Welcome to the major leagues of debt. Collateralized debt obligations, almost always referred to as a CDOs, are horrendously complicated deals that often leave anyone without a MBA wondering what was put into these CDOs.

The first thing to understand about bonds, (aka debt) is that bonds are often backed by something else. Think about your home mortgage. If you don't pay your mortgage, the bank can take the house. You end up homeless, and the bank sells the house to pay off the rest of that mortgage. There is something "backing" that mortgage; something lender can fall back on, if you don't pay your bills like a good human being. That's called collateral.

CDOs are one flavor of an entire sector of investing called structured finance, and they are also backed. CDOs, in the simplest concept, are just bonds backed by something else. In most cases, a CDO is backed by a collection of various types of debt. CDOs can be home mortgages, or other types of debt like credit cards, auto loans, and personal loans. Most of these types of debt are usually considered a bit more risky and they don't have the backing that a home loan does. So, if you think it through, you can imagine that CDOs are usually considered a risky investment.

To take a step further, understand that CDOs have multiple flavors within each CDO. These flavors are called tranches. If you've taken French, you might recognize the word, it means "slice" or "portion." Each slice of that CDO you invest in is a little different and carries different amounts of risk.

You could invest in the lowest risk tranche of the CDO, which would provide you lower risk. But, you don't get a good return on that investment. Or, you can be the heroic adventurer of bonds and invest in the lowest-grade tranche of the CDO. You'll make an amazing return, but if the economy even looks at you wrong, you might lose the entire investment.

CDOs aren¿t easy, and are almost always invested in by mutual funds, insurance companies and hedge funds. As an individual investor, you will probably not come across a CDO you can participate in.

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Monday, June 16, 2008

Zacks Analyst Interview Highlights: Cooper Tire & Rubber, Sonic Automotive and ArvinMeritor

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Comtex

CHICAGO, Jun 16, 2008 (BUSINESS WIRE) ----Zacks Equity Research releases the latest Analyst Interview. Today's interview is with senior analyst Paul Raman, who discusses Cooper Tire & Rubber Company (NYSE: CTB), Sonic Automotive (NYSE: SAH) and ArvinMeritor (NYSE: ARM).

Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: http://at.zacks.com/?id=2678.

Here is an excerpt from the interview:

Have you issued any recent reports on suppliers to the auto industry?

Yes, we just finished a small-cap report on Cooper Tire & Rubber Company (NYSE: CTB), which specializes in the manufacture and marketing of automotive products. A challenging North American auto environment makes us rate the stock a Sell with a six-month target price of $7.00.

The company has 67 manufacturing, sales, distribution, technical and design facilities located around the world. Cooper is the fifth-largest tire manufacturer in North America and the ninth-largest tire company in the world, with a 7% and 2% market share, respectively. The company has a 15% market share in the light-vehicle replacement tire market in the U.S.

What other types of companies are being affected by the sluggish auto industry?

Sonic Automotive (NYSE: SAH) is a large automotive retailer that is heavily exposed to an industry experiencing increasing competition and lower car sales. Thus, we rate the stock a Sell with a six-month target price of $13.00.

Can you tell us of any auto suppliers with some recent good news?

ArvinMeritor (NYSE: ARM) has developed a leading position in most of the markets it serves. Presently, the company is planning to split itself into two pieces. The company is undergoing dramatic cost reductions as well as implementing an impressive global growth strategy. The company is also expanding geographically and outsourcing to low-cost countries. This leads us to rate the shares a Buy with a target price of $20.00.

About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

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About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leonard Zacks. As a PhD in mathematics Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros.

Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.

Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.

SOURCE: Zacks.com

Zacks.com Mark Vickery
   312-265-9380 Visit: www.zacks.com

Copyright Business Wire 2008 **********************************************************************
   As of Thursday, 06-12-2008 23:59, the latest Comtex SmarTrend� Alert, an automated pattern recognition system, indicated a
   DOWNTREND on 05-23-2008 for ARM @ $14.93. As of Thursday, 06-12-2008 23:59, the latest Comtex SmarTrend Alert, an automated
   pattern recognition system, indicated a DOWNTREND on 03-17-2008 for CTB @ $16.26. As of Thursday, 06-12-2008 23:59, the latest
   Comtex SmarTrend Alert, an automated pattern recognition system, indicated a DOWNTREND on 05-23-2008 for SAH @ $18.47. For
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