Tom Russo, an excellent Buffett Style investor and a hell of a nice guy talks about last year..
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Quite possibly the greatest political speech ever given….
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Nancy? there only 300 million Americans…
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Russia, Ethanol, CNBC, Housing
– Do not ignore them
– I stopped watching over this crap….
– Another dire view
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How fast “hope” turned to “fear”…….
From the Washington Post
“A failure to act, and act now, will turn crisis into a catastrophe.”
— President Obama, Feb. 4.
Catastrophe, mind you. So much for the president who in his inaugural address two weeks earlier declared “we have chosen hope over fear.” Until, that is, you need fear to pass a bill.
And so much for the promise to banish the money changers and influence peddlers from the temple. An ostentatious executive order banning lobbyists was immediately followed by the nomination of at least a dozen current or former lobbyists to high position. Followed by a Treasury secretary who allegedly couldn’t understand the payroll tax provisions in his 1040. Followed by Tom Daschle, who had to fall on his sword according to the new Washington rule that no Cabinet can have more than one tax delinquent.
The Daschle affair was more serious because his offense involved more than taxes. As Michael Kinsley once observed, in Washington the real scandal isn’t what’s illegal, but what’s legal. Not paying taxes is one thing. But what made this case intolerable was the perfectly legal dealings that amassed Daschle $5.2 million in just two years.
He’d been getting $1 million per year from a law firm. But he’s not a lawyer, nor a registered lobbyist. You don’t get paid this kind of money to instruct partners on the Senate markup process. You get it for picking up the phone and peddling influence.
At least Tim Geithner, the tax-challenged Treasury secretary, had been working for years as a humble international civil servant earning non-stratospheric wages. Daschle, who had made another cool million a year (plus chauffeur and Caddy) for unspecified services to a pal’s private equity firm, represented everything Obama said he’d come to Washington to upend.
And yet more damaging to Obama’s image than all the hypocrisies in the appointment process is his signature bill: the stimulus package. He inexplicably delegated the writing to Nancy Pelosi and the barons of the House. The product, which inevitably carries Obama’s name, was not just bad, not just flawed, but a legislative abomination.
It’s not just pages and pages of special-interest tax breaks, giveaways and protections, one of which would set off a ruinous Smoot-Hawley trade war. It’s not just the waste, such as the $88.6 million for new construction for Milwaukee Public Schools, which, reports the Milwaukee Journal Sentinel, have shrinking enrollment, 15 vacant schools and, quite logically, no plans for new construction.
It’s the essential fraud of rushing through a bill in which the normal rules (committee hearings, finding revenue to pay for the programs) are suspended on the grounds that a national emergency requires an immediate job-creating stimulus — and then throwing into it hundreds of billions that have nothing to do with stimulus, that Congress’s own budget office says won’t be spent until 2011 and beyond, and that are little more than the back-scratching, special-interest, lobby-driven parochialism that Obama came to Washington to abolish. He said.
Not just to abolish but to create something new — a new politics where the moneyed pork-barreling and corrupt logrolling of the past would give way to a bottom-up, grass-roots participatory democracy. That is what made Obama so dazzling and new. Turns out the “fierce urgency of now” includes $150 million for livestock (and honeybee and farm-raised fish) insurance.
The Age of Obama begins with perhaps the greatest frenzy of old-politics influence peddling ever seen in Washington. By the time the stimulus bill reached the Senate, reports the Wall Street Journal, pharmaceutical and high-tech companies were lobbying furiously for a new plan to repatriate overseas profits that would yield major tax savings. California wine growers and Florida citrus producers were fighting to change a single phrase in one provision. Substituting “planted” for “ready to market” would mean a windfall garnered from a new “bonus depreciation” incentive.
After Obama’s miraculous 2008 presidential campaign, it was clear that at some point the magical mystery tour would have to end. The nation would rub its eyes and begin to emerge from its reverie. The hallucinatory Obama would give way to the mere mortal. The great ethical transformations promised would be seen as a fairy tale that all presidents tell — and that this president told better than anyone.
I thought the awakening would take six months. It took two and a half weeks.
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Talk about lasting brands…..
