Here is a pdf. link to Ben Graham testimony before congress in 1955 in regards to a Stock Market Study he did for it.
For those not sure who Ben Graham is, he was Berkshire Hathaway’s (BRK.A) Warren Buffett’s mentor.
Here is the link
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This is one of the better video’s I have seen..
A conversation about leadership at the Harvard Business School centennial celebration with John Doerr – venture capitalist, Kleiner Perkins Caufield & Byers, Jeffrey Immelt – chairman and CEO, General Electric (GE), Anand Mahindra – vice-chairman and managing director, Mahindra & Mahindra, Meg Whitman – former CEO, Ebay (EBAY) and James Wolfensohn – former president of the World Bank
Disclosure (“none” means no position):Long GE, none
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Why is Bernanke pushing another stimulus when Paulson’s banks plan has only just begun?
Last week before Congress Bernanke said the following:
Now, did you ever hear the saying “the cure is worse than what ails you”? I get that things aren’t that great. I gt that thew Fed and Treasury feel the needed to do something. I get something has to be done.
But, when you have a near trillion dollar plan that has only just begun to take effect, ought not we wait just a bit and see how it works before we go pump another 1/2 trillion or so of taxpayer money into the system?
Isn’t the current complaint from both the left and the right of the political spectrum of his predecessor Alan Greenspan that he interjected himself into fiscal policy? won’t this backfire as foes from wither party will now use this decision against him and perhaps constrict his ability to use his powers in the future?
Bernanke has gotten broad authority from Congress in order to deal with the current crisis. One can argue whether of not he has used it wisely or should it have been granted to him but it was and he has mitigated what could have been a far worse scenario. The problem with what he is doing now is that he will become the fall guy for either party for anything that goes wrong from here. Should the stimulus not work, he will be accused of wasting taxpayer money for no result. Should its relief only be temporary (like that last one’s was) he will get accuse acting for the sort term, not what is best for the country long term.
No one is saying they think a stimulus will “cure” what ails us so Ben’s backing of it has no real long term positives for him.
Ever hear the saying “give a man enough rope to hang himself”. Congress just did it to Ben, he took the, rope and now they have their fall guy.
Much of what the Fed can accomplish is based on what people thin of the institution and its leader. The general perception of Ben is that he has done a great job thinking outside the box recently and has saved us from much worse. That gives markets some degree of confidence we will get though this.
When Congress takes his forray into their domain and uses that as a reason the cast blame from themselves to him, his ability to calm Main St. or the Markets (.INX) ,(.DJI) in the future will be severely restricted.
That is far worse than whether or not any stimulus is a good idea…..it isn’t by the way..
A couple of event in the last two weeks have me thinking about coal.
Today Arch Coal (ACI) said third-quarter net income more than tripled to $97.8 million, or 68 cents a share, from $27.3 million, or 19 cents a share in the year-ago period. Revenue increased to $770 million from $599 million. Wall Street analysts expected the St. Louis coal producer to earn 61 cents a share on revenue of $772 million, according to a survey by FactSet Research. Arch’s trading and optimization function reported an $18.4 million loss in the third quarter, offset by a $26.9 million income tax benefit. “Despite a near-term softening of coal demand, we remain on pace to deliver our best financial performance in company history,” Arch Coal said.
Now, last week Peabody (BTU) announced a $1B buyback that at current levels amounts to 12% of its market cap. With the Arch news, it would seem the fundamentals of the business in no way relate to the current stock price action would indicate.
Third. It was reported last week that India was in the US shopping for coal deposits.
Now, while coal demand may be softening, it has not evaporated as the share price of
both would suggest (down over 60%). When we have other nations here looking for coal, we can only assume they need much more than they have. That is good for global producers like BTU.
BTU which earned $1.37 in 2007 has earned $2.37 a share through the first nine months of 2008 and will add 12% to that down the road just through the share repurchases. Peabody trades at 9 times very conservative estimates for the remainder of 2008 and just 6 times the low end estimates for 2009 (the estimates were done before the share repurchase plan was announced).
Coal is one of those things we cannot live without. More than that, the rest of the developing world wants it really bad. It is a nice business to be in, especially when the stocks are priced at these levels..
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A sign of the times and a really unique idea. Thanks to Jud for the tip..
San Francisco — Sears (SHLD) is offering VenJuvo’s Trade4Credit program to Sears.com shoppers that allows consumers to earn Sears store credit in exchange for trading in pre-owned electronics that have been determined to still hold value.
The program, which offers free recycling and shipping, will accept a variety of electronics including iPhones, digital cameras and camcorders, MP3 players, GPS systems and gaming systems.
“At Sears we’re always looking for ways to help our customers maximize their spending dollars,” said Jonathan Magasanik, VP/general merchandise manager of home electronics for Sears Holdings. “The Trade4Credit program does just that by providing our customers with an easy way to transform their used electronics into store credit they can use to buy the Sears products they’ve really been wanting.”
