Interdum stultus opportuna loquitur...

Tuesday, November 11, 2008

OzRant: Citi, Citi, Citi... Morons...

Note - from June 24th 2009, this blog has migrated from Blogger to a self-hosted version. Click here to go straight there.

Before I start putting the boot into Citigroup and others, I just want to straighten something out: I often crap on about how fatuous most financial journalists are, and a couple of folks have e-mailed me asking if that meant that James Dunn and I don't get on (since we worked together for years at IWL).

Jim and I get on like a house on fire - he is among the cleverest guys you could ever hope to meet, and he is extremely witty (in a way that I wish I was).

Like everyone on the green site team during my time there (except that hopeless dickhead Potter), Jim is someone I genuinely like. Plus, I've sat in Lodge with his Dad - so I will brook no assumption that Jim is in any way tarred with the same scorn that I reserve for 'Kochie', Pascoe, Clitheroe and Kohler.

Likewise, Marty Pretty (who is now an analyst anyhow) went to the Fin and wrote some sensible stuff, and is a smart kid (he's not a kid anymore I guess), and Ben Schneeeeeeders was no slouch even though he had a funny-shaped head.

So that clears that up... let's get the boot in now.

O h man... following on the heels of Deutsche Bank's downgrade of GM (with a target price of zero) we get proof positive that the same sell-side stupidity exists in the Strayan market. (Let's not mention that Deutsche Bank's zero price target was made four years after you read the same target price in the USRant).

Citigroup had given Asciano a 12-month target share price above $6; today with AIO dropping to under 70c, the geniuses at Citi cut AIO's target to 80-odd cents.

Why did they wait until today? Why not when it went through $10, or $9, or $8, or $7, or $6, or $5, or $4, or $3, or $2?

Are they all former S&P or Moody's 'analysts', who in truly gutless fashion always believe that the appropriate time to shout a warning is after the company shuts its doors and puts all its records through the shredder?

In case you think that I am being too harsh, let's just say that the methodology of the subscription site got it right all along, and will get it right when the All Ords is languishing in the 2000s. By that time we will be listed, I reckon - the ASX will be so desperate for new listings that we'll be able to list through a listed shell via a reverse takeover... wouldn't it be hilarious if we wound up listing through the shell of NCP?

Anyhow... enough silliness. If the subscription site had to rely on comparisons to a sell-side brokerage in order to look good, I would shut it down and replace it with a site about Indian Dancing (remember that is what happened to RantPro when it got DoS'd to death). Sell-side analysis is the Special Olympics of stock analysis.

Conversely, the electronic brainery behind the subscription site has no need for a logo or a marketing budget. It's known as the algorithm

Single quotes, Arial Narrow lower case, no borders, no drop-shadow or reflection, no bold, no italics. Just the algorithm.

If you're a fan of Top Gear (the real UK one, not the Strayan wanker knockoff), you will understand the following: the algorithm is to me, what The Stig is to Jeremy Clarkson.

Some say that it lives in a hole in the internets tubes, and pounces on badly-run companies like a moray eel. All we know is, it's called the algorithm.

Anyhow, looking at what the algorithm said about AIO (a view that is unchanged since July 2007, when the site had a different name but the same underlying technologerisation) you will see that it has always been a SELL.

Click for larger image

Now, let's look at a bit of the Summary page for AIO...

Click for larger image

the algorithm (which is lower case even at the start of a sentence) has precisely one stock in AIO's sector that it rates a buy (and only a 'trading' buy at that). That's Macquarie Airports (MAP), and it only rates 'OK' on fundamentals, due to a reasonably high dividend yield. With only 'OK' fundamentals, it can only be a Trading Buy on dips to oversold. (And although the algorithm is supposed to be a virtualisation of my braininess, it disagrees with me sometimes: it has not triggered a Speculative Buy on QAN, even though I've said for years that QAN can be bought when it is in the low $2s. the algorithm says NO, because the recent pullback in oil prices will not be reflected in $A earnings).

Elsewhere in the sector, Macquarie Infrastructure Group (MIG) has had a blue dot (Neutral) despite having similar yield and PE characteristics to MAP - its sectoral composition and economic sensitivities are different enough to change the Fundamental rating and therefore the overall rating. (Personally I think Macquarie are a bunch of clowns who will eventually overstep and blow up... but on valuation I defer to the algorithm).

