If Harbinger Group Inc goes, Spectrum Brands goes

I wanted to point out a couple technicals I’m watching on Spectrum Brands, a company I have written about on this blog in regards to major accounting and business concerns.

We have seen 6 months of higher lows so, watch last months low of 42.75.  What I really is if we break 42.75, hold 40.00, then rally back over 43 for a few days...then the next time we take out that low could be a good time to add some shorts.

Donald Shekels

Analyst for Hire

Accounting Games: Spectrum Brands and Harbinger Group Inc.

It’s the same game as it was back in 2005-2008 with Falcone and the related parties in Spectrum Brands.  I went back in the fillings and charted the revenue overlayed with net income for the 2nd chart, and the 1st chart is Goodwill and Intangibles.

I’ve written in previous entities about some of the ridiculous accounting gimmicks this concern uses to inflate revenue figures (capital expenditures).  Anyways what I want to display graphically is how it played out back in 2006, 2007, and 2008 where they started writing down the Goodwill and Intangibles they had been tacking on in years prior, then how the game was up in feb 2009 when they filled for bankruptcy and wiped out equity holders.

 Here is a chart I found of the bond ratings I thought was interesting to look at with the previous two.

The mergers and acquisitions I mentioned above which resulted in bogus accounting fluff (but not before insiders sold millions in stock), I figured i'd present a couple of the timelines here.

Harbinger Group Inc, Spectrum Brands, and Philip Falcone’s next LightSquared

Harbinger Group Inc, Spectrum Brands, and Philip Falcone’s next LightSquared

I really have to say the more I look into this the more it looks to me like Falcone got his hand caught in the cookie jar.  In this report I will highlight some fillings and market assumptions I find to be a problem.  I have put in bold and underlined the relevant points in the paragraphs to save time.

I suggest you read my first write up on HGI, SPB, and F&G first.  

The Bear Case against Philip Falcone, Harbinger Group Inc, and Spectrum Brands

I’ll jump back and forth but a couple highlights scattered within:

• A fully disclosed rigged game; insiders have absolute control, motives counter to shareholders, almost zero fiduciary duty owed to equity holders, players with history of self dealing, and the comical disclosure about destroying documents.
• What could/will start the domino affect and lead to collapse of house of cards.
• Is Falcone to Fidelity and Guaranty Life like Jon Corzine was to MF Global?

The Bear Case against Philip Falcone, Harbinger Group Inc, and Spectrum Brands

The Bear Case against Philip Falcone, Harbinger Group Inc, and Spectrum Brands 

Three Parts:

1.       Philip Falcone

2.      Harbinger Group Inc (NYSE:HRG)                             

Last                        9.71

Mkt cap                1.36B    

P/E                           -

52 week               2.75 - 10.85

3.      Spectrum Brands Holdings, Inc.(NYSE:SPB)

Last                        47.50

Mkt cap                2.44B

P/E                         275.99

52 week               23.04 - 48.22

Part 1:  Philip Falcone

US-Listed Chinese Frauds…Connecting the US Hedge Funds and Banks.

Do you think it’s a coincidence that Michael Burry, George Soros, and Passport Capital—all big names from their short bets in the 2007 housing collapse-- all just happen to come across and invest in Focus Media Holdings, while all hell was breaking loose here?  For those not familiar, Focus Media Holdings is accused of being yet another Chinese fraud by Muddy Waters.

Focus Media plunges on Muddy Waters allegations | Reuters Nov 21, 2011

If you have read The Big Short by Michael Lewis, you’ll agree Michael Burry is a very intelligent guy who does his own homework.  He, like myself, actually reads through these obnoxiously long securities fillings (globally) most people ignore.   Burry was also one of the first to actually put on these CDS housing trades; and with billions in exposure and his clients breathing down his neck, do you really think he gave a fuck about a Chinese company making LCDs?

What the Big Boys are looking at

Here are two examples of what these guys are shorting (Click to Enlarge)

It’s a no brainer if you ask me; I don’t think it will take much of a slowdown in China for this market to run into trouble.  If you take a
forensic look at what the Hedge Funds, Banks, and Structured Finance
Arrangers are doing to the underlying market; infecting it with structured finance schemes which act like a cancer, at the same time act as fuel for the asset bubble—similar to what Magnatar was accused of doing back in 2007.

I almost hate to call these guys game out because it’s a great trade and I wish I had the means to put it on (in an ethical, honest fashion).  That last part I don’t believe is possible for these guys as they are just too big; instead they resort to fraud, deceit, and downright thievery in order to build a market large enough for them to short.  

The methods in which the Banks, Funds, and Arrangers employ for this will be the topic of future entries.

Feel free to contact me with any questions.

Donny

China Property CDO's...Merged On You're Balance Sheet...

Despite my efforts of sending my report to a large number of fund managers in Melco, global regulators, company auditors, reporters, and a good number of the Funds in the ISDA club, the stock seems little interested.  

What did Deutsche Bank and Morgan Stanley do with that Synthetic?

I mean just read how ridiculous this is.  A lease hold?  Its painfully obvious DB and ML, are advancing $ for the ramp up of a CDO.  I'll write some commentary on this soon, along with a big relationship map of how Melco connects to the HK and Chinese property market the hedge funds are currently shorting.

http://www.hkexnews.hk/listedco/listconews/SEHK/2007/0601/LTN20070601056.pdf