To use the service, consumers simply have to log onto www.sears.trade4credit.com, select their item and enter the specifics about their device so the system can calculate an estimated trade-in value. Once the value is established, the user can print out the prepaid mailing label and send the device to VenJuvo. Once the device is received, VenJuvo will validate the value and within three days of that point the user will be able to collect a Sears gift card for that value.
This is a great idea. The program currently has a couple dozen brands, but is sure to be expanded. Rather than throwing away those electronic devices, the opportunity to get something for them must intrigue more than a few people. It does me. The beauty of it is that there is no cost to the consumer, not even postage, just print the label and ship…easy..
Is it a cure-all? No. But it will garner the retailer a look for those looking to upgrade or replace certain items.
Disclosure (“none” means no position):Long SHLD
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This is an excellent explanation of the issue.
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Word is out today that Goldman Sachs (GS) approached Citigroup (C) last month to proposed a merger .
Citigroup CEO Vikram Pandit rejected the idea from Goldman Sachs CEO Lloyd Blankfein, the FT said, citing people it didn’t identify.
The deal, which was to have been structured as a takeover of Goldman by Citigroup, would have led to the firing of thousands of workers in the investment banking units of the two companies, and the loss of several senior executives, the newspaper said
However, uniting Goldman’s strengths in risk management, advisory services and proprietary trading with Citi’s large retail deposit base and huge corporate client network could have created a powerful financial giant.
Industry insiders argue that such a deal could have also benefited the US financial system by creating a counterpoint to JPMorgan Chase and Bank of America, two institutions that have significantly expanded during the recent raft of government-induced rescue deals.
The tone of the article was that Citi rejected the proposal out of hand. Now, this is odd for a couple reasons. First we know Citi has the largest exposure to the current mortgage market problem. Second, they can’t be in that strong of a financial position as their proposed takeover of Wachovia (WB) was not able to be accomplished without FDIC assistance. Wells Fargo (WFC), on the other hand, walked in and did the deal on its own.
So, one has to wonder why it was not even considered? Perhaps the “culture” differences are just so great, consolidating them would have been too difficult. But, if Goldman thought it was doable, why not even consider it?
This raises even more questions about Citi. Goldman is known as the class of the industry and if Citi won’t even consider a tie-up with them, then what is it about Citi that makes it so prohibitive? Is it a fear of Goldman merging and then taking over? If that is the case then wouldn’t that be the best for Citi shareholders in the long run? Isn’t that what Pandit & Co. are really there for?
It isn’t the fact that Citi turned the overture down that ought to concern people, it is the “without consideration” of the action that ought to.
Disclosure (“none” means no position):Long GS,C
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Biden, Thank -you, Reich
– Why does Obama let him talk?
– Thank you for the mention
– I actually agree with Reich….scary
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Pimco’s Co-President talks about the current environment. He says investors should look for the high quality names that have been damaged in the sell off and pay attention to the capital structure of the company.
He also said he was encouraged by the recent activity in the credit markets.
I thought the same thing…..who the hell is RHI Entertainment?
Klarman’s Bauposat Group filed a 13D sayigng is now has 3.4million of 25% of the shares in the company.
RHI Entertainment, Inc. develops, produces and distributes new made-for-television movies, mini-series and other television programming worldwide. The Company also selectively produces new episodic series programming for television. In addition to its development, production and distribution of new content, RHI Payment systems Ltd owns a library of existing long-form television content, which it licenses primarily to broadcast and cable networks worldwide.RHI owns rights to approximately 1,000 titles, or over 3,500 broadcast hours, of long-form television programming, the majority of which has been developed and produced by it. The Company’s customers include a variety of domestic broadcast and cable networks, such as ABC, CBS, the Hallmark Channel, Lifetime, NBC, SCI-FI Network, Spike TV and USA Network, as well as international broadcasters, including Antena-3, M6, PROSIEBEN-SAT1, TF1, Seven Network and Sky.
FULL FILING
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I mean, it been a few days since he bought some.
Sears (SHLD) Chairman Eddie Lampert bought another 44k shares of AutoZone (AZO) at between $103 and $104 a share. He now has 23.4m shares.
How long before AutoZone, Sears and AutoNation (AN) tie up? Lampert either own over 50% or is just about there in all three.
Disclosure (“none” means no position):Long SHLD, AN, none
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Well, the price is $2.23 which represents an 11.5% return in 7 weeks…no where near what I thought would happen but given current market, I’ll happily take the gain.
PNC (PNC) Corp. said Friday that it is buying troubled regional bank National City Corp (NCC) for $2.23 a share, or a total of about $5.2 billion on PNC stock and another $384 million in cash. PNC also said it plans to sell $7.7 billion of preferred stock to the U.S. Treasury under the TARP Capital Purchase Program. That investment by the Treasury will allow the newly combined PNC and National City entity to have a roughly 10% Tier 1 capital ratio, the company said. “The acquisition of National City will increase our core deposit base to $180 billion, making PNC the fifth largest U.S. bank by deposits. At a time when core funding is key, we see our deposit strength as an important success factor,”
Do I want to to own PNC (PNC) shares? No. I’ll take the profit and move on to something else..