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I have said for about 6 months now and still believe there is a mother of a short squeeze coming in Sears Holdings (SHLD)..
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Justa day after Bill Gates, who holds 12.2% of the stock filed a 13D, Sears Holdings Chairman (SHLD) Eddie Lampert added to is 46% stake.
Lampert disclosed today he added 28k shares of AutoNation (AN) on 2/2.
Seems to be a race to own it..
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Bruce Berkowitz’s Fairholme Fund (FAIRX) just released their annual numbers.
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This is cool….
From Flowing Data
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Sorry, did not read close enough last night. AutoNation (AN) shares are up 10% – 15% today and foks have been emailing me asking why. This little nuggett in Bill Gates 13D filed last night gives a clue.
From time to time the Reporting Persons have engaged and expect in the future to engage in discussions with management of the Issuer concerning the Reporting Persons’ investments in the Issuer and the business and strategic direction of the Issuer. The Reporting Persons may also engage in discussions with other shareholders of the Issuer to discuss matters of mutual interest, which may include discussions regarding the strategic direction of the Issuer and opportunities to enhance shareholder value.
The Reporting Persons intend to continuously review their investment in the Issuer and reserve the right to change their plans and intentions at any time, as they deem appropriate, and to take any and all actions that they may deem appropriate to maximize the value of their investment. The Reporting Persons may at any time and from time to time, in privately negotiated transactions or otherwise, acquire additional securities of the Issuer and/or dispose of all or a portion of the securities of the Issuer that the Reporting Persons now own or may hereafter acquire. The Reporting Persons may formulate other plans or proposals regarding the Issuer or its securities to the extent deemed advisable by the Reporting Persons in light of their general investment policies, market conditions, subsequent developments affecting the Issuer (including but not limited to the attitude of the Issuer’s board of directors, management and other shareholders) and the general business and future prospects of the Issuer.
Except as set forth herein, the Reporting Persons have no current intention, plan or proposal with respect to: (a) the acquisition by any person of additional securities of the Issuer, or the disposition of securities of the Issuer; (b) an extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving the Issuer or any of its subsidiaries; (c) a sale or transfer of a material amount of assets of the Issuer or any of its subsidiaries; (d) any change in the present board of directors or management of the Issuer, including any plans or proposals to change the number or term of directors or to fill any existing vacancies on the board; (e) any material change in the present capitalization or dividend policy of the Issuer; (f) any other material change in the Issuer’s business or corporate structure, including but not limited to, if the Issuer is a registered closed-end investment company, any plans or proposals to make any changes in its investment policy for which a vote is required by section 13 of the Investment Company Act of 1940; (g) changes in the Issuer’s charter, bylaws or instruments corresponding thereto or other actions which may impede the acquisition of control of the Issuer by any person; (h) causing a class of securities of the Issuer to be delisted from a national securities exchange or to cease to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association; (i) a class of equity securities of the Issuer becoming eligible for termination of registration pursuant to section 12(g)(4) of the Securities Exchange Act of 1934; or (j) any action similar to any of those enumerated above.
So now we have both Gates and Sears Holdings (SHLD) Eddie Lampert in discussions with management………hmmmmmmm
Disclosure (“none” means no position):Long AN, SHLD
Not that anyone has notice but Archer Daniels Midland (ADM) has been adding assets at quit the rate lately.
First:
Archer Daniels Midland Co (ADM.N) was expected to buy ownership interest in three grain elevators from its bankrupt partner, Pilgrim’s Pride Corp (PGPDQ.PK), U.S. Midwest grain traders said on Monday.
Pilgrim’s Pride is seeking court approval of the sale, which it expects to generate $5 million, according to papers filed Jan. 16 in U.S. Bankruptcy Court in Fort Worth, Texas.
Two elevators are in Brookston and Parr in northwest Indiana, according to news releases issued when the joint venture was created in 2006. The third elevator is in Hoopeston, Illinois, just across the Indiana border.
ADM, based in Decatur, Illinois, declined to provide additional details. ADM operates more than 350 grain elevators and earned $1.8 billion last year for storing, transporting and processing grain and oilseeds.
ADM has the right of first refusal in the deal.
