ValuePlays – Page 596 – A value investing site launched in Jan 2007

Ackman Says, "I Got Buyers" and Here They Come

Post author By ToddSullivan
Post date September 12, 2008

So, just a day after Bill Ackman claims CVS’ (CVS) offer for Longs Drugs (LDG) is too low and that he “has other interested parties”, they begin to emerge.

The WSJ Reports:

Walgreens said it would pay $75 a share in cash to buy the California-based Longs, besting CVS’s price of $71.50 per share, also in cash, which was equivalent to about $2.7 billion. Either deal would also include the assumption of about $200 million in debt.

Walgreens CEO Jeffrey Rein said in a letter to Longs’ board of directors that the company would prefer to negotiate with Longs directly but was also prepared to take the offer directly to the company’s shareholders.

Rein also noted in the letter, which Walgreens disclosed in a press release late Friday, that Walgreens had expressed an interest in acquiring Longs earlier for $70 a share but never received due diligence materials from the company.

What annoys me the most is that I was actually going to do the “Ackman Longs Trade” discuss Thursday on Monday, it would have been a nice 4.5% in a day….would have been..

Like I have said here countless times, timing is indeed everything and I missed out on this one.

Disclosure (“none” means no position):
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Einhorn Buys 11% of Helix

Post author By ToddSullivan
Post date September 12, 2008

In a just released SEC filing, David Einhorn, through his Greenlight entities has purchased 11% of Helix Energy Solutions (HLX).

In the filing, Einhorn discloses purchases bringing his ownership to 10.2 million shares through 4 entities.

Here is the recent activity

Who Is Helix?:

Helix Energy Solutions Group, Inc. (Helix) is an international offshore energy company providing reservoir development solutions and other contracting services to the energy market, as well as to other oil and gas properties. Helix operates in the Gulf of Mexico, North Sea, Asia Pacific and Middle East regions. The Contracting Services segment utilizes the vessels and offshore equipment that when applied with the methodologies reduce finding and development (F&D) costs. The Oil and Gas segment is engaged in prospect generation, exploration, development and production activities. On December 11, 2007, the Company’s wholly owned subsidiary Cal Dive (CDI) completed the acquisition of Horizon Offshore, Inc. (Horizon). In July 2007, the Company acquired the remaining 42% interest in Well Ops SEA Pty Ltd. On September 30, 2007, Helix 30% working interest in the Phoenix oilfield, the Boris oilfield and the Little Burn oilfield to Sojitz GOM Deepwater, Inc.

Disclosure (“none” means no position):none
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The Week’s Best at VIN

Post author By ToddSullivan
Post date September 12, 2008

Here are the week’s top at Value Investing News

1. Stock Screen: Warren Buffett Picks

(via www.thediv-net.com)

On BusinessWeek.com, S&P’s Howard Silverblatt has a great screen with the selection criteria that Warren Buffet uses for his portfolio. Stock Screen: Buy ‘Em Like Buffett

2. Stock Analysis: McGraw-Hill Companies Inc (MHP)

(via www.thediv-net.com)

The McGraw-Hill Companies Inc. is a leading information services organization serves worldwide markets in education, business, industry, other professions and government. Linked here is a detailed analysis and commentary.

3. Weekend Reading Links – September 6, 2008

(via www.thediv-net.com)

The articles listed in the reading links contain some of the best dividend and value investing insights found on the web. They were written by various members of the Dividend Investing and Value Network (DIV-Net) over the past week.

4. Investing Carnival #11

(via www.oldschoolvalue.com)

Join Jae Junand the members of Div-Net in this weeks Investing Carnival # 11

5. Five Characteristics of a Great Business

(via www.magicdiligence.com)

Five characteristics to check for to determine if a potential investment is truly a great business.

6. 20 Top High-Dividend Growth Stocks

(via dividendgrowth.blogspot.com)

The typical dividend aristocrat is a mature company with wide moat that has weathered the storms of many boom and bust cycles while continuing to increase dividend payments to shareholders. These companies as well as the dividend champions are the cornerstone to my dividend strategy.

7. The Next Great Company

(via www.dividends4life.com)

There have always been companies that stand head-and-shoulders above their peers and the competition. They are loved by their shareholders, hated by the competition and known by all. Who are these companies and how can I find the next great company? All the great companies have something in common. Let’s look at a few of them:

8. Fannie, Freddie, and Preparing for Black Swans

(via streetcapitalist.com)

A look at the Treasury’s plan for Fannie Mae and Freddie Mac, plus Guy Spier of Aquamarine Capital Management’s guidelines for protecting your portfolio from Black Swans

9. Diageo: Spirits Anyone?

(via barelkarsan.com)

Diageo PLC (public limited company in the UK) is an international producer of premium alcohol based brands, including Smirnoff vodka, Johnnie Walker Scotch whiskies, Captain Morgan rum, Baileys Original Irish Cream liqueur, JeB scotch whisky, Tanqueray gin and Guinness stout.

