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    • Fri Nov 21st 13:47 PM | Rating: 0 0
      Commented on:
      Last Legal Stand in the BCE Privatization Deal
      BCE is starting to look like a possibly lucrative arbitrage play. The banks involved seem to have been saying all the right things, and now the suit above was dismissed. The only risks I can remaining are:

      For non-Canadian arbitrageurs, there's currency risk. The USD was 1 for 1 to the CAD earlier, but today (11/21), it's CAD$1.29 to the USD. That means that the CAD$42.75 buyout offer is now worth $33 or so. Of course, BCE is trading about $26.50 on the NYSE. Even if the CAD somehow depreciates to $1.50 to the USD, US investors would still get US$28.50.

      I'm a bit more worried that the deal might be delayed or renegotiated lower. Starting about 16 minutes into this interview, Mark McQueen of Wellington Financial in Canada believes that the banks will want to renegotiate and that a lower share price will be better for everyone involved (except BCE arbitrageurs). The interview was conducted at the end of October. The banks have been saying all the right things and TD reiterated its commitment in early Nov.
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    • Wed Nov 19th 09:35 AM | Rating: 0 0
      Commented on:
      ROH, DOW, BUD:Three Arbitrage Opportunities?
      I bought Anheuser instead, which was a fortuitous decision. With Rohm, I'm confident of the financing, but I'm less certain about the closing date. Dow said they expected to close in early 2009. How do you define early? That could be anywhere from January to May.
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    • Wed Nov 12th 23:00 PM | Rating: 0 0
      Commented on:
      The Sears Mistake
      Warren holds cash when he can't find compelling values - meaning that he will be in a position to take advantage if the market stumbles or a particular company stumbles.

      As to Sears, if Eddie plans to keep it as a retailer, he's running the place into the ground. He's trying to run a retailer like a hedge fund and failing. Ironically, I'm effectively long Sears because of a large investment in the Fairholme fund, which trusts his leadership.
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    • Wed Nov 12th 15:03 PM | Rating: 0 0
      Commented on:
      Four Reasons Radian Group Is Headed Higher
      I'm not convinced that Radian's services are essential to the muni bond market or that Radian is structurally important. Given this, I don't think taxpayer money will be on the way. Even if the Treasury bails them out, that doesn't guarantee current equity holders any sort of value. Additionally, their sales will decrease substantially and their present book value is suspect. Investing in Radian would be speculation, and you haven't convinced me that there is any long term value. The best you might be able to do is trade the stock around, and that's not something I'm prepared to do.
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    • Wed Nov 5th 19:48 PM | Rating: 0 0
      Commented on:
      The Volatility Is Killing Me: Explaining My Sale of Expeditors International
      If you're really confident in your analysis of Expeditors' business, then why the heck are you setting stop loss orders, and doing so at just 8% under your purchase price? The market is volatile and any stock could move by 8% within a pretty short time span. However, Expeditors is debt free and has steadily grown revenue in the low double digits even during the crisis. International trade is not going to cease. You're just shooting yourself in the foot by selling low and buying high (assuming you do decide to buy Expeditors later).
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    • Tue Nov 4th 16:04 PM | Rating: 0 0
      Commented on:
      5 Best Performing Dividend Stocks in 2008
      BBT: hardly surprising. This is a bank that has long maintained conservative lending practices. They've made only modest writedowns and have a strong capital position. They've also maintained their dividends even through the crisis.
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    • Tue Nov 4th 07:54 AM | Rating: 0 0
      Commented on:
      10 High Cash, High Yield, No Debt Stocks
      Of the list, I especially like Paychex as a dividend paying stock. The firm targets small and medium businesses, which gives it better pricing power than ADP. Paychex's customers face high customer switching costs.
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    • Sat Nov 1st 11:21 AM | Rating: 0 0
      Commented on:
      Why Autodesk Is Still a Buy
      I agree. Autodesk is one of my top picks at the moment. I see no liquidity issues and strong growth prospects. No idea why this has sold off so much.
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    • Sat Nov 1st 10:59 AM | Rating: 0 0
      Commented on:
      Chesapeake Energy Unlikely To Remain this Cheap
      Aubrey McClendon is a visionary CEO and a very aggressive operator. A recent WSJ article quoted an energy analyst who sits on Chesapeake's board, who commented that he repeatedly had to restrain McClendon's enthusiasm and that now some of their more aggressive purchases were causing them difficulty.