Second:
Food processor Archer Daniels Midland Co. said Friday it agreed to acquire Schokinag-Schokolade-Industrie Herrmann GmbH & Co., a German chocolate and cocoa powder producer.
Financial terms were undisclosed.
ADM said the acquisition will allow it to strengthen its cocoa and chocolate supplier business in Europe.
Schokinag, based in Mannheim, Germany, makes chocolate and other cocoa products in Mannheim and in Manage, Belgium.
Third:
Archer Daniels Midland Co. (ADM) is close to taking control of a Brazilian agricultural cooperative Cooagri, reported local financial newspaper Valor Economico Friday. ADM is expected initially to lease Cooagri’s 18 units in Mato Grosso do Sul state, the newspaper reported. The deal is expected to be signed on Feb. 13, said Valor.
ADM sees the potential to hike Cooagri’s corn and soy storage capacity by 50% from its current one million tons, a person close to the deal told Dow Jones Newswires.Brazil is the world’s No.2 soy producer after the U.S.
Now:
VeraSun Energy Corporation (NYSE:VSE) (Brookings, South Dakota), the nation’s second largest ethanol producer, will auction off seven fuel-ethanol plants representing 640 million gallons of annual company that the company acquired when it merged with U.S. BioEnergy. According to court filings, the auction will take place between March 16 and March 31.
For details, view the entire article by subscribing to Industrial Info’s Premium Industry News at http://www.industrialinfo.com/showNews.jsp?newsitemID=142998, or browse other breaking industrial news stories at www.industrialinfo.com.
Industrial Info Resources (IIR) is a marketing information service specializing in industrial process, energy and financial related markets with products and services ranging from industry news, analytics, forecasting, plant and project databases, as well as multimedia services. For more information send inquiries to alternativefuelsgroup@industrialinfo.com or visit us at www.industrialinfo.com.
Does anyone want to place any bets that ADM will be a bidder/buyer of some of these fire-sale assets? Other than privately held Pope and Cargill, there are no other ethanol producers that have the funds to make a bid for these plants and with oil prices at $40, the chances of an oil major bidding to diversify earnings is low..very low…
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This did get me to thinking…….
There were many similarities, 1987 vs. 2008. To understand the dynamics will lead to understanding how a quick recovery is possible this time around.
Both 1987 and 2008 had a period of debt accumulation to enhance investment returns with leverage. Then it was a series of LBO’s. This time the debt was elsewhere but the main point is that part of the market was over-levered.
In 1987 the trigger for the crash was one Dan Rostenkowski, Dem-IL, Chairman of the House Ways and Means Committee, who angered that LBO’s were causing labor reductions to produce gains for the financially privileged introduced a retroactive tax law which would be in effect as of Jan 1 of 1987. This law if enacted would make all the year’s LBO’s uneconomical. It was changing the tax laws after much had occurred. He did the same in 1986 to completely rewrite the tax law as it pertained to tax shelters thus making them no longer as attractive and thus helped kick the S&L’s into a swan dive that resulted in a major bail out because the S&L’s had already closed on deals which now resulted in immediate losses.
The 1987 proposed legislation came out of committee late on Oct 13th, the market began to slide. The slide continued the 14th&15th (Thurs&Fri) but many were as yet unawares of the proposed law. They found out over the weekend as the news spread and a 10 sigma event began in Europe and hit us on Oct 19th with the help of “Portfolio Insurance” which was run by computers, never designed or tested for a massive sell off and in fact multiplied the sell off in the subsequent crash. Only one keen observer, Robert Bartley of the WSJ wrote about this at the time. The rest of the word did not understand what truly happened. A single individual had attempted to change the investment rules over night. Rostenkowski let the legislation die quietly.
The crash of 2008, i.e. what happened in Oct.&Nov., was also the work of one individual changing the playing field in a market already fragile. This was one SEC Chairperson Chris Cox who had eliminated the short sale rule saying he did not have the capacity to monitor the market in June 2007, then decided to ban the only defensive tool HF’s had to limit portfolio volatility w/levered positions of 20:1. He banned short selling. Now the HF’s were forced to sell levered positions outright, banks called margin for fear of losses and the market hit a vacuum. Cox changed the playing field and the participants had to adjust as quickly as possible. Just as in 1987.
