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Irate Icahn - Fast Money Recap (9/19/08)

by: SA Editor Joan Wickham September 19, 2008 | about stocks: ACI / BBT / CME / GHL / GS / IWM / JEF / LAZ / LMT / MS / NDAQ / NUE / NYX / SPY / TGT / TS / USB / WM / WMT    

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Recap of CNBC's Fast Money, Friday September 19.

The Big Bail - SPDR Trust (SPY), iShares Russell 2000 (IWM), BB&T (BBT), Goldman Sachs (GS), Morgan Stanley (MS), U.S. Bancorp (USB)

Dylan Ratigan started the show with a discussion of the government's decision to put up a half trillion dollars to bail out the banking system. Jeff Macke said the market is a lot "weirder" than it was last Friday. "The government took a sledge hammer to everyone who was against the market," he added. Macke says he has no idea where to put his money and said the market is like a carnival game. Pete Najarian says the volatility index shows that many investors still have major concerns. "Look at how those banks opened on their highs and weren't able to hold those highs," he said. Guy Adami says the government bailout could end up being the greatest trade in the history of trading. "The U.S. government has now become the biggest hedge fund on the planet," he said. Karen Finerman told viewers that she is shorting index ETFs such as SPDR Trust and iShares Russell 2000 against her long positions. She disclosed that she is still short BB&T and said she didn't cover the position, despite the stock being on the banned list of financial shorts. Najarian says the government did what it had to do under the circumstances. "If they hadn't done it, we would be having a lot different conversation on what would have happened to Goldman Sachs and Morgan Stanley," he explained. Adami pointed out that not all banks were involved in the financial crisis. He highlighted U.S. Bancorp, which hit an all-time high today. Adami says don't jump in now but wait for a dip. "Buy it when it's scary, sell it when their giddy," Macke added.

The Plan Ahead - Washington Mutual (WM), Wal-Mart (WMT), Target (TGT), Lockheed Martin (LMT), Arch Coal (ACI), Nucor (NUE), Tenaris (TS)

What do they plan to do next week when the market opens asked Ratigan? Finerman said she is going back to value and looking for good companies with great market positions and good balance sheets. She told viewers she bought Washington Mutual today because she believes the company will be taken over. "We will look back at $3.50 and say it was a fantastic price on Washington Mutual," she said. Adami says the money will rotate back into retailers like Wal-Mart and Target. He also told viewers to look at Lockheed Martin. Najarian said the global system had a recovery today. He said to look at some of the coal stocks and steel stocks like Arch Coal, Nucor and Tenaris.

What Now? - CME Group (CME), Nasdaq OMX (NDAQ), NYSE Euronext (NYX), Jefferies (JEF), Greenhill (GHL), Lazard (LAZ)

Joe Terranova joined the traders to discuss who the new winners will be on Wall Street. Terranova says the new Wall Street will need to bring the unregulated insurance market to a regulated exchange. He says the winners will be CME Group, Nasdaq OMX and NYSE Euronext. Adami says Jefferies, Greenhill and Lazard will be the new winners on Wall Street, but he said he wouldn't race out and buy the stocks now.

The Boards Are Out of It

Carl Icahn is angry and when the Queens-born billionaire gets angry, he also gets rich. He's angry now because in his 47 years on Wall Street he's never seen wealth destroyed on a scale quite like this. The financial meltdown this month could have been prevented, he says. Icahn, the world's most famous capitalist, has amassed his fortune by punishing the actions of greedy, incompetent CEOs and unlocking value for shareholders in the process. He said the boards of many companies in America are "completely" and "totally" out of it. He says there is no accountability in corporate America at the CEO level. "For the most part, CEOs are inept," he said. "What's amazing to me is that Lehman Brothers CEO Dick Fuld made $17,000 an hour last year." In other words ineptitude has led to company’s taking excessive risk. He says it's time to see the laws changed in America so that corporate boards are held more accountable.

Bad Debt Fund News

CNBC's Steve Liesman joined the traders to discuss breaking news on the bad-debt fund. Liesman said hedge funds will not have access to the fund and only U.S.-based companies will be allowed to put securities into the fund. He says the Treasury will have the authority to buy these securities for over a two-year period. "Home loans, collateral debt obligations and mortgage-backed securities will be eligible for the fund," he added. He says the plan should be outlined by Sunday night, and Congress should be ready to vote on it by Wednesday.

