Bill Ackman just sent a letter to shareholders of Longs Drug (LDG) in regards to his effert to find another buyer for them as an alternative to the CVS (CVS) offer, now that Walgreen’s (WAG) has backed out. There was none…full letter below
Disclosure (“none” means no position):none
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This is a great explanation for those afraid to ask…
Just got this emailed to me…It is a great read…
Disclosure (“none” means no position):None
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From the Financial Times. on the lighter side…
A new bank model
By Robert Shrimsley
Published: October 9 2008 03:00 | Last updated: October 9 2008 03:00
1) Take money from members of the public in savings accounts on pretext of keeping it safe
2) Use that money to lend to people who are unlikely to repay it.
3) When loan defaults rise and wholesale markets dry up, start refusing loans and credit to those who are able to repay.
4) Resist paying more for insurance scheme to guarantee savings accounts. You can always take money from the public, through nationalisation, as the price of keeping their money safe.
5) As investors notice structural weakness, start hoarding cash.
6) When this leads to system crisis, take money from the public by offloading bad loans by swapping for Treasury bills at Bank of England.
7) As turbulence continues, stop lending money to businesses.
8) Take more money from the public through government recapitalisation, in return for promise to keep lending people their own money.
9) Slash dividend. Create new executive remuneration scheme.
Original Link
Disclosure (“none” means no position):
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Now that the Wachovia (WB) saga seems to be settled and Wells Fargo (WFC) is the winner, will Citi (C) turn its sights to National City (NCC)?
Capital World Investors now beneficially owns 103 million shares, up from 8 million in the last quarter.
From the filing:
Capital World Investors is deemed to be the beneficial owner of 103,764,990 shares or 5.1% of the 2,035,010,452 shares of Common Stock believed to be outstanding as a result of CRMC acting as investment adviser to various investment companies registered under Section 8 of the Investment Company Act of 1940.
Disclosure (“none” means no position):Long C,NCC, WFC, none
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Here is the audio of Bill Ackman’s press conference at the Value Investing Congress. If you are an investor of any type, you must listen to it..
The questions are hard to hear (that does not matter) but Ackman’s answers are very clear and great stuff. For me, this was the highlight of the conference. Ackman was very gracious with his time answered questions on all subject for over an hour. I was able to ask him about short selling disclosure, Borders (being on the board he opted not to answer), and why hedge funds have such a lousy reputation.
He talks about AIG (AIG), Wachovia (WB), Citi (C), Wells Fargo (WFC), the SEC, Treasury, the Fed, the “Bailout”, Longs Drug (LDG), Walgreen’s (WAG), CVS (CVS), Borders (BGP), Barnes and Noble (BKS).
Disclosure (“none” means no position):Long BGP, WFC, C, none
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This year will make for some good “year in review” clip on New’s Years..
Like Seth Klarman from a previous post, Fairholme’s (FAIRX) Bruce Berkowitz is using the market weakness to add shares.
Berkowitz added over 7 million share of AmeriCredit (ACF) brining his total to over 21 million shares. From the filing:
21,049,200 shares of Americredit Corp. are owned, in the aggregate, by various
investment vehicles managed by Fairholme Capital Management, L.L.C. (“FCM”)of
which 15,588,200 shares are owned by Fairholme Funds, Inc. Because Mr.
Berkowitz, in his capacity as the Managing Member of FCM or as President of
Fairholme Funds, Inc., has voting or dispositive power over all shares
beneficially owned by FCM, he is deemed to have beneficial ownership of all such
shares so reported herein.While the advisory relationship causes attribution to Bruce Berkowitz, Fairholme
Funds, Inc. or FCM of certain indicia of beneficial ownership for the limited
purpose of this Schedule 13G Amendment, Bruce Berkowitz, Fairholme Funds, Inc.
and FCM hereby disclaim ownership of these shares for purposes of
interpretations under the Internal Revenue Code of 1986, as amended, or for any
other purpose, except to the extent of their pecuniary interest.