Conversely, AIO has been a 'Red Dot' - SELL - since about a month after it listed. 

Then again - much to my disappointment - nobody was ever going to present me (or the algorithm) with a multi-million dollar temptation to compromise our analysis. I am not saying that Citi was doing IB work for AIO, but that even the prospect of IB work makes large-house analysts scared to call a SELL until they know the company is literally dead in the water.

So anyhow... there you have it: on AIO, I disagreed with Citi, and I was right. On GM, I disagreed with Kirk Kerkorian, and I was right. On Fannie and Freddie, I was barking for four years, and I was right. And so on and so forth - all the way back to News Corpse, DavNet, Virotec, Sausage Software, Seafood Online (and on the plus side, Credit Corp, CVC BizVision, CBio and others).

Yeah yeah, let's hear it for me. Big f#cking deal.

But there is a pattern there, I reckon: if it's your Beloved GT versus some politician, finance journalist or sell-side shill, you won't go far wrong if you back The Beloved.

When you say it like that, it's hardly a ringing endorsement - it's like saying that the Frogs could conquer any nation that was armed only with unsharpened sticks. In the Land of the Blind, the One Eyed Man is King (and probably a Collingwood supporter).

I'm not pretending to be infallible - don't anybody dare mention the Strong Buy I slapped on Telstra in 2002 (which I countermanded the moment they hired little "Manuel from Barthelona", but by then it was too late).

And for those who want more Stig quotes, I think the best collection is this blog (it's not mine).

Major Market Indices

The broad market - the All Ordinaries (XAO) - slid pretty savagely, posting a loss of 138.2 points (3.4%), finishing at 3921.8 points. The index hit an intraday high of 3959.1 at 3:03 pm, while the low for the day was 3890.5 - set at 11:26 am Sydney time. 

The index could still not resist the urge to try and bounce off its lows - even though it took over three hours to bounce 70 points, it still has a crack aty a bounce every time it has a down day. So we still have not seen the capitulation we really need to see before we can put in an interim bottom. 

Total volume traded on the ASX was 1.17bn units, 9.8% below its 10-day average of 1.3bn shares.The ASX's daily listing of all stocks included 1094 different 3-letter FPO's which traded (i.e., had non-zero trade volume). Of these, 227 issues rose, with volume in rising issues totalling 357.5m units; there were 629 declining stocks, which traded aggregate declining volume of 689.2m shares.

Of the 493 All Ordinaries components, 69 rose while 349 fell. Volume was tilted in favour of the losers by a margin of 2:1, with 301.08m shares traded in gainers while 608.99m shares traded in the day's losers.

The Index that forms the cash basis for the SFE's Share Price Index Futures - the S&P/ASX 200 (XJO) - dipped rather savagely, losing 146.9 points (3.58%), closing out the session at 3960.9 points.

GT Intraday Chart
Name Close +/-(%)
All Ordinaries 3921.80 -138.20 (3.4%)
ASX 20 2367.10 -97.50 (4.0%)
ASX 50 3988.00 -149.40 (3.6%)
ASX 100 3257.00 -120.00 (3.6%)
ASX 200 3960.90 -146.90 (3.6%)
ASX 300 3939.60 -145.50 (3.6%)
ASX Mid-Cap 50 3626.90 -117.50 (3.1%)
ASX Small Ordinaries 1873.70 -70.70 (3.6%)

The "heavy hitters" of the Australian market - the ASX 20 Leaders (XTL) - got the crap beaten out of it today, sliding 97.5 points (3.96%), closing out the session at 2367.1 points.

The 21 stocks which make up the index traded a total of 144.58m units; 2 index components rose, with rising volume amounting to 12.49m shares, while the 19 decliners had volume traded totalling 132.08m units. The major percentage gainers within the index were

  • Stockland (SGP), +$0.27 (6.59%) to $4.37 on volume of 5.6 million shares; and
  • Westfield Group (WDC), +$0.55 (3.93%) to $14.55 on volume of 6.9 million shares.