The Future of the Bailout

Tim Seymour joined the traders to talk about the future role of the government bailout. Seymour joked that the Fed will insure good weather this weekend and personal happiness. He says that as a manager, you have to evaluate where there's been a real policy shift or a quick reassessment of fundamentals that may not have changed. "What we have seen over the past few days is that there are policies in place that provide a different type of backstop," he added. He said he has turned to getting more net long, out of fear of short-covering. Icahn said he doesn't understand why the government has to come in to be the buyer of last resort in the CDO market. Macke said we become Pakistan this week, because it outlawed short-selling last June. However, since that time, the Pakistan stock market has fallen even lower.

What to Do about Yahoo! (YHOO), Microsoft (MSFT), Google (GOOG)

Ratigan moved the discussion to the Yahoo! (YHOO) board meeting that's coming up. Its newly reconfigured board meets for the first time on Tuesday. With two allies of Carl Icahn now in the mix, opponents of CEO Jerry Yang may be able to advance their agenda from inside the struggling Internet company. Icahn says Yahoo! is a great company but said that eventually it has to do something with Microsoft (MSFT), or Google (GOOG) is going to kill them.

Seeking Alpha is not affiliated with CNBC, or Fast Money
 

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This article has 28 comments:

  •  
    Sep 20 01:11 AM
    The US government just bet the farm...........and on the wrong side.

    Liquidity is not the issue, solvency is. Shorts aren't the issue, leverage is.

    Let's hope that the US economy is just a wounded animal........not a dead one. Think there was a coincidence with the news about N.Korea starting its nuclear program again coming out today.........
    Reply
  •  
    Sep 20 10:55 AM
    Using more debt to cover other debt is a fool's game. Congress is debt addicted and in need of rehab. Let the lenders fail as other businesses have failed when risks don't pan out. Newer, better banks will emerge if the corrupt ones are allowed to fail.
    Reply
  •  
    Sep 20 11:36 AM
    Icahn for president (as soon as we restore democracy in America.)
    Otherwise don't vote for president unless you live in a contested state.
    Reply
  •  
    Sep 20 12:41 PM
    Maybe not to vote at all if there are no suitable candidate for President...
    Reply
  •  
    Sep 20 12:48 PM
    Thereis Ralph Nader ....or Manpower
    Reply
  •  
    Sep 20 01:25 PM
    Fast Money is a joke! Finerman is the biggest joke!!! When will CNBC take this piece of trash off the air?
    Reply
  •  
    Sep 20 02:03 PM
    I actually don't mind Fast Money and Finerman's okay too - It was not the ideal venue for an Icahn interview but his message was loud and clear - the majority of executive suties are populated by morons who are adept at politics and inept at most everything else -- It's no wonder he's reviled by so many boards - he sees them for what they are and exposes them. I thought his best line was instead of EBITDA to measure a company he uses EBITDAT with the T standing for Theft.

    I also never knew he had his own blog

    www.icahnreport.com/
    Reply
  •  
    Sep 20 03:00 PM
    Carl Icahn is exactly right. Too, why are shares of publicly owned corporations ever "given" to management (more correctly, mismanagement), or anyone else? No more stock options, no more stock dividends, EVERY share of a publicly owned corporation should have to be purchased.

    Simple mathematical formulas can be applied to all public companies to award compensation to management __ enough of this back patting and pocket stuffing between directors and CEOs.

    Richard Collins
    Claremont, CA

    Reply
  •  
    Sep 20 04:51 PM
    The reason why shares of public companies are given to management is that it is intended to align shareholder interests with those of management. It is not a perfect system, but the idea is that if management is only paid a salary they will not have any incentive to take appropriate risk to grow the business and will sit on conservative policies and collect their salary.

    Clearly the flip side of the situation is that with stock as compensation some CEOs etc have sacrificed the long term outlook and been too aggressive in pumping up the share price short-term to cash in.

