Knight Capital Group's Ironic Imaginary Valuation

At $3.07 a share, after its 24% drop Monday, Knight Capital Group (NYSE: KCG) looks to be priced exactly right. That’s because, while it secured funding to stay afloat, it did so at great cost to legacy shareholders while admittedly saving what they had left. So I find it ironic that some are seeing KCG worthy of a higher value now. To me, that is amusingly anomalous to the mathematic malfunction that nearly erased the company.

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

Knight Capital Group

Knight Capital Group (KCG) secured a lifeline of $400 million in equity financing from a consortium of investors including Jefferies (NYSE: JEF), Blackstone (NYSE: BX), GETCO LLC, Stephens, Stifel Financial (NYSE: SF) and TD Ameritrade (Nasdaq: AMTD). In doing so, the company stayed afloat, yes, but it gave up 70% of equity, the equity of legacy shareholders.

Some are talking today about the franchise value of Knight, the potential gain for the new shareholders, and the ongoing opportunity for all parties moving forward. While it’s true the company avoided bankruptcy, the odds of it rising from here back to $10, representing a 233% gain, are equal to the odds that the company sported in July to rise from its price then of $10 to $33. In other words, the only thing that was saved was the $3 per share investors have left and the jobs of the executives and the employees of Knight. The potential of the company is probably unchanged despite whatever creative capital minds might construct to sooth the wound. What was lost, and it was lost, was $7 per share or 70% of capital for each legacy shareholder of Knight who not long ago saw quotes of $10 a share for their stock.

The stock is priced right according to the efficient market (in theory), but I would say from here there is more likelihood of downside, given the potential for shareholder lawsuits and regulatory penalty. Given the broad reaching impact of mankind’s colossal failures in finance, more recently made famous by algorithmic trading and also the mortgage security malfunction at the hands of Wall Street and the rating agencies, these latest algorithmic errors are likely to bring down the hammer of Capitol Hill once again. So, I would avoid Knight’s shares rather than imagine value where it is not.

Article should also interest Goldman Sachs (NYSE: GS), J.P. Morgan (NYSE: JPM), Citigroup (NYSE: C), Morgan Stanley (NYSE: MS), McGraw-Hill (NYSE: MHP) and Moody's (NYSE: MCO) investors. Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

The Unemployment Insurance Game

If you follow business media, you were probably enthused this morning to hear that jobless claims had improved based on the latest Department of Labor (DOL) report. In fact, you might even have attributed the stock market’s broader bounce to it. But you would be wrong, as it was all hoopla drummed up by producers who had no real clue as to why stocks were higher. Alas, this is why I am here… to make sense of it all for you.

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

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The Unemployment Insurance Game

Big deal! Weekly Jobless Claims improved by 7,000 in the period ending August 6, but they were still up near 400K, at 395K to be exact. I mean, I would have thought my long cursed Philadelphia Eagles had won the Superbowl or that I had won the lottery the way the news was being read to me this morning. This was more akin to Marley, my Maltese friend, choosing not to poop on the bathroom floor. It was that kind of good news… you see the difference.

The four-week moving average of weekly jobless claims illustrates the general malaise in the labor market, improving by just 3,250, to 405,000. Hey, the insured unemployment rate improved by a tenth of a percentage point, to 2.9% in the period ending July 30! Sit back down now; we’re not chilling the champagne just yet.

Don’t think I have not noticed, though, that the number of people receiving benefits continues to decrease. The pool of the insured unemployed shed 60K in the latest check-up, and the number of people receiving a benefit of some sort, including extension benefits, dropped 89,945 in moving to 7.48 million.

"The unforgiving “system” then throws them out on the street without a dime nor dignity."

The problem is that I suspect people are simply losing their benefits, more so than finding work. This is how it goes in the government benefits game. There are a million rules set up to inspire the unemployed to keep seeking work, versus bumming around collecting free money. What happens all too often instead though is that people, being human, get tripped up by the net of government rules and regulations. The unforgiving “system” then throws them out on the street without a dime nor dignity. So, they fall out of the government count, presenting illusion of improvement where an even more indignant state exists than the previous. What will be end result of all this, if not the kind of riots and protests that we see occurring today in the United Kingdom and Greece. I think it will not be long before MoTown Mobs gather.

As always, the state data details:

The highest insured unemployment rates in the week ending July 23 were in Puerto Rico (5.5), Pennsylvania (4.2), New Jersey (4.1), Alaska (3.9) California (3.9), Connecticut (3.8), Oregon (3.8), Rhode Island (3.7), Nevada (3.6) and Arizona (3.4).

