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  • Bill Gross's Misguided Diagnosis Of America's Economic Problems [View article]
    You are dead on correct. The key to understanding Gross and other guys saying the same thing, like Doug Kass, and John Hussman, is this: they are old and rich, and their clients are old and rich.

    I don't mean that in a class- or age-warfare kind of way. (Ok, I do a little.) I simply mean that their views are colored by their experience. It is inarguable that Fed policy has marginally hurt people who are older, and who in addition to social security, rely upon bond coupon income. But such people are, relative to most Americans, among the economic elite. I absolutely agree that viewed on a macro level, looking at all sectors of the economy, all age-groups, Fed policy has been enormously helpful. Here is my post on this from some time ago, in response to Kass: http://bit.ly/11DCiXH

    More broadly, the Fed should not even be viewed as the true cause of this. The true case of pain is deflationary tendencies in a deleveraging over-indebted economy. The Fed's impact on interest rates has actually been rather minor. See here, for example:
    http://bit.ly/11DCiXJ

    The Fed should best be viewed as a ship captain steering our little ship left or right in response to deflationary or inflationary winds that would have us veer off course from a price-stability standpoint. In the 80's, Volcker turned hard left because of strong inflationary winds pushing us to the right. People who knew nothing hated him. Now Bernanke is steering our ship hard right because of deflationary winds pushing us strongly to the left (just as the Fed did in the late 1940s). People who know nothing hate him and call his actions unprecedented.

    Even the impact of the Fed on asset prices is likely wildly overstated by people misconstruing Fed policy. The Fed is really only interested in rising asset prices to the extent they signal or cause less deflation.

    Bill Gross has been Mr. Wrong ever since about early 2010, when he first started freaking out about the Fed. I am not terribly religious, but I do pray the Fed stays the course -- to continue my metaphor, until deflationary tendencies have played themselves out enough that the economy can grow unaided, and that it will not be bullied by the whining of portfolio managers who seem unable to see beyond the complaining of their old clients, who apparently could care less about what the economy looks like in fifteen years, so long as they get nice bond income for the remaining years of their own lives.
    Jun 15 07:27 PM | 1 Like Like |Link to Comment
  • SodaStream Tie-Up Could Make Sense - And Cents [View article]
    Long since $41.5 and $28.5 in fall of 2011. In addition to business-model concerns, it was also undervalued because at the time it reported in Euros and traded basically as a Euro stock during the Eurozone crisis. You could literally watch the stock price gyrate wildly with the Eurozone ups and downs, even though the U.S. business was just beginning to explode.

    Biggest concern is what independent growth will be like after the expansion into new doors (Walmart, etc.) stops providing one-time boosts.

    Also, pretty sure both Coke and Pepsi bought their U.S. bottling operations, so they can basically do whatever they want with regard to selling syrup directly to consumers if they want to. That is the political/mechanistic thing that makes such a tie-up possible.
    Jun 10 05:45 PM | 1 Like Like |Link to Comment
  • Why I Am Selling Ituran Location And Control Ltd. [View article]
    Helen, so NOW Klarman has reduced his Ituran postiion by about 20%, as of today's 13F filing. What can I say, he's fading me.... :-) http://1.usa.gov/10oI42S
    May 14 09:49 PM | Likes Like |Link to Comment
  • SodaStream: Economic Value Added [View article]
    How are you backing out IP assets out of operating assets?
    May 13 08:02 PM | Likes Like |Link to Comment
  • Why I Am Selling Ituran Location And Control Ltd. [View article]
    Helen, upon review, it looks like you are correct. I apologize for the error. I was relying for the earlier information on other blog posts by other people, instead of looking at the older 13Fs myself, and only looked at the latest 13F to compare it to prior blog reports. I should have gone directly to EDGAR as you did, and as I just did. For me, I put it as a rationale last because it is my least important rationale for selling. I'm comfortable with my own analysis for selling, regardless. But it was a pretty egregious error and thank you for identifying it.
    May 7 12:56 PM | Likes Like |Link to Comment
  • Why I Am Selling Ituran Location And Control Ltd. [View article]
    HSP15, great comment, thanks for your thoughts. You haven't convinced me to keep it though. Cautious optimism has existed on implementation for a long, long time. I'll keep my eye on it though, and good points about FX. I tend to ignore FX, deliberately, because I'm not sure it is appropriate to back it out. Once you translate the FX, the FCF is still gone, as I understand it, even if it's due to currency-translation issues. It's really just an argument that they are not hedging their FX exposure well enough, which is an additional argument against them in my view. For a contra note how PM, which reports in dollars, assiduously hedges its exposure to many, many currencies, not entirely successfully (because that is impossible), but very well. If you think I am missing something on the FX issue I would be very grateful for a fuller explanation as to why.
    May 6 11:53 AM | Likes Like |Link to Comment
  • Procter & Gamble Is In Trouble [View article]
    And P&G cutting forecasts again.

    http://bit.ly/Mk9qAr
    Jun 20 07:51 PM | Likes Like |Link to Comment
  • Transocean Has A Major Accounting Problem (And Many Others) [View article]
    TGC004, thank you for returning and demonstrating your continued failures in reading comprehension.

