Bill Miller, Recession?, Bank Stocks, Rite Aid, Master’s Picks
– Can’t argue with this. Great investors do not “lose it”.
– Here is the case against a recession.
– The case for buying banks
– Rite Aid has not been on my radar screen but at these levels, deserves a look. Thanks to the Masters
– Speaking of the Master’s, here is a list of stocks they think will bounce before 2007 is done.
Donate to the ValuePlays Project for KIVA
How could you announce million dollar “retention” bonuses for executives and then days later announce results like this? Watching these guys operate is like watching a monkey try to impregnate a football.
For the three months ended Nov. 30, Circuit City’s (CC) losses ballooned to $207.3 million, or $1.26 per share, from $20.4 million, or 12 cents per share, a year ago. Excluding tax-related accounting items, losses totaled 64 cents per share in the latest period.
Sales slipped 3 percent to $2.96 billion from $3.06 billion a year earlier, with sales at stores open at least a year falling 5.6 percent.
CEO Phillip Schoonover still insists Circuit City is on the right track. “We’re implementing the right initiatives to lead to profitability and sustained growth,” he said. “We’re staying the course on our longer-term strategic initiatives.” By long term do you mean by the end of the decade Phil? I mean it has taken you three years to ruin the company, do you really think you can bring it back faster?
Regarding the bonus announcements, Schoonover said the bonuses are essential to keep together a team he spent three years assembling. Three years assembling a team to get these results? Far from getting bonuses for staying with CC, these incompetent buffoons ought to be thanking god everyday they are even employed.
Bruce H. Besanko, Executive Vice President and Chief Financial Officer made the following inexplicable statement regarding the bonuses:
“The base program that we have in place was a combination of stock options and restricted shares. Because of the current stock performance, that program for many of our executives was underwater and so far underwater that it didn’t have any meaningful value over time. In addition to that, our senior most executives did not receive a bonus for the last two years and will not receive a bonus based on this year’s performance. So we have two plans now to retain those leaders. One is our cash-based retention program and two is a stock-based incentive program which is in line with our annual stock-based incentive program and I feel I have the tools in place now to keep the management and leadership as well as the managers at all levels in the company engaged in this work.”
Essentially, he is saying that because the executives performance has been so bad, under the old plan, they were not eligible for a bonus. That being said, CC decided just to lower the bar, just show up for the next three years, performance be damned to get your money. This is disgusting.
This makes me want to buy shares just to bash them every single day……how can shareholders stand for this?
If that isn’t enough to have shareholders going into vapor-lock, Schoonover then said, “We are very dissatisfied with our third quarter results. We underestimated the financial impact from the disruption of our transformation work.” Here it comes “We believe that these issues are primarily self-induced”.
He “believes” they are? What else could it be? What were they doing, remodeling stores in the middle of the Christmas shopping season? Shares are down 25% today and now down 70% for the year.
Back in June when people speculated Eddie Lampert and Sears might make a run at CC, I opined, “Eddie Lampert, based on past history would just be as likely to wait for these buffoons to run it into bankruptcy and buy it there even cheaper than now.”
It just may get there next year…..
Let’s not forget that current management turned down a $20 offer per share from private equity not too long ago…. shareholders will never see that price again, not with these guys in charge.
Finally, A note to Herb Greenberg: How can you in all intellectual honesty say Eddie Lampert at Sears Holdings (SHLD) is worse than this guy? Herb, Sears IS MAKING MONEY!!!!
This is a call for Herb to do a “do over” with his pick for 2007. We’ll give him a Mulligan or should we now call it a Greenberg?
Donate to the ValuePlays Project for KIVA
UPGRADES
Globecomm Systems GCOM Collins Stewart Market Perform » Buy
Pier 1 Imports PIR Wedbush Morgan Hold » Buy
Knology KNOL Morgan Keegan Mkt Perform » Outperform
Itron ITRI RBC Capital Mkts Sector Perform » Outperform
Genomic Health GHDX RBC Capital Mkts Underperform » Sector Perform
Research In Motion RIMM Bear Stearns Peer Perform » Outperform
Rite Aid RAD UBS Neutral » Buy
Schering-Plough SGP Lehman Brothers Equal-weight » Overweight
IMS Health RX Robert W. Baird Underperform » Neutral
First Horizon FHN Keefe Bruyette Underperform » Mkt Perform
DOWNGRADES
Anadigics ANAD Charter Equity Mkt Perform » Mkt Underperform
Respironics RESP Caris & Company Above Average » Average
Genitope GTOP Punk, Ziegel & Co Buy » Mkt Perform
Cognos COGN Wedbush Morgan Buy » Hold
Ruby Tuesday RT KeyBanc Capital Mkts Hold » Underweight
Genitope GTOP RBC Capital Mkts Sector Perform » Underperform
Donate to the ValuePlays Project for KIVA
Our first three loans have bee dispersed to the recipients…Let’s Wish Them Good Luck
**This is an update on “Second-hand electronic sales”, run by Basilia
Paucar Quispe,:
Thank you for your loan. It has been disbursed to Basilia Paucar Quispe
by Microfinanzas PRISMA in Peru. We are excited to watch this business
grow. Over the next 6 months, Microfinanzas PRISMA will be collecting
repayments from this entrepreneur and posting progress updates on the
Kiva website.
