Whitney was recently on “Wealth Track” and had some great things to say about investing in the current environment.
I usually do not read the comments sections in other blogs (time issue) so was unaware of this pattern. Apparently I am not the only one attacked for questioning the perfection of all things Apple (AAPL).
Eric Savitz writes a tech section for Barrons and in reading it this week came across this item.:
“On my Tech Trader Daily blog, I recently wrote a flurry of posts about concerns on the Street that demand for both the iPod and the iPhone may be sagging. Some analysts doubt Apple can hit its target of 10 million iPods for 2008. Some are saying that Apple has reduced orders for iPod and iPhone components. Bullish comments from Tim Cook last week helped buoy the shares, but some investors nonetheless are sitting on fat losses. For a while there, the fanboys were taking out their frustrations on me, on the comment section of my blog. With every post on questions or data points that don’t fit with the idea that Apple can do no wrong, I would get creepy, vitriolic comments. I was forced to shut down the comment section of some posts in the face of anti-Semitic attacks, threats of physical violence and generally acidic bile. It was ridiculous, and unnerving. And I hope it stops.”
What is wrong with you people? Why is the very thought of Apple not being perfect so offensive to you? I have read Savitz’s columns for a quite a while now and one would have to be exceedingly thin skinned to take anything he says as inflammatory.
Why the hostility? Why the anger? Personally in the just over a year blogging about hundreds of different companies the level of hostility and outright rage from the Apple folks is unmatched.
Perhaps they think they can bully those of us who doubt Apple’s perfection into being quiet?
It is too bad Savitz took down the comments section as I am sure it gave Apple fans a “victory” in their minds. Leaving it up would have only illuminated the world as the who they really are (those who troll blogs leaving those types of comments). Apple does seem to be in a class of one when it come to these types of folks.
My guess is that unlike their claims to “have bought Apple at $10” they are sitting on price levels far higher and are taking their current losses out on those of us doubters, like we have any control over the 53 million shares that trade daily (maybe they think we really so?).
Alas, put the comments back up Eric and reveal to the world the cult of Apple. I will leave mine up and will look forward to laughing at the ones for this post….spew on folks!!
Disclosure (“none” means no position):Sold July $280 calls in Jan
Equinix Inc (EQI) = $4,324,275
Scana Corp (SCG)= $1,960,809
Delphi Financial Group Inc (DFG)= $ 1,477,801
Enterprise Gp Holdings L P (EPE) = $1,254,870
Janus Capital Group Inc (JNS)= $ 1,222,500
Grubb & Ellis Co (GBE)= $ 1,097,166
Netgear Inc (NTGR0 = $1,091,200
Zymogenetics Inc (ZGEN)= $1,006,033
Coca Cola Enterprises Inc (CCE)= $ 951,168
Spectranetics Corp (SPNC)= $ 922,074
Medtronic Inc (MDT)= $ 901,218
Here are this weeks winners at Value Investing News
Students from Emory’s Goizueta Business School and McCombs School of Business at UT Austin were invited to come visit Mr. Buffett for a Q&A session.
Whitney says the “break up ” value is $250 a share
Simply awesome. This article details the interesting story of Gillette (one of Buffett’s more famous investments).
Mr. Walter J. Schloss, CFA, Walter & Edwin Schloss Associates, New York, NY (February 12, 2008) – Videoconference
With announced buyout of CHC Helicopter it presents an opportunity for workout return.
A QUESTION Warren Buffett and Charlie Munger are often asked is: how do you learn to be a great investor? “First of all,” says Charlie Munger, “you have to understand your own nature.
A bear market can be hard on your psyche. It’s depressing watching the value of your portfolio fall day after day.
When Google completed its initial public offering in August 2004, the stock seemed overpriced. Even after reducing its IPO price from $108 to $85, the company’s trailing price/earnings ratio was well over 200. Journalists, analysts and market pundits exclaimed that Google was the most overpriced IPO in years, and warned investors to avoid it.
