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-thinks downturn will be “longer and deeper”. Won’t be better five months from now
-Freddie and Fannie in a practical sense “don’t have any net worth”. From standpoint of independent entity “game is over”
-OFHEO was setup by Congress in 1992. It’s sole job was to regulate Freddie and Fannie with 200 employees and annual budget of $65M a year [tax payers sure didn't get their money's worth]
-Bear Stearns had 750,000 derivative contracts on the books
-To protect against inflation, first invest in your own talents. Second own stocks that have products that don’t require much capital investment
-the wonderful thing about investments is your knowledge is cumulative
-he’s always interested in understanding the math of things and understanding as much as I can about all aspects of business
-last 10 years: first 5 years oil demand went up 4 million barrels a day. Next five years it went up 8 million barrels a day. That’s 12 million barrels a day of new demand. Current demand is 86 million barrels a day
-US is using 20 million barrels a day about a 1/4 of the world’s demand
-what he asks politicians is what do you believe in and will work for that a majority of their constituents oppose. Answers to that show what they really believe in
-Fed got real problems with inflation and commodity prices. He sees dramatic cost increases in July and margins are getting squeezed. Brick is natural gas. Carpet is oil
-”We are in an economy that is going to see significant inflation”
-Paul Volcker mentioned, “the problem with inflation is if it get ignited, it gets very hard to put out”
-”I don’t try to pick turns in any kind of industry in terms of buying stocks. I just like to buy them when I think they’re cheap relative to their long-term earnings power”

Conference Call
-5 of top 10 trade-in weeks all time in Q2 and June was a new monthly record as the consumer is budget-stretched
-used sales up 32%
-27% of sales is international
-Game Informer magazine is over 3.5 million subscribers
-Q3 guidance of flat to up 2% same-store, Q4 8-10%
-building up used inventory for Q3 and Q4
-bigger Wii allocation, but still have shortages. Wii Fit is even in more short supply
-3 months ago, Wii would sell out in 2 days. Now it’s 3-4 days

Hershey put our a press release announcing it will raise prices about 10% across its entire domestic product line. Hershey raised prices on average of 13% for one-third of their line back in January according to the WSJ.

“Market prices for ingredients such as cocoa, corn sweeteners, sugar and peanuts are up 20 to 45 percent since the beginning of the year. As such, in 2009 we expect our commodity cost increase to be more than double the 2008 increase”

2009′s cost increase to double 2008′s increase? Woah.

Press Release
-EPS 39c vs. 32c est. (20% beat). Revenue $64.2M vs. $50.2M est. (28% beat)
-Revenue was up 78.9% y/y. Earnings up 86% y/y. U.S. wholesale business was up 57.3% y/y. International wholesale business was up 66.3% y/y. Consumer direct sales (includes their branded stores) was up 170.5% y/y. This is an acceleration from the March quarter where the company grew 47.4%, 29.5%, 28.5%, 190.3% respectively
-Gross margin was 57.5% vs 57.3% a year ago. Operating margin was 24% vs. 23.5% a year ago
-Raising 2008 guidance to $242-$247M in sales ($220-$225M previously) and EPS to $1.61-$1.65 ($1.52-$1.56 previously)
-”Our strong financial performance in the first half of the year combined with our increased visibility into the second half of 2008 give us confidence in our ability to achieve our goals for 2008 and led us to raise our 2008 guidance for the second consecutive quarter”
-$52M in cash and marketable securities
-U.S. wholesale forward order book is up 35% y/y

Conference Call
-Opened 15 new stores YTD. As performance has exceeded expectations, increasing 2008 new store goal to 24 (4 more than original plan). By year-end expect total store count to be 39
-ASP for womens $206, mens $196, kids $100
-Expect sales in the second half of 2008 to be evenly split between Q3 and Q4. Net income to be slightly higher in Q4 vs. Q3
-International sales backlog is down y/y. Expect international sales to be down 12% y/y in Q3 due to timing shift of fall orders from July 2008 to June 2008 ($3M)
-Opened 12 new stores in the quarter, 34 stores currently, 26 full prices and 8 outlets

Q&A
-Retail stores is 73% jeans and 27% sportswear
-Looking out to 2009 want 50% of sales to be from consumer direct
-If good performance continues, want to open 20-25 stores a year
-U.K. and Germany strong
-Getting a majority of the top real estate they want given the tougher economy
-In terms of calendar seasonality of denim, Q2 is the weakest (this quarter which they just posted 79% growth)
-No problem in fulfilling orders

Take-aways
-Confident in business trends to up the 2008 new store count by 4 to a total of 39 by year-end
-79% sales growth in a crumbling economy for $200 jeans is amazing