Kiva very much appreciates your responses online. You can read and
respond to this journal online here:
**This is an update on Yusif Musayev:
Thank you for your loan. It has been disbursed to Yusif Musayev by
Norwegian Microcredit LLC (Normicro) in Azerbaijan. We are excited to
watch this business grow. Over the next 14 months, Norwegian
Microcredit LLC (Normicro) will be collecting repayments from this
entrepreneur and posting progress updates on the Kiva website.
Kiva very much appreciates your responses online. You can read and
respond to this journal online here:
**This is an update on Ada Laura Zumaeta De Toguchi:
Thank you for your loan. It has been disbursed to Ada Laura Zumaeta De
Toguchi by Manuela Ramos / CrediMUJER in Peru. We are excited to watch
this business grow. Over the next 6 months, Manuela Ramos / CrediMUJER
will be collecting repayments from this entrepreneur and posting
progress updates on the Kiva website.
Kiva very much appreciates your responses online. You can read and
respond to this journal online here:
I will update their progress in the blog…
Donate to the ValuePlays Project for KIVA
Monday’s Picks
No picks for Monday
Friday’s Results
Jeff Macke recommends getting long Disney (DIS). Open $32.33 Close $32.94 GAIN
Karen Finerman likes ValueClick (VCLK).Open $22.63 Close $23.61 GAIN
Pete Najarian prefers Microsoft (MSFT).Open $35.52 Close $36.06 GAIN
Results since 6/21/2007:
Guy Adami= 57-45 = 60%
John Najarian= 13-4 = 76%
Jeff Macke= 60-40 = 66%
Pete Najarian= 48-40 = 57%
Tim Seymore= 7-7 = 50%
Karen Finerman= 38-30 = 56%
Stacey Briere-Gilbert= 3-0 = 100
Ned Riley= 1-0 = 100%
Carter Worth= 0-1 = 0%
Donate to the ValuePlays Project for KIVA
INSIDER PURCHASES
Anesiva Inc ANSV = 7,999,997
Imax Corp IMAX = 5,598,082
Internet America Inc GEEK = 2,480,000
Chesapeake Energy Corp CHK = 1,929,579
Unitrin Inc UTR= 1,790,607
First Acceptance Corp FAC = 1,579,479
Isle Of Capri Casinos Inc ISLE = 1,576,086
O Charley S Inc CHUX = 1,470,364
Kronos Worldwide Inc KRO = 1,297,182
General Electric Co GE = 1,280,521
Ardea Biosciences Inc RDEA = 1,238,851
Macerich Co MAC= 1,221,455
Churchill Downs Inc CHDN= 1,200,670
Donate to the ValuePlays Project for KIVA
The week’s top picks from VIN. Ever heard of Warren Buffett?
Geoff Gannon writes this blog post in response to Barron’s “Sell Buffett” cover story. The post looks at a fair value for Berkshire (BRK.A) shares and finds that there is currently no real “Buffett premium” baked into the stock price. In fact, if Buffett gives Berkshire another 9 years, Berkshire may end up being a bit undervalued at the latest price of $143,000 per “A” share.
Two months ago in my Financial Times column, I listed some of the things I have learnt about the stock market over the years. I likened the market to a game of online poker, with anonymous opponents and continuously evolving probabilities. I received some good reader feedback, so this month I’ve decided to revisit the topic. Here are a few more things I’ve learnt about the stock market.
Whitney Tilson and Glenn Tongue, co-portfolio managers of T2 Partners, presented on November 29, 2007 at the 3rd Annual New York Value Investing Congress to a standing- room-only crowd at Rose Hall in the Time Warner Center. This link will take you to their presentation, which also argues that Berkshire Hathaway is somewhat undervalued but offers an immense margin of safety.
Legg Mason Value has been a stinker the past two years. But Bill Miller is a gifted manager. Bet on him to rebound. By Steven Goldberg
First Eagle is reopening two of their funds and several other value funds have recently been reopened. Could this be a sign that managers are find more value opportunities?
“Forget about the upcoming presidential primaries; it’s already election night at Nautilus (NLS) – and the early exit polls favor the challenger.” Geoff Gannon reports on the proxy fight between activist hedge fund Sherborne investors and the incumbent board of Bowflex maker Nautilus.
