddie Mac originally appeared on BloggingStocks on Thu, 20 Sep 2007 16:45:00 EST. Please see our terms for use of feeds.

The Dow Jones Industrial Average fell 387.18 points today to 132,270.68, its worst loss since Feb. 27's 416-point plunge. Fasten your seat belts ladies and gentlemen, the bumpy ride has just begun.

The worry that investors had about the meltdown in the subprime mortgage market has morphed into downright panic. All of the Zoloft and Xanax in the world isn't going to calm the frayed nerves of investors worried about rising mortgage defaults among people with credit that had been good until now.

Shares of brokerage houses including Goldman Sachs Group Inc. (NYSE: GS), JP Morgan Chase & Co. (NYSE: JPM) and Citigroup Inc. (NYSE: C) are getting pounded. Bloomberg News pointed out that volume at the New York Stock Exchange was at its highest level since 2002. Markets in Europe also are tanking.

"It looks hideous out there," Morgan Keegan & Co. John Wilson told Bloomberg in what could be the understatement of the year.

Of course, things don't stay horrible forever. Experienced investors know they have to be patient as the market corrects itself as if it were somehow wrong in the first place. Look for market pundits to point out the usual suspects, including retail sales which so far have been a mixed bag.

Even though things may look bad now, over the long term most people are better off having a good portion of their assets allocated in the stock market. Over time, that's proven to be the best strategy. Remember that as your eyes well up with tears when you read your next brokerage statement.

Dow tanks 387 points -- more to come? originally appeared on BloggingStocks on Thu, 09 Aug 2007 17:35:00 EST. Please see our terms for use of feeds.

Option update: Financial sector volatility increases on credit quality originally appeared on BloggingStocks on Fri, 03 Aug 2007 17:50:00 EST. Please see our terms for use of feeds.

MAJOR PAPERS:

• Vonage Holdings Corp (NYSE: VG) said bankruptcy is one of the potential risks from its continuing patent litigation with phone giant Verizon Communications Inc (NYSE: VZ), reported the Wall Street Journal.
• Blackstone Group is selling Extended Stay Hotels to Lightstone Group for $8B, which beat offers from Fortress Investment Group (NYSE: FIG) and Goldman Sachs Group Inc (NYSE: GS), according to the Wall Street Journal.
• The Wall Street Journal reported that other financial firms such as Countrywide Financial Corporation (NYSE: CFC), CIT Group Inc (NYSE: CIT), iStar Financial (NYSE: SFI), and KeyCorp (NYSE: KEY) may be in play after the sale of Sallie Mae (NYSE: SLM).

• The Telegraph reported that General Electric Company (NYSE: GE) is looking to sell a natural gas power plant in the UK for an estimated GBP450M-GBP500M, with potential buyers including E.ON AG ADS (NYSE: EON) and Scottish Power ADS (NYSE: SPI).
• The New York Post has learned that Heather Pech, a senior Jones Apparel Group Inc (NYSE: JNY) executive that headed the Nine West retail chain, has left the company.

• WNBC.com reported that Research in Motion Limited's (NASDAQ: RIMM) Blackberry service is suffering a massive system failure since last night.

Newspaper wrap-up 4-18-07: Blackberry service suffers meltdown originally appeared on BloggingStocks on Wed, 18 Apr 2007 09:15:00 EST. Please see our terms for use of feeds.