Some weekend non-investment entertainment..Carrie Underwood at the PCA’s…..WOW…..
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Holy Cow…..
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Jim Cramer Rally Monkey
t plenty of requests so here it is…Have g
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Ackman who as of the 11/20 filing held over 6.4 million shares has sold out of his Barnes and Noble (BKS) position.
Todays’s filing SEC Link.
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A Reader’s Take on Management
This reader has a great point on Berkowitz and Buffett…
From a Reader…
Kiplinger asks what went wrong at Dodge&Cox. Why did Fairholme (FAIRX) sidestep the mess at AIG (AIG) and some others? Pabrai has discussed Berkowitz as a manager that places great importance on the financials, but also importantly on the management skills.
I sold my AIG in the mid-$30’s because I gradually became aware of Martin Sullivan’s shutting off the credit risk reviews as unimportant to the business while I knew that Greenberg was on top of risks daily. Managers who simply review the #’s missed this change in risk monitoring including Davis even though Davis in particular felt that they had special insights to their companies.
In my view there is no such thing as a “Moat” often touted by value managers because of your market position. Many have taken up the “Moat” banner, i.e. Morningstar with a “Moat” rating.
AIG is a clear example of a company’s management style causing the companies virtual extinction. The only “Moat” a company has vs. competitors is a qualified management and culture. Lose this and the company can lose everything. Investment managers who do not understand this will have markets in which their shallow, numbers only methodology will fail to protect their clients.
Berkowitz and Berkshire’s (BRK.A) Buffet have the learned to distinguish between good and bad management as well as calculate buy and sell valuations.
The Kiplinger question has missed the “management quality” just like 99.98% of investors. We do not teach “How to identify good management?” Most people simply look at the historical financials and assume a new manager’s record will continue in the same direction. NOT NECESSARIALY!!!!
Berkowitz looks more deeply than any other mutual fund manager I know and it shows in his results.
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Marty Whitman Profiled
This is a pretty cool video…
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Here are the GAPP guidelines Sovereign Wealth Funds from 23 nations have agreed to adhere to, called the “Santiago Principles”.
Sovereign Wealth Funds: “Santiago Principles”
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Watch Wal-Mart’s Growth
This is one of the coolest things I have seen. Watch Wal-Mart (WMT) grow.
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Simmons & Co. on China’s Energy Needs
A must read…..there is huge value in energy right now
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Friday’s Links
Berkowitz, Coulter, Oil, Do a Good Deed,
– “Prices are as attractive as I have ever seen“
– Sorry but Ann is funny…
Watch CBS Videos Online
– You must read Gregor
– Help out
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Quote of the day
“There was certainly no pay-to-play involved, because I don’t have no money,”
Roland Burris on his Senate nomination (WSJ Page 1 article)
hmmm…interesting logic. Also, can’t he at least use proper english? Seems like he will fit in well with everyone else in the Senate.
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This is a follow up to previous interviews… View them here and here
We have gone from trying to push them away in Q1, to begging for their money in Q2, to them just ignoring the rest of the world on Q3. Funny how events unfold…
Q3 Highlights:
Monitor Group Research Reveals Sovereign Wealth Funds
Alter Investment Strategies during Worsening Global Financial Crisis, Funds Focus on Joint Ventures and Home Market Investments
Cambridge, Mass. – December 17 – In Q3 of 2008, as the global financial crisis continued to worsen, SWFs sought to limit their exposure to the riskiness of OECD markets. At the same time these funds sought to put more capital to work in their domestic economies which were becoming increasingly strained. These developments are highlighted by Monitor Group, one of the world’s leading advisory and consulting firms in its July-September 2008 quarterly analysis of global SWF investments.