The Peridot Capitalist chimes in on the Berkshire Hathaway valuation debate and actually thinks the shares are even more overvalued than Barron’s. The debate rages on…
Here is the Barron’s story that everyone is talking about today regarding Berkshire Hathaway’s value. Access to this story should now be free.
Jeff Matthews responds to Barron’s recent “Sell Buffett” cover story. He focuses on issues other than valuation, and points out that Berkshire is not harder to understand than many other businesses, despite its complexity. Most importantly, Buffett actually does communicate extensively with shareholders – he just doesn’t do quarterly conference calls for Wall Street analysts.
Berkshire Hathaway shares are under a lot of pressure today after a cover story in Barron’s over the weekend recommended, “Sell Buffett: Sorry, Warren, Your Stock’s Too Pricey.” (The piece itself is still behind a paid subscription firewall, but will become free content this afternoon.)
Donate to the ValuePlays Project for KIVA
Why is it good news? It simply means it is no longer needed.
At the request of Hank Paulson, Head of The Treasury Department, Bank of America (BAC), Citigroup (C) and J.P. Morgan (JPM) had been working to set up the SIV fund since September. It was proposed to buy assets from so-called structured investment vehicles (SIV’s), removing the direct risk from the banks.
The fact that the banks feel it is no longer needed is very good news indeed. It means the write downs for the SIV’s at the institutions can’t go much lower. These things ARE worth something. Citigroup’s decision to put them on the balance sheet also is a very good event. They will provide clarity.
I have been stumping for financials since about October. They will be the big winners next year and our next purchases will be in the sector again. Currently we own Citi (C), Wachovia (WB) and Goldman Sachs (GS). Goldman is an automatic buy under $200, Citi under $30 and Wachovia under $39.
Our next purchases will be a troubled mortgage lender and a Buffett favorite.
span style=”font-weight: bold;”>Donate to the ValuePlays Project for KIVA
Most of you know I am involved with KIVA. Andrew Corn over at Clear Asset Management has a wonderful group he is involved with. Please read and invest.
Dear Friends,
It is the season. The season of holidays and the season of requests. Mine is a request to invest. Invest in people and receive a return beyond dollars and cents. Below is my blog post from this morning. I hope you consider joining me and my family and the thousands of others trying to change and repair a small piece of the world.
Happy Holidays,
Andy
Earn Two Percent and Change the World
It is that time of year, the holidays. The old movies are on TV and one of my favorites is It’s a Wonderful Life. A key take-away of the movie is that everyone is connected. Our actions can have an impact on a global basis.
That same powerful, enabling concept can hold true in investing.
Now let’s move to US foreign policy. There is a hypothesis in some circles that our vast aid sometimes breeds resentment. The richest country in the world is providing a handout. Many people are proud and resent handouts. The old Chinese proverb goes: “give a person a fish, feed them for a day, teach a person to fish and feed them for a lifetime.” This philosophy of investing in individuals’ ability to make their own living can translate as follows:
The Investment Thesis
* Touch over 100 lives with a minimal investment of $1,000 (a three year lockup)
* Loan people the tiny amount they need to buy “a fishing pole;” we are not “teaching anyone to fish”
* Earn 2% in the process
The essence of my investment thesis combines interest income with touching over 100 lives over three years, empowering them to help themselves through an entrepreneurial endeavor. The concept of MicroBanking is not new. Unfortunately it has been perverted by some large banks. My family has had the privilege to meet and work with a not for profit organization. They charge the lowest amount of interest possible as a microleander and pay interest back to their investors.
The Bank was founded in 1975 by the World Council of Churches and is the largest, most far reaching organization of its kind. The loans have no religious overtone. This is only about non-profit microbanking, not about converting the masses. I believe in this so strongly that I have started a personal web site to assist them at www.InvestingBack.com which is chock full of information.
How to Get Started
I recommend you invest your hard earned money to help people earn their way out of a life of poverty. They accomplish this by borrowing small amounts of money and paying it back. The default rate is lower than credit card defaults in the US. Every investor has received their principal investment back along with interest.
Invest a minimum of $1,000 for three years and earn a two percent interest rate. This is not a donation! It is an investment.
The money will be loaned, mostly to women, who will use this money ($100 borrowed on average) to devise a way to make an honest living, feed and clothe their family and provide basic healthcare.
I believe giving someone money because he or she is poor is not helping them as much as lending them money to create a business, get on their feet and keep earning money. I am investing in people helping themselves.
It truly is a wonderful life!
Your money is invested in the loan pool of the Micro Bank which invests it over and over again, helping many people. You are NOT placing one cent into administration or fund raising. Your investment touches many people (remember the movie scenario) helping individuals, families and touching whole communities. Yes, each investment into the loan portfolio makes a material difference!
