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  • Wall Street Breakfast: Tax Inversions, Tech Partnerships, New Development Bank [View article]
    The real problem is that complex tax codes benefit certain professions (legal and accounting). Those professions are well-represented as members of the congress. And as you point out, the tax code is something that Congress uses to reward and/or punish various groups that are then driven to make campaign contributions. I don't expect to see any significant tax reform.
    Jul 16, 2014. 09:02 AM | 9 Likes Like |Link to Comment
  • Wall Street Breakfast: Must-Know News [View article]
    The scariest thing is that Ben Bernanke said the MF situation will have limited impact. Its scary because he has been so wrong so often.
    Nov 3, 2011. 08:54 AM | 9 Likes Like |Link to Comment
  • Linn Energy: High Dividend, Low Valuation [View article]
    Ranjit has made some very serious and very false claims about Linn Energy, LLC.

    Lynn Energy, LLC is a producing company, not an exploration company. The majority of the revenues come from natural gas and natural gas liquids, which are well hedged. Oil accounts for approximately 30% of the reserves (oil is also hedged).

    The distributions (it is an MLP) come from free cash flow, not new shares issued. New shares are sold primarily to raise capital for acquisitions or to pay down credit facilities. The acquisitions in turn generate revenue. Linn also uses credit and operating cash flow for acquisitions.

    You can use this link to see the various presentations that Linn Energy has made that explain the current hedges that they have in place: If the link doesn't work, go the Linn Energy LLC website where all of these presentations are available along with financial statements.

    Of course, the current results at Linn are heavily influenced by the hedges that they have in place. If energy prices, especially natural gas, remain low beyond 2012, then distributions may have to be reduced.

    I personally don't see much potential for short-term capital appreciation as I don't see energy prices raising above the current floors established by Linn's ; however this company has been touted by Jim Cramer which has brought it from a trading range of $14 to $16 per share to the current trading range.

    As I previously stated, Linn Energy is set up as an MLP, so some of the distribution is classified as a return of capital and individual investors also get to take the depletion allowance. This should result in paying lower taxes on the distributions than on C Corporation (such as Exxon Mobil) dividends for most individuals.

    I also don't see Linn being "in deep trouble" as intimated by Ranjit when the hedges come off. Of course, it should be obvious to all that Ranjit did no research on this company whatsoever.

    On Aug 14 07:05 AM Ranjit Thomas wrote:

    > The problem with LINE is that like a lot of other exploration companies,
    > they generate no cash, pumping huge amounts into capex. The high
    > dividend yield is illusory because it is funded by regular equity
    > issuances - no different from a Ponzi scheme. Also, they were smart/lucky
    > enough to hedge most of this year's production at high prices. As
    > these hedges come off, they will be in deep trouble.
    Aug 14, 2009. 01:14 PM | 9 Likes Like |Link to Comment
  • Wall Street Breakfast: European Investment, Failed Iraqi Election, Argentina On Watch [View article]
    Actually, Jordan now has a big problem with Syrian refugees. They have come into Jordan and many have set up their own businesses. They are not playing well with the Jordanians. If Jordan doesn't blow up this summer, it will blow up next year.

    ISIL would like to incorporate Jordan into a new Sunni Arab Caliphate (along with northern Iraq and Syria). I don't think that will be allowed to happen, but it does mean the blood shed is nowhere near finished. And the US & Europe need to be very careful about who they are arming.
    Jul 2, 2014. 09:13 AM | 8 Likes Like |Link to Comment
  • Wall Street Breakfast: Must-Know News [View article]

    The taper will cause share prices to drop because interest rates will rise (they are already rising in anticipation) and that will provide an attractive alternative to stocks. So even if the higher interest rates don't impact a company's ability to continue with growth plans and margins remain strong; the stock prices will still drop because money will move out of stocks. Also, there will be less QE funds available to invest. Lower demand will lead to lower prices even if a company's results remain strong.

    From your example of Starbucks, taper shouldn't have an impact on the amount of coffee they sell. It could have them paying higher interest rates on debt, but lets assume that doesn't happen. So Starbucks margins remain intact and their growth continues; nonetheless there will be money that moves out of Starbucks into USTs (for example) if the interest rates are more attractive on what is reviewed to be a lower risk investment. That can (not necessary will) cause a drop in the stock price. But in the overall stock indices, you will see a drop at least short term. At least that is my opinion.
    Sep 17, 2013. 08:40 AM | 8 Likes Like |Link to Comment
  • Wall Street Breakfast: Must-Know News [View article]
    Syria is all about the money. Gulf nations want a natural gas pipeline across Syria and Russia doesn't. IMO, that is the root of the conflict. I believe KSA is at the forefront for rebel funding.
    I believe if McCain were president we may have already been involved. Just read some of his comments regarding Syria--he was pushing for intervention a long time past. KSA knows who to grease in the US. 
    Sep 10, 2013. 08:33 AM | 8 Likes Like |Link to Comment
  • It's Gut Check Time For Gold And Silver [View article]
    Or not. These are the same banks that were selling gold at less than $300/oz levels in the 90s (those of Australia, England, Switzerland, Russia, etc.). Perhaps you don't remember that. Their argument was why hold an asset that pays nothing when you can rotate in and out of government bonds from various countries that pay interest. The CBs may be a contra-indicator.