10. Stock Analysis: Caterpillar Inc. (CAT)

(via www.dividends4life.com)

Caterpillar Inc. is the world’s largest producer of earthmoving equipment, is also a big maker of electric power generators and engines used in petroleum markets. Linked here is a detailed stock analysis and commentary.

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Ackman Has Buyers for Longs: CVS Answers His Valuation

Post author By ToddSullivan
Post date September 12, 2008
2 Comments on Ackman Has Buyers for Longs: CVS Answers His Valuation

Bill Ackman, who has an economic interest in 26% of Longs Drugs (LDG) shares says the CVS (CVS) offer is insufficient and is getting his own buyers. The CEO of CVS answers his claim this morning on CBNC.

From the Letter:

We and our financial advisor are pursuing alternative transaction partners for the Company. We have identified four potential buyers including two separate strategic buyers, a REIT and a real estate private equity investor, each of which we believe is interested in pursuing an alternative transaction with the Company. Some of these parties have been identified in the press while others have not. We are confident that the Company and its advisors would view each of these parties as bona fide and will recognize each as having the willingness and ability to pay substantially more than $71.50, including any lawful break-up fee, in addition to a substantial premium to shareholders.
While we can give no assurance that any party will come forward with an offer, the likelihood of such an event would materially increase if interested parties have more time to do their work and if the Company appropriately responds to inquiries that could lead to one or more superior offers.
Fortunately, given the tender offer’s 66 2/3% minimum tender condition, the Board has empowered shareholders to act on their own behalf by choosing not to tender into the offer at this time. Moreover, given the put right described above, shareholders retain the optionality to sell at a later date and get paid dividends while they wait.
While the terms of the Transaction limit the Company’s ability to fully re-open the auction process, Pershing Square and Blackstone are not limited from seeking higher and better offers. We are continuing to do just that. Blackstone will carry on its efforts to encourage potentially interested parties to approach the Company with alternative transactions. We are hopeful that, if such parties move forward with alternative transaction proposals, the Company’s Board of Directors and its advisors will welcome the opportunity for a better deal.
We will update you with our progress within 45 days. Please feel free to call me if you have any questions.

On CNBC today the CEO of CVS answered Ackman’s comments from yesterday. Here is what Ackman said:

Now, the CVS CEO’s answer:

It is unfortunate that neither CVS or CNBC seemed to be aware of the Ackman letter from yesterday. Perhaps the discussion would have been more accurate had they been aware of the other potential buyers?

No matter who you believe here is the really sad part of this whole thing. Ackman, whether you admire or despise him is doing the very job the Board of Directors and the CEO of Long’s should have done, maximize the potential value for shareholders.

The more I see stuff like this the more I start to lean toward the camps of people who want more shareholder rights and control…and I don’t even have any skin in this particular game.

Disclosure (“none” means no position):None
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Seth Klarman at Harvard (video)

Post author By ToddSullivan
Post date September 12, 2008

A video from May 1st, 2006. Seth Klarman guest lecture at Harvard’s Psychology of Leadership course. It is a 48 minute video but worth the time.

Disclosure (“none” means no position):
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Friday’s Links

Post author By ToddSullivan
Post date September 12, 2008

Monopoly?, biodiesel, Taxes, Speeches

– Is anyone surprise by this?

– Sick of gas? Run it on used kitchen oil.

– Will he or won’t he raise them, does he know?

– This is really cool, see what the speeches really focused on

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Ackman Sends Letter to Longs Board

Post author By ToddSullivan
Post date September 11, 2008

Bill Ackman says the CVS (CVS) offer for Longs Drug(LDG) is way too low.

Says Ackman:
“With owned real estate of $1.3 billion and leased full service real estate of $1.6 billion, the Company’s real estate assets alone are worth $2.9 billion, or approximately $71.50 per share. In effect, CVS is buying Longs’ real estate and is getting its PBM business and retail operations for free.”

Read Letter

Disclosure (“none” means no position):None
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9/11……………..

Post author By ToddSullivan
Post date September 11, 2008

Just got this emailed to me………..sent chills down my spine. It is amazing how this bring everything you felt that day right back to the surface

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Matt Damon……Moron

Ok…nothing to do with investing but now that I have stopped laughing so hard I was crying, I thought I would share..

Filed under: Why actors should shut up and just act….

Best line: “I really want to know if Sara Palin thinks dinosaurs were here 4,000 years ago”…..Why Matt?

“It terrifies me that she could be President because I do not know anything about her”……one word Matt….GOOGLE….you could find out easily if you wanted to..

“Did she ban books?”…uh Matt, this internet rumor was discredited almost as soon as it came out. Here Matty, I’ll do the work for you

Check out his condescension toward both “small towns” and being Governor of Alaska (as opposed to Governor of…nothing?).

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RIMM and TiVo Deal: We Can Already Do It!!!