Disclosure (“none” means no position):Long NCC (for now), None
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This is a good one. Buffett author and Legg Mason (LM) portfolio manager Robert Hagstrom is on the show.
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I tell you, Grant is one of the best out there….In this interview he covers everything from the consumer, the Fed, short sellers and global confidence in market. In what is looking like a historic down day for the Dow (.DJI) and S&P (.INX), it bears watching..
Part 1
Part 2
Please Read his New Book:
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Based on the comments by management, one should expect large buybacks from Dow Chemical (DOW) to begin early next year.
From the Q&A:
PJ Juvekar – Citigroup
“Thank you. And quickly, Geoff, you didn’t talk about stock buyback when you talked about your financial strategy. If you look around… many industrial companies are suspending stock buybacks to conserve cash. Can you just tell us how you’re thinking about buybacks?”
Geoffery E. Merszei – Executive Vice President and Chief Financial Officer
“Well, sure. As you know… thanks for the question, PJ. As you know, during the course of the third quarter, we completed our $2 billion program and we spent about $50 million on that The only reason why we haven’t announced yet another programs is because we have two very large transactions that are about to close plus, of course, your last point, which is on cash preservation.
But let me reiterate what our financial policy has been over the last two years and will continue to be is that at a minimum we’re going to cover dilution. This is on an annual basis. And you can count on a new program following the two transactions that we are about to complete.”
Peter Butler – Glen Hill Investments
“Andrew, wouldn’t Carl Gerstacker be backing up the proverbial truck right here to buy shares cheap? Gerstacker would say, “My God, if you can buy at a 7% yield, then you’re looking at good news from Kuwait and Rohm and Haas. Why wait for the stock to go higher?”
Andrew N. Liveris – Chairman and Chief Executive Officer
“Yes. Look, Peter, as Geoffery answered because we have these two or three moving parts that are close in two or three months. But I think Geoffery indicated, I don’t know backing up the truck is a colorful way of explaining it. But I said this morning, the dividend is safe. This CEO is never going to cut it. I’m not going to be the first. The yield is unbelievable. The stock is undervalued by a long mile. I mean, so clearly, your analysis is our analysis.
We’re just going to get through the two transactions. Let us go on the other side of it. And then obviously, stock buyback is going to be top of mind. And these values hang in there in equity markets for the next several months. I think Mr. Buffett said it, well, Buy American. Well, we’re American.”
Robert Koort – Goldman Sachs
“Andrew, I think you said on one of the shows this morning that you don’t think a $3 trough number is reasonable anymore. I was wondering if you could tell me what the path to the trough looks like? Is it a demand erosion trough in ’09? Or do still think ’10 or ’11 is the trough?
And then, secondly, in your performance business particularly Performance Plastics obviously a pretty horrific margin partly influenced by the hurricanes, but what do you see in terms of the progression of your performance business margins as you go through the next couple of years? Thanks.”
Andrew N. Liveris – Chairman and Chief Executive Officer
“Yes, I think, Bob, firstly on the trough. We’re going to spend a lot of November analyzing our view of ’09, ’10 and ’11 given these new market conditions. Clearly, ’09 now is going to be a tough demand year, everything we’ve just talked about. So we see an economic trough in ’09. The industry trough that we were forecasting for ’10 and ’11 is going to be impacted by both sides of that discussion.
One is the new demand forecasts are going to speak… stop projects happening. So people who are early in their project calibrations are going to delay projects compared to… this is on the commodity stuff in particular and the petrochemical stuff. In addition, there is going to be a lot of competitors out there who don’t have our leverage ratios, who are not going to make it. I mean people who are… with their debt ratios in the 90s who leveraged up in the good days are going to suffer. You pick your favorite companies, I’m sure you can find them in the commodity chain in particular.
And then, on top of that you’ve got frankly the other side of the coin, which is the people who have got low-cost feedstocks and now can negotiate better EPC contracts because everything is coming off… the price of steel, the price of copper, the price of engineering. You can start to bring these projects more in line with the better returns in the low feedstock cost regimen.
And so actually companies like Dow, who have put these joint ventures in place should benefit from the ‘010, ‘011 scenario compared to what we were before. And last point I’ll make, in a declining oil and gas environment, we have feedstock flexibility that we can bring to bear in our developed economies now, which we didn’t have up until a month or two ago.
In other words, naphtha, LPG, ethane… we’ve got flexi-crackers that we can bring to help us out in the ’10-’11 industry trough. So these are the sorts of things we’ll be discussing deeply in November and we’ll come out on the other side of that and give you guys a better view. Second question, Bob?”
So, here we are in October and in the next three months (give or take) the company will be fundamentally changed. The 7% yield is safe and starting next year, assuming the share price does not rally much from here, will feature large share repurchases.
Another point that I think is being lost here was Liveris’s comment about the competition and some of it falling by the wayside during the next year or two due to leverage ratios. Market share increases due to this need to start getting factored into estimates going forward. Along with the market share increase, the reduction in competition also give Dow enhanced pricing power with customers.
It is going to be a very interesting winter for shareholders…and an exciting one
FULL TRANSCRIPT
Disclosure (“none” means no position):Long DOW
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