Berkowitz now owns 18% of ACF and between Fairhome and Leucadia (LUK) combined, own over 50%. Leucadia, is Berkowitz’s 7th largest holding.
Disclosure (“none” means no position):none
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Looks like the path is cleared for Wells Fargo (WFC) to acquire Wachovia (WB) over Citigroup (C).
Release Date: October 9, 2008
For immediate release
The Federal Reserve acknowledges the considerable efforts of Citigroup Inc. and Wells Fargo & Company to reach an accord regarding the acquisition of Wachovia Corporation.
While no agreement between Wells Fargo and Citigroup was reached, the two parties have indicated that they will no longer seek injunctive relief to prevent a transaction.
The Federal Reserve will immediately begin consideration of the filings submitted by Wells Fargo for approval to acquire Wachovia Corporation.
So, here it is. We are done with the legal games and it would seem the decision is up to the Fed. The way I read it, the Fed is going to decide between either proposal, not decide how to break up Wachovia.
If that is the case, then Wells Fargo has to win because their deal involves no FDIC involvement. Simple. That, and it is a far better deal for shareholders.
Disclosure (“none” means no position):Long WFC, C
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It’s been a while since the last one…
Even after coming way off its highs of last year, Sears’ stock is trading at the nosebleed valuation of more than 26 times this year’s expected earnings. In comparison, discount retailers such as Wal-Mart Stores (WMT) and Costco Wholesale (COST) — both of which reported higher same-store sales in September, even as consumers deserted other stores — are trading in the mid-to-high teens. Not to mention lower profile retailers like TJX Cos. (TJX), whose chains draw brand-conscious consumers looking for a bargain, which is trading at a multiple of about 11.
Part of the reason for the anomaly could be Sears’ inclusion on the no-short sale list; indeed Thursday, after the ban expired, Sears fell sharply. Sears also benefits from a relatively small float, as several loyal investors have stuck by controlling shareholder Eddie Lampert. And the company has been steadily buying back stock, even as cash generation has slumped.
At some point, though, the faith in Mr. Lampert displayed by these investors may start to crumble. Recessions are the ultimate in Darwinian exercises for retailers. Every time there’s a severe economic downturn, a smattering of big and small retail chains go bankrupt. Recent months have already seen a handful of specialty chains file for Chapter 11 bankruptcy protection, including Steve & Barry’s, Linens ‘n Things and Mervyn’s. Others, like electronics chain Circuit City (CC) and drug store operation Rite Aid Corp. (RAD), face serious challenges. Sears’ prospects in an extended downturn aren’t much better.
OK…So let’s for a minute just sit back and reflect the inclusion of cash rich (it currently holds more cash that all the other combined), low debt (it currently has less than any of the other did) Sears with any of the above retailers. Why not look at is next to Macy’s (M), Kohl’s (KSS), JC Penny (JCP) or even Home Depot (HD)? My guess is the article would then have been far less dramatic or interesting as people would have come to the logical, “well, all of retail is suffering now” conclusion.
What the author alludes to but chooses not to focus on is that unlike at the above, Sears is still churning out profits and cash flow. He does note that Sears tumbled today after the “no short ban” was lifted. A 680 point drop on the Dow today would lead some to believe that perhaps this was not a “Sears specific event”?
The Sears shareholder base. This has merit. 86% of the shares are held by investors who typically have a holding period measured in years. In fact, Chairman Lampert himself controls 51% and isn’t going to be selling anytime soon. So, aside from the “naked shorting”, of Sears shares (IS THE SEC’S CHRIS COX STILL ON THE JOB?), in any given day only about 14% of the shares are going to be sold by anyone other than those who view purchasing a stock as “ownership”, not trading paper.
That math ought to lead anyone to conclude that there isn’t a ton of downside to shares, or , if there is, based on the reputations of the investors that hold shares, they most likely will eagerly be snapping them up.
Sears is a complicated investment both due to the various businesses and parts it has, and its evolving ownership base. A true “why isn’t it going down” analysis really cannot honestly be done in a pithy 3 paragraph piece…
When you have a stable investor base that is not inclined to sell, many of the usual daily market machinations and their effect of the stock price tend to not matter as much. That by the way, is a good thing…
I just may have avoided the 23% drop this month in the Dow..
