A special “Thank You” to the top traffic generators for the month of November to ValuePlays (ranked in order)
2- Stockpicker
6- TheStreet.com
7- Minyanville
Limited Brands Inc –LTD= $7,586,526
Enteromedics Inc –ETRM= $5,000,000
El Paso Pipeline Partners L P –EPB= $4,504,000
Mcmoran Exploration Co –MMR= $2,733,887
Private Media Group Inc – PRVT= $2,194,250
Inland Real Estate Corp –IRC= $1,858,424
Unitrin Inc –UTR= $1,456,630
Cardinal Health Inc – CAH= $1,149,970
Fannie Mae – FNM = $1,105,687
Weingarten Realty Investors –WRI = $1,011,680
Blackrock Inc New – BLK= $1,003,462
Here are this week’s best at VIN.
A brief look at two attitudes held by value investors which are not only childish but inhibitive to our learning.
Sardar Biglari’s Lion Fund increased its stake in Steak n Shake and the activist billboards and websites go up. I’m guessing he will also be putting the new cash from Western Sizzlin’s rights offering to work on this situation as well shortly.
The head of Fairfax Financial had a front-row seat when the Japanese market began its 15-year retreat. And he thinks the U.S. indexes might be about to do the same. Click on FULL STORY for all.
Fund manager Amit Chokshki attended this week’s 3rd Annual New York Value Investing Congress on behalf of Seeking Alpha. Here are Amit’s notes from the presentation of David Einhorn, Greenlight Capital:
Fund manager Amit Chokshki attended this week’s 3rd Annual New York Value Investing Congress on behalf of Seeking Alpha. Here are Amit’s notes from the presentation of T2 Partners’ Whitney Tilson and Glenn Tongue:
Fund manager Amit Chokshki attended the 3rd Annual New York Value Investing Congress this week on behalf of Seeking Alpha. Here are Amit’s notes from the presentation of Leon Cooperman, Omega Advisors:
Fund manager Amit Chokshki attended this week’s 3rd Annual New York Value Investing Congress on behalf of Seeking Alpha. Here are Amit’s notes from the presentation of Rich Pzena, Pzena Investment Managment:
At current levels, I can’t find a better risk/reward stock in the market than USG.
“In this web-only video clip shot with my own trusty minicam, you’ll see some additional footage from Becky’s “video diary” as she tells us what really happens “behind-the-scenes.”
A response to “The Follies of Value Investors” – The comparison between the returns of different value / quant funds – Number of employees working for Lampert, Pabrai, Buffett – Investing with great allocators
WAG Walgreen Co. 36.87
UXG US Gold Corporation 3.50
NVGN Novogen Limited 6.10
NOBL Noble Intl Ltd 16.10
NOA North Amern Energy Pa … 12.55
SOLD Housevalues Inc 3.42
SMTK Simtek Corp 2.05
IIG Imergent Inc 12.79
IHC Independence Holding … 13.90
BMJ Birks & Mayors Inc 6.15
BIG Big Lots Inc 19.00
ANEU American Cmnty Newspa … 4.00
ACME Acme Communication Inc 3.05
Sears Holdings (SHLD) Chairman Eddie Lampert issued the following letter to employees yesterday.
To our Associates:
Yesterday, Sears Holdings announced our results for the third quarter of 2007. While we were not pleased with these results, much of the commentary in the media and on Wall Street following the results ignores the strength of our company and the progress that we have made. In fact, over the past several years, we are one of the few retail companies that have actually reduced our overall debt levels, while at the same time investing over $1 billion on capital expenditures, making investments in inventory for our customers, contributing significantly to our pension plans for our past and future retirees and repurchasing over $3 billion of our shares.
As Aylwin said yesterday, we cannot blame our results entirely on the retail and macro-economic environments, and we need to continue our quest to improve. At the same time, it is also the case that many retailers, including Home Depot (HD), Lowe’s (LOW), Macy’s (M), Kohl’s (KSS) and JC Penney (JCP), have suffered from the economic environment of the past year and have had disappointing sales and earnings results. Much of the commentary following their results focused on the difficulties in the housing markets, the overall macro environment, and the highly promotional nature of the retail environment that has existed recently. An analyst for Fitch, the credit rating agency, reacting to JC Penney’s new store openings was cited as praising JC Penney for keeping expenses under control. When other companies manage expenses carefully, it is often characterized as a sign of good management and prudence. In the case of Sears Holdings, meanwhile, expense controls are often cited as a root cause of poor performance.