If you’ve ever been lucky enough to hear Berkshire Hathaway (NYSE: BRK-A) Co-chairman Charlie Munger speak, you’ve undoubtedly walked away feeling wiser and slightly humbled. And wondering, “Did he really just say that?”
The item was a 50th birthday gift for the chairman of Fairfax Financial Holdings Ltd., but also serves as a source of inspiration. The Templeton principles, after all, underpin much of Fairfax’s investment philosophy: Be flexible; search around the world for the best bargains; and above all else, go against the crowd – buy when others are pessimistic, and sell when optimism rules.
Just like personal credit scores, the bond markets have their own credit system that decides a corporations credit rating or score.
Reading Leucadia’s 10-k uncovered this
Warren Buffett is placing his bets on the Brazilian real, with Joyce Chang, JP Morgan; Geoffrey Dennis, Citi; and CNBC’s Dylan Ratigan.
For investors looking for stability in this current economic climate and a ‘nice’ 4,1% dividend yield, Altria (MO) seems to be an excellent opportunity. We believe that it would be quite reasonable for investors to target a share price appreciation of between 15 and 20% in the next 24 months whilst enjoying the dividend yield.
A quick look at a chart of AMD and you might just think its a print of someone’s heart monitor.
How to use variable annuities correctly to invest for retirement and avoid outrageous fees and expenses. Shows which asset classes to hold inside a variable annuity and where to get them.
IBMs announcement of a stock buyback plan really lifted wall street today.
The credit card company Visa will IPO sometime around March 20th to raise around $19 Billion.
That’s the new buzzword on the street. Bank of America which is hurting greatly from the subprime credit crunch, has proposed an offer to Congress, asking for the creation of the Federal Homeowner Preservation Corporation.
Legg Mason’s Bill filed his latest letter with the SEC Friday. Some notables from it.
“The late 1980s saw a merger boom similar to what we have experienced the past few years and a housing boom as well. In 1989, though, the merger boom came to a halt with the failure of the buyout of United Airlines to be completed. The buyout boom had been fueled by financial innovation. Then it was so-called junk bonds, which had been purchased by many savings and loans in an attempt to earn higher returns. Now it is subprime loans repackaged into structured financial products. The Federal Reserve Board (“Fed”)D had been tightening credit to guard against rising inflation, which began to impact housing. By 1990, housing was in freefall, the savings and loans were going bankrupt (as the mortgage companies did in 2007), financial stocks were collapsing, oil prices were soaring in 1990 due to a war in the Middle East, the economy tipped over into recession, and the government had to create the Resolution Trust Corporation to stop the hemorrhaging in the real estate finance markets. Eerily similar to today, the situation began to stabilize when Citibank (C) got financing from investors from the Middle East.”
On current situation:
“The monetary and fiscal authorities have now begun to move with alacrity, with the Fed cutting the funds rateF to 3% (with likely more to come in my opinion), and the administration and Congress coming up with a fiscal stimulus package estimated at around $150 billion dollars.
Will it be successful? I believe, yes. More precisely, if these measures aren’t enough to free up credit and stimulate spending sufficient to set the economy on a growth path, then I believe additional measures will be taken until that is accomplished. The important point is that the monetary and fiscal policymakers are focused and engaged, and I believe they will do what is necessary to stabilize the markets and restore confidence. This does not mean that the recovery will be swift, or seamless, or without additional trauma. But there will be a recovery in my opinion, and I think the market abounds with good value. Those values may get even better if the markets get more gloomy, but they are good enough now for us to be fully invested.
I think the market is in for a period of what the Greeks refer to as enantiodromia, the tendency of things to swing to the other side. This is not a forecast, but rather a reflection on valuation. “
“Even more compelling are financials, where you can get dividend yields about double that of Treasuries, which only adds to their allure, with them trading at price-to-book value ratios last seen at the last big bottom in financials.
