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  • KKR Earning Billions; I'll Take 7.3% On The Recently Issued Preferred Stock [View article]
    Smells like an MLP, only the underlying source of business income - highly illiquid private equity holdings - is vastly more complicated than pipeline companies' and other MLPs' distributions... Tempting but I'll stay away.
    Feb 20 05:52 PM | 2 Likes Like |Link to Comment
  • Occidental Petroleum Now A Dividend Achiever [View article]
    Good analysis. OXY is going to surprise on the upside and will have a big year.

    Keep in mind also the upside from the Monterey Shale, which will be permitted at some point by Gov. Brown, given the desperate need for state revenues. OXY dominates the Monterey opportunity and has significant upside at very low cost of entry.
    Feb 20 04:31 AM | 1 Like Like |Link to Comment
  • Heinz May Be A Buffett Stock, But This Isn't A Buffett Price [View article]
    Possible buys now:

    Morgan Stanley: very cheap, turnaround oppty, shedding fat now and M&A activity rebounding. Longer term, much more value to a slimmer bank focused on asset mgmt and with less exposure to volatile trading revenues.

    Others:
    AIG - also in turnaround mode, very cheap now, solid franchise.
    BBVA - extremely cheap, great franchise, on track to repay the ECB, worst is over
    CZZ - Brazilian sugar/ethanol producer, remaking itself into a major player in fuel distribution, severely undervalued
    Feb 20 04:13 AM | Likes Like |Link to Comment
  • Cisco: A Solidly Improving Story Continues [View article]
    Cisco's a shaky bet.

    Core business is undergoing ferocious price competition from well-capitalized, opportunistic rivals. Other businesses have executed poorly.

    Acquisitions have not been integrated well and have failed to deliver synergies.

    Extremely cumbersome, complex senior management structure that inhibits flexibility and attention to lingering problems and underperformance.

    If you're betting on a turnaround, HPQ actually offers a better margin of safety. NTAP is a better value as well. Until/unless Chambers goes, and many of the senior VPs along with him, CSCO will lag.
    Feb 15 03:00 PM | Likes Like |Link to Comment
  • Heinz May Be A Buffett Stock, But This Isn't A Buffett Price [View article]
    Kerry's shifty, sure, but this is small potatoes compared to his moves in mid-2008, when he and Teresa were trading furiously after John heard Paulson's Senate testimony about the impending financial collapse.
    Feb 15 02:36 PM | Likes Like |Link to Comment
  • Heinz May Be A Buffett Stock, But This Isn't A Buffett Price [View article]
    Not a problem for private equity investors seeking lessons in how to lever up and invest properly, but Buffett really doesn't offer any lessons to a small unlevered investor buying common shares.

    Buffett has more in common with Mitt Romney than with Peter Lynch.
    Feb 15 02:02 PM | Likes Like |Link to Comment
  • A worrying trend or a contrarian indicator? Leon Cooperman's Omega Advisors was far from the only big hedge fund to unload its Apple (AAPL) position in Q4. Joining Omega were Dan Loeb's Third Point, Thomas Steyer's Farallon Capital, Barry Rosenstein's Jana Partners, John Burbank's Passport Capital, and Eric Mindich's Elton Park Capital. On the other hand, David Einhorn's Greenlight Capital raised its stake to 1.3M shares from 1.1M and bought 275K call options ahead of its Prop. 2 suit (13F). Apple has historically been a hedge fund darling[View news story]
    Samsung has blanketed San Francisco's hip quarters with ads touting their huge screen, and it's working. Evidence is piling up that in the bellwethers of cool on the other side of the Pacific, such as Hong Kong and Singapore, young trendsetters are experiencing "Apple fatigue" and have already turned toward the product from Korea, which is now seen as the latest in Cool. http://reut.rs/Yeev0V

    If you think this business of Cool is without much logic to it, welcome to the club. Apple is competing in the consumer fashion/pop culture world, where tastes can turn against the market leader in very short order. Apple is no longer the King of Cool.
    Feb 15 10:56 AM | Likes Like |Link to Comment
  • A worrying trend or a contrarian indicator? Leon Cooperman's Omega Advisors was far from the only big hedge fund to unload its Apple (AAPL) position in Q4. Joining Omega were Dan Loeb's Third Point, Thomas Steyer's Farallon Capital, Barry Rosenstein's Jana Partners, John Burbank's Passport Capital, and Eric Mindich's Elton Park Capital. On the other hand, David Einhorn's Greenlight Capital raised its stake to 1.3M shares from 1.1M and bought 275K call options ahead of its Prop. 2 suit (13F). Apple has historically been a hedge fund darling[View news story]
    Bingo. AAPL's runup was fueled by unwise and herd-like portfolio allocations into one consumer gadget company. Given signs of weakness in that stock, the herd is furiously rebalancing so that their investors don't attack them for violating basic diversification principles.