The latest Monitor Group analysis is a quarterly update to its June 2008 report: “Assessing the Risks: The Behaviors of Sovereign Wealth Funds in the Global Economy.” Key findings of the latest analysis include:
§ SWF recent behavior shows a marked shift toward domestic and emerging markets deals. 46 percent of reported deals in Q3 were domestic transactions, the highest percentage since 2003. Also, 54 percent of Q2 and Q3 deals by value ($23 billion out of $42 billion) were in emerging markets, the highest share of total deal value since 2005
§ Investment in OECD countries has declined sharply during 2008, from $37 billion in Q1 to $9 billion in Q2 and $8 billion in Q3. In Q3, North American targets were involved in 7 SWF deals totaling $2.4 billion. In contrast, there were 7 North American deals totaling $23 billion during Q1 2008.
§ Investment in financial sector targets has fallen off significantly since Q1; real estate investment, which spiked up in Q2, also dropped sharply in Q3. Financials comprised $43.4 billion of deal value in Q1, compared to $4 billion each in Q2 and Q3. Real Estate deals were $3.2 billion in Q3 (16 percent of the total), compared to $13.7 billion (52 percent) in Q2 2008.
§ SWFs from the MENA region were the most active in Q3, carrying out some 90 percent of the deals by value. Asian SWFs were much less active in Q3 2008 than in previous quarters.
§ In Q3, funds in the Monitor SWF Transaction Database executed 46 deals totaling $15.4 billion. This is a decline from $58.3 billion in Q1, and $26.5 billion in Q2, although the total number of deals per quarter was similar in all three quarters.
I spoke to Drosten Fisher today, a principal with the international strategy consultancy Monitor Group. His focus is serving government and commercial clients in the areas of economic competitiveness, national security and international finance. A Middle East specialist, he speaks Arabic and has lived and worked in the region. He is a co-author of a recent Monitor report into sovereign wealth fund investment and is a regular speaker and commentator on Middle Eastern investment, politics and business. Educated at Oxford, LSE, and Georgetown, Drosten is a member of the Arab Bankers Association of North America.
He feels that SWF’s are going to be very selective going forward, especially in the financial services area when investing. Domestic pressures, both from the fall of oil and the falling trades surpluses are forcing SWF’s to focus internally in their investment choices. This paradigm does not show any reversal until the global economy, especially the US (#1 trade partner) improves. Further, continued weakness in oil prices will depress foreign investment from SWF’s indefinitely.
Here is the Full Report:
Monitor Group SWF Q3 Report
Like I said repeatedly, I don’t think Kuwait thought their decision to cancel the Dow Chemical (DOW) deal all the way through and are only now beginning to recognize the damage they have done to themselves.
MP Jamaan Al-Harbash on Tuesday asked his colleagues to conduct a thorough investigation on the Dow Chemical project, especially after the company announced its plan to take legal action against the state-owned Kuwaiti company which, sources say, might be asked to pay a fine of $2.5 billion for pulling out of the deal. Al-Harbash also urged the MPs to look into allegations that some people have earned commissions amounting to $750 million from the deal, conflict of interests, and unfair penalty clause. He also stressed the importance of determining the actual reason behind the decision of the Supreme Petroleum Council (SPC) to sign the deal only to withdraw from it later.
Proposing the formation of an investigative committee to look into the alleged violations, Al-Harbash stated “we have to find the truth to take the right decision on the issue. We must identify the people behind the violations and hold them liable for their acts as Kuwait has now become the laughing stock of the whole world due to this deal.”
No kidding…..
As for proof Kuwait still does not get it, Reuter reported yesterday,
“The state of Kuwait has undertaken all necessary measures to counter the case Dow Chemical is pursuing against KPC for not concluding a deal by Petrochemicals Industries Co with Dow,” al-Watan quoted Commerce & Industry Minister Ahmad Baqer as saying.
Baqer did not elaborate.
Several Kuwaiti officials have told Reuters that under the agreement Dow would need a court ruling proving that Kuwait had violated the deal to qualify for a break fee.