      I doubt that Chesapeake is in danger of financial distress given their cash generation and their hedging. I think natural gas in the US has great potential. At the same time, commodity prices are volatile and the CEO is a bit of a cowboy. I'm long Chesapeake, but if I were to do this again I would buy a more conservative company like Cimarex Energy (XEC).
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    • Mon Oct 27th 16:47 PM | Rating: 0 0
      Commented on:
      Starbucks Stops Paying the Rent
      I remember a similar incident where a San Diego superior court ordered Starbucks to compensate baristas for tips the company had made them share with shift managers. Starbucks of course announced its plans to appeal the ruling, but also said it refused to comply with the ruling. The company also said it would disobey an injunction preventing supervisors from sharing tips in the future.

      When investing with a visionary CEO, one of the possible risks is that the CEO will act as if he/she is above the law. While the court could have got it wrong, the company should have at least complied with the injunction.

      I hope the company considers the effect of actions like these on its public image. Americans don't generally like scofflaws.

      Disclosure: long Starbucks.
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    • Mon Oct 20th 15:29 PM | Rating: 0 0
      Commented on:
      Earnings Preview: Pfizer
      Bruce Berkowitz has about 10% of the Fairholme Fund's assets in Pfizer. his long term thesis is that Pfizer will use its cash hoard to buy out or partner with smaller and more nimble drug or biotech companies. they have the cash to become a bit like a mini-Berkshire in the pharma space - the question is, will they?
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    • Fri Oct 17th 17:06 PM | Rating: 0 0
      Commented on:
      Earnings Preview: American Express
      > In addition, the firm thinks that American Express is more vulnerable than its peers to credit market fluctuations because its deposit base is smaller than those of other card issuers.

      American Express' model is spend-centric. While they don't discourage customers from carrying a balance, their model centers on getting them to spend big and capturing the economic value from the interchange fees. Their superprime customers are less likely to carry large balances over long terms anyway.
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    • Fri Oct 17th 08:37 AM | Rating: 0 0
      Commented on:
      Market Jitters Enable Even Small Investors to Get a Piece of BUD
      >AB is a remarkable company which I, for one am in awe of how well run it is.

      That comment alone makes me distrust just about everything else you said. Anheuser mispositioned itself, concentrating on Budweiser and refusing to move upmarket to craft beers. This completely missed the trend in the US market, which was to craft beers, spirits and wine. Additionally, the firm failed to move into the international front (hence InBev had to do it for them). As a result, they had a couple years of quite weak results. Their management team was certainly not best of breed.

      As for the arbitrage issue, think about it. If Ockham's analysis is right, they won't need anyone other than InBev to prop the price up. InBev will (they hope) pay out $70 in cash at the end of the year. Of course, the downside if InBev doesn't get the financing is more considerable; Anheuser would drop to the high $40s or low $50s.

      My understanding was that InBev does have the proper commitments from the banks. Several of InBev's European banks were in trouble (Fortis was one of them). Beer is a relatively steady business and InBev has a great international distribution network. InBev paid a pretty high price, but they should definitely be able to make their payments. The banks, therefore, would probably want to make this loan.
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    • Thu Oct 16th 13:02 PM | Rating: 0 0
      Commented on:
      Kinder Morgan Energy: A Little Corruption, American Style
      I think the criticisms of the incentive distribution structure are way off base. The structure compensates the general partner for managing the asset. Most general partners probably also own a boatload of limited partner shares.

      Folks who are really dissatisfied about the structures can either set up their own MLP without incentive distribution rights, or they can invest in one of the several publicly traded general partners. Legacy Reserves is an example of the former. Enterprise GP holdings and Magellan Midstream Holdings are two examples of the latter.
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    • Mon Oct 13th 14:04 PM | Rating: 0 0
      Commented on:
      10 Reasons I'm Glad To Be Doing Business in America
      > 9. Hard working society. The U.S. isn’t a lazy society and Americans are hard working and conscientious people. We work more hours per year than almost every other country ...

      The official work week in the US is 40 hours per week. The official work week in Singapore is 44. A 2004 report by the OECD quoted in Wikipedia shows that Korea, Poland, Mexico, the Czech Republic, Japan and Greece have longer annual work hours. Canada, Spain, New Zealand, Slovakia and Hungary are pretty close.

      en.wikipedia.org/wiki/...

      > 6. Social and ethnic diversity supported by an aggressive immigration policy ... Our immigration policy ensures a dynamic and growing population that creates increasing demand for goods and services which in turn sustains long term economic growth...

      It's true the US has significant general immigration. However, comparing US immigration policies for skilled workers with bachelors degrees or higher to Canadian, EU, UK, Australian and New Zealand policies, US policies are overly restrictive.
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