Category: Articles

Harley Davidson’s Ziemer to Retire: "Car Czar" Next?

Post author By ToddSullivan
Post date December 16, 2008
2 Comments on Harley Davidson’s Ziemer to Retire: "Car Czar" Next?

Not as crazy as it may sound….

Harley-Davidson, Inc. (NYSE:HOG) announced today that President and Chief Executive Officer James L. Ziemer has informed the Board of Directors that he intends to retire in 2009, capping a 40-year career with the Company. The Board of Directors has formed a search committee to review both internal and external candidates. Ziemer will remain in his current role until a new CEO is in place.

“Jim Ziemer has dedicated his entire professional career to Harley-Davidson and has been a great advocate for the Company,” commented Board Chairman Jeffrey L. Bleustein. “All of us who have worked with Jim throughout the years have benefited from his leadership, his selfless commitment to the Company and his contributions to making the brand one of the most admired and successful brands in the world. As an avid and lifelong motorcyclist, Jim also exemplifies the great legacy and spirit of Harley-Davidson.”

Ziemer is a native Milwaukeean who grew up in the neighborhood next to Harley-Davidson’s original Milwaukee factory location on the city’s west side. He started with the Company in 1969 as a freight elevator operator while attending the University of Wisconsin-Milwaukee. Upon earning his undergraduate degree in accounting at UWM, he joined the accounting department where he spent the majority of his career. He was named the Company’s Chief Financial Officer in 1990. In 2005, he was named President and Chief Executive Officer of Harley-Davidson, Inc. Ziemer also serves on the Board of Directors of Textron, Inc.

“Working at Harley-Davidson has been an honor and privilege and has fulfilled a life-long dream for me,” said Ziemer. “I am extremely proud of what our outstanding team of employees and dealers has accomplished together. There is always new and exciting work to be done on Harley-Davidson’s epic journey, and I have great confidence that the powerful combination of our employees, customers and dealers around the world and their passion will continue to fuel the strength of the brand. I am delighted to be able to spend more time with my family and am enthusiastic about the Company’s tremendous opportunities and its prospects for success in the years to come.”

Why maybe the “Car Czar”? Unlike the US auto makers like Ford (F) and GM (GM), Harley Davidson has had a very successful labor union relationship. That is not to say it has been all roses, union relationships never are, but it is to say that both side have profited handsomely from the arrangement, unlike the auto manufacturers.

That fact alone makes Ziemer the perfect person for the post. He will have little patience for management that turns out inferior products (and way too many lines of them) and the same intolerance for labor unions that want to enrich membership at the expense of shareholders and the company’s viability.

Because of his success at Harley Davidson, either side would be hard pressed to object to his appointment unlike GE’s (GE) former CEO Jack Welch, who’s name has been tossed in the ring but would face strong union objections because of his stance on them. Personally I think Welch would be great but realities just will not allow it.

Disclosure (“none” means no position):Long HOG, GE, none
Visit the ValuePlays Bookstore for Great Investing Books

Tags davidson

Articles

Selling Altria…..It’s Been Great..

Post author By ToddSullivan
Post date December 16, 2008
3 Comments on Selling Altria…..It’s Been Great..

No, it has nothing to do with any “moral objection” to selling cigarettes. I fear the legal landscape is bout to change in a very negative way..

First, Altria said yesterday:

In a 5-4 decision, the Supreme Court today ruled that a lawsuit involving “lights” cigarettes brought under the Maine Unfair Trade Practices Act was not barred by federal law.

“While we had hoped for a dismissal based upon federal preemption, it is important to note that the Supreme Court made no finding of liability. We continue to view these cases as manageable, and the company will assert many of the strong defenses used successfully in the past to defend against this very type of case,” said Murray Garnick, Altria Client Services senior vice president and associate general counsel, speaking on behalf of Philip Morris USA.

The Court said that the plaintiffs “still must prove that [the companies’] use of ‘lights’ and ‘lowered tar’ descriptors in fact violated the state deceptive practices statute.”