    It is a balancing act and an imperfect system, but stock options are an important tool in trying to align shareholder and management interest.
    Reply
  •  
    Sep 20 05:37 PM
    I find it interesting that Corporate executives are so roundly, and deservedly criticized while politicians who arguably are most at blame for creating an environment where the GSEs have no oversight at all. We've had more than one reform bill before Congressional committees which were blocked by those who received over $180 million in lobbying over the last decade. Check the record.
    If the GSEs had a due diligence plan they wouldn't have provided a dumping ground for trash, and its quite likely we wouldn't have seen it come out of the mortgage companies in the first place. The investment banks are also guilty of no due diligence and instead depending upon the rubber stamp AAA ratings the ratings agencies applied to everything.
    Reply
  •  
    Sep 20 06:54 PM
    Ichan looted TWA and left. Great CEO type. Burn and salvage.
    Reply
  •  
    Sep 20 11:03 PM
    Three cheers for Icahn!
    Reply
  •  
    Sep 21 12:24 AM
    Ichan is motivated by greed and hubris like all the rest. His entire passion in life is making money, which seems rather soulless to me. And the audience celebrates him like some sort of minor god. He's certainly not celebrated for giving back to the system that has made him wealthy, though I'm sure he has in a minor god-like way.
    Reply
  •  
    Sep 21 10:06 AM
    Ichan for president!
    Reply
  •  
    Sep 21 04:58 PM
    I way pretty disappointed in the Carl Ichan visit to Fast Money. He seemed a little disoriented and was interested in telling long winded stories with no point. They kept rolling into commercials while he was talking. I felt bad for him. (Not sure how much sympathy I can muster for a billionaire.) He did not come off well. They should do some prep next time or keep him focused on a relevant point. There was not much value add to his appearance in fact it was a distraction form the overall show.

    I really enjoy when the Fast Money crew go to remote locations (Silicon Valley, Miami, Chicago, even the Time Warner Center) keep up the remotes.
    Reply
  •  
    Sep 21 05:27 PM
    The Stanford University did a survey and reported that about 30% of whites are not sure if they would vote for a black candidate as President. But, this survey purposely not to mention that over 92% of black will never vote for any Republican candidates for anything, even if the candidates are Black. How bias !! And all the medias are reporting exactly what the survey said. Wake up, America, cannot trust any media or surveys.
    Reply
  •  
    Sep 21 08:37 PM
    Icahn (please note correct spelling) is on the right side of this issue. As far as protecting the rights and concerns of shareholders, Boards of Directors are a joke. The more they are paid the more suspicious you should be.

    jackooo: For the commentor who asserted Icahn looted TWA, wake up! TWA was a disaster before he got there. That was one of his biggest mistakes.
    Reply
  •  
    Sep 21 10:37 PM
    obama is not black...at least not in an american way. when he served as Developing Community Project director in chicago 1985-1988, his staff grew from 1 to 13, in which the budget grew from $70,000 to $400,000.....so we know he is going to require more tax payer money to accomplish whatever it is (we still don't know what) he plans to change.
    Reply
  •  
    Sep 22 12:47 PM
    Cantab, you offered some good information, which is common knowledge, but offered no solutions. That may be better then the Congress; they cannot even DEFINE the problems. Could it possibly be that they ARE the problem?

    Here are some changes I'd like to see:

    1. Cut the size of Congress by one-half __ one Senator from each state, combine Congressional districts to cut the House by one-half. These people are falling all over each other to the point of MISrepresentation. It would take a Constitutional amendment __ NOT likely. But, is dead-weight ever a good thing?

    2. All future government entitlements eliminated. All government employees on Social Security, with FICA payroll deduction beginning with all new hiring or military entry as of January 1. Again, NOT likely. "Sponges will "inertially" continue to soak up anything available."

    3. Health care is not a right __ it is a product and a service. Does the government buy your food for you? Without food you will die, absolutely. Without health care you probably will not. You may die because OF the health care. I ask YOU, which one is more important? Spread the peril of needed health care over our 300 million population by making the U.S. government the insuror, with EVERYONE PAYING EXACTLY THE SAME PREMIUM __ TO THE PENNY!

    4. For all of those who want higher taxes, add a line on all tax return forms below the amount of tax owed, so those who want higher taxes can make a contribution over and above what they would owe. I would not want to deprive them of the opportunity to show their generosity.

    You already know that the stock exchanges are casions __ lets see if any of YOU out there have any ideas to change that.


    Richard Collins
    Claremont. CA

    Reply
  •  
    Sep 22 02:20 PM
    Yes jackooo add Chgo & Northwestern R. R. to the heap he jumped, pumped and dumped. He is just another greedy Wall St. card sharp, that doesn't give a darn about employees or Communities.
    Reply
  •  
    Sep 23 05:47 PM

    Yes Obama has that much stuff to change.When he made changes as a project director He could face some obstacles even though he made his mark as a director.Now he is planning to change the entire situation of the country He has that required stuff to make changes.
    ======================...
    Jeff Dean
    [url=fsbo.fastrealestate.ne...]Homes For Sale By Owner[/url]
    Reply
  •  
    Sep 28 06:50 PM
    "Carl Icahn is angry and when the Queens-born billionaire gets angry, he also gets rich."

    Uh huh. Why this guy has any money at all is a mystery. What has he been right about? He's a greenmailer whose reputation vastly exceeds his performance. Look at his involvement in Yahoo-- what happened there? Zero.
    Reply
  •  
    Sep 28 08:53 PM
    Crocodilian

    It's no mystery why Icahn is rich. He has been right many times. In the mid '80s I was a financial executive at a Fortune 500 firm. I was talking on the phone to a large investor in our company. He asked if he could put me on hold for a minute. He apparently pressed the hold button on the phone but didn't press it all the way. I could hear his excited conversation with an associate: " Icahn is buying TWA? Buy! Buy! I don't care what the price is! Buy! If Icahn is buying, buy!

    Icahn had more followers in the mid to late 80s than any other takeover artist. That was because he always made big money.
    Reply
  •  
    Sep 29 07:05 PM
    @Kinabalu
    [quote]
    " Icahn is buying TWA? Buy! Buy! I don't care what the price is! Buy! If Icahn is buying, buy!

    Icahn had more followers in the mid to late 80s than any other takeover artist. That was because he always made big money.
    [/quote]

    And how did TWA do? Went broke; Icahn did strip some assets for himself, but that didn't do the shareholder any good. The guy's a greenmailer, who's found a way to harass managements into paying him off. Contrary to the claim, investing alongside Icahn hasn't been much of a strategy-- he'll get bought off, but not you. He seems to have invested heavily in PR seeking an image as a corporate reformer. That's not what his record shows.
    Reply
  •  
    Oct 03 12:47 AM
    Crocodilian

    TWA was Icahns first real mistake. My company looked at acquiring TWA before Icahn went in and decided not to make a try for it because they had too many real problems. We concluded they were going to go broke no matter who bought them. After he bought his position we proposed a management solution to him which he turned down because he thought he could turn it around himself, and is sort of fiendish about cost control. I don't deny he was a greenmailer in some deals before it was illegal, but most of his deals pre-TWA benefitted all participants. He was, and probably still is, a very good investor with a very good eye for value.

    People tend to forget that Icahn was originally a bond trader. In that business you make $ million trades constantly on verbal agreements. If you go back on one of those agreements no one will trade with you. That tends to instill a certain amount of integrity in a person.
    Reply
  •  
    Oct 03 01:09 AM
    Just another comment on TWA. The major problem they had was a massively underfunded pension plan. Congress had just passed a law giving the PBGC a lien, with the same status as a tax lien (meaning, prior to everyone else), against the shareholders equity of any company they had to cover pension benefits for. This was a complicated area, not well covered in the financial statements, and it took a few years for accountants and acquirors to understand it. We always felt that if Icahn had understood this issue he would have avoided TWA as we did. It ultimately proved their downfall, along with recalcitrant unions, and the reason he couldn't turn them around.
    Reply
  •  
    Oct 06 02:48 AM
    Kinabulu -- Icahn hasn't made any money for anyone but Carl Icahn in a very long time. There's a review of his record at:
    www.alleyinsider.com/2...-

    It ain't good. . .
    Reply
  •  
    Oct 13 02:04 AM
    Crocodilian:

    You need to read more critically. The article you linked is Yahoo propaganda.
    Reply
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