Disclosure (“none” means no position):Long SHLD, none
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Not everyone was dumping shares this week…
Seth Klarman’s Baupost Group has acquired 6.1 million or 11.7% of Breitburn Energy Partners LP (BBEP).
BreitBurn Energy Partners L.P. is an independent oil and gas partnership focused on the acquisition, exploitation and development of oil and gas properties in the United States. The Company’s assets consist of producing and non-producing crude oil and natural gas reserves located in the Los Angeles Basin in California, the Wind River and Big Horn Basins in central Wyoming, the Permian Basin in West Texas, the Sunniland Trend in Florida, the Antrim Shale in Northern Michigan and the New Albany Shale in Indiana and Kentucky. The Company conducts its operations through a wholly owned subsidiary, BreitBurn Operating L.P. (OLP) and OLP’s general partner BreitBurn Operating GP, LLC. On June 17, 2008, the Partnership announced the acquisition of all of the limited and general partnership interests of the Partnership previously owned by Provident Energy Trust. As part of the transaction, the Partnership acquired a 100% interest in BreitBurn GP, LLC, the general partner of the Partnership.
A theme at the Value Investing Congress this week was oil and gas parnership both for valuation and yield…. Breitburn’s current yield? 17%.
Disclosure (“none” means no position):None
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From the man who uncovered the Enron scandal…
Chanos explains the mechanics behind why many people short and how the ban has hurt investors..
One really has to think this was only a matter of time…
The WSJ Reports:
As the scramble to resolve the Wachovia (WB) situation continues (Wells Fargo (WFC) and Citigroup (C) are sorting it out), National City Corp. (NCC) , a Cleveland-based regional bank crippled by bad real-estate loans, is in talks with a number of banks about a possible sale, people familiar with the situation said.
Among the potential buyers are PNC Financial Services Group Inc. (PNC), a Pittsburgh-based lender that has dodged many of the industry’s problems, and Toronto-based Bank of Nova Scotia. PNC declined to comment Wednesday, and Bank of Nova Scotia (BNS) couldn’t be reached.
National City declined to comment.
In the beginning of October I bought National City shares, not for this situation but because I thought their loan portfolio was notably superior to Wachovia or Washington Mutual (WM), it was still growing its deposit base and the market was pricing it as though either of those scenario’s did not exist.
It might seem other banks agree. With industry consolidation underway full steam, and National City not in dire straits, those institutions in a position to expand their operations are obliged to kick the tires…
Disclosure (“none” means no position):Long NCC, WFC, C, none
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Berkshire’s Warren Buffett is taking advantage of the volatility out there to sell put options on Burlington Northern (BNI)
Buffett sold 12/08 puts at an $80 strike price for $7.02 each on 1.3 million shares on 10/6.
Explanation of Responses:
1. The put options were written by National Indemnity Company (?NICO?), a subsidiary of OBH, Inc. (?OBH?). OBH is a subsidiary of Berkshire Hathaway Inc (BRK.A). As OBH and Berkshire are each in the chain of ownership of NICO, each of Berkshire and OBH may be deemed presently to both beneficially own and have a pecuniary interest in all securities of Burlington Northern presently owned by NICO. Warren E. Buffett, as the controlling stockholder of Berkshire, may be deemed presently to beneficially own, but only to the extent he has a pecuniary interest in, the Burlington Northern securities presently owned by NICO. Mr. Buffet disclaims beneficial ownership of the reported securities except to the extent of his pecuniary interest therein.
FULL FILING
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Here is the full video of Lehman’s (LEH) Fuld before the Senate. I can’t do it justice, you really do have to watch it. Fuld’s action are indefensible, despite his best efforts to do so…
He blames the SEC, short sellers (David Einhorn), Goldman Sachs (GS)…everyone except…oh yea…him..
Disclosure (“none” means no position):Long GS, none
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