Sears Holdings sells a large variety of merchandise. Many of our merchandise categories, including home appliances, tools, and lawn and garden equipment are directly related to home improvement, home maintenance and home turnover related activities. As Mike Ullman, CEO of JC Penney, was quoted recently as saying, “It’s hard to sell window coverings to homes that aren’t being built.” JC Penney reported lower income in its most recent quarter compared to last year. Kohl’s Corp. reported that its income for the past quarter was lower as well. The same goes for Home Depot and Lowe’s. All of these companies have spent enormous amounts to open new stores and to remodel existing stores and still ended up with lower earnings. Spending lots of money doesn’t always lead to the results people expect.
In fact, Sears Holdings has made significant investments and taken measured risks, including the increase in our inventory position over the past couple of years. Not all of these risks pan out and, in the case of our inventory investment, the additional inventory has not resulted in improved sales and profitability. Had the economic environment been different, certain actions may have led to different results. We are taking actions to adjust our inventory position so that, by the end of our fiscal year, we expect our inventory levels will be below the levels of the prior year.
Retail is a fickle business. Nevertheless, like any other business, by focusing on the long term, making decisions based on facts and logic, and appreciating that all decisions are based on many possible future scenarios, companies can navigate the ups and downs of the economy and the stock market to create long term value for their shareholders. That is our focus, and our goal, at Sears Holdings. We will take the actions we believe are necessary to drive value over the long term and manage the business closely and opportunistically in the short term.
We thank you for your hard work and are committed to working to deliver better results in the future. Remember, not everybody likes rooting for the underdog. It is up to us to earn their respect by our performance on the retail playing field.
Respectfully,
Edward S. Lampert
Chairman
Sears Holdings
Buffett’s success, Blogsport, Rove, Censorship
– Here is one of the best articles to date about what makes Warren so good at what he does.
– Great name Adam.
– If you can’t get ’em legally, just cheat.
– Starbucks apparently has some thin skin
Why “mandate” refiners use less ethanol they are already using? Shouldn’t a “mandate” require they use more than they already are? Isn’t that the point?
Regulators on Tuesday set the new renewable fuels standard of nearly 4.7% for next year to meet a federal mandate that at least 5.4 billion gallons of ethanol be blended into transportation gasoline in 2008.
The standard for 2007 was slightly more than 4 percent, which amounted to roughly 4.7 billion gallons, according to the Environmental Protection Agency. The volume target increases every year until reaching 7.5 billion gallons in 2012. Why is this a joke? The U.S. currently has 134 operating ethanol plants with a total capacity of 7.2 billion gallons. That means the “mandate” could have been raised another 20% to 30% and current capacity could have easily handled it.
With producers like ADM (ADM) currently undergoing capacity upgrades that will have it producing 1.6 billion gallons itself annually, if congress and the EPA are indeed serious about making a dent in our oil consumption and the strangle hold it has on us, more aggressive target are required. Verasun (VSE) has put expansion on hold chiefly due to uncertainty over Congressional legislation.
The industry is currently subdued after it meteoric rise in early 2006. Unless congress want the inevitable consolidation that will occur, concentrating production in only a few companies, action is required. We are at a crossroads. We have the production available but unless we force refiners like Exxon (XOM), BP (BP) and Chevron (CVX) to use it, they will not as it ultimately threatens them.
Ethanol currently sells for $1.96 a gallon and every car in the US can run on a 10% blend. Currently several states have not yet enacted the 10% blend level and this EPA “mandate” only assures that will not happen anytime soon.
Almost 8 million of autos and trucks can run on the E85 blend. My Suburban can, but I cannot buy the fuel here. Supply it and you can bet I will. I would gladly support an Iowa farmer over a Saudi Shiek and smile while doing it.
Down the road, Konrad Imielinski reports:
“The U.S. House of Representatives could vote on a wide-ranging energy bill next week that would triple the use of ethanol. There is speculation that legislation will require 20.5 billion gallons of ethanol by 2015, with 5.5 billion gallons of that coming from cellulosic ethanol. The bill is also speculated to set short-term targets of 9.5 billion gallons by 2008 and 11.6 billion gallons by 2009. Back in June, the Senate passed a proposal to require 36 billion gallons of ethanol use by 2022. Democrats will also attempt to hit the oil industry with $15 billion in taxes and require utilities to get 15 percent of their electricity from wind, solar and other renewable sources.”