    I don't think you should look to central banks for any kind of leadership on anything. They are political animals first and foremost.
    Feb 17, 2013. 06:47 PM | 8 Likes Like |Link to Comment
  • Wall Street Breakfast: Must-Know News [View article]
    Fiat will have to figure out how to turn Opel around; which is something GM hasn't been able to do. Opel is bleeding GM and this one way to stop the bleeding.

    What I am saying is that getting Opel for "free" may not be such a great deal for Fiat.
    Oct 5, 2012. 09:04 AM | 8 Likes Like |Link to Comment
  • Wall Street Breakfast: Must-Know News [View article]
    What happened to SOX? Corzine signed off on the financial reports; therefore he is criminally liable under the law. That much at least should be obvious.

    SOX doesn't allow the "I had no idea what was going on" defense. That was one of the main purposes of the law, wasn't it?
    Feb 10, 2012. 08:20 AM | 8 Likes Like |Link to Comment
  • Wall Street Breakfast: Must-Know News [View article]
    Under SOX it should already be a criminal case. He signed off on the financial reports as CEO, so he is liable for criminal charges.
    Dec 14, 2011. 09:11 AM | 8 Likes Like |Link to Comment
  • What's Causing Silver's Slide? [View article]
    Add to those reasons that the CME has repeatedly tightened margin requirements for Silver and has scheduled further tightening through Monday. The tightening may not be the root cause of the steep decline, but it certainly provided the trigger.
    May 5, 2011. 04:55 PM | 8 Likes Like |Link to Comment
  • Wall Street Breakfast: Must-Know News [View article]
    Yes, the way is called "diet and exercise," but that seems too complicated for most. I am amazed at the number of people who are looking for a "magic bullet" so that they don't have to eat less, drink less alcohol or engage in more physical activity.
    Sep 16, 2010. 08:30 AM | 8 Likes Like |Link to Comment
  • Microsoft May Have Delivered A Knockout Punch To BlackBerry [View article]
    I do not think of stability when I think of Blackberry. How many times have you had to pull the battery from your Blackberry phone to reset it? I have had to do that many times when it locked up (five different models, including the horrible track ball one). I've also experienced service outages and E-mail stoppages.
    I've seen firsthand that it is not a stable platform.
    Oct 29, 2014. 09:30 AM | 7 Likes Like |Link to Comment
  • Wall Street Breakfast: Must-Know News [View article]
    The sad thing is that these low interest loans are probably not illegal.

    Remember Congress is dominated by the legal profession and protects itself well. They often exempt themselves from the same laws they create for us to live under.
    Jul 6, 2012. 09:18 AM | 7 Likes Like |Link to Comment
  • Will Junior Mining Stocks Be the Investment of 2011? [View article]
    Unfortunately, the implementation of N.I. 43-101, JORC and other reserve reporting requirements will not prevent another Bre-X happening IMO.

    There have been cases after N.I. 43-101 was implemented where data was manipulated. The 43-101 technical report works if the data used is correct (JORC requirements are similar). It requires enough information be presented (reserves, methods of calculation used, cost assumptions, met tests, property situation, status of permits, etc.) that I can tell, for example, if the sampling was reasonable. It doesn't tell me that the raw resource data wasn't manipulated in an office in Vancouver (yes that has happened post Bre-X). Remember it took Freeport twinning holes on the property in Indonesia to verify that Bre-X was a complete scam (and it didn't take many at that).

    Although the penalties are provided for (and indeed fraud has always been illegal), an unscrupulous individual can make money on the stock he was issued until the truth comes to light. Then he can bug off to the Grand Caymans like some of the Bre-X boys did; and keep his money so he won't need his professional registration intact. So buyer beware. As several comments have stated, look at the management team and the board they have put together to see if they are credible. Its unlikely that a group of already wealthy professionals in good standing are going to stoop to fraud.
    Jan 27, 2011. 04:48 PM | 7 Likes Like |Link to Comment