I think enantiodromia has already begun. What took us into this malaise will be what takes us out. Housing stocks peaked in the summer of 2005 and were the first group to start down. Now housing stocks are one of the few areas in the market that are up for the year. They were among the best-performing groups in 1991, and could repeat that this year. Financials appear to have bottomed, and the consumer space will get relief from lower interest rates. Oil prices have come down, and oil and oil service stocks are underperforming in the early going.
Investors seem to be obsessed just now over the question of whether we will go into recession or not, a particularly pointless inquiry. The stocks that perform poorly entering a recession are already trading at recession levels. If we go into recession, we will come out of it. In any case, we have had only two recessions in the past 25 years, and they totaled 17 months. As long-term investors, we position portfolios for the 95% of the time the economy is growing, not the unforecastable 5% when it is not.
I believe equity valuations in general are attractive now, and I believe they are compelling in those areas of the market that have performed poorly over the past few years. Traders and those with short attention spans may still be fearful, but long-term investors should be well rewarded by taking advantage of the opportunities in today’s stock market. “
Countrywide (CFC):
“Since the cut in rates, many companies closely tied to the housing and mortgage markets have seen their shares rise sharply. Washington Mutual, the nation’s largest thrift, is up over 30% this year. IndyMac, a smaller version of CFC, is likewise up over 30% this year. CFC shares, on the other hand, are down 25% as share price appreciation has been truncated by the deal with Bank of America (BAC).
We will support the deal if we believe it is in the best interests of shareholders to sell to BAC, and we will vote LMCM’s shares against it if we believe greater value can be achieved by having CFC remain independent. “
Value vs. Price:
“But the price of a publicly traded security is one thing, and its value is something else. Price is a function of short-term supply and demand characteristics, which are heavily influenced by the most recent news and results. Value is the present value of the future cash flows of the business, and that is what we focus on. We believe the values in the market today are as attractive as they have been in the past five years, and that patient long-term investors (including the Fund) should be well rewarded for putting money to work right in here.”
Disclosure (“none” means no position):None
(TIN)- Temple-Inland Inc
(TIA )- Telecom Italia S P A New
(TEG )- Integrys Energy Group Inc
(SEPR )- Sepracor Inc
(S )- Sprint Nextel Corporation
(RVSN)- Radvision Ltd
(RSYS )- RadiSys Corporation
(RJF )- Raymond James Financi …
(RHD )- R H Donnelley Corp
(RELV )- Reliv’ International Inc
(LTM )- Life Time Fitness Inc
(LPX )- Louisiana Pac Corp
(LNET )- LodgeNet Entertainment
(CRI )- Carter’s, Inc.
(CRDN)- Ceradyne Inc
(CONN )- Conn’s, Inc.
(COBZ )- Cobiz Financial Inc
(AMLN )- Amylin Pharmaceutical …
(ALSK )- Alaska Communications …
(ALLT )- Allot Communications Ltd
(ADSK)- Autodesk Inc
(ADPT )- Adaptec Inc
Has anyone else read this guy? It is a great blog. He takes the BS mailers and emails you get promising 1,000% returns and dissects them. The next time you get one, go here first and check it out before you do anything else..
Reading Leucadia’s (LUK) 10-k this morning uncovered this little tidbit.
“In June 2007, the Company invested $200,000,000 to acquire a 10% limited
partnership interest in Pershing Square, a newly-formed private investment
partnership whose investment decisions are at the sole discretion of Pershing
Square’s general partner. The stated objective of Pershing Square is to create
significant capital appreciation by investing in Target Corporation (TGT). For the
period from investment to December 31, 2007, the Company recorded losses of
$85,500,000 from this investment under the equity method of accounting,
principally resulting from declines in the market value of Target Corporation’s
common stock. At December 31, 2007, the book value of the Company’s investment
in Pershing Square was $114,500,000. “
Disclosure (“none” means no position):None
Macalope, Ross, Schloss, Sprint
– A voice of reason
– Wilbur makes a big bet
– Watch this. Schloss is a legend
– Best plan on the market now…
Investor Mark Wattles was on CNBC this morning discussing Circuit City (CC).
