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Kass: 10 Rumors That Could Rock Stocks

01/05/07 - 09:47 AM EST

Doug Kass

6. A medium-sized private homebuilder and two more prominent subprime mortgage originators/servicers will shortly announce bankruptcy.

7. HSBCHBC is considering the sale of its Household Finance subsidiary because of the hemorrhaging of profits in its mortgage business.

8. The falloff in subprime lending and the tightening of standards at traditional originators has caught the eye of the now Democrat-controlled House. There will be an attempt by the Democrats to introduce legislation that will subsidize first-time homebuyers, who because of affordability issues and less availability of subprime loans are having trouble getting mortgage financing.

9. The dramatic drop in prices in the energy complex coupled with a general decline in commodity prices will reverberate in the hedge fund market over the next month, as at least three large funds have each experienced $1 billion-plus losses.

10. Retailers -- caught with unexpectedly high inventories -- are worried about the first quarter's profitability and will announce initiatives (and create incentives) that will encourage consumers to spend their gift cards quickly. (For example, Home DepotHD recently announced that it is offering to donate 5% of the gift card value of all gift cards redeemed by Jan. 28 to help build and maintain USO centers.)

RealMoney Barometer Poll

1 What would best describe your stance heading into the coming week of trading?
Bullish
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2 Which of these sectors do you think is set to move up in the coming week?
3 Which of these sectors do you think is set to move down in the coming week?


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At time of publication, Kass and/or his funds were short DELL and MSFT, although holdings can change at any time.

Doug Kass is founder and president of Seabreeze Partners Management, Inc., and the general partner and investment manager of Seabreeze Partners Short LP and Seabreeze Partners Short Offshore Fund, Ltd. Until 1996, he was senior portfolio manager at Omega Advisors, a $4 billion investment partnership. Before that he was executive senior vice president and director of institutional equities of First Albany Corporation and JW Charles/CSG. He also was a General Partner of Glickenhaus & Co., and held various positions with Putnam Management and Kidder, Peabody. Kass received his bachelor's from Alfred University, and received a master's of business administration in finance from the University of Pennsylvania's Wharton School in 1972. He co-authored "Citibank: The Ralph Nader Report" with Nader and the Center for the Study of Responsive Law and currently serves as a guest host on CNBC's "Squawk Box."

Kass appreciates your feedback; click here to send him an email.


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