Conference Call
-EPS grew 37%, Sales 10% to $21.3 billion, organic sales 5%, organic volume 4%. Pricing added 3%. FX added 6%
-Higher commodity and energy costs impacted the quarter by over 300bps. Gross margin decreased 160bps
-Beauty grew 11% with organic up 4%. Baby care up 10%
-Some brands mentioned: Olay Skin Care, Pantene, Head & Shoulders, Gillette, Nice ‘N Easy, Cover Girl, Crest, Oral-B, Pringles, Folgers, Duracell, Pampers, Luvs, Charmin
-Coffee sales decline mid-single digits
-Global market growth at 3-4% with 1-2% lower on a volume basis
-They see evidence of trade-down. Tide went from high single digits to mid-single digits, while Gain continued to grow high single digits
-Selling Folgers to JMP Smucker Company
-FY2009 guidance of organic sales growth of 4-6% with price contributing 3%, FX 2-3%, so end sales growth of 5-7%
-Organic volume will grow 2-3% which is below 4-5% achieved in the first half of the year
-Distributor network in China reaches 2300 cities and 40% of towns and villages. 60% of the country’s population. In India they have a distributor network of 4.5 million stores. In Russia they reach 80% of the population
-In China they are number 1 in 11 of the 12 categories they compete
-30% of revenue is from developing markets. Leadership shares in China, Russia, Poland, Turkey, and Saudi Arabia

Take-away
-Unlike so may other companies, P&G has built brand equity which lets them have pricing power

Conference Call
-energy costs and commodity inflation have become bigger challenges
-Grew Coors Light sales 4% globally
-U.K. economy is weakening, in the first 5 weeks of Q3 sales have decreased at a mid-single digit rate from a year ago
-May and June were weak, so competitors chased volume (lowered pricing – aggressive discounting)
-cost inflation of mid-single digit increases for the rest of the year – agriculture and fuel
-a lot of pub closure in the U.K.

Take-aways
-Energy and agriculture cost inflation (mid-single digits) + slowing growth especially in the U.K. + aggressive discounting from competitors = Ouch.

Press Release
-Revised 2008 revenue composition to include the film production segment
-Iron Man ($571M) and The Incredible Hulk ($246M) had $817M of combined global box office
-$122M in cash
-Schedule: Iron Man 2 – April 2010, Thor June 2010, Captain America May 2011, Avengers July 2011
-Licensed Movies: X-Men Origins: Wolverine May 2009 by Fox, Punisher: War Zone by Lionsgate December 2009
-Guidance upside in film and licensing. Publishing had lower than expected operating income

Conference Call
-Publishing operating margins declined from 45% a year ago to 37% this quarter due to lower sales
-Received $5M advance from Sony for Spiderman 4
-Combined film cost was $312M for Iron Man and Hulk
-Paramount has distribution rights for Iron Man 2

Take-aways
-Publishing margins were poor
-2009 is an empty slate in terms of moves releases outside of the license movie Wolverine

Press Release
-Activision stand-alone revenue $654.2M, 32% y/y. EPS of 23c non-GAAP. Vivendi Games 223 million euros and 42 million euros in EBITA
-World of Warcraft is at 10.9 million players
-Blizzard pipeline includes World of Warcraft: Wrath of the Lich King, Starcraft II, and Diablo II
-September 2008 guidance: $620M non-GAAP. non-GAAP EPS 8c
-December 2008 guidance: $2.3B non-GAAP. non-GAAP EPS 64c
-$1.34B in cash, $24M debt

Conference Call
-Combined company has $3B in cash
-Key products: Call of Duty, Guitar Hero III, Kung Fu Panda, Guitar Hero on Tour, Guitar Hero Aerosmith
-Pre-sales for Guitar Hero World Tour are up 30% vs. Guitar Hero 3
-Holiday releases: Call of Duty World at War, James Bond Quantum of Solace (uses COD4 engine), Madagascar 2, Escape to Africa, Spider-Man Web of Shadows, Crash Bandicoot, Mind over Mutant, and The Legend of Spyro: Daw of the Dragon
-CY2009: multiple new Guitar Hero SKUs, new Call of Duty, reinvented Tony Hawk, Marvel Ultimate Alliance 2, Marvel’s Wolverine, Transformers 2, Monsters vs. Aliens, Ice Age
-Wrath of Lich King is in beta. The last expansion pack sold 2.4M in the first 24 hours and 3.5M in its first month. Team of over 100 developers.
-40% of people that left to try Age of Conan have come back

Q&A
-See at least another year of 20%+