Check out the video here:
Disclosure (“none” means no position):None
The market and many commentators are acting like MBIA (MBI) and Ambac (ABK) are almost out of the woods, Whitney Tilson explains the fallacy of thoughts like that in this article
Upgrades
Imperial Oil (IMO )- BMO Capital Markets Market Perform » Outperform
GSI Group (GSIG)- BMO Capital Markets Underperform » Market Perform Illinois Tool (ITW)- UBS Neutral » Buy
Parker-Hannifin (PH)- UBS Sell » Neutral
Teck Cominco (TCK)- RBC Capital Mkts Sector Perform » Outperform
Nalco (NLC)- Credit Suisse Underperform » Neutral
Plexus (PLXS)- Credit Suisse Neutral » Outperform
Maxwell Tech (MXWL)- JMP Securities Mkt Underperform » Mkt Perform
Sotheby’s (BID)- JMP Securities Mkt Perform » Mkt Outperform
Blockbuster (BBI)- JP Morgan Neutral » Overweight
Varian (VARI)- UBS Neutral » Buy
Downgrades
Petro-Canada (PCZ)- BMO Capital Markets Outperform » Market Perform
Kenneth Cole (KCP)- Sterne Agee Hold » Sell
Gehl (GEHL)- BMO Capital Markets Outperform » Market Perform
Quicksilver Resrcs (KWK)- CapitalOne southcoast Add » Neutral
Provident Bank (PBKS)- Sandler O’Neill Hold » Sell
Lexington (LXP)- Stifel Nicolaus Buy » Hold
Boyd Gaming (BYD)- KeyBanc Capital Mkts Hold » Underweight
TRW Automotive (TRW)- JP Morgan Overweight » Neutral
Lear (LEA)- JP Morgan Overweight » Neutral
Borg Warner (BWA )- JP Morgan Overweight » Neutral
Forest Labs (FRX)- Friedman Billings Outperform » Mkt Perform
First Potomac Realty (FPO)- Wachovia Mkt Perform » Underperform
RF Micro Device (RFMD)- Jefferies & Co Buy » Hold
Seagate Tech (STX)- Citigroup Buy » Hold
Western Digital (WDC)- Citigroup Buy » Hold
EnerNOC (ENOC)- Jefferies & Co Buy » Hold
SourceForge (LNUX)- MDB Capital Group Buy » Neutral
Friday’s Picks
Jeff Macke and Guy Adami recommend shorting the Dow by buying Short Dow30 ProShares (DOG) $62.48
Tim Syemour prefers shorting Petrobras (PBR) $124.86
Pete Najarian thinks Applied Materials (AMAT) $19.83 is a buy.
Thursday’s Picks
Jeff Macke likes Wal-Mart (WMT) $51.44 Close $50.70
Karen Finerman recommends Fannie Mae (FNM) $27.27 Close $27.90 GAIN
Pete Najarian thinks Cisco (CSCO) $24.95 is a buy. Close $24.66 LOSS
2008 Records:
Brian Schaeffer= 0-1
Carter Worth= 0-1
Jon Najarian= 4-1
Jeff Macke= 14-11
Tim Seymore= 5-4
Guy Adami= 13-14
Pete Najarian= 13-9
Karen Finerman= 13-13-1
2007 Results (Since 6/21):
Guy Adami= 58-46 = 56%
Jeff Macke= 60-40 = 60%
Pete Najarian= 49-41 = 54%
Disclosure (“none” means no position):
It is hard to get all worked up over these results at Sears Holdings (SHLD) for a few reasons.