Dow is not suing for a “breakup fee” but for damages due to breach of contract as CEO Andrew Liveris stated several times over the last two days. The two are very different things. Dow only needs to prove monetary damages due to the Kuwait action (will be easy enough) to be awarded a settlement. Although I think the real reason for the suit is to force the deal.
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Sears Holdings Surprises $$
Given what is happening in the retail universe right now, this is an outstanding report from Sears (SHLD).
HOFFMAN ESTATES, Ill., Jan. 8 /PRNewswire-FirstCall/ — Sears Holdings Corporation (the “Company”, “we”, “us”, or “our”) (Nasdaq: SHLD) today announced domestic comparable store sales for the five-week (“December”), quarter-to-date (“QTD”) and year-to-date (“YTD”) periods ended January 3, 2009 for its Kmart and Sears stores as follows:
Kmart’s December comparable store sales benefited from a year over year increase in sales made through our layaway program. Sears Domestic December comparable store sales reflect reduced sales across most hardlines and apparel categories. We believe that comparable store sales were affected by unfavorable economic conditions, including the weak housing market and consumer credit issues.
Gross margin rates for the quarter-to-date period improved slightly from last year as higher margin rates at Kmart were somewhat offset by lower margin rates at Sears Domestic. We currently expect that net income for the quarter ending January 31, 2009 will be between $300 million and
$380 million, or between $2.44 and $3.09 per fully diluted share. Our expectation of fourth quarter net income and earnings per share excludes the potential impact, if any, related to store closings, restructuring activities including severance, mark-to-market gains and losses on hedge transactions executed by Sears Canada and impairment of goodwill and other intangible assets as prescribed in Statement of Financial Accounting Standards No. 142. In the fourth quarter of the prior year, the Company reported net income of $426 million, or $3.17 per fully diluted share.For the full year ending January 31, 2009, the Company expects net income to be between $163 million and $243 million, or between $1.27 and $1.90 per fully diluted share, which also excludes the potential fourth quarter impact, if any, related to store closings, restructuring activities including severance, mark-to-market gains and losses on hedge transactions executed by Sears Canada and impairment of goodwill and other intangible assets as prescribed in Statement of Financial Accounting Standards No. 142.
During the month of December 2008, we repaid all borrowings under our revolving credit facility as working capital needs declined as expected (although we do expect to borrow under the revolver again in January 2009 due to the seasonal increase in working capital). We currently expect to end the fiscal year with approximately $1.3 billion in cash and cash equivalents (of which approximately $600 million will be domestic and $740 million will be Sears Canada). The expected cash and cash equivalents balance indicated does not give effect to any share repurchase activity after January 7, 2009. In addition, we currently expect to end the fiscal
year with approximately $8.5 billion of domestic inventory, down from $9.1 billion last year, despite the addition of approximately $135 million of Kmart footwear inventory. Kmart began operating its footwear department on January 1, 2009. Prior to that time, Kmart’s footwear department was operated as a licensed business by another party.Also during the fourth quarter, we repurchased 2.9 million common shares at a total cost of $119 million (or $40.82 per share) under our share repurchase program. As of January 7, 2009 we had remaining authorization to repurchase $506 million of common shares under the previously approved programs.
It is looking like Sears’ decision to be first in launching their layaway program was a real winner with consumers and a coup for the company. Also, how happy are shareholder there is still $1.3 billion in the bank and the debt repaid? With the destruction of balance sheets happening all over retail, Sears’ is holding strong, very strong….
This is really good news folks…really good…
Like the auto retailers, those who end up standing tall after this carnage will be the winners and emerge stronger. Sears is levered heavily to the home. With Linen’s N Things “sleeping with the fishes”, that leaves one less place for folks to buy those items. Given that many of them are in the same malls as Sears, that means by default these shoppers will wander in Sears for these items.
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Oil just may be the only real value out there right now especially when you consider what is happening to housing and the economy..
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Thursday’s Links
2009, Tobacco, Coal, Dollar
– Bad news
– In the cross hairs
– A dollar ETF
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