My Quest
The promise I made to my family, who are all in on this, is not to stop talking, writing and cajoling people about micro banking until at least 99 additional families have invested alongside us. For those that know me well, the whisper number is 999. Together we can help a lot of families and repair a small piece of the world.
Invest Now!
http://www.investingback.com/ap/Invest/tabid/56/Default.aspx
The bottom Line
Too many funds are down for the year. A daily liquid savings account pays near zero. How many money markets are invested in level three junk bonds and are in trouble? Through this investment, you know who the lender is, where the money is going and all of the stats are a few links away.
I suggest investing more than the minimum and doing it with your family this weekend.
Make money and make a difference.
www.InvestingBack.com
Donate to the ValuePlays Project for KIVA
Here is the video from this mornings comments from Martin Whitman on Bill Ackman
Here is the video
Donate to the ValuePlays Project for KIVA
Whitney is interviewed on a 360 point down day for the Dow in October. If you are a value investor, this is what your thought process must be to be successful. Please view this. It is 9 minutes long and worth every second.
Here he talks about about McDonalds (MCD), Google (GOOG), Oil (USO), Microsoft (MSFT), EMC (EMC), Citigroup (C), Target (TGT) and financials.
Donate to the ValuePlays Project for KIVA
Beer, Hat’s off, Steroids, CEO melt down,
– So it is beer, not guns, that cause more murders…
– Got to give it this parent, this is how you make a point.
– Who performed best after the “juiced”?
– Sallie Mae’s CEO melts down
Donate to the ValuePlays Project for KIVA
Whitman on CNBC just called Bill Ackman a “slick salesman who does not know much about insurance and certainly doesn’t know much about restructuring secure debt”…WOW
I’ll look for the video later…
Donate to the ValuePlays Project for KIVA
I guess we finally found out where the money Circuit City (CC) saved by “letting go” its highest paid and most experienced sales people earlier in the year is going, to the folks who made the ill-fated decision.
In an SEC filing, CC said the company’s board approved “retention awards” of $1 million for executive vice presidents and $600,000 for senior vice presidents. The awards will be effective as of January 1, 2008, and vest over a three-year period. Circuit City said the awards were intended “to ensure the stability of the company’s leadership team by providing an incentive” for the officers to stay.
Included in the payouts are Bruce H. Besanko, chief financial officer; George D. Clark Jr., executive vice president for multi-channel sales; and general counsel Reginald D. Hedgebeth.
CEO Philip Schoonover will not be participating in the retention plan, but would be able to receive long-term incentive awards under a 2003 stock incentive plan. Based on both the company’s and the stocks performance, Schoonover gets nothing and in all reality will be fired before next year is out anyway.
One would think shareholders would be outraged by this. They have watched this team lose almost 75% of the company’s market cap this year as shares have fallen from $22 to $6. If we go back a another year, the losses jump to 80% from $30 a share.
I guess the questions is, why would shareholders want to retain these guys? By almost every metric, Circuit City is worse off. Since FY 2005 ended its cash position has steadily deteriorated (from $1 billion to $400 million), debt has almost tripled and market share has plummeted. They did manage to raise the dividend this year from 16 cents a share from 7 cents in 2005 but given the company’s precarious financial situation, even that decision is questionable.
Both Best Buy (BBY), Wal-Mart (WMT) and Sears Holdings (SHLD) all have reported strong electronics sales this Christmas. If Circuit City does not do the same, there ought to be a shareholder revolt.
It just seems that every time we hear from Circuit City, they leave us scratching our heads. At least we are not shareholders, they are probably pounding their heads on a table.
Donate to the ValuePlays Project for KIVA
Let’s just say it before they do. Starbucks (SBUX) will not meet its earnings goal this year. Why?
Back in May, months before Starbucks actually acknowledged this, I spoke about milk prices and their effect on the company. What has happened since then?
The price of milk has increase of 23.2 percent through November. The nationwide average for a gallon of whole milk is $3.80, according to the U.S. Department of Agriculture. That, by the way smashes the price of everyone largest gripe, the nationwide average for a gallon of unleaded gasoline which stands at $2.99.
Now, Starbucks actually came out in late summer and admitted diary prices were hurting them. What was the average price per gallon in May? $3.38, a full 13% lower than current levels.
Starbucks responded to these increases by raising prices, a move I panned then and a move that received the expected response, a dramatic decline in store traffic.
How do they expect to reach their lofty expectations in 2008? When facing lower store traffic and steadily increasing costs, another price increase for the company is just not possible.
With shares trading at levels not seen since early 2004, it would seem investors feel the same way…
Donate to the ValuePlays Project for KIVA