On the less salubrious side of the big-cap fence, the following stocks were the worst-performed within the index:

  • Wesfarmers (WES), -$2.87 (12.48%) to $20.13 on volume of 4.6 million shares;
  • Macquarie Group (MQG), -$3 (10.06%) to $26.81 on volume of 2.5 million shares;
  • National Australia Bank (NAB), -$2 (9.03%) to $20.15 on volume of 21.1 million shares;
  • Suncorp-Metway. (SUN), -$0.61 (7.18%) to $7.89 on volume of 3.3 million shares; and
  • Commonwealth Bank Of Australia (CBA), -$2.39 (6.29%) to $35.61 on volume of 8.1 million shares.

The denizens of the ASX Small Ordinaries (XSO) slid in line with its large-cap counterpart. The Small Ords was taken to the woodshed somewhat, sliding 70.7 points (3.64%), closing out the session at 1873.7 points.

Among the stocks that make up the Small Caps index, 30 index components finished to the upside, and of the rest, 155 closed lower for the session.

The 207 stocks which make up the index traded a total of 218.88m units: volume in the 30 gainers totalling 21.3m shares, with trade totalling 172.14m units in the index's 155 declining components. The major percentage gainers within the index were
  • Abacus Property Group (ABP), +$0.04 (13.46%) to $0.30 on volume of 4.7 million shares;
  • Charter Hall Group (CHC), +$0.03 (7.89%) to $0.41 on volume of 1.2 million shares;
  • Mirabela Nickel (MBN), +$0.11 (7.05%) to $1.67 on volume of 39.4 thousand shares;
  • Great Southern (GTP), +$0.02 (6.25%) to $0.34 on volume of 642.7 thousand shares; and
  • Imdex (IMD), +$0.03 (4.55%) to $0.58 on volume of 1.1 million shares.

In the red-zone of the little-stock index, the following list represents the biggest downers (in terms of percentage decline):

  • Australian Education Trust (AEU), -$0.05 (22.22%) to $0.18 on volume of 706 thousand shares;
  • NRW Holdings (NWH), -$0.1 (21.98%) to $0.36 on volume of 2.5 million shares;
  • Minara Resources (MRE), -$0.12 (20%) to $0.46 on volume of 1.8 million shares;
  • Babcock & Brown Power (BBP), -$0.01 (17.95%) to $0.06 on volume of 10.7 million shares; and
  • Bannerman Resources (BMN), -$0.08 (16.67%) to $0.40 on volume of 614.6 thousand shares.

Index Changes
Code Name Close +/- % Volume
XAO All Ordinaries 3921.8 -138.2 -3.4 967.9m
XFL ASX 50 3988 -149.4 -3.61 433.5m
XJO ASX 200 3960.9 -146.9 -3.58 846.1m
XKO ASX 300 3939.6 -145.5 -3.56 916.9m
XMD ASX Mid-Cap 50 3626.9 -117.5 -3.14 269.7m
XSO ASX Small Ordinaries 1873.7 -70.7 -3.64 213.6m
XTL ASX 20 2367.1 -97.5 -3.96 139m
XTO ASX 100 3257 -120 -3.55 703.3m
Market Breadth
Advances 2 14 27 69 30 227
Declines 19 85 170 349 155 629
Advancing Volume 12.5m 276.8m 291.2m 301.1m 21.3m 357.5m
Declining Volume 132.1m 410.1m 543.4m 609m 172.1m 689.2m
GICS Industry Indices

Among the 11 industry indices, today's market action was dominated by sectoral declines - only one sector managed a gain for the day.

The only sector index to gain was Property Trusts (XPJ), which added 35 points (3.5%) to 1036.1 points. The 21 stocks which make up the index traded a total of 342.58m units; 8 index components rose, with rising volume amounting to 270.74m shares, while the 13 decliners had volume traded totalling 71.84m units. The major percentage gainers within the index were

  • Abacus Property Group (ABP), +$0.04 (13.46%) to $0.30 on volume of 4.7 million shares;
  • Dexus Property Group (DXS), +$0.10 (11.24%) to $0.99 on volume of 39.9 million shares;
  • Stockland (SGP), +$0.27 (6.59%) to $4.37 on volume of 5.6 million shares;
  • Mirvac Group (MGR), +$0.08 (5.84%) to $1.45 on volume of 18 million shares; and
  • GPT Group (GPT), +$0.06 (5.53%) to $1.05 on volume of 108.1 million shares.