Today’s decision came in Altria Group, Inc. v. Good.

The decision is a horrible one in that it now opens all businesses to suits that would have ordinarily been funneled to Federal Court to State Court where we all know nothing good can happen. At a time when the US is fighting to house its share of international business, increasing litigation costs is not the way to go. But, that is for another post.

Altria. It has been a wonderful investment bought back in 2000 for a now adjusted $4 a share it has produced shares of Kraft (KFT), sold, and Phillip Morris International (PM), still held. It has also produce thousands of dollars in dividends over the years. I will hold PMI as it yields 5%, has great growth prospects and little ligation risk.

But, I fear things are going to take a turn for the worse here domestically and with already owning shares of the international tobacco operations, it is time to exit. Will the upcoming purchase is UST (UST) help earnings? Yes. Will it offset the upcoming deluge of lawsuits against the company? Not so sure. Having Tom Daschle at HHS is also a bad omen. Whatever grand plans he has for universal health care will undoubtedly be funded in part on the back of cigarette companies through litigation or its customers through oppressive taxes.

The irony of the tax argument is that it is a “negative” not “progressive” tax. We know the less education a person has, the more likely they are to smoke. We also know that those with less education tend to be lower income earners. It this case, raising taxes to these addicts decreases their disposable income to fund grand ideas of health care for all. Nice…”soak the poor”

This is also a result of better opportunities for the funds. Do I think the price of Altria (MO) will double in the next 12-18 months? No. I have a high degree of confidence the price of oil will though. I am buying that through the DBO (DBO) and DXO (DXO) ETF’s.

Disclosure (“none” means no position):Long PM, DBO, DXO, none
Visit the ValuePlays Bookstore for Great Investing Books

Tags MO, PM

Articles

Borders To Try Alternate Model

Post author By ToddSullivan
Post date December 16, 2008
3 Comments on Borders To Try Alternate Model

This does make sense…

The WSJ Reports

Borders Group Inc. has agreed to accept books from HarperStudio on a nonreturnable basis, departing from a decades-old publishing tradition.

Under the terms of the deal, the nation’s second-largest bookstore chain by revenue will get a deeper discount on initial orders of books published by the new imprint of News Corp.’s HarperCollins Publishers — 58% to 63% off the cover price, instead of the usual 48%. In exchange, Borders won’t return any unsold books to HarperStudio, instead probably discounting them in the store. (News Corp. owns The Wall Street Journal.)

“The idea of taking inventory and then shipping it back isn’t a good idea for anybody. We’re open to all publishers to discuss alternatives to the traditional return model,” said Robert Gruen, executive vice president of merchandising and marketing at Borders, of Ann Arbor, Mich.

Under standard industry practice dating to the 1930s, retailers can send back whatever new titles don’t sell for full credit, with publishers paying for shipping. This has created a mass of titles that are trucked from one warehouse to another until they eventually are sent back to the bookstore chains, where they are sold for a significant discount to the list price.

People in the industry estimate that between 30% and 40% of all consumer adult titles are eventually returned to their publishers.

“Returns have never made sense in our business, and with the recent economic downturn, publishers and booksellers are more open than before to experimenting with models that might decrease waste and increase profit,” said Robert Miller, president and publisher of HarperStudio. When he started the imprint earlier this year, Mr. Miller said he intended to shake up traditional book-publishing economics.

Pro’s are that the new arrangement instantly increases margins or, should Borders elect not to go that route, they are now able to become more competitive on prices to the consumer without pressuring current ones. The key to making it work is inventory. It now become more important than ever to maintain proper levels to maximize sales of new titles at higher prices.

Borders this year has shown that it is able to do that and having control of the website from Amazon (AMZN) does give them a far more profitable clearing house for unsold titles.

This is a very good move, what needs to happen next is clarity on the “alternative financing arrangement with Bill Ackman and Pershing.