Congress needs to act and the party that takes the lead may just get credit years from now for saving us from oil. Isn’t that enough motivation?
It was just matter of time.
Verasun (VSE) and US Bioenergy (USBE), both trading around 52 week lows, have agreed to merge.
Under the agreement, 0.81 share of VeraSun common stock will be issued for each outstanding share of US BioEnergy common stock, representing a premium of approximately 11% based on 11/23, closing prices. Existing VeraSun shares will remain outstanding and will represent approximately 60% of the shares outstanding after the merger.
VeraSun Chairman, CEO and President Donald L. Endres will remain CEO of the combined company, and US BioEnergy President and CEO Gordon Ommen will serve as chairman following the closing of the merger. VeraSun Senior Vice President and Chief Financial Officer Danny C. Herron will become president of the combined company. The combined entity will retain the VeraSun name and trade under VeraSun’s existing ticker symbol, VSE.
Upon completion, the new company will have nine ethanol production facilities in operation and seven additional facilities under construction. By the end of 2008, the company is expected to have a total production capacity of more than 1.6 billion gallons per year (BGY) and 16 facilities constructed by Fagen, Inc. and utilizing ICM process technology. Through the merger, the employees of both companies will be integrated into a combined work force.
VeraSun will then be the or equal to ADM (ADM) as the largest public ethanol producer in the US. With valuation of producers at record lows, do not expect this to be the last merger or buyout you read about in the coming months. Prime targets are Pacific Ethanol (PEIX) for its west coast monopoly and The Andersons (ANDE) because it is still profitable and has a fertilizer segment that is doing very well.
UPGRADES
MGP Ingredients MGPI Northland Securities Under Perform » Market Perform
InterActive IACI Piper Jaffray Neutral » Buy
General Maritime GMR Citigroup Sell » Hold
Sigma Designs SIGM RBC Capital Mkts Sector Perform » Outperform
Natl Oilwell Varco NOV Citigroup Hold » Buy
Patterson Companies PDCO Lehman Brothers Equal-weight » Overweight
Nalco NLC Jefferies & Co Hold » Buy
Red Robin Gourmet RRGB CIBC Wrld Mkts Sector Perform » Sector Outperform
Dollar Tree DLTR Friedman Billings Mkt Perform » Outperform
Range Resources RRC Friedman Billings Mkt Perform » Outperform
General Motors GM Bear Stearns Underperform » Peer Perform
TiVo TIVO JP Morgan Underweight » Overweight
Double Hull Tankers DHT UBS Neutral » Buy
Nuvelo NUVO UBS Neutral » Buy
DOWNGRADES
Rogers Comms RCI BMO Capital Markets Outperform » Market Perform
Men’s Wearhouse MW Caris & Company Above Average » Average
Transocean RIG Sterne Agee Buy » Hold
Rogers Comms RCI Bear Stearns Outperform » Peer Perform
Sierra Pacific SRP Credit Suisse Outperform » Neutral
State Auto Fin STFC Piper Jaffray Neutral » Sell
Donegal Group DGICA Piper Jaffray Neutral » Sell
Piper Jaffray PJC Wachovia Outperform » Mkt Perform
Tyler Tech TYL Banc of America Sec Buy » Neutral
Rogers Comms RCI CIBC Wrld Mkts Sector Outperform » Sector Perform
Aeropostale ARO Sun Trust Rbsn Humphrey Buy » Neutral
TSH Teche Holding Company 37.90
TSC Stephan Company , The 3.25
SOLD Housevalues Inc 3.50
SMTK Simtek Corp 2.10
SMSI Smith Micro Software Inc 7.72
SMRT Stein Mart Inc 5.41
SHLD Sears Hldgs Corp 102.13
PBY The Pep Boys-Manny, M … 10.86
PAL North Amern Palladium Ltd 5.40
PAGI Pemco Aviation Inc 3.01
NYT New York Times Company 16.73
NVGN Novogen Limited 6.36
NUTR Nutraceutical Intl Corp 11.34
MW Mens Wearhouse Inc 34.81
MTLK Metalink Ltd 4.90
CTR Cato Corp New 14.63
CRED Credo Petroleum Corpo … 8.45
Jesus, what did Sears Holdings (SHLD) Eddie Lampert do to CNBC’s Erin Burnett? Did they date when she worked at Goldman Sachs (GS) or did he rebuff her advances? Perhaps she is miffed that she did not get an interview she wanted?
