Archive | May, 2011

13 & 26 Week Auction Results, June Auction Calendar

31 May

Today’s 13 & 26 week auction results are out, along with the full updated June issuance calendar:

13 Week – Yield: 0.06 vs. 0.055 (5/23), last 10 avg: 0.058, Indirects: 37.18/30.30/26.52, Bid To Cover: 4.66/4.70/4.55, Coupon: 0.061/0.056/0.059

26 Week – Yield: 0.115 vs. 0.10 prev (5/23),  last 10 avg: 0.112, Indirects: 43.73/38.28/39.70, Bid To Cover: 4.76/4.97/4.741, Coupon: 0.117/0.102

Updated Auction Stats and June Auction Calendar [GDocs]


Project YOKU-zuna Update: 10-Year Projected Income Statement

31 May

I’m still not done modeling YOKU‘s projected financial performance, but so-far I think I’ve done enough research to put together a preliminary (set of) income statement(s).  The image below shows an income statement which combines generous revenue growth and margin assumptions, each semi-possible – although by no means probable – if we look at those of YOKU’s “comps” over the past 5-10 years.

I haven’t finished the model yet so I don’t have accurate cash flows, but even using these very bullish assumptions I’m extremely skeptical I can get to the current valuation (~$4.5 BILLION).  The stock price has dropped significantly following the (announcement of) the secondary offering, but it looks like its still over-valued by about 15-20%, at the very least…

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NY Fed Primary Dealer Report – Period Ending 5/18/11

26 May

The latest NY Fed Primary Dealer report is out, interesting highlights for the period ending 5/18 include:

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Explaining the Lack of Posts This Week: Project YOKUzuna

26 May

If you read the site but don’t follow me on Twitter, you’re very likely wondering why I’ve gone from at least one post/day to zero over the past week.  The simple reason is because I’ve decided to undertake a much larger, more time-consuming project of attempting to value Chinese “internet television” high-flyer Youku, in response to challengers who think $4.5 billion is an entirely reasonable valuation for a company with increasingly tough competition from new and incumbent services that’s bleeding cash and losing money every year for the foreseeable future.  Did I mention its a high-flying Chinese internet company, susceptible to what readers should immediately recognize is a non-zero probability of being an accounting and/or other type of fraud?

Preliminary results (read: NON CONCLUSIVE) indicate that if we assume the Youku’s financial statements are accurate – which I consider to be a bit of a leap of faith – the firm would have to grow revenues about 50% per year for the next decade while driving their costs down by about the same % to rationalize its current valuation.  Is this possible?  Sure, but is it likely?  Most certainly not.  Again, this is to say nothing of the (not unsubstantial in my opinion) discount we should apply considering the legal structure and financial/etc opacity involved.

If you want to see some of my preliminary thoughts, you can check out the Stocktwits stream and/or follow it on Market Pulse.

If you’ve been following this company and/or cover it, feel free to get in touch and we can discuss the assumptions/inputs.

7Y Auction Results

26 May

7y auction results are out, amidst all of the interesting turmoil this morning out of Europe this was a pretty strong auction.

Yield: 2.429 vs. 2.712 prev (4/28), Indirects: 47.64 vs. 39.13, BTC 3.24 vs. 2.63, Coupon: 2.375 vs. 2.625

Bid to cover set a new record since 7Y’s have been issued (2009), coming in at 3.24 vs. last month’s auction at 2.63. Indirects also recovered from their recent slump as of late. I hate to try to draw conclusions to limited data, but in my (humble) opinion, I think today’s auction results were driven in part due to flight to quality. We’ll see how long the love affair lasts into the afternoon.

For those who want a quick look at the historical btc and indirect trends:

Updated: Auction Statistics/Issuance Calendar [GDocs]

Today’s auction concludes the major auctions for the month, however after the Memorial Day holiday we have the 13 and 26 week auctions coming out. June’s issuance calendar will be updated at that time.

5Y Auction Results

25 May

Today’s 5Y auction results are out:

Yield 1.813 vs. 2.124 prev (4/27), Indirects: 47.07 vs. 39.99, BTC 3.20 vs. 2.77, Coupon 1.75 vs. 2

vs. Last 10: Yield + 1.81 vs. 1.79, Indirects: 47.07 vs. 41.62, BTC 3.20 vs. 2.815, Coupon 1.75 vs. 1.738

Updated: Auction Statistics and Calendar [GDocs]

Tomorrow is the last auction of the week ahead of Monday’s holiday.

Goodbye Ruble Tuesday

24 May

Last night Natsionalnyi Bank Respubliki Belarus announced it had re(de)valued it’s controlled  exchange rate to 4,930/USD from 3,155/USD on their ruble starting at today’s fix.

Probably the best thing for them long run, as grey market currency trading had taken over for official rates since it was so far off base. However it made for one hell of an ugly chart.

BYRUSD year to date