Tulls19

David Einhorn: The Irony of It All

LOL I just finished reading Einhorns book and am researching his assumptions. Nothing I've read so far has lead me to believe his is wrong about anything. Most of the people who criticize him don't seem to have read the book. FYI he doesn't criticize ALDs entire existence the way a lot of the people who continue to hold this stock proclaim he only points out is faults going back to the late 1990's. If you have received dividends before and after Einhorn shed light upon the inner workings of this company then the better for you. At this point you are probably holding an unrealized loss and are a little nervous after this Madoff affair to know that you are essentially invested in a legal ponzi scheme. You can always cut your losses now and be thankful for the dividends you have received all of those years. I invested in Bank of America pre-countrywide and pre-Meryll the dividends I received wouldn't cover the cost of John Thains office toilet much less the loss of capital I suffered before selling. I could site the long history of dividends but I won't. Suffice it to say that BAC changed for the worse just as Allied apparently did at some point in its 46 year history. If you want to go on trusting managers who paid themselves so well wile diluting their shareholders than by all means double down. I would point out however that their are plenty of beaten down stocks right now that the last remaining shred of your principal would probably be better invested with at a maintainable dividend.

Still, the Crooks Be Winnin'

Just finished reading Fooling some of the people all of the time and must say that although I usually hate shorts I thought the book was excellent and in none of my web browsing have I found any evidence that anything he said in the book was incorrect. I thought it was funny that one analyst recently upgraded ALD from sell to hold? I guess we have been in a bull market for too long but how exactly can you hold if you sold and if you didn't sell then of what value is this analyst? With all the opportunities for long positions in this market who in their right mind would touch this company?

Tech Bellwethers Looking Cheap?

On 23SEP08 MSFT authorized 40B buyback of its shares and an increase on dividend of %18 to 13 cents. GE bought billions of its own shares at a much higher price than it is at now. GE is too illiquid to buyback shares now due to massive debt and so billions of share holder dollars went up in smoke. MSFT also bought back billions in shares over the years (though in relative terms not near the level GE overpaid) yet the company generates so much cash that is is now sitting on reserves and can take advantage of this price environment. It's unfortunate that the author didn't take a stab at what level earnings MSFT would have to maintain to influence its PE with its own cash.

Buffett Buys GE, Goldman: Should You Follow?

I own GE stock and am contemplating selling at a huge loss out of anger and doubt about what this company is really worth and here is why.

1. GE's annual report tells us that the company is strategically positioned around the world. OK so they are positive that they are strategically positioned around the world and yet earlier this year Imelt or Omlet as I like to call him couldn't even get their earnings right in pre-release statements and sent the share price down 16% in ONE day.

2. NBC has failed to keep up with Fox news in the ratings. To figure out why I took a look at their news coverage and what do you know. The chearleading for Obama going on on that network will alienate all but the far left for years to come. If you don't believe me try listening to Keith Oberman for 5 minutes with an open mind to the center and right's points of view. I wrote to them to complain and had the privileged of receiving a form letter and I started seeing more of Oberman than ever before. So sadly I have have and unrealized loss of 6K on GE stock and I watch Foxnews because not even when it is in my own economic self interest can I bring myself to tolerate even 5 minutes of Obermans smugness.

3. GE bought back Billions of dollars worth of shares in the high 30's and has now issued 12 Billion dollars worth of common and up to 6 Billion worth of preferred at the low 20's mark. So basically the company has squandered billions worth of capital that would have served the shareholders more had it been dispersed in dividends and now Buffet is being paid to take the risk while the common shareholders have been diluted. Keep in mind that the dividends paid on these new issues will be weighing on earnings for the duration of there existence as will the $4 to $1 debt ratio the company has to finance and pay interest on.

4. With the debt that the company is carrying and the credit market frozen you would think that the liquidity received from recent offerings would be a boon and would be kept for the time being to insure that AAA credit rating on GE capital and yet Omlets press release mentions only the potential acquisitions that GE could make with this money. Yes we have seen how competent thay have been at capital allocation so far.

In the end I have no one to blame for my investment but myself but I would urge anyone thinking about investing in GE to think about whether GE is really looking out for its shareholders given my experience with them so far.