Disclosure (“none” means no position):
Visit the ValuePlays Bookstore for Great Investing Books

Tags ackman, bgp

Articles

Tuesday’s Links

Post author By ToddSullivan
Post date December 16, 2008

Borders, Geo-politics, NetFlix, The dollar,

– Top Retailing site

– Job may not be biggest threat

– Cheap entertainment

– Here comes the fall

Disclosure (“none” means no position):
Visit the ValuePlays Bookstore for Great Investing Books

Tags bgp

Articles

Fitch Watches 60 Minutes, Downgrades Alt-A Mortgages: Pathetic $$

Post author By ToddSullivan
Post date December 15, 2008
3 Comments on Fitch Watches 60 Minutes, Downgrades Alt-A Mortgages: Pathetic $$

As if the ratings agencies did not need any more bad press. This action could not have been more ill-timed…

The day after 60 minutes aired this piece of the coming Alt-A disaster,

Watch CBS Videos Online

Ficth took the following action:
From Housing Wire

Citing “a rapid deterioration of U.S. Alt-A RMBS performance,” Fitch Ratings again took the hatchet to its previous assumptions for Alt-A mortgages on Monday morning, revising its surveillance methodology and updating loss projections for all U.S. Alt-A RMBS.

Fitch said it now expects losses on all Alt-A collateral to far exceed the estimates of its ‘moderate stress’ scenario in its late ratings update earlier this year. “Market developments, ongoing home-price declines and loan performance trends in the Alt-A sector over the prior six months have effectively eliminated the possibility of this stress scenario,” said Fitch in a statement.

The rating agency said it now expects average cumulative losses om 2005, 2006 and 2007 vintage Alt-A transactions to hit 2.72, 6.78 and 9.58 percent, respectively, up dramatically from expectations at the agency earlier this year.

Fitch cited a “rapid increase in 60+ day delinquencies experienced over the past six months,” despite servicers’ collective efforts to hold off on actual foreclosure sales — likely implying that a halt to foreclosures is having little effect in resolving borrower delinquencies. Between May and October 2008, Fitch said that 60+ day delinquencies for the 2007 vintage increased from 8.80 percent to 14.65 percent; 2006 and 2005 vintages also experienced steep increases rising from 10.30 percent to 14.24 percent and 6.57 percent to 8.79 percent, respectively.

While delinquencies are continuing to pile up, cumulative losses are not — at least, not yet.. “The small increase in cumulative losses relative to the rising level of 60+ day delinquencies reflects, in part, the lengthening foreclosure/liquidation timeline being experienced throughout all vintages,” analysts at the agency wrote.

All of which means that it’s time to get ready for a whole new slew of downgrades to Alt-A in the coming few weeks. Fitch warned in its note Monday that it expects that it will downgrade many senior bonds to below investment grade — just in time for fourth quarter earnings.

Now here is the really sad part, in October I reported the same information from Tilson from the Value Investing Congress. This information was first presented by Tilson in the spring of 2008 (I believe, it may have been earlier).

So, where has Fitch been? Why are they only now taking action on it? Were they hoping and praying for a miracle to avoid more AAA ratings of their’s and their compatriots at S&P and Moody’s (MDO) turning into the garbage most folks know them to be?

It is really sad this stuff is still going on..

Although, if you are looking for that summer home, 2009 and 2010 and i have said here several times will be prime picking for them..happy hunting..

Disclosure (“none” means no position):none
Visit the ValuePlays Bookstore for Great Investing Books

Articles

Mike Jackson and Wilbur Ross on Senate Vote

Post author By ToddSullivan
Post date December 15, 2008
2 Comments on Mike Jackson and Wilbur Ross on Senate Vote

I’m as sick as the next guy from the constant chatter about the auto bailout for Ford (F) and GM (GM). But, when Jackson ans Ross have something to say, I listen.

AutoNation CEO Mike Jackson

Wilbur Ross

Disclosure (“none” means no position):Long AN, none
Visit the ValuePlays Bookstore for Great Investing Books

Tags AN

Articles

Bernie Madoff in His Own Words (video)

Post author By ToddSullivan
Post date December 15, 2008

Given current events, this is………. “ironic”?

