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Chris Sandys
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Portfolio Manager, Belpointe Asset Management, Greenwich, CT Chris is responsible for overseeing investment advice given to clients of Belpointe Asset Management. Chris began his career in finances in fixed income institutional sales at UBS. While at UBS he transitioned to the Private Client... More
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  • The Vanishing American Saver

    A friend of mine authored a good piece on the state of savings in the United States. I agree with her conclusions. It is a quick and interesting read:

    The Vanishing American Saver

    Mar 04 7:31 PM | Link | Comment!
  • Herbalife - Not Just For The Adults

    There have been a lot of articles recently about Herbalife (HLF), and although I would like to write an article about this position, I cannot add anything to the prodigious amount of information that has already been published. However, I can offer an opinion for your consideration.

    As a quick summary, HLF is the battle ground for a number of hedgie titans. On the short side is Bill Ackman, bringing the shorting capability of his $12BB fund, Pershing Square. He has shorted a gigantic 20 million shares. On the long side, taking the fight to Pershing, are a growing number of challengers, most notably Dan Loeb and Carl Icahn. The fight has been a bit acrimonious between Ackman and Icahn, who have litigation history.

    Never before have I seen the strategy between the competing sides so clearly spelled out for anyone that takes the trouble to read it all. It's a particularly long read from Ackman. It seems as though he is trying to make an entire case for regulators, hoping that if he does all the leg-work they will only need to follow his lead and open a case. No kidding, it really looks like that is part of the strategy. I think that smacks of hubris. I also think it's incredibly precarious to invest approximately 7% of your hedge fund on the hope that regulators will take action, and that the potential action they take will eventually go in your favor. I have no idea if he has made any Herbalife investments other than the short equity position. If I were one of his investors I would hope that he had positions in options that expired in the money, but none of that has been disclosed and is purely speculation.

    As I have been following the news of this over the past couple of months I have noticed a common sentiment with the financial journalists. They are, very regularly and annoyingly, cautioning the retail investor to steer clear of this. It is almost as if they view this as a pit fight between two seasoned dogs, the kind of fight that you would have everything to lose by getting into that pit. I disagree.

    So often you will hear retail investors lament, often justifiably, that they are at a great disadvantage when trying to compete in the market with institutional investors. From reading what financial journalists have to say, including some here on Seeking Alpha, it seems as though that is more than a foregone conclusion, it is your expected role in the market. Why should you get in this pit of prodigious information and clearly defined battle lines? Wouldn't you be better off looking for a steady, safe return in Procter & Gamble? This is an opportunity for you to absorb information, make a decision, and invest pari passu with the guys that make legendary big-money. You don't need to wait two years to read a James Stewart book about how fortunes were made and lost, you can be part of that history.

    Are their risks? Obviously - yes. But two things make this opportunity very enticing. The first is that there is a great deal of public information available. The two warring sides have seen to it that the best cases for shorting or going long have been presented to the world of investors and regulators. As someone close to Herbalife fight, Einhorn, could tell you - it's okay to have a differing opinion, as long as you take the time to understand the issue. Secondly, you are not going into this alone. If you go short, you will in the same boat with 20 million shares sold short by Ackman and those of his tag-alongs. Conversely, joining the battle with Icahn on your left and Loeb on your right is also comforting. Either way, you are not going to be caught in a weak position due to superior information or leverage applied in one direction by an institutional investor.

    I need to disclose that my firm, Belpointe, has a dog in this hunt. We are long HLF. I found Ackman's argument not only unconvincing, but, as I mentioned, almost as a gambit to hand regulators a case on a silver platter.

    Whatever you decide to do, don't let financial journalists condescend you into not participating. If you have the capability to read (you don't even need to analyze - that's already been done for you) and the capability to buy and sell a stock, then there is no reason to be afraid. Be cautious and careful with your money, but don't be afraid. If you decide to steer clear, then do so based on your opinions, not on the admonishment of journalists that you are too little to sit at the adults' table.

    DISCLOSURES: Belpointe is long HLF. Material within this article does not constitute investment advice and is meant for educational and discussion purposes only. Past performance does not guarantee future results.

    Disclosure: I am long HLF.

    Feb 14 9:55 PM | Link | Comment!
  • Who's in charge here, anyway?
    An article in the New York Times caught my attention.

    http://www.nytimes.com/2010/07/15/business/15aig.html?src=busln

    There is something very wrong with the ending of this story.

    The Chairman respresents the shareholders. You, the American taxpayer, are a major shareholder in AIG.  The CEO is an employee at will; he works for you.  In a showdown the CEO should not win, but why did he?

    Mr Golub, the Chairman, your representative, states: "I’m resigning for the simple reason I believe it is easier to replace a chairman than a C.E.O.”  Problem #1, he took the easy route.  It is always easier to walk away. He also states: "I view asking the board to choose between us would be an abdication of my responsibility to lead.”  Wrong. It was your duty to ask the board to choose. Leadership requires difficult confrontations.

    I would to say this is what happens when the US Government tries to run a business enterprise, but that would be deceptive. Unfortunately, Mr. Golub's actions as a Board member are par for corporate boards.  The positive thing I can say about Golub is that he gets a nod for resigning his position, rather than resigning his principles, i.e. he's trying to make a statement. Let's hope his replacement, Miller, has the backbone and the resolve to represent the owners.

    Disclosure: No Belray clients are direct shareholders of AIG
    Tags: AIG
    Jul 14 10:02 PM | Link | Comment!
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