Most will not see it this way. Most will point to the build up of debt in HF’s, sub-prime lending, the extraordinary period of Greenspan’s cheap money, the mistakes by certain regulators, the avarice of certain politicians and the mortgage agencies, but this was not an economic collapse. This was an economic slowdown and had begun at the end of 2005 when auto and home sales had peaked.
We were in an economic slow down with financial institutions at risk and we were in an orderly correction when Cox changed the rules and the wild collapse shattered investor confidence.
What we have today is shattered trust. No one knows what the rules are at the moment. It is not that liquidity is not available. It is that liquidity is not moving about the system. People with reasonable credit scores cannot buy cars or houses at the moment because of the fear of the unknown that was inspired by Cox’s single thoughtless decision.
Yes, jobs are being lost not because individuals are over levered, but more because of the fear of lending the copious funds that are available. Ah yes. There is also the issue of the Mark-to-Market rule that was never expected to see an overnight change in value as we have seen. Cox should have suspended this but did not. Mark-to-Market was meant to be a helpful investor tool in an orderly declining market place, something to keep the financial institutions honest. When Mark-to-Market valuations are registering default levels for perfectly healthy securities then you know the rule should be modified.
Much of the value destruction today is the result of accounting rules designed for a functioning market pricing mechanism meeting a frozen market pricing mechanism because one person changed the playing field.
This is not a Depression and does not even have to be a Recession. It is solvable. The rules have to be modified to produce fair valuations and to get pricing mechanisms working again. The head of the SEC can do this. It is quite simple.
Trust is what is missing. We need to revive it.
“Davidson” is the pseudonym for a reader who must remain anonymous…..
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Finally got around to finishing Howard Lindzon’s book, it was good.
I will always read a book from someone who makes me laugh and Howard does just that, whether it be on twitter or on his blog. When you add in the fact he actually knows what the hell he is talking about, well that is just a kicker. For a look at Howards current investments, go here.
Lindzon practices an investment philosophy called “trend following”. The book focuses on, as it says “Tends, find them, ride them, get off”. The beauty of the book is that it is produced with real life examples and failures. This is not one of those academic exercises that looks in the rear view mirror and adopts a philosophy to fit the evidence (or lack thereof). The book is a walk through his varied investments, how he noticed the trend, why and when he bought, and why he sold.
He does not bog the reader down with minutia and chart patters. Rather, he walks you through the process of going through your everyday life but with your eyes open for opportunity. What are your neighbors buying? What are the things at school all the kids must have? What items in your own life are becoming indispensable? Investment ideas abound everyday, people just far too often do not recognize what is become a trend and miss an oportunity.
Unlike some books that simply brag of one success after another and omit mistakes, Lindzon gives the reader some of his errors and uses them as a learning experience to illustrate how moving away from what you know and not doing proper investigation can cost you. Some of the best lessons in the book are the mistakes and what was learned from them.
Lindzon preaches that investors find a style that fits them and that they avoid trying to be something they are not. He does not claim this is the only way to make money in the market. It is for him though. What he does say is that not being yourself and by not picking a style that suits the reader they are surely headed for disappointment.
Chapter 10 bears particularly close readin It is about using social leverage to get ideas and learn. He advises turning off CNBC (read about his recent boycott of it here) and instead read blogs and connect with people. He shows the reader how to find bloggers worth reading, how to connect with other investors via facebook, twitter and now stocktwits and how to use them to become better investor (this chapter ought to be expanded for the next book Howard).
Lindzon claims (and I agree) that by turning off the the TV and saving yourself from the apoplectic 8 hours of benign drivel over the todays economic numbers that will be meaningless tomorrow or next week, connect with those who have ideas, who are leaders in their field and who have been successes doing what they do. Social networking allows you to do that. Besides, you can read the days economic numbers in a minute, you do not need them rehashed all day to understand them. Remember, it is the job of those on TV to keep you near panic so you tune in, it clouds all they do.
Buy the book here:
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Berman, Cockroaches, Kindle, Oil
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– Just now getting this?
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