Hi again everyone. It's been a while since I checked this board but see many of the same people still here.
CLL is now on its way to zero and I'm afraid nothing can be done to turn this ship around. Asset sales, as Jurek mentioned, will prolong the pain but the operating loss will become too large to handle with oil prices at $50-60. Westcoaster, CLL's management is ok at working the numbers to show a minor profit, but if you look closer you will see that this is not the case.
As for oil prices, consider the following:
BNP Paribas: PIIGS Exposure: $229.57 billion (Italy & Greece are over 64% of the total)
Current market cap $33.61Billion, a drop of nearly 42% since Dec. 2010European bond exposure as % of Common Equity: 127% (reuters).
So what I am thinking is that if they are forced to mark to market their holding of PIGGS bonds and only reduce their value by 10%, they will have to show an immediate loss of $23 Billion which will bring their net common equity to a value of $32.4 billion and their market cap to $10.6 billion
If the mark down is more like 20-25%, the loss grows to $57 Billion, or $2 billion more than the total equity in the bank and all of the market cap, bringing the current market cap to negative $23 Billion
The sad thing is BNP is one of the healthier banks…
The Euro rescue fund is now just shy of 500 billion, but it will need to be at least 1.4 trillion to prevent the 20 worst european banks from defaulting.
Why would you keep your money in CLL?
For the record I have been short since $0.80 and have shorted further at $0.6 and $0.4
