TAX, Shorts, Audible, Girlfriends
– Maybe will not raise you income tax, but Obama is considering taxing everything else..
– Money to be made in lightly shorted stocks
– Audible book on the Blackberry
– Another Onion classic
Disclosure (“none” means no position):
As if we did not have enough reasons to like Baupost Group’s Seth Klarman
From the Boston Globe:
Advertising mogul Ed Eskandarian is selling his minority stake in the Boston Red Sox to Seth Klarman, a well known Boston hedge fund manager, according to two people briefed on the transaction.
Eskandarian is one of a group of three Boston businessmen who together invested $25 million in the 2002 purchase of the Red Sox, led by John Henry and Tom Werner. Their stake at the time represented about 3.6 percent of the $700 million deal. Eskandarian, chairman of Arnold Worldwide, a Boston advertising agency, invested about $6 million.
Klarman and Eskandarian both declined to comment. The Red Sox also declined to comment.
However, by yesterday Eskandarian’s name had been removed from the list of owners posted on the team website. Klarman, who runs Baupost Group in Boston, is not listed as an owner. Major League Baseball must approve any change in team ownership.
The New York Times Co., which owns The Boston Globe, is trying to sell its 17.5 percent stake in the Red Sox. According to published reports, the Times Co. believes its stake is worth $200 million, which would value the team at $1.1 billion.
One of Eskandarian’s co-investors, TJX Cos. chairman Ben Cammarata, sold his stake in the team in 2007. The third investor, former textile executive Martin Trust, remains an owner.
It could not be learned yesterday what price Eskandarian is getting for his share. Cammarata, reached by telephone yesterday, said he did not know what a Red Sox stake would fetch today. He would not say how much he sold his $12.5 million stake for: “It was a wonderful time and a very good investment.”
The Red Sox franchise has risen in value, to $833 million, according to rankings created by Forbes magazine each year. The Red Sox are the third most valuable team in baseball, behind the New York Yankees and the New York Mets.
When David D’Alessandro, the former chief executive of John Hancock Financial Services Inc., sold his $5 million stake in the team in 2007, he reaped just over double his original investment, $10.3 million, the Globe reported.
Disclosure (“none” means no position):Long Red Sox
Smaller operating loss, increased cash flows and 45% less debt, all very good things. Shareholders, unfortunately for those who bought shares 2 years ago are still paying for the sins of past management. But, this marks the third consecutive quarter of very good improvement in a dismal operating environment.
Work still needs to be done on Borders.com. The site is sluggish and ordering can be difficult. Customer service is responsive BUT, Borders needs to eliminate the necessity to even need them which seems to be all too frequent. On the positive side, the site is very visually appealing and the Rewards Program and the affiliate relationships do offer tremendous savings. But, to bring it to the next level as a destination purchasing site…..it needs to be faster….much faster and the ordering glitches need to be eliminated.
Disclosure (“none” means no position):Long BGP
Some humor….Hat Tip Reader Jeff for finding & emailing..
Disclosure (“none” means no position):
Interview and discussion with David Rosenberg of the Gluskin Sheff & Associates on both Fox Biz and Bloomberg. He talks about the comments from Krugman and Greenspan.
Rosenberg is one of the few that have nailed everything to date. Whether you agree with him or not, you must take his thoughts with a huge grain of salt. He also boosts his cause in my eyes as not being as dire as either Roubini or Taleb who seem to call for the “end of days” on a regular basis. Rosenberg is far more rational.
Disclosure (“none” means no position):
After having spoken about the “time factor” in housing so much recently, I decided to put some hard data to the words.
Here is my appearance on Wall St. Media yesterday on the subject (housing comes in about 1/2 way though)
Open spreadhseet in another window
Those facts alone, even if we disregard the severity of the price fall in housing would tend to force most folks to push the bottom of the current situation out a bit further. When you add the wealth destruction that has happened to healthy homeowners who may have been looking to scoop a bargain but no longer have equity to roll, we are further suppressing demand.
Disclosure (“none” means no position):
“Davidson” submits:
When you are a value investor you are really an asset buyer with an expectation on ROE on those assets over an anticipated future period. The “science” that Ian Cumming references in his quote, “The science is in the “In”. The poetry is in the “Out”.”, is in the means that a value investor assesses the potential that the expected returns are likely to be realized. It is important to be cognizant of financial history, Hamilton, Fed Reserve history, economic philosophy of Hayek and etc as well as how this has played out since the 1871.
A powerful record of the effect of the Federal Reserve acting as a financial shock absorber has been in effect since 1933-see chart 1 (click to enlarge). 
With all the manipulations of govt., war, high taxation, excess govt. spending leading to inflation and the recovery and disinflation under Reagan and Volcker, one can build a great deal of confidence in US society and the its economic underpinnings that can serve to let one see thru the current fog of issues clouding our economic future.
If one measures BV (the productive assets of public cos) growth of the SP500 (I see this as quite steady at ~6.2%) (see Chart 2, click to enlarge) and then when one examines the ROE on these assets and measures that regression analysis produces a quite steady 14.2%.
Between 1978 to Present, one can produce a forecast for SP500 earnings and convert this to an earnings yield. This earnings yield is compared to the Real US GDP trend which is 3.16% and the current core inflation rate which is 2.3%; the combination of these 2 rates becomes the benchmark against which all investments are compared. The market has priced the SP500 against this benchmark return since 1978 in a fairly close relationship with allowances for market psychology which is an important factor at all times (see Chart 3, click to enlarge).
The current relationship is that the SP500 is priced at an estimated 8.08% earnings yield while the Market Cap Rate (MCR) is 5.4%. For the SP500 to return back to a normalized rate of return, this means that it needs to rise by 49.6% to roughly 1,350 from 900 currently. This is how a value investor converts assets to future returns by assuming that a historical trend with many periods of in which problems like those we fear today will eventually be resumed and return to trend.
Can value investors be wrong? Absulutely!! But, there is a very strong trend of economic history that supports these assumptions and the Fed is easing like it has done in the past. The cry, “But, but, but…it is different this time!!!” has be uttered at every major low in our financial history, i.e. 1974, 1982, 1987, 1990, 1998, 2002-2003 and 2008-2009. The odds greatly favor recovery, strong recovery which few are forecasting.
Our greatest problem today is fear and a complete lack of perspective. Historical perspective is how value investors look across the valley.
Paulson, Gitmo, Home sizes, Taxes
– 49% oppose its closing
– Another state losing millionaires due to increased taxation
Disclosure (“none” means no position):
For those who want a more visual interpretation of the job situation. Full link to the flowing data below. It really is striking..
Jan. 2007
Q1 2009:
The Geography of Jobs – TIP Strategies
Posted using ShareThis
When you look at this and consider US home prices fell 19% in Q1 over last year, I still can not find a convincing argument for the “housing has bottomed” theme. People having confidence does not equate to having money in the bank to buy a home. Nor does it equate to banks not continuing to tighten credit standards….
When making investments, please keep these charts in mind…pictures really do tell a rather convincing story
This is interesting stuff. I don’t see anyway this does not lead to a flood of nominees being proposed by investors should it pass. I also think it leads to chaos the first year and current managements will be unprepared for what comes but in the longer term, it becomes a normalized part of the business and then becomes better for all shareholders.
The less guaranteed job safety and person has in a job, in my opinion the better their performance in that job becomes.
Here is the proposal…
Disclosure (“none” means no position):
As stated here before, I have no “skin in this game”. The sole reason for my interest in this is the message it hopefully sends to other corporate boards should Ackman be successful.
Hopefully there is little objection to the “corporate boards are unresponsive to shareholders” meme. That being said, a successful Ackman may spur changes at other boards if for no other reason the avoid a similar situation.