She has been joyously drubbing this quarters performance all day today on CNBC. She does is with this sick little smile on her face too. Odd…
Now, I am not saying this was a good quarter, it sucked. But, Burnett has taking it a bit farther. She spent this morning comparing his Citigroup (C) purchases to that of Saudi Prince Alwaleed’s. Now, it is one thing to compare two investors purchase price but is it really legitimate or the slightest bit honest to compare purchases of a company made 17 years apart? Am I the only one who finds that embarrassingly transparent?
Then she jumps into the “how much time does Lampert have left” doomsday scenario. Okay,,,,,, let’s just forget the 20 year and 28% annual return Lampert has produced for investors. That track record alone places him in a handful of investors. I mean, I am sure anyone who has made a fortune with Lampert is jumping ship now because of a bad year. Let’s also forget the 5 year lockup people give him when they fork over their $10 million minimum to invest with him. Let’s also ignore the fact that folks who have $10 million to give someone for 5 years to invest, did not get that type of money by pissing their pants at every bump in the road.
Sears. Burnett clearly has no grasp of the situation. It is a retail turnaround story. Those take years. Sears is not losing money and still is producing billions for Lampert to repurchase shares. Has Burnett seen the stock price and performance of other comparable retailers like JC Penny (JCP) down 48% from its high and Macy’s (M) down 30% from its high? Apparently not. Check out the one year chart of all three here. Look similar?
What Burnett casually glosses over is that when Lampert took control of both Sears and Kmart, they were careening toward extinction (Kmart actually was bankrupt). Now they produce about $1 billion in cash and every quarter that goes buy, Lampert increases our ownership percentage.
Awful job Eddie…. (please detect the sarcasm)
Erin, get over it “he just not that into you”
Thank-You, Shopping, Mutual funds, 1,000%
– Here is a great read from Minyanville about children and the Holidays
– Even better than that, how to make Christmas shopping an educational experience.
– If you invest in mutual funds, here is how to do it.
– Not a bad year?!?
Going to be an ugly day for Lampert and compnay.
Sears (SHLD) today reported net income of $2 million, or $0.01 per diluted share, for
the Q3 ended November 3, 2007, compared with net income of $196 million, or $1.27 per diluted share, for the Q3 ended October 28, 2006. The Q3 2006 results included $101 million in pre-tax gains ($64 million after tax or $0.42 per diluted share) on total return swap investments outstanding during that period.
Excluding these gains, earnings per diluted share were $0.85 for the Q3 of fiscal 2006. The year-over-year decline in income is primarily the result of a $223
million decline in gross margin, reflecting both sales declines, as well as an overall decline in our gross margin rate for the quarter due to discounting.
Operating income for the quarter decreased $230 million to $46 million in 2007, as compared to $276 million in the third quarter of 2006, mainly due to lower gross margin generated at both Kmart and Sears. For the quarter, Sears Holdings generated $3.2 billion in total gross margin as compared to $3.4 billion in the third quarter last year.
Lampert had cash and cash equivalents of $1.5 billion at 11/3 (of which $0.8 billion was domestic and $0.7 billion was at Sears Canada) as compared to $2.1 billion at October 28, 2006. The $1.1 billion net decline in cash for the quarter primarily reflects $0.9 billion used for share repurchases and $0.9 billion used to build inventories for the holiday selling season, partially offset by $0.6 billion of cash generated through short-term borrowings that have been repaid as of 11/27.
Lampert repurchased 6.7 million common shares at a total cost of $0.9 billion (or $131.72 per share) under our share repurchase program during Q3. As of November 27, he had remaining authorization to repurchase $736 million of common shares under the program.
The bright spot was November month-to-date period (Sunday, November 4, 2007
through Tuesday, November 27, 2007) domestic comparable store sales
at Sears increasing 1.9%.
Good? Hell no. Sucks actually. But, did you really expect any better? Sears is going to get hit hard today and that is fine as I will be a buyer when shares drop below $110. Retails stories are long term ones ans Lampert is only in act two. Act one was getting both companies off the bankruptcy express, act two is determining the format which appears to be a brand central one. Act three will be the roll out of this (this will happen over the next year) and then we wait.
The good news is share count is decreasing rapidly, now down to about 137 million so the turnaround earnings will be excellerated for those holding shares.
View release here:
