Saturday, April 30, 2005

Another Las Vegas RE Bank Goes Public: Updated

In a replay of the tech boom, here comes an IPO that should be a perfect fit for the real estate speculator. The Las Vegas Sun reports that Western Alliance Banc has filed with the SEC to go public. "If the offering is completed, Western Alliance will be the third Las Vegas-based bank to make a public offering in the past year."

"In 2003, the company has branches in Phoenix, Scottsdale and Tucson, and Torrey Pines Bank which has branches in San Diego and neighboring La Mesa." In other words, some of the riskiest areas in the nation.

"Commercial real estate, construction and land development and commercial and industrial loans, which comprised 88.7 percent of our total loan portfolio as of December 31, 2004." These may be a better short than the home builders.

I response to requests, the two previous IPO's are Valley Bancorp and Community Bancorp. As you can see, investors have been discounting the LV housing market via these stocks for months.


At 12:51 PM, Anonymous Anonymous said...

do you have stock symbols?...will add to potential short list.

At 2:07 PM, Blogger mspenelope said...


Hi Ben,
You didn't respond to the comments made below (in response to "It's The Gold Rush In Reverse") I was curious if you had any opinion, good or bad, on China unpegging their yuan?
PS Yes....stock symbols would be nice to have.....if they're allowed to be shorted.

At 6:11 PM, Anonymous said...
BTW, I just read a news from China saying China's central bank is going to unpeg Chinese yuan for a few hours before most Chinese start taking the week-long May 1 holidays in China. Apr 30 is like the Friday after Thanksgiving in China that most traders and brokers are on vacation, so volume is usually very light and the best time to test the market.

At 6:18 PM, Anonymous said...
The reason why the unpeg of Chinese yuan is important to the RE market here is if yuan is appreciated 20% this year, it will translate to more than 10% of inflation in the US, on top of the oil price increase. That will leave the FED no choice but to raise the rate.

At 11:19 PM, Anonymous said...
The implications of stronger Yuen still need more observations.
IMHO, if Yeun appreciated 20%, means the US deficits will be smaller in dollar terms. Both the Stock (up 20 %) and RE will alure more foreign money. Therefore, the RE bubble might last longer.

I think this is what exactly Fed try to do here : Refi America one more time by shrink dollar.
However, China,Japan and Indea just keep buying dollars via GSE.
and there is no easy way for AG to walk away with clean hands.

At 11:43 PM, Anonymous said...
Who's to say that CHINA won't have serious problems in the near future? So what if their currency rises--without US exports they won't sell much. Their profit margin may go down and US prices may not be affected very much.

All reports indicate their own economy is super bubbly and primed for a recession. On top of that the whole country is a political powder keg--Tianamen Square, Taiwan, corruption, religion, labor movements, etc. They've had several major upheavals in the last 100 years so another one may well be on its way.

At 2:34 PM, Anonymous Anonymous said...

I think most people have overlooked how much China has contributed to the unusual low inflation or deflation the US and the rest of the world enjoy the past 15 years. China surely has it own share of problems and its generational storm is going to be several times the magnitude of ours due to their one-child policy. Problems in China will not alleviate our own though. If social unrest forces China to halt even half of its export to the US, most stuffs you buy at Walmart, K-mart, costco, and other stores except foods will all have to have a significant second source, if there is any, There is no single country in the world with that kind of capacity to replace China in the production of socks or other mass produced stuffs made in China.

Mexico and many Asia countries used to make our below $300 TVs and other goods, but they can not compete with China in price, so eventually all the manufacturers move their production to china. Most of the luxury stuffs we buy are still from Europe or Japan, but people who are most sensitive to pricing buy almost all their stuffs made in China. Even Japan and Germany are moving their auto production to China, the kind of cars not for the domestic market of China.

At 3:01 PM, Blogger John Law said...

I wouldn't make any predictions on inflation rising because of china. a rise in the yaun would make commodities less expensive for them. we also don't know how much price competition there would be in china among firms.

At 3:23 PM, Blogger Ben Jones said...

Ms. P,
I think I addressed that on one of the other blogs. I must have missed yours.

