StokBlogs - Investors learning by example
Bring clarity to the often confusing world of investing, with an emphasis on common stocks and value investing.
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- Martin Whitman versus Bill Ackman
Martin Whitman Bill Ackman
Martin Whitman bought $326 million of MBIA's stock and surplus notes since December and attacks Ackman:
MBIA is being victimized by an apparently well organized bear raid headed by William Ackman ("Ackman") of Pershing Square Capital Management. While the bear raiders have been helpful to Third Avenue, in making it easier to acquire MBIA Common at depressed prices, the bear raiders might have the ability to adversely affect the going concern attributes of MBIA, given the possible capriciousness of Rating Agencies and regulators.
Bill Ackman is shorting shares of MBI massively.
Here is video and here is his presentation.
PS:Do you remember what said Eric Sprott about MBI .(MBI is a zero)
Sat, 08 Mar 2008 06:28:12 -0500 - No questions, no answers, no money
From now on before I buy or sell short, before I choose stocks or commodities,US or EUR I want to know both sides of the coin.
This brings me to the second point that I found too late .Everybody is bull: stock brokers,CNBC,FED.(Oil will be $200,gold will be $4000 and S&P will grow and dollar will be strong forever)
There is third thing that doesn't stop suprising me and that is lack of new questions. 90% of all news,posts just repeat the answers on questions that we know.
1.If the recession prevail who should expect the biggest downturn after financials and housebuilders?
2.If the credit crisis will get worse who is the next one in row to fall?
3.Who will suffer and who will benefit from weak dollar?
4.If you open your broker account in EUR and you will sell short US stocks and dollar will get weaker .What will happen?
5.If US interest rate will be equal to japanese interest rates what will happen to japanese yen?
6.What will happen to gold stocks if stock market will fall down 15% ?
7.What will happen if fed decrease interest rates to zero and you will still have recession?
8.What will happen if UBS,FNM or CFC will go bankrupt?
9.Who will suffer the most if US consumers will stop spending and start saving ?
10.What will happen to stocks if Hussein Obama,Hilary Clinton or John McCain will be elected?
If you have any other interesting questions or answers please post them !
Fri, 07 Mar 2008 18:53:22 -0500 - Smartest one is always the last one!
First I should talk about my best stocks.
I think the best stock I found was DFC Delta financial .I should be warned by its name Delta.Ever heard about delta airlines? They went bakrupt same as Delta financials. Vooch warned me many times.
Then I had long discussion with Bruno about the best bargain ever housebuilders! I recommended here PHM 9/7/2006 when the price was 28.8 $ per share ...It was screaming bargain now it is $11.
It's good to be smart especialy when you know stock gurus and their picks.Bill Miller (LMVTX) beat the market 15 years in row , Arnold Schneider (SCMVX) had a beautiful track record and Whitney Tilson (TILFX) was giving me Buffett lessons .
My friend asked me how you can make money when the stock market goes down? My answer was I will have such a bargain that the market will not bring it down. USG should be the proof.
There was this guru who told me don't care about macro just micro is important.I said fine then they beat me on weakening dollar, falling stock markets etc.
The other advice was put everything to your best ideas with all these advices I was a real Dhandho investor.
Before the biggest bull stock market you had 25 short only hedge funds after the bull market you had just 2 and half .(The last one retired)
So, if the bear market comes how many of these value contrarians will stay in the game?
My friend was crying that he is not good for UBS they prefer math-Phd. I hope they help UBS now.
PS: I burnt my whole portfolio with one pick Delta financial did I mention it before?
Fri, 07 Mar 2008 18:25:56 -0500 - Goodbye and good night ! WCI
The shares of WCI rebounded back to $3.1 from this year low of $1.35 so what has caused the stock to rebound ?- WCI expects massive loss of 460 million !
- WCI indicated that it may not file its 10-K on schedule.
- There's not much hope it can service what's likely to be more than $1.75 billion in debt at year-end.