The largest increases in initial claims for the week ending July 30 were in Minnesota (+472), Kentucky (+393), New Jersey (+291), Delaware (+64), and Vermont (+50) while the largest decreases were in Tennessee (-4,448), Michigan (-3,025), Florida (-2,336), New York (-2,132), and Texas (-1,828 ).

Extended benefits were available in Alabama, California, Colorado, Connecticut, Delaware, the District of Columbia, Florida, Georgia, Idaho, Illinois, Indiana, Kansas, Kentucky, Maine, Massachusetts, Michigan, Minnesota, Missouri, Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, Washington, West Virginia, and Wisconsin during the week ending July 23.

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

Article should interest investors in Paychex (Nasdaq: PAYX), Manpower (NYSE: MAN), Robert Half International (NYSE: RHI), 51Job Inc. (Nasdaq: JOBS), Monster World Wide (NYSE: MWW), Korn/Ferry International (NYSE: KFY), Administaff (NYSE: ASF), Kforce (Nasdaq: KFRC), TrueBlue (NYSE: TBI), Dice Holdings (NYSE: DHX), Kelly Services (Nasdaq: KELYA), SFN Group (NYSE: SFN), CDI Corp. (NYSE: CDI), Cross Country Healthcare (Nasdaq: CCRN), On Assignment (Nasdaq: ASGN), AMN Healthcare Services (NYSE: AHS), Barrett Business Services (Nasdaq: BBSI), Hudson Highland Group (Nasdaq: HHGP), StarTek (NYSE: SRT), RCM Technologies (Nasdaq: RCMT), VirtualScopics (Nasdaq: VSCP), American Surgical (OTC: ASRG.OB), Medical Connections (OTC: MCTH.OB), iGen Networks (OTC: IGEN.OB), St. Joseph (OTC: STJO.OB), General Employment Enterprises (NYSE: JOB), Total Neutraceutical (OTC: TNUS.OB), TeamStaff (Nasdaq: TSTF), Stratum (OTC: STTH.OB), Purespectrum (OTC: PSRU.OB), Corporate Resource Services (OTC: CRRS.OB), Bank of America (NYSE: BAC), J.P. Morgan Chase (NYSE: JPM), Goldman Sachs (NYSE: GS), Citigroup (NYSE: C), Morgan Stanley (NYSE: MS), Wells Fargo (NYSE: WFC), TD Bank (NYSE: TD), PNC Bank (NYSE: PNC), General Electric (NYSE: GE), Wal-Mart (NYSE: WMT), McDonald's (NYSE: MCD), Alcoa (NYSE: AA), American Express (NYSE: AXP), Boeing (NYSE: BA), Caterpillar (NYSE: CAT), Cisco Systems (Nasdaq: CSCO), Chevron (NYSE: CVX), DuPont (NYSE: DD), Walt Disney (NYSE: DIS), Home Depot (NYSE: HD), Hewlett-Packard (NYSE: HPQ), IBM (NYSE: IBM), Intel (Nasdaq: INTC), Johnson & Johnson (NYSE: JNJ), Kraft (NYSE: KFT), Coca-Cola (NYSE: KO), 3M (NYSE: MMM), Merck (NYSE: MRK), Microsoft (Nasdaq: MSFT), Pfizer (NYSE: PFE), Procter & Gamble (NYSE: PG), AT&T (NYSE: T), Travelers (NYSE: TRV), United Technologies (NYSE: UTX), Verizon (NYSE: VZ), Exxon Mobil (NYSE: XOM).

FedEx (NYSE: FDX) EPS Report Shows us a Hiding Place for Corporate American Ailments

We're On Guard for You Against Shady Tactics

FedEx (NYSE: FDX) shares rose 3% Thursday after it painted a rosy view of the economy and its own forward quarter outlook. The transportation company is an important barometer of the broader economy, and so its report and communications are important to all investors. But I'm warning readers to beware the current environment, because I see within it a place for corporate America to hide what ails it.