Post author By ToddSullivan
Post date September 11, 2008

Research in Motion (RIMM) and TiVo (TIVO) announced today a partnership that will enable Blackberry users to schedule recording and view show times on their phones, but, I can do that already!?!

The announcement said:

TiVo (Nasdaq: TIVO) and Research In Motion (Nasdaq: RIMM), announced a partnership to bring customized TiVo services to the BlackBerry(R) wireless platform.

The new relationship brings TiVo and RIM together to develop a variety of mobile entertainment services that marry RIM’s leading BlackBerry(R) smartphones with the content delivered to consumers through the Emmy-winning TiVo(R) service. Initially, BlackBerry smartphone users will gain the convenience of being able to discover what shows are on and schedule television recordings while away from the living room and on the go. Future collaboration between the companies will focus on software applications that further simplify mobile access to video content.

Now, I use DirecTV (DTV) and by going to directv.com on my Blackberry (or any smartphone I believe) I am able to view show listings and schedule recordings on my DVR at home. The bonus here is that I can do so on any DirecTV DVR, not just the TiVo variety.

The only way this deal is in anyway big news is if they find a way to let me then view those recordings on my Blackberry, then I’ll be impressed.

Disclosure (“none” means no position):none
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When Less Equals More

Post author By ToddSullivan
Post date September 11, 2008

So, if Bear Sterns (BSC) is gone and Lehman (LEH) appears to be next, doesn’t that make Goldman Sachs (GS), Merrill Lynch (MER) and Morgan Stanley (MS) stronger in the end?

As regional banks fail and it looks like either Wachovia (WB) or Washington Mutual (WM) or both may also, doesn’t that make JP Morgan (JPM), Wells Fargo (WFC) and Citigroup (C) that much stronger after the carnage ends (it will)?

In my recent interview with AutoNation (AN) CEO Mike Jackson, we spoke of this very scenario. He said scores of auto dealerships in the US will disappear this year. I asked him if he would try to acquire these then very cheap properties or just let his market share grow through attrition. He simply stated “we will let it grow through attrition”.

In any business as competitors fall by the wayside, those left standing are left in a superior position than they were before the events that lead to the fallout began. Jackson said that there is “significant postponed purchases” of autos out there and once the credit environment resolves itself, those people will return. Because his company will be one of the ones left standing, more of that hoard will be buying from him.

The same holds true with investment banks and depository banks. The number of deals that will get done over time will grow and the numbers of services people will want from banks will also. The main beneficiary of the current malaise is those who are left standing as the increasing demand for those services is met with fewer options.

Now, the “when” is debatable, but not the “if”. This is the natural “cleansing of capitalism”. Those who took disproportionate risk and had seriously flawed business models face a day of reckoning as their flaws are exposed by the system. As those businesses are weeded out, those left with durable models survive and prosper.

Financials may very well get crushed again today, if Goldman goes below the $150’s or Wells Fargo dips below $30, it will be hard not to nibble at them again….

Disclosure (“none” means no position):Long GS, WB, C, none
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Berkshire’s Buffett with Charlie Rose (video)

Post author By ToddSullivan
Post date September 11, 2008

It is an hour long video from May, 2007 of Berkshire’s (BRK.a) Chairman. Well worth the time

Disclosure (“none” means no position):none
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Wells Fargo: The Beat Goes On…

Post author By ToddSullivan
Post date September 11, 2008

Time for the almost daily “Wells Fargo (WFC) expands insurance operations” post.

Wells Fargo announced today that it has acquired the assets of Three Bridges, New Jersey’s Herder – Tarricone Associates. Already a major private employer in New Jersey, Wells Fargo has 680 team members serving banking, insurance and financial services customers in 40 communities across the state.

Herder – Tarricone Associates provides a range of corporate coverages, employee benefits and financial services products to both businesses and individual customers. Shareholders Peter Tarricone, Chris Tarricone, Karen Tarricone and their team will continue to be based in Hunterdon County, NJ. Terms of the transaction were not disclosed.

“We’re excited to offer expanded resources, services and support to Herder – Tarricone Associates’ customers,” said Gary J. Tully, head of Wells Fargo Insurance Services Northeast, Inc. “Their firm is well known and highly respected in the local business community and they’ll be a tremendous addition to our growing operations in New Jersey and across the Northeast.”

“We’re delighted to join such a well respected organization that lets us broaden and strengthen the products, services and solutions we deliver to our customers,” said Peter Tarricone. “Our customers will receive the same great local service from the same committed professionals, plus they’ll have access to a wider range of resources and services to help them succeed financially.”

“We’ve grown to become one of America’s largest insurance brokerage companies by combining our national resources with great local agencies like Herder – Tarricone Associates,” said Dave Zuercher, president, chairman and CEO of Wells Fargo Insurance Services. “We’ll continue to look for agency acquisitions that advance and strengthen our vision, values and geographic interests across the country.”

Disclosure (“none” means no position):Long WFC
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