A whole lot of Irrational Exuberance Part II

General Motors lost $39 billions?
Most of the $39 billions posted by GM today is accounting NON-CASH charges which is related to the write down of deferred tax assets on GM's book. The loss in GMAC is what concerned me. But even then, GM sold 51% stake of GMAC to Cerberus Group before the subrpime mess got messier. Smart move?
The automotive segment of GM actually made $122 mil during the quarter, driven by strong solid performance results from GM Latin America and GM Asia-Pacific segment. Surprise?

Toyota Motors trades at $200 bil market cap vs. GM $19.5 bil market cap. GM is on my list of stocks to buy if it get cheaper. Too many reasons to list in a blog post. You will definitely see a report on TM vs. GM from me soon.

Time Warner (AOL) mess
AOL division profit decline continued to drag down TWX's results. Disappointing to say the least, TWX replaced Dick Parson with Jeff Bewekes. Shareholders are probably looking at some sort of asset(s) sales in the near future (hopefully, someone would take AOL off TWX's hands). I must say, Steve Case (former CEO of AOL) sold the top. The man is a genius in destroying shareholders' value and enriching his own. I was tricked by Yahoo thinking that TWX is trading at P/E of 11. The company affirmed that guidance of $1.07 for 2007, which make the company trades at P/E of 17. No value here even if they sell AOL out (who will buy that crap?). Good luck to Jeff Bewekes. TWX is off my list.

The Big Red Umbrella?
I did not know that Citigroup sold it's big red umbrella logo to the St.Paul Travelers Group. Looks like Citigroup really need a big red umbrella now. They saved for rainy days, but it has been pouring every day since. On top of that, Citigroup's CDS is trading at the lowest of investment grade level, coupled with a downgrade from Fitch recently, the cost of capital at Citi must be rising. Citigroup is also stuck with $55 bil of CDOs and $135 bil of Level 3 assets (assets that don't have readily market value). I smelled more write downs to come. I'm staying away. If Citi trades at book value, another $10-15 bil write down will bring down another $10-15 bil market cap. That's roughly 10% of Citi $171 bil market cap. Citigroup, I will be waiting for you on the sideline.

I can't believe the automaker is the most attractive out of my list. Talk about Irrationality!