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

Relative tickers: NYSE: FDX, NYSE: UPS, Nasdaq: CHRW, Nasdaq: EXPD, Nasdaq: UTIW, Nasdaq: HUBG, Nasdaq: FWRD, Nasdaq: ATSG, Nasdaq: PACR, Nasdaq: AIRT, Nasdaq: SINO, Nasdaq: WLGI, NYSE: UNP, NYSE: CNI, NYSE: CSX, NYSE: NSC, NYSE: CP, NYSE: KSU, NYSE: WAB, NYSE: GSH, NYSE: TRN, NYSE: GWR, NYSE: RA, NYSE: GBX, Nasdaq: ARII, Nasdaq: RAIL, Nasdaq: PWX, Nasdaq: JBHT, Nasdaq: LSTR, NYSE: CNW, Nasdaq: WERN, Nasdaq: ODFL, NYSE: KNX, Nasdaq: HTLD, Nasdaq: MRTN, NYSE: CGI, Nasdaq: ECHO, Nasdaq: UACL, Nasdaq: PATR, Nasdaq: SAIA, Nasdaq: QLTY, Nasdaq: USAK, Nasdaq: CVTI, Nasdaq: PTSI, Nasdaq: YRCW, AMEX: XPO, Nasdaq: FFEX, NYSE: TDW, NYSE: KEX, NYSE: TK, NYSE: TGP, NYSE: FRO, NYSE: CKH, Nasdaq: ALEX, NYSE: SFL, Nasdaq: DRYS, NYSE: TOO, Nasdaq: GLNG, NYSE: NAT, NYSE: SSW, NYSE: DSX, NYSE: NMM, NYSE: OSG, Nasdaq: CMRE, NYSE: HOS, NYSE: SB, OTC: VLCCF, NYSE: NM, NYSE: DAC, NYSE: TNK, NYSE: GNK, NYSE: EXM, NYSE: GSL, NYSE: TNP, Nasdaq: CPLP, Nasdaq: EGLE, NYSE: GMR, NYSE: DHT, Nasdaq: BALT, Nasdaq: STNG, Nasdaq: PRGN, Nasdaq: SBLK, Nasdaq: ULTR, Nasdaq: GASS, NYSE: ISH, Nasdaq: KSP, Nasdaq: ESEA, NYSE: HRZ, Nasdaq: TBSI, Nasdaq: RLOG, Nasdaq: DCIX, Nasdaq: GLBS, Nasdaq: OCNF, NYSE: TMM, Nasdaq: TRBR, Nasdaq: TOPS, AMEX: BHO, Nasdaq: FREE, Nasdaq: ONAV, Nasdaq: NEWL.

FedEx (NYSE: FDX) EPS Report Shows us a Hiding Place for Corporate American Ailments

FedEx shares rose despite the company's missing its fiscal third quarter target by a penny, after already having warned analysts that severe weather would impact its quarter. The final tally from the snowy December/January span cost the company approximately $0.12 in EPS. The company earned $0.81, excluding nonrecurring items, just shy of the adjusted $0.82 analyst consensus tallied by Bloomberg.

Besides that bad news, an analyst from Barclay's Capital (NYSE: BCS) estimates the company does $1.7 billion in annual business from Japan, some 4% of its total revenue. If that was not enough, gasoline and other fuel costs that strike at the core of FedEx's expenses, are on the rise without ceiling in sight.

Yet, FedEx overcame a potentially terrible Thursday by focusing the market's attention on the opportunity it has to ship relief and reconstruction supplies into Japan. Better yet, it projected EPS of $1.66 to $1.83 for its May quarter that left the analysts' consensus short at approximately $1.66 per share. That's the kind of good news the market rewards, and it did.

After its rosy forecast that supposedly takes into account the "current market outlook for fuel prices and continued moderate growth in the global economy," the market ignored FedEx's subtle warning that its earnings "could be affected by the effects of ongoing political turmoil in the Middle East and North Africa on fuel prices and the economy." After making the big prediction for its numbers, the company went on to warn that the uncertain situation in Japan could somehow affect its operating environment. Well duh!

I'm not saying FedEx is doing this, but it seems there is a cushion for companies now, and perhaps some are taking advantage of an opportunity to forecast liberally to overcome current bad news. After all, that gives a company a full three months to make the magic happen, or else just blame the next miss on the "extraordinary" chaos overseas. I'm just saying the volatile global environment allows some leeway for little white lies, not that anyone in corporate America would ever do something like that...