Disclosure (“none” means no position):
Visit the ValuePlays Bookstore for Great Investing Books

Articles

Rogers & Roubini: The Gloomy Boys

Post author By ToddSullivan
Post date December 15, 2008

Roubini:

On a side note, it would be easier to date these clips is Roubini would actually wear anything other than a light blue shirt. At least he “86’d” the blue tie that usually goes with it.

Rogers:

Disclosure (“none” means no position):
Visit the ValuePlays Bookstore for Great Investing Books

Articles

60 Minutes Finally Catches Up With Mortgage Mess

Post author By ToddSullivan
Post date December 15, 2008

Ok, Tilson has been saying this same thing for a year now. Nice that the MSM has finally caught on.

Watch CBS Videos Online

Disclosure (“none” means no position):
Visit the ValuePlays Bookstore for Great Investing Books

Articles

Monday’s Links

Post author By ToddSullivan
Post date December 15, 2008

Profile, Madoff, Banks. Madoff

– Market Folly has a nice post on three traders

– The list of “victims”

– Bankrupt

– OK

Disclosure (“none” means no position):
Visit the ValuePlays Bookstore for Great Investing Books

Articles

Edward Lampert’s Thoughts on Kmart Circa 2003 $$

Post author By ToddSullivan
Post date December 14, 2008
2 Comments on Edward Lampert’s Thoughts on Kmart Circa 2003 $$

This Scribd thing is pretty cool. digging for information take a little time but there is some great stuff there.

Lampert K-Mart Bankruptcy

Publish at Scribd or explore others:

Disclosure (“none” means no position):
Visit the ValuePlays Bookstore for Great Investing Books

Articles

"Twas the Nightmare on Wall St", A Compilation of Articles

Post author By ToddSullivan
Post date December 14, 2008

304 pages of articles on the crisis.

Nightmare on Wall Street

Publish at Scribd or explore others: Economics Business financial crisis subprime mortgages

Disclosure (“none” means no position):
Visit the ValuePlays Bookstore for Great Investing Books

Articles

Whitney Tilson Decribes Mortgage Fiasco (video) $$

Post author By ToddSullivan
Post date December 14, 2008

Whitney really does a great job here explaining the what’s and the why’s as to how we got to where we are today.

Video:

It should be noted here that Tilson’s T2 fund has begun buying as he said “some of the most toxic mortgage assets a out there”. Nothing will help turn things around faster than private money coming into this market. Now if we can just get the gov’t out of the way.

Disclosure (“none” means no position):
Visit the ValuePlays Bookstore for Great Investing Books

Articles

Berkowitz Named to AmeriCedit Board

Post author By ToddSullivan
Post date December 14, 2008

Berkowitz and Leucadia (LUK) hold almost 45% of the outstanding shares.

-AMERICREDIT CORP. (NYSE:ACF) today announced the appointment of Bruce R. Berkowitz to its board of directors. AmeriCredit’s board now includes ten directors.

Mr. Berkowitz is the President of Fairholme Funds, Inc., and is also a member of its board of directors. He has more than 24 years of investment management experience and is the Managing Member and Chief Investment Officer of Fairholme Capital Management, L.L.C. Mr. Berkowitz also serves as a director and member of the audit committee of TAL International and White Mountains Insurance Group.

“We are pleased to add such a well-respected and experienced professional to our board of directors. I am certain that our company and our shareholders will benefit greatly from his knowledge and insight,” said AmeriCredit’s Chairman Clifton Morris Jr.

Additionally, in consummation of the transaction announced on Nov. 24, 2008, between AmeriCredit and Fairholme Funds, Inc., (FAIRX) AmeriCredit has issued approximately 15.1 million shares of its common stock to Fairholme Funds, Inc., valued at $6.02 per share, in exchange for $108 million of par value of AmeriCredit’s 8.50% Senior Notes due 2015.

FULL RELEASE

Disclosure (“none” means no position):None
Visit the ValuePlays Bookstore for Great Investing Books