- WCI was in violation of the interest coverage covenant governing its bank debt as of the end of the third quarter.
- WCI derives a substantial amount of its revenue from Florida
- Recently proposed accounting standards will negate WCI's ability to use the percentage-of-completion method for its tower business revenue recognition.
- Management has recently reduced WCI's operating cash-flow forecast from $1 billion for all of 2007 to $210 million
Thu, 06 Mar 2008 20:17:36 -0500 - Performance is everything in this business !
"There are a thousand ways to beat the market .The important thing is to master a technique."
Eric Sprott
"This volatile environment has influenced not only the amount of short-selling opportunities we identify on an ongoing basis, but also the strategy we employ in trading the short side of the portfolio.
Essentially, we endeavor to cover a selection of our shorts around market bottoms and then short stocks on thesubsequent bounce.
One of the tools we use to successfully execute the timing of this strategy is the VIX (CBOE Volatility Index), a widely used measure of perceived market risk that we have addressed in previous market comments. As we transition into March,we are wary of the fact that the chart below indicates to us that another correction may be
Interesting strategy isn't it ?
Thu, 06 Mar 2008 18:08:47 -0500 - Warren Buffett is the richest man on the planet
After over a decade, Warren Buffett is now the world's richest man again! Buffett's net worth increased $10 billion to $62 billion, meanwhile Carlos Slim is at #2 with $60 billion, and Bill Gates dropped from #1 to #3 with $58 billion. I found the following slides quite addictive, reading how each of these individuals made their massive fortunes:- The world's billionaires
- Youngest billionaires
- Celebrity billionaires
- Billionaire bachelors
- Billionaire women we envy
- Self-made billionaires
Wed, 05 Mar 2008 23:45:01 -0500 - The world's billionaires
- World best short sellers: Manuel P. Asensio !
Short-sellers tend to move under cover of darkness, launching stealthy guerrilla raids on stocks they deem ready for a fall.
Not Manuel Asensio, a combative soul whose noisy frontal assaults on his targets have made him one of the least popular figures on Wall Street.
Where fellow short-sellers deliver sotto voce comments on their picks to a select few, he takes short positions then posts vituperative screeds on the Web site for nine-year-old Asensio & Co., a broker-dealer and hedge fund manager.
Other money managers, longs and shorts alike, discuss stocks with owlish aplomb. Asensio rants about "frauds" and "scams," sounding like Al Pacino in Scarface.
I'm so glad I found his website .It feels like being on the treasure island.
Tue, 04 Mar 2008 05:59:14 -0500 - World best short sellers : Jim ChanosJim Chanos is certainly one of the best ones. What is he making for living ? Shorting stocks. It's so funny to see Jim Chanos betting against Carl Icahn and WINNING !
Watch this video!
Jim Chanos is CEO of Kynikos Associates.
We don't know how bad this gets. The problem is we don't know how bad the hole is. And by "the hole," I mean not only what the bad credit is but also the accounting of it. I think we're seeing that a lot of financial institutions probably weren't as profitable as we thought they were. That is, they showed big profits and everyone got big bonuses on the way up, and there are going to be big write-offs on the way down.
Another video.
Mon, 03 Mar 2008 19:42:55 -0500 - Dollar / Gold / Oil
The U.S. Dollar
The U.S. dollar hit some new and exciting lows this week. The Fed has told the world they will cut interest rates until the cows come home. The currency traders have listened. Over the last couple of weeks the U.S. Dollar Index is down almost 4% to close at just under 74. From a technical standpoint, this is scary. While the size of the move is disturbing, more important is the fact that this is completely uncharted territory.
The currency market moves primarily on technical analysis. When there are no obvious points of resistance (previous lows in this case) aggressive traders can try to find resistance. Unfortunately, nice round numbers tend to be psychologically important. Will the traders push the dollar to 70? I don't know and neither does anybody else. However, there is a strong probability that there will be volatile trading while everybody tries to find the next bottom.