As for the Yuan. I still think the Fed is terrified of deflation and will welcome the debasement of the US dollar. The corporate world dreams of "pricing power", which means raising prices and having consumers accept it. Anytime the central bank is actively seeking a devaluation, the next stop is a banana republic.

One reason deflation may trump the Fed is if the global economy slows down, demand for all sorts of things will fall. I think the Fed hopes to have inflation push us into a recession before we fall into deflationary depression, from which the banks won't emerge.

All currencies should float. But I am skeptical that communist China is an economic powerhouse. If the bubble bursts, we should expect protectionism to bring down the WTO and immigration issues to come to a head. A few down years will change the political landscape. It's not just homeowners that are in for a rude awakening. Mr. G will probably go into exile, like the last president of Mexico.

One other tell; the fact that China is laying the groundwork for such a move may mean they are trying to support the US debt by any means possible. It may be a desperation move, as I see little positive in it for the US. I am working on a Fannie Mae story that should be good. Thanks Ms. P. I'll try to find those symbols and post them here.

At 3:31 PM, Blogger Ben Jones said...

LV Bank symbols:

Valley Bancorp (Nevada) (VLLY)

Community Bancorp (CBON)

I believe both are on hte Nasdaq (fittingly) and both have already been hammered! Good luck.

At 4:33 PM, Anonymous Anonymous said...

I read an article today that the Chinese unpegged the yuan for just a few minutes,it started to rise, then they pegged it again.

Testing testing, one, two, three

At 12:12 AM, Anonymous Anonymous said...

I have 2 questions:

1. Could someone explain the terms "short" and "long" in the context of investing? I gather from context that being "short" or "shorting" something means you're betting it will go down in price. Could someone explain it or post a link to a beginner's level article?

2. I currently have like $3000 in an IRA that is invested in Mortgage Backed Securities which has done very well for the 2 years since I bought it, but I'm worried that since housing is probably about to crash, that the MBS-based IRA will soon start to lose money. I lost money in my other IRAs in 2001. I am afraid that the MBS-based IRA will suddenly lose value based on Bubble fears and FNM selloffs and such, but my partner says it wouldn't happen like that overnight and we should keep it as long as it keeps making money. Do IRA's reflect gains and losses in the market directly or is there some kind of lag or smoothing effect associated with the fact that it is a mutual fund?

(I wish all this investment stuff were optional but more and more it seems like merely "saving up" for one's retirement isn't going to keep one out of poverty in their old age. Instead it seems like the average person has to become very sophisticated in finance and tax rules just to have a chance at a decent retirement. Did it seem that way to every generation, or is this new?)

Thanks, this is a great blog!

At 3:08 AM, Anonymous bob r said...

For long-term retirement accounts like IRAs and 401k, I'd strongly recommend you forget the speculative stuff and just put your money in something boring like a no-load index fund. Vanguard is the perfect place to park it and forget it. Retirement accounts are no place for trading.

At 7:20 AM, Anonymous Anonymous said...

You think an index fund can provide the kind of historical returns people received from 1982-2000. Or do you think we might be looking at the kinds of returns people receive from 1966-1982 (minus 23% in the Dow over 16 years). Or how about 1929-1950 (minus 50% over 21 years). Or maybe 1959-1974 (minus 17% over 15 years). Yes, the market has always gone up eventually, but that doesn't mean it's always a good time to buy. Like real estate.

I think we are still close to an historic top here.

We have all been so brain washed to believe that all you have to do is hold stocks and you will come out ok. Not if you happened to need to retire in 1982, or some future equivalent. I think the industry convinces the public to buy and hold so that they always have a buyer when they want to sell.

At 8:21 AM, Anonymous Anonymous said...

1. Could someone explain the terms "short" and "long"

You are right, long means you think it will go up, and short the opposite. I sometimes use the term loosely by saying that I am shorting the housing market by renting. But in stocks, it means that rather than buying and holding a stock or other security, you sell it.

But shorting in the stock market means that you sell a security that you do not own.

Eventually you have to buy it back, or cover your position. If it has gone down, you keep the difference. If it goes up, you loose.


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