The worst-performed index for the session was Information Technology (XIJ), which dipped 30 points (6.8%) to 411 points. There are only two stocks in this index, and one of them is an absolute minnow compared to the other. the minnow is Iress (which rose today, but only traded 70000 shares). But there was no way that IRE's little gain was going to offset the fal;l in teh index's gorilla... 

  • Computershare (CPU), -$0.61 (7.83%) to $7.18 on volume of 4 million shares.

Just missing out on the wooden spoon was Financials ex Property Trusts (XXJ), which slid 214.5 points (4.85%) to 4208.5 points. The 29 stocks which make up the index traded a total of 108.19m units; The 23 decliners had volume traded totalling 98.24m units, and 4 index components rose, with rising volume amounting to 3.44m shares, The major percentage decliners within the index were

  • Babcock & Brown (BNB), -$0.16 (20.39%) to $0.61 on volume of 13.6 million shares;
  • Macquarie Group (MQG), -$3 (10.06%) to $26.81 on volume of 2.5 million shares;
  • National Australia Bank (NAB), -$2 (9.03%) to $20.15 on volume of 21.1 million shares;
  • Challenger Financial Services Group (CGF), -$0.18 (8.61%) to $1.91 on volume of 498.2 thousand shares; and
  • Suncorp-Metway. (SUN), -$0.61 (7.18%) to $7.89 on volume of 3.3 million shares.

Third-to-last amongst the sector indices was Industrials (XNJ), which slid 168.8 points (4.47%) to 3611.3 points. The 32 stocks which make up the index traded a total of 72.92m units; The 29 decliners had volume traded totalling 71.49m units, and 2 index components rose, with rising volume amounting to 1.42m shares, The major percentage decliners within the index were

  • Asciano Group (AIO), -$1.03 (59.88%) to $0.69 on volume of 6.1 million shares;
  • NRW Holdings (NWH), -$0.1 (21.98%) to $0.36 on volume of 2.5 million shares;
  • Boart Longyear (BLY), -$0.06 (13.64%) to $0.38 on volume of 7.3 million shares;
  • Ausenco (AAX), -$0.43 (10.86%) to $3.53 on volume of 595.7 thousand shares; and
  • Bradken (BKN), -$0.5 (10.55%) to $4.24 on volume of 764.9 thousand shares.

Sector Indices
Code GICS Sector Close +/- % Volume
XPJ Property Trusts 1036.1 35 3.5 343m
XTJ Telecommunications 1435.3 -37.1 -2.52 33m
XUJ Utilities 4622.5 -123.4 -2.6 61m
XEJ Energy 13168.8 -365.9 -2.7 48m
XHJ Healthcare 8906.1 -268.3 -2.92 11m
XMJ Materials 9011.2 -357.8 -3.82 136m
XDJ Consumer Discretionary 1249.8 -52.4 -4.02 34m
XSJ Consumer Staples 6657.2 -309.6 -4.44 20m
XNJ Industrials 3611.3 -168.8 -4.47 73m
XXJ Financials ex Property Trusts 4208.5 -214.5 -4.85 108m
XIJ Information Technology 411 -30 -6.8 4m

All Ordinaries Major Movers

All Ords Volume Leaders
Code Name Close +/- % Volume
GPT GPT Group 1.05 0.06 5.53 108.1m
GMG Goodman Group 1.18 0.06 4.89 79.3m
BBI Babcock & Brown Infrastructure Group 0.07 -0.01 -14.29 41.2m
DXS Dexus Property Group 0.99 0.10 11.24 39.9m
TLS Telstra Corporation. 4.28 -0.12 -2.73 30.1m
All Ords Percentage Gainers
Code Name Close +/- % Volume
ABP Abacus Property Group 0.30 0.04 13.46 4.7m
DXS Dexus Property Group 0.99 0.10 11.24 39.9m
APE AP Eagers 7.80 0.60 8.33 0.3k
CHC Charter Hall Group 0.41 0.03 7.89 1.2m
AVJ Avjennings 0.42 0.03 7.69 13.2k
All Ords Percentage Losers
Code Name Close +/- % Volume
ABS ABC Learning Centres 0.00 0.00 38k
AIO Asciano Group 0.69 -1.03 -59.88 6.1m
AEU Australian Education Trust 0.18 -0.05 -22.22 706k
NWH NRW Holdings 0.36 -0.10 -21.98 2.5m
BNB Babcock & Brown 0.61 -0.16 -20.39 13.6m