Article interests: FedEx (NYSE: FDX), United Parcels Service (NYSE: UPS), C.H. Robinson Worldwide (Nasdaq: CHRW), Expeditors International (Nasdaq: EXPD), UTI Worldwide (Nasdaq: UTIW), Hub Group (Nasdaq: HUBG), Forward Air (Nasdaq: FWRD), Air Transport Services (Nasdaq: ATSG), Pacer International (Nasdaq: PACR), Air T Inc. (Nasdaq: AIRT), Sino-Global Shipping America (Nasdaq: SINO), WLG Inc. (Nasdaq: WLGI), Union Pacific (NYSE: UNP), Canadian National Railway (NYSE: CNI), CSX (NYSE: CSX), Norfolk Southern (NYSE: NSC), Canadian Pacific Railway (NYSE: CP), Kansas City Southern (NYSE: KSU), Westinghouse Air Brake (NYSE: WAB), Guangshen Railway (NYSE: GSH), Trinity Industries (NYSE: TRN), Genesee & Wyoming (NYSE: GWR), RailAmerica (NYSE: RA), Greenbrier (NYSE: GBX), American Railcar (Nasdaq: ARII), FreightCar America (Nasdaq: RAIL), Providence & Worcester (Nasdaq: PWX), J.B. Hunt Transport (Nasdaq: JBHT), Landstar System (Nasdaq: LSTR), Con-way (NYSE: CNW), Werner Enterprises (Nasdaq: WERN), Old Dominion Freight (Nasdaq: ODFL), Knight Transportation (NYSE: KNX), Heartland Express (Nasdaq: HTLD), Marten Transport (Nasdaq: MRTN), Celadon Group (NYSE: CGI), Echo Global Logistics (Nasdaq: ECHO), Universal Truckload (Nasdaq: UACL), Patriot Transportation (Nasdaq: PATR), Saia (Nasdaq: SAIA), Quality Distribution (Nasdaq: QLTY), USA Truck (Nasdaq: USAK), Covenant Transportation (Nasdaq: CVTI), P.A.M. Transportation (Nasdaq: PTSI), YRC Worldwide (Nasdaq: YRCW), Express-1 Expedited Services (AMEX: XPO), Frozen Food Express (Nasdaq: FFEX), Tidewater (NYSE: TDW), Kirby (NYSE: KEX), Teekay (NYSE: TK), Teekay LNG Partners (NYSE: TGP), Frontline (NYSE: FRO), Seacor (NYSE: CKH), Alexander & Baldwin (Nasdaq: ALEX), Ship Finance International (NYSE: SFL), DryShips (Nasdaq: DRYS), Teekay Offshore Partners (NYSE: TOO), Golar LNG (Nasdaq: GLNG), Nordic American Tanker (NYSE: NAT), Seaspan (NYSE: SSW), Diana Shipping (NYSE: DSX), Navios Maritime Partners (NYSE: NMM), Overseas Shipholding (NYSE: OSG), Costamare (Nasdaq: CMRE), Hornbeck Offshore (NYSE: HOS), Safe Bulkers (NYSE: SB), Knightsbridge Tankers (OTC: VLCCF), Navios Maritime (NYSE: NM), Danaos (NYSE: DAC), Teekay Tankers (NYSE: TNK), Genco Shipping (NYSE: GNK), Excel Maritime (NYSE: EXM), Global Ship Lease (NYSE: GSL), Tsakos Energy Navigation (NYSE: TNP), Capital Product Partners (Nasdaq: CPLP), Eagle Bulk Shipping (Nasdaq: EGLE), General Maritime (NYSE: GMR), DHT Holdings (NYSE: DHT), Baltic Trading (Nasdaq: BALT), Scorpio Tankers (Nasdaq: STNG), Paragon Shipping (Nasdaq: PRGN), Star Bulk Carriers (Nasdaq: SBLK), Ultrapetrol (Nasdaq: ULTR), StealthGas (Nasdaq: GASS), International Shipholding (NYSE: ISH), K-Sea Transportation (Nasdaq: KSP), Euroseas (Nasdaq: ESEA), Horizon Lines (NYSE: HRZ), TBS International (Nasdaq: TBSI), Rand Logistics (Nasdaq: RLOG), Diana Containerships (Nasdaq: DCIX), Globus Maritime (Nasdaq: GLBS), OceanFreight (Nasdaq: OCNF), Grupo TMM (NYSE: TMM), Trailer Bridge (Nasdaq: TRBR), Top Ships (Nasdaq: TOPS), B&H Ocean (AMEX: BHO), FreeSeas (Nasdaq: FREE), Omega Navigation (Nasdaq: ONAV), NewLead (Nasdaq: NEWL).

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.