Gold
Gold has taken its cue from the falling dollar and closed at $975 on Friday. A similar dynamic is happening in the gold market as gold hits new highs. There is one fundamental difference between the two markets. Gold is a relatively small market and is much more volatile. While the dollar has fallen about 4%, gold has risen about 8% over the last couple of weeks. I would not be surprised to see some short term selling in the next couple of days as traders take some money off the table.
Oil
West Texas Intermediate Crude had its first weekly close above $100/bbl this week. That is up about 80% in nominal terms from its lows of around $55/bbl in January, 2007. The oil market is also in uncharted territory, which creates uncertainty and fear.
Conclusions / Questions
The recent rise in oil and gold is screaming inflation without even looking into the recent agricultural inflation. What does this mean for the U.S. stock market? At some point U.S stocks will become very cheap in other currencies and buyers will start to step in. I don't think that day is anytime soon. What will it take foreign buyers to step in? Personally, I would like to see:- Stabilization of the dollar. Let other people try to grab this falling knife!
- Some indication that the official government policy is not to destroy the dollar. A responsible fiscal and monetary policy would go a long way here.
- An indication that the U.S financial system will weather the debt crisis. Right now it seems that everybody is still in denial. Although about $150 billion has been written off, there is still an additional $450 billion to be written off (according to S&P). The mark to model fantasy has to end and the true amount off losses disclosed.
- An attractive dividend yield on the S&P 500. A 50% drop in price would do this.
There is also a lot of banter about how the Sovereign Wealth Funds are sitting on boatloads of cash and very large investments in the United States are imminent. Of course, anything is possible, but I can't imagine responsible investment professionals assessing the current situation and deciding this is the optimal time to buy into the U.S. market. Then again, I've been wrong before.
The path of least resistance seems to be down for U.S. stocks for the next little while unless there is some catalyst to change this dynamic. If anybody has some insight as to what that catalyst might be, I'd love to hear it.
SunTzu
Sun, 02 Mar 2008 14:13:33 -0500 - Stabilization of the dollar. Let other people try to grab this falling knife!
- Lithium this market will rocket !
I believe that in 2015 we will have electric cars using lithium ion batteries. You can check (Shai Agassi,Yi Cui,Martin Eberhard, Jan-Olaf Willums ).It means that the demand for lithium ion batteries and lithium will be much,much higher.
The lithium market can be divided between lithium chemicals (sourced from brines or minerals), which account for some 80% of total consumption, and lithium minerals consumed directly. These market shares have almost reversed since SQM entered the lithium carbonate market in 1996.Reflecting growth in demand, world lithium production is estimated to have increased by some 4%py between 2002 and 2005. The industry is characterised by a high degree of concentration of production, with two countries a' Chile and Australia a' together accounting for nearly two-thirds of world output and for most of the growth in production in the mid-2000s.
Sons of Gwalia in Australia produces some 60% of world output of lithium minerals (as spodumene) from Greenbushes hard rock deposit, with output estimated at 120,000t (gross weight) in 2005. SQM of Chile, with shipments of 27,800t lithium carbonate in 2005, accounted for 36% of world production. This share will increase in 2008, following the company's planned expansion in production capacity to 40,000tpy.
An interesting feature of world lithium production is the potential emergence of China as a leading supplier. The development of technology to extract lithium from high-magnesium brines has led to the start of lithium carbonate production from salt lakes in Qinghai and Tibet provinces. In late 2005, CITIC Guorun began construction of a 35,000tpy lithium carbonate plant to exploit lithium reserves in Xitai Ginar salt lake in Qinghai province. Production was scheduled to start in 2006.
Portable electronic consumer products will remain the main area of growth for secondary batteries through 2010, with shipments to the Asian cellular phone market alone estimated to rise by 50%py and growth rates in Russia and Poland reaching 70%py. Longer-term growth will depend on the market penetration achieved by hybrid electric vehicles and on the commercialisation of safe and cost-effective lithium batteries to power them.
Demand for lithium has shown strong growth in the mid-2000s, with world consumption estimated to have increased by 4-5%py since 2002 to reach a record level close to 80,000t lithium carbonate equivalent (LCE) in 2005. This increase has been led by higher demand for lithium carbonate in secondary batteries. In 2005, batteries accounted for 20% of total lithium consumption, more than double the 9% share held in 2000. Growth in the use of lithium secondary batteries has been driven by the rapid expansion in the portable consumer electronics sector. By 2005, nearly all mobile phones and over 90% of laptop computers incorporated lithium-based secondary batteries due to their higher energy density and lighter weight than nickel-cadmium and nickel-metal hydride products. Driven by demand from the battery market and higher production costs, lithium carbonate prices began to recover in 2003, and the upturn gained pace through 2006. Tight supply was reflected in a 20% rise in Chilean lithium carbonate prices in 2005, while SQM reported that in the first quarter of 2006, prices were 40% higher than in the same period of 2005.
How much do we have in the ground?
The main players are:
NYSE:SQM;
NYSE:FMC (FMC Lithium);
Chemetall GmbH is part of Rockwood Holdings, Inc. (NYSE:ROC)
ASX:ADY Admiralty Resources NLChina:CITIC Guoan hold a large stake in MGL, the largest Chinese manufacturer of LiCoOx cathodes for LiIon batteries.
Sons of Gwalia Ltd has been in administration since September 2004.
Sat, 01 Mar 2008 23:52:04 -0500 - Buffett's 2007 Annual Report is Out!
Warren Buffett's 2007 annual letter to shareholders and the Berkshire Hathaway annual report have been unleashed. Enjoy!
Sat, 01 Mar 2008 21:26:42 -0500 - Welcome in London Think City !
New zero-emission electric car is being launched in London. The Think City can travel for 125 miles and has a top speed of 65mph.
Its 'fuel' bill will come to just £120 over 10,000 miles compared with about £1,600 for a petrol car. And if the Think City is charged up on the cheap-rate overnight electricity, the bill will be only £50.
Sat, 01 Mar 2008 18:09:36 -0500 - Donald Coxe - Sprott's secret source ?
I found his name on some forum then checked him out and was suprised how many ideas this guy produces and how similiar they are to ideas of Eric Sprott.
What I understood is that he publishes monthly report called basic points and he writes articles to canadian newspapers as well. Just to give you a taste here are 2 links.
1.
2.
I also heard his track record is quite good does anybody know something more about this guy ?
Fri, 29 Feb 2008 22:57:52 -0500 - Sears Holdings (SHLD)
I just got finished reading Eddie Lampert's letter to the shareholders. I started a new position in SHLD at $97.75/share recently.
After reading it, I had so many key points I wanted to post here, I decided to just provide the link:
http://www.searsholdings.com/invest/
It's jam-packed with great information.
Eddie Lampert is a superstar in my book. I have never lost money with him when I invested in AZO and SHLD in the past.
- Vooch
P.S. I wonder if they'll start selling DieHard batteries at AutoZone soon?
Thu, 28 Feb 2008 22:59:20 -0500 - Regulators are bracing for 100-200 bank failures over the next 12-24 months
From CNN:In the past year there have been four bank failures.
And the chairman of the Federal Deposit Insurance Corp and banking industry experts foresee many bank failures down the road.
"Regulators are bracing for 100-200 bank failures over the next 12-24 months," says Jaret Seiberg, an analyst with the financial services firm, the Stanford Group.
Expected loan losses, the deteriorating housing market and the credit squeeze are blamed for the drop in bank profits.
The problem areas will be concentrated in the Rust Belt, in places like Ohio and Michigan and other states like California, Florida and Georgia.
Thu, 28 Feb 2008 11:48:19 -0500