    How do you think investors will react when they learn that 1) the money they thought was spread out across multiple investment classes (smallcap, largecap, growth, value etc) was in fact unusually concentrated in one stock, and 2) said stock is now falling?

    Will those investors listen to the Apple, Uber-Company of the Modern Era thesis any more? Or will they go back to proper diversification and dump the funds that violated this rule?
    Feb 15 10:10 AM | Likes Like |Link to Comment
  • A worrying trend or a contrarian indicator? Leon Cooperman's Omega Advisors was far from the only big hedge fund to unload its Apple (AAPL) position in Q4. Joining Omega were Dan Loeb's Third Point, Thomas Steyer's Farallon Capital, Barry Rosenstein's Jana Partners, John Burbank's Passport Capital, and Eric Mindich's Elton Park Capital. On the other hand, David Einhorn's Greenlight Capital raised its stake to 1.3M shares from 1.1M and bought 275K call options ahead of its Prop. 2 suit (13F). Apple has historically been a hedge fund darling[View news story]
    Android's not an ecosystem to rival Apple's? Developers around the world are shifting to Android. You're behind the curve.
    Feb 14 09:03 PM | Likes Like |Link to Comment
  • A worrying trend or a contrarian indicator? Leon Cooperman's Omega Advisors was far from the only big hedge fund to unload its Apple (AAPL) position in Q4. Joining Omega were Dan Loeb's Third Point, Thomas Steyer's Farallon Capital, Barry Rosenstein's Jana Partners, John Burbank's Passport Capital, and Eric Mindich's Elton Park Capital. On the other hand, David Einhorn's Greenlight Capital raised its stake to 1.3M shares from 1.1M and bought 275K call options ahead of its Prop. 2 suit (13F). Apple has historically been a hedge fund darling[View news story]
    Will Apple continue to throw off scads of cash? Of course. But they're not the coolest thing around anymore.

    Per IDC:
    Q4 2011 Smartphone unit sales: Apple 37m,Samsung 36.2m.
    Q4 2012 Smartphone unit sales: Samsung 63.7m, Apple 47.8m.

    Current market share: Samsung 29%, Apple 21.8%.
    Samsung's average selling price is rising. Apple's is not.

    Samsung is the latest cool thing in an industry whose consumers have, as one poster above colorfully put it in another context, the "attention span of a gnat."

    You won't make money by looking in the rear view mirror. Look around, plenty of great opportunities out there, including many with far better risk/return profiles than Apple.
    Feb 14 07:49 PM | 4 Likes Like |Link to Comment
  • A worrying trend or a contrarian indicator? Leon Cooperman's Omega Advisors was far from the only big hedge fund to unload its Apple (AAPL) position in Q4. Joining Omega were Dan Loeb's Third Point, Thomas Steyer's Farallon Capital, Barry Rosenstein's Jana Partners, John Burbank's Passport Capital, and Eric Mindich's Elton Park Capital. On the other hand, David Einhorn's Greenlight Capital raised its stake to 1.3M shares from 1.1M and bought 275K call options ahead of its Prop. 2 suit (13F). Apple has historically been a hedge fund darling[View news story]
    Not only is Apple slashing orders for the iPhone5, but the iPad is underperforming as well.Market share down from 56% in Q2 to 38% now. Unit sales falling. Revenues up only 1.8%.

    Ouch:
    http://read.bi/12GXMUN
    Feb 14 07:37 PM | 2 Likes Like |Link to Comment
  • Top 13 Stocks For 2013 - Part 1 [View article]
    I like your approach of focusing on larger themes that 1) are solidly supported by hard economic data, 2) point to a sharp change in earnings for all the leading companies in the industry, and 3) are easy for Mr Market to understand and adopt.

    My own themes include your two, above, and the global obesity epidemic: buy the insulin makers (NVO and SNY) and also the emerging market Coke bottlers such as KOF who are well on their way to making their countrymen even fatter than Americans.