1- They were expected
2- Cash is higher than predicted
3- Debt is lower
4- The share count is lower (20% lower in the last 4.5 years)
5- They plan you have been clamoring for is being implemented
So, first the results:
Net income of $426 million, or $3.17 per diluted share, for the fourth quarter ended February 2, 2008, compared with net income of $811 million, or $5.27 per diluted share, for the fourth quarter ended February 3, 2007. For the fiscal year ended February 2, 2008, net income was $826 million, or $5.70 per diluted share compared with net income of $1.5 billion, or $9.58 per diluted share, for the fiscal year ended February 3, 2007.
For the quarter, domestic comparable store sales declined 4.5% in the aggregate, with Sears Domestic comparable store sales declining 4.0% and Kmart comparable store sales declining 5.2%. For the year, domestic comparable store sales declined 4.3% in the aggregate, with Sears Domestic comparable store sales declining 4.0% and Kmart comparable store sales declining 4.7%. Declines for both the quarter and fiscal year include a more pronounced decline in comparable store sales in the month of January
2008.
The reason? The same as every other retailer save Wal-Mart (WMT). The weather is lousy, people have no money, housing, etc… Sears is no different in most respects except they have more tied to housing that either Macy’s (M), JC Penny (JCP) and Kohl’s (KSS) because of the huge number of appliance sales.
What really matters:
Sears had cash and cash equivalents of $1.6 billion at February 2, 2008 (of which $743 million was domestic and $879 million was at Sears Canada) as compared to $3.8 billion at February 3, 2007, a decline of $2.2 billion. For the year, the significant uses of cash included $2.9 billion for share repurchases, approximately $580 million in capital expenditures, debt payments (net of new borrowings) of approximately $600 million, and approximately $220 million of contributions to pension plans.
On January 14, 2008, they forecasted domestic cash and cash equivalents would be $1 billion at year-end, without effect of share repurchase activity after January 11, 2008. Subsequent to January 11, 2008, they repurchased $40 million of common shares.
During the fourth quarter of 2007, they repurchased approximately 5.3 million common shares under the share repurchase program at a total cost of $553 million, or an average price of $104 per share. For the full year, they repurchased 21.7 million common shares under the share repurchase program at a cost of $2.9 billion, or an average price of $135 per share. As of February 2, 2008, they had remaining authorization to repurchase $183 million of common shares under the program.
We have the odd position that the sales results were poorer than expected but the financial condition of the company is much better. Given a choice between the two, and in an economy like this one currently, it is more often the case than not, I will take the latter.
We are at a point now where we close the door on Sears as it is and look to the future. A 900% plus gain since Lampert took over Kmart in 5/2003 to the present, is there a problem?
What does the future hold? Sears brands will begin to show up all over especially in the likes of Home Depot (HD) and Lows (LOW). I can very easily see a scenario in which both retailers, given their current situation try ti outbid each other for an “exclusive” deal for the lines (Craftsmen, Kenmore, Diehard).
Kmart will eventually disappear. The real estate arm will look to maximize the value of each location and those locations will be either as a Sears, or another retailer. Either way, who cares. A large part of the eventual revenue will come from the REIT portion of the company. For evidence of how this can evolve, check out Vornado’s (VNO) history.
As the main brands become sold in various other retailers, the flexibility and the options in the real estate grow profoundly. The actual value of a Sears and Kmart location actually diminishes in terms of the company’s revenue and the value of what can be done with the floors and walls increases.
Will it happen in 2008? No. Don’t forget, retail as a whole still currently is lousy. That being said, progress is all we should really expect and want to see. The company will still produce $6 billion from operations that will buy back more shares and pay down more debt while we wait.
More later as I digest this more..
Disclosure (“none” means no position):Long SHLD, WMT, None
Brown, “Cheap”, Buffett, Buffett
– Another college waives tuition, about time..
– Chad Brand has a point, read carefully.
– Notes from a recent Warren Buffett (BRK.A) MBA talk
– Or, watch a video of Berkshire Hathaway’s (BRK.A) chief.