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  • Brown-Forman: Earn 13.8% (Nearly) Risk Free [View article]
    I do not contest that the gap *should* close, only that it hasn't been closing for a week now. So long as there is a struggle over control of the company, the spread may persist or even grow. Someone has been willing to push the gap down to 6% to 7% but no lower. I disagree about the cost of capital being zero. Presumably it is the cost of capital (plus opportunity cost, plus risk that the gap might not close in a year, and so on) that deters hedgers from closing the gap below ~6%. On the other side, someone is willing to bid up the A shares exclusively, to what price ultimately we don't know.

    I established a long/short position a week ago -- thank you for alerting us to the opportunity. As i type now the gap has increased to $8. This could take months or longer.
    Jun 11, 2015. 02:48 PM | Likes Like |Link to Comment
  • Brown-Forman: Earn 13.8% (Nearly) Risk Free [View article]
    Oh, it means something. The odds are near zero of it occurring by chance alone that the two would stay pegged at 6-7% difference while both move up and down day to day. Yes, i know that the spread had grown to $13 when you first pointed it out.
    Jun 11, 2015. 09:47 AM | Likes Like |Link to Comment
  • Brown-Forman: Earn 13.8% (Nearly) Risk Free [View article]
    Nope. It's still stuck at 6-7% A > B, nearly 4 full market days since I made the observation. Someone(s) is holding it there pretty snugly.
    Jun 10, 2015. 09:49 PM | Likes Like |Link to Comment
  • Why Greece Still Matters To Financial Markets [View article]
    But a Greek exit is unlikely, since most Greeks don't want that. A Greek default (or last-minute deal) is a foregone conclusion, but that's another matter. What's the widespread harm of Greece defaulting on loans from the IMF and the ECB? Not much, say the markets.
    Jun 7, 2015. 08:53 AM | Likes Like |Link to Comment
  • Brown-Forman: Earn 13.8% (Nearly) Risk Free [View article]
    Something, well, trading actions are holding these two glued to a fixed ratio of A > B by ~6% over the last two days. Let's see how long that holds.
    Jun 5, 2015. 10:38 PM | Likes Like |Link to Comment
  • You Took Good Care Of The Market While I Was Gone [View article]
    ' "if the oxygen masks come down, be sure to put yours on first before trying to help others." An advice the investment profession takes quite seriously.'

    May 20, 2015. 08:28 PM | Likes Like |Link to Comment
  • The Shallow Industrial Recession [View article]
    It would appear that the strength of the US dollar will tie the Fed's hands as much as the softness of the economy.
    May 20, 2015. 02:04 PM | Likes Like |Link to Comment
  • Micron Becalmed - 'A Painted Ship On A Painted Ocean' [View article]
    Thanks for the encouraging analysis. However, I am confused and somewhat disturbed by an image of the author somehow wetting his appetite.
    "Rumors... calling this new product 'revolutionary' certainly wet my appetite..."

    May 16, 2015. 03:22 PM | 1 Like Like |Link to Comment
  • Apple Hit By Ongoing Disaster At Sharp [View article]
    Interesting article -- thanks. With Apple's suppliers making little profit, such issues are bound to arise from time to time.
    May 15, 2015. 04:33 PM | 2 Likes Like |Link to Comment
  • 39% Annualized Return And AT&T [View article]
    What becomes of the contract when the deal goes thru? I presume it will convert to some odd contract of T Jan put. Otherwise current prices would not be what they are.
    May 10, 2015. 02:01 PM | Likes Like |Link to Comment
  • The Phony War Over [View article]
    Dana, yes, a mostly-stock deal would be dilutive, but Mr. Softie could pay all cash or cash plus debt, in which case it might not be dilutive. A superficial glance shows CRM with -263M earnings but +1B cash flow for TTM, so depending on accounting differences after merger, it might be immediately accretive to earnings in a cash deal. Does Nadella have any better ideas for his boatload of cash? If he thinks CRM would really help MS grow in coming years, synergies and so on, it could be worth it. It depends on what future he might envision here, if the rumor has substance.
    May 6, 2015. 04:21 PM | Likes Like |Link to Comment
  • Sysco Stock Heading To $42 Despite Third-Quarter Earnings Miss [View article]
    With a p/e over 25, the dividend of nearly 4% is eating nearly all of the earnings. Need to look at cash flow, debt, capital needs, and so on -- the concern being whether the yield is sustainable. Unfortunately, I'm too lazy for that this morning.
    May 5, 2015. 07:59 AM | Likes Like |Link to Comment
  • Why Investors Should Be Terrified, In One Chart [View article]
    This article could make great satire, a nice example for Logic 101. Note that margin debt is positively correlated with the stock market -- the more money in people's accounts, the more margin they have and use. Doh! EVERY time the market reaches a new high, margin debt also makes a new high. Margin debt is not a leading indicator for the market. Lowbidder is correct; a coincident indicator makes no prediction at all.
    May 5, 2015. 07:53 AM | 2 Likes Like |Link to Comment
  • Yes, China's Market Is In A Bubble, And No, It Won't End Well [View article]
    David, to answer your question more directly, I think a bubble is by definition a large unsustainable market rise due to the psychology of momentum or unrealistic expectations. Re this article, is the doubling of SSEC in less than a year a bubble or is the market accurately forecasting? I agree with Hale that it looks like a bubble, but only time will tell.
    May 4, 2015. 09:23 PM | Likes Like |Link to Comment
  • Yes, China's Market Is In A Bubble, And No, It Won't End Well [View article]
    David, it's a matter of definition. Every peak is not a bubble. Cyclical stocks may go up and down with business cycles without ever getting into bubble territory. Historically such stocks would have low p/e during the "boom" phase (high earnings) and high p/e (low profits) during downturns. This is because the stock market would discount the extremes of the business cycle, always looking forward, so no bubbles.
    May 4, 2015. 09:02 PM | Likes Like |Link to Comment