Doug Kass shares his views every day on RealMoneyPro. Click here for a real-time look at his insights and musings.

 

 

The State of Our Financial and Market Affairs

Originally published at 11:31 a.m. EST on February 12, 2016
 
I think there are only a few grownups in the room on Wall Street right now, including:

JPMorgan Chase's Jamie Dimon
Dimon, the CEO of JPMorgan Chase  (JPM - Get Report) , put his money where his mouth is and bought 500,000 shares of JPM stock yesterday -- and did so without much fanfare. This was akin to J.P. Morgan Jr. himself stepping in to try to save the markets in 1929.

By the way, Dimon's ability to time his bank purchases is historically uncanny, as these two charts show:


Source: Bloomberg


Source: Bloomberg

Deutsche Bank Co-CEOs Jon Cryan and Jurgen Fitschen
The heads of Deutsche Bank  (DB - Get Report) also get a shout-out for tendering for $5.4 billion of the bank's bonds.

Where Are the Regulators?


By contrast, the financial regulators (particularly in the United States) whose job it is to ensure "safety and soundness" didn't have the brains to step up and say anything about the banking system's health.

But this is a banking system that they produced -- with about one-third of 2008's leverage, but so much liquidity that liquidity itself has actually been one of the things retarding economic growth.

Regulators have also stood by as algos, the 3x-levered ETFs, the loss of the uptick rule (which blocked the algos from working) and the like drove the individual investor out of the market. Meanwhile, capital goes to what I've described as "money heaven."

A pity ... but also a long opportunity.

Position: Long JPM, FITB, CMA, RF, WFC, BBT, BAC (large), C (large)
 
 

 


Buying Biotechs

Originally published at 10:38 a.m. EST on February 11, 2016

The iShares Nasdaq Biotechnology ETF (IBB - Get Report) has tumbled from nearly $400 a share early last summer to around $240 at last check, so I'm taking advantage of today's market schmeissing to purchase a small position in a biotech (biowreck?).

I'm buying a basket of 12 individual biotech stocks, some conservative and some quite speculative. I'm purposely taking a diversified approach, as my research suggests that with the exception of Gilead Sciences  (GILD - Get Report) and Celgene  (CELG - Get Report) , individual biotechs can be quite risky.

 

I'm starting with small stakes, but will monitor individual companies' progress (or lack of) going forward. I'll keep subscribers apprised on firms' product and earnings developments. And most days, I'll look back at this investment's performance in my daily Takeaways and Observations column.

The stocks I bought this morning:

  • Intrexon XON at $29.99
  • Gilead Sciences, paying $87.25
  • Cempra  (CEMP) for $16.41
  • Celgene at $101.28

Position: Long ACAD, AERI, CELG, CEMP, GILD, NKTR, NVAX, OTIC, PTLA, SAGE, TTPH, XON (all small)

 

 

 

At the time of publication, Kass and/or his funds were long JPM, FITB, CMA, RF, WFC, BBT, BAC, C, ACAD, AERI, CELG, CEMP, GILD, NKTR, NVAX, OTIC, PTLA, SAGE, TTPH, XON (all small) although holdings can change at any time.

Doug Kass is the president of Seabreeze Partners Management Inc. Under no circumstances does this information represent a recommendation to buy, sell or hold any security.