My main issue is with Target’s changing of their governance rules in order to entrench the board. Also, their refusal to publicly debate or discuss the ideas of their largest shareholder, while at the same time using press releases to snipe at the ideas he floats is more than a bit distasteful..
Read other ValuePlays post on this here, here, and here.
Here is today’s CNBC appearance.
Part 1:
Part 2:
Pershing Square Press Release May 26
Disclosure (“none” means no position):None
Recently Fed chairman Ben Bernanke gave a speech to Graduates at the Boston College School of Law in which he said:
Instead, I’d like to offer a few thoughts today about the inherent unpredictability of our individual lives and how one might go about dealing with that reality. As an economist and policymaker, I have plenty of experience in trying to foretell the future, because policy decisions inevitably involve projections of how alternative policy choices will influence the future course of the economy. The Federal Reserve, therefore, devotes substantial resources to economic forecasting. Likewise, individual investors and businesses have strong financial incentives to try to anticipate how the economy will evolve. With so much at stake, you will not be surprised to know that, over the years, many very smart people have applied the most sophisticated statistical and modeling tools available to try to better divine the economic future. But the results, unfortunately, have more often than not been underwhelming. Like weather forecasters, economic forecasters must deal with a system that is extraordinarily complex, that is subject to random shocks, and about which our data and understanding will always be imperfect. In some ways, predicting the economy is even more difficult than forecasting the weather, because an economy is not made up of molecules whose behavior is subject to the laws of physics, but rather of human beings who are themselves thinking about the future and whose behavior may be influenced by the forecasts that they or others make. To be sure, historical relationships and regularities can help economists, as well as weather forecasters, gain some insight into the future, but these must be used with considerable caution and healthy skepticism.
Bold type emphasis mine..
Now this goes to a post herejust last week on the subject of the Fed’s forecasts.
The only question we could have then is, “if Bernanke admits the forecasts made by himself and other economists are equatable to a weather forecast, why are the making them so far out into the future and why aren’t we bring told they are essentially guesses”? I mean, even the weather man is not insane enough to be making prediction for next May, yet Bernanke and company are making them not only for next May, but the one after that.
Haven’t we learned yet that any economic prediction, push out to a year is not at all reliable, much as a weather forecast for that date would be? Even the weatherman is careful enough to preface what he says with “stay tuned tomorrow because things can change”.
Yet, when we read ANY of the Fed forecasts, they are delivered with such a certainty that one is lead to believe their belief in the accuracy of their predictions despite what we know to be the error rate (it is large). Now, there are those who will say they are required to make the forecasts they produce.
Then ought not the type of candor Bernanke expressed at BC be required when he is testifying before Congress and millions are being updated as to his every utterance? Since we are lead to believe he has a more exact idea of what the future of our economy holds for us than any other economist out there, if he truly believes in the inaccuracy of his profession, shouldn’t he lead with that disclaimer. Even us bloggers put them on our blogs…..
The cold hard reality just may be he does know more, but because he must put on a “happy face” so as to not start a panic, hides it from us all. This was the essence of my previous post on the subject and if it is true, is a worse scenario. The more his “predictive” abilities are wrong, the less faith anyone will have in him or the institution he presides over. When that comes to pass, a certain level of panic/doubt cannot be avoided…
Who knows, maybe we are already there???
Full Text
Disclosure (“none” means no position):
Foreclosures, Porsche, Nukes, Hyack
– 70% of “saved” homes………re-default
– This is a really big deal folks
– Revisited
Disclosure (“none” means no position):
Music, Flip-Flops, Jim Rogers, Robert Reich
– Say one thing and do another…
– Alex has a great site on Jim Rogers
– Looking at the problem backwards…Universites have >$340B in endowments…..how about lowering tuiton to reduce student debt?
Disclosure (“none” means no position):
Frontline once again nails it…
Disclosure (“none” means no position):