UBS AG (USA) (UBS)

Slogan "You and Us, UBS" : Well, mine is U-B-BS

This one has moved to the top of my list of the financials to short. You need a position in this company with a put once it hits $30 and the IV drops to a somewhat normal level.

Here are the details on what is cookin....

1) UBS dumped $25B Alt-A mortgages due to liquidity concerns

3/14/08 “Analysts said they believed UBS had sold its Alt-A investments -- U.S. mortgages ranked between prime and subprime – to bond manager Pimco for 70 cents to the dollar, taking a deep discount on a 26.6 billion Swiss franc ($25.7 billion) portfolio.”

2) UBS still holds $400B in repurchase agreements for funding

3/14/08 “Analysts also said they expected the ailing bank making further writedowns on a massive 400 billion franc portfolio of repurchase agreements as it rushes to cut its exposure to the capital markets in general and to risky assets in particular.”

3) Tried to sell it’s Paine Webber brokerage arm to raise cash

Swiss bank UBS, another bank suffering from the credit crunch, recently shopped its PaineWebber brokerage unit in an effort to drum up cash but failed to find the right buyer. (BAC, Wells Fargo and Barclays all declined)

Negative

1) Still sitting on 19B in cash

3/14/08 - UBS, the European bank hit hardest by the credit crisis, has said it is well positioned to withstand further losses after raising 19 billion francs in emergency capital. Analysts largely agree that the bank could take more big hits without needing more emergency cash from shareholders or new investors.

cdulan: Then again, Bear Sterns said they had $17B in cash two days before they went under. Does any one find it odd that the Fed has doled out $750B over the past year in treasuries for toxic waste that the banks then sell for cash, and no one ever reports how much of their liquidity is from stepping up to the TAF? It is like if I came my financial planner and said "I have $50000 in $100 bills right here in my pocket" and you look at my credit card statement and I have a $50000 cash advance right there front and center. How well financed am I really?

UBS is going to have to come to the confessional on a lot of the repos, leveraged loans, and lost prime brokerage business. That is why I think it will be worth $12 / share by year end.