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Masco Corporation Message Board

  • analyst_usa analyst_usa Mar 10, 2009 4:12 PM Flag

    World According to Masco at Conference

    Debt to Net Worth - looks like 137%, not 60%. Wishful thinking doesn't count. $3.915 Billion compared to even the ridiculously hot-air-inflated reported Stockholders' Equity (Net Worth) of $2.846 Billion comes to over 137%. Not 60%.

    Taking the above a step further, and looking at what Stockholder Equity really is worth, the Tangible (REAL) Stockholders' Equity is a minus $824 Million. I repeat - Masco has a MINUS Real Net Worth of $824 Million. Wait until Masco tries selling any of that hot air when the going gets tougher. Citi stockholders have discovered how much hot air is worth.

    Quite a difference in percentages (which of course underpin lending ratios), but it is likely to be a fatal difference between reality and what lenders, the rating agencies that Masco has hired, and Masco's friendly bankers, have chosen to ignore. The banks that are underwriting the unused $2 Billion revolving credit have been enriching themselves for years and years with unnecessary standby fees so that Masco can have a Vanity Revolving Credit Facility. Or what these days would be termed a VRCF.

    I continue to find it almost unbelievable that, at a time like this, banks appear willing to go along with what easily could become another substantial toxic loan. The last time I looked, the taxpayers' friends at Citi had committed $240 Million, those at JPMorganChase (Masco Chairman's former source of lush directors' fees and special loan treatments) $240 Million, Merrill (and B of A together) $205 Million. Each of those three principals has profited handsomely from deals they were chosen to participate in by Masco. Now may be payback time - unless some alert banker or rater says "wait a damn minute".

    I will post additional information from the conference when I have time. The Installation and Other Services segment obviously has tanked. Among the conference highlights: "Reduced vehicle fleet by more than 3700", "Reduced headcount by 44%", "Closed over 80 locations", and "Additional costs anticipated in 2009 related to on-going activities". No wonder the economy is in trouble. Imagine the impact on GM of the 3700 barely-used trucks hitting the market.

    The good news, that we all know, is that none of the foregoing cutbacks, setbacks, and anticipated costs have, in the opinions of Masco and its auditor-for-life, suggested that the company should write off a substantial portion portion of the $Billions of Goodwill attributed to the sick, and likely to become sicker, formerly $3 Billion segment. That is nothing short of a miracle - a miracle of management and managed accountancy.

    The conference, billed as the "30th Annual Institutional Investors Conference in Orlando, Florida on March 10, 2009" was sponsored by a favorite Masco broker, Raymond James, a southeast regional firm that has enjoyed a very special relationship with Masco for many years. I wonder if any of those institutional money managers will continue to postpone dumping Masco - so that they can manage to lose even more of the "other people's money" that they have entrusted, so to speak, to Masco.

    As for those institutional investors who picked and held Masco, it looks like they have lost plenty for their trusting clients - about 80% over the past year, and almost 90% over the past two. I didn't realize that money managers were in the business of redistributing wealth that way. I suppose Madoff was just one of the more notable ones. While they can relieve investors of the trouble of handling their own money, they can also relieve them of their money. Without remorse, and accidentally or otherwise.

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