    One more I'm pretty confident in is Europe's rebound. Reports of the eurozone's death are, as Mr Twain said, premature. A lot of herdlike behavior that has obscured the fact that Europe boasts many great companies with brilliant managers - this is very underappreciated by Americans who've not worked for them - and also exceptionally talented engineers and scientists, and excellent R&D. Novo Nordisk is a winner, as is Core Laboratories (CLB) and plenty of others.

    Re the housing recovery, I like the smallcap players such as American Woodmark AMWD or Fortune Brands FBHS.

    I'm with you on natural gas, with a particular focus on technology-heavy service providers who have the potential to dominate the market for their services or, alternatively, have the scale and track record to generate above-average returns as drilling expands. So to CJES I would add GEOS and HAL.

    Another related theme is chemicals producers whose feedstock prices have fallen sharply due to cheap natural gas. I like LYB and am researching other players.

    Also, it's worth looking at a Brazilian sugar producer that is reinventing itself as a major fuel distribution and alternative fuels provider in that country, Cosan (CZZ).
    Feb 14 07:32 PM | Likes Like |Link to Comment
  • A worrying trend or a contrarian indicator? Leon Cooperman's Omega Advisors was far from the only big hedge fund to unload its Apple (AAPL) position in Q4. Joining Omega were Dan Loeb's Third Point, Thomas Steyer's Farallon Capital, Barry Rosenstein's Jana Partners, John Burbank's Passport Capital, and Eric Mindich's Elton Park Capital. On the other hand, David Einhorn's Greenlight Capital raised its stake to 1.3M shares from 1.1M and bought 275K call options ahead of its Prop. 2 suit (13F). Apple has historically been a hedge fund darling[View news story]
    Not buying. I remember when Blackberries were the coolest thing in the universe, too

    Apple has already ceased to be the Coolest Company On the Planet. Build orders for iPhone 5s have been slashed by one-third. That can't all be due to replacement by the iPhone 5S.
    http://read.bi/YbIIeI

    Apple remains a great company, but so was RIMM/Blackberry in its day, as was Sony, as was Nikon etc etc. The laws of physics apply to AAPL as they do to any other consumer electronics company, which are that, unlike, say, an oil company, a gadget-maker's competitive advantage period can shrink to nothing virtually overnight.

    Apple's products, while still cool and generating cash, are no longer the coolest on the planet. Already, the hipsters - and not just the hipsters - are shifting to the Samsung product whose screen area is over 33% larger than the iPhone's. And Samsung has deep marketing pockets and will continue to spend hundreds of millions to spread awareness even further and influence consideration and purchase.

    Samsung's product has caught up with and in the most crucial area - photo-sharing and display - even surpassed Apple's product.

    This will continue to cause Apple's iPhone sales to underperform expectations - not financial expectations necessarily, but the popular expectation of Apple continuing to grab all the buzz and monopolize Cool.

    The problem for Apple is that fund managers, being far too overweighted toward this gadget company- especially those who really shouldn't have large holdings in a megacap tech stock to begin with - will dump it en masse if and when the price begins to fall, for the simple reason that they'll face very unpleasant questions from their own investors as to why they were so overweight one stock.

    .
    Feb 14 06:53 PM | 8 Likes Like |Link to Comment
  • Heinz May Be A Buffett Stock, But This Isn't A Buffett Price [View article]
    The preferred shares are indeed where the action is for Buffett. His genius is for financial engineering, not stock-picking, and his formula hasn't really changed in over 40 years:

    1) find a modestly growing but well-entrenched, conservatively managed old company that generates rock-solid cash flows with only modest annual increases in invested capital;

    2) engineer a deal that gives you first claim on the cash flows of the business, either by taking the company private (See's Candies) or by locking down a large portion of the preferred shares, or both;

    3) take the cash flows out of the business and use them to lever up your returns on equity investments in other businesses.

    Buffett is not a genius stock-picker. Were it not for his leverage, his equity holdings would have barely outperformed relevant indices over the years.

    Buffett's massive leverage, obtained at very attractive rates and on very long terms, is what sets him apart.

    He is a genius at arranging cheap, stable sources of captive financing that provide him a 1.6x leverage ratio for what is essentially a conservative version of a hedge fund masquerading as a closed-end fund.
    Feb 14 06:28 PM | 1 Like Like |Link to Comment
  • Coca-Cola: A Conservative Investor's Best Friend [View article]
    KO's return on invested capital has shown a slow but very consistent decline over the last 5 years.

    In other words, it's clear that KO management is becoming less and less skilled at their deployment of capital to generate real economic returns.
    Feb 13 04:57 PM | Likes Like |Link to Comment
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