Friday, March 14, 2008

We Called It

(Per our usual disclaimer…”It Ain’t Braggin’ If It’s True!")

On November 29th, 2007, StreetBrains held a client event where each of our analysts made their ‘Big Calls’ for 2008. Some of those calls have already come to fruition, and we’re not even out of the first quarter.

Steve Digilio, senior analyst at The Bank Notes made his call that a top bank would fail or be acquired in 2008, and today, he’s right twice over. Today JPMorgan Chase (JPM) and the New York Fed have had to step in and provide financing to a failing Bear Stearns (BSC). Also, the Wall Street Journal noted this morning that National City Corporation (NCC), the 13th largest bank holding company by assets as of December 31, 2007, has reportedly put itself up for sale.

Larry Rothman, senior analyst at DebtVisions, made the call back then that Sharper Image (SHRP) would file bankruptcy in 2008, which it did in late February.

Additionally, Rothman said that increased volatility would lead to increased convertible issuance from certain sectors, particularly biotech. Since then, Vertex Pharmaceuticals (VRTX) and OSI Pharmaceuticals (OSIP) have utilized the convertible market.

Last but not least, this Wednesday, March 12th, Gotham Research closed a pair trade - long Aetna (AET) and short Humana (HUM) - with an advance of 20.13%.