    Also, note that I posted another fraud stock above for your "accountants catch everything and the lawyer is foolish to suggest otherwise" portfolio. Stocks like that one should lose you money for years to come.
    Jun 13 12:19 PM | Likes Like |Link to Comment
  • Transocean Has A Major Accounting Problem (And Many Others) [View article]
    Hey TGC004, did you own Aegis, too?

    See here:
    http://read.bi/KyDMwa

    After all, as you state, "...If management doesn't, then the audit firm will certainly [verify]..." So I hope you had this one in your "accountants catch everything and the lawyer is a fool to say otherwise" portfolio!

    I'm guessing you are an accountant. To be fair, one profession that is more of a joke than yours is the ratings agencies, though of course they employ many accountants. (They do an excellent job of telling us all what anyone with common sense and/or a calculator knew six months before they said it.)

    Allow me also to suggest Diamond Foods (DMND) for your "accountants catch all shenanigans and the lawyer is a fool to suggest otherwise" portfolio, too? Or how about GMCR? That's a GREAT one for your portfolio as well. Boy, their accountants sure did a bang-up job looking at inventories, there!

    I'll be sure to keep updating you on more stocks for your personal "accoutants catch all shenanigans and the lawyer is a fool to suggest otherwise" portfolio. Since every year sees some relatively well-known company or another rocked by an accounting scandal, we should have regular additions for you and you can lose money almost at will.
    Jun 12 12:48 PM | 1 Like Like |Link to Comment
  • Transocean Has A Major Accounting Problem (And Many Others) [View article]
    Fair points.
    Jun 7 10:57 AM | 1 Like Like |Link to Comment
  • Transocean Has A Major Accounting Problem (And Many Others) [View article]
    Hi Joshua, it has now been awhile since I did this analysis, but the way I would usually handle that is to deduct depreciation/amortization from cash flow, rather than deducting CapEx. That is how Greenblatt does it and I like his logic: the portion of CapEx that can reasonably be assumed to represent maintenance should over time approximate depreciation.
    Jun 7 10:57 AM | Likes Like |Link to Comment
  • Transocean Has A Major Accounting Problem (And Many Others) [View article]
    Great, I hope those Enron holdings worked out well for you.
    May 31 09:29 PM | 2 Likes Like |Link to Comment
  • Transocean Has A Major Accounting Problem (And Many Others) [View article]
    You seem primarily interested in an oil price analysis. I do not think RIG is in any sense the best play on capturing profits from increases in price,. As blogged by me in another article, I think XOM is a phenomenal long-term hold, and a buy under $80. But RIG is an asset-intensive services company. It neither makes the rigs (which also increase in price for new ones during a boom) nor sells the oil. Obviously I get the interaction with dayrates though.

    As I wrote in my article, from an asset standpoint, I think it's much more undervalued. than from a FCF standpoint. I view it as an asset play or a turnaround. For a true long-term holding viewpoint, I think it is not nearly as attractive as the oil companies themselves. Keep in mind that in making its goodwill impairment, RIG itself is telling you that it does not expect its free cash flow to match the assumptions in place at the time of the 2007 GlobalSantaFe deal. And it said so again when it diluted shares at $40/share offering price.

    I don't think my analysis in my comment at all implies that the market is not pricing in China, India, etc. A lot of that probably is priced in. As is a lot of uncertainty.

    Keep in mind I'm still long. I think it's also getting hammered because it trades as if it is a Euro stock, since it is legally based in Switzerland.
    May 31 07:26 PM | 1 Like Like |Link to Comment
  • Transocean Has A Major Accounting Problem (And Many Others) [View article]
    1) You point is correct as to deepwater drilling away from the gulf.
    2) CapEx comes right off the financial statements. Also, the latest annual report is replete with admissions that far from thinking 2011 was a good time take rigs offline, repairs took way longer than expected; most analysts acknowledge this as well.
    3) I'm not sure what point you are making about the accounting impairment.
    4) Oil prices have dropped 30% this year.
    5) The dollar is strengthening, and will continue to do so as long as Europe sucks. All of the moo-mooing from Fed haters in the U.S. that the dollar is weakining in the last three or four years is the nonsense of economic illiterates and politically-motivated obfuscators. It has proved to be just as nonsensical as all of the calls that we face imminent hyperinflation.
    6) China is slowing, India is at its lowest GDP in years, Europe is a basket-case, and the U.S. seems to be carrying the torch. This is much more conducive, at best, with a "muddle through" scenario than with a strong recovery. Also, don't understimate the amount of additional oil that fracking will eventually produce not just in the U.S., but in places like Europe and China....
    May 31 12:23 PM | Likes Like |Link to Comment
  • Transocean Has A Major Accounting Problem (And Many Others) [View article]
    And Delloitte "audited" many of the Chinese RTOs, BTW.
    May 30 06:44 PM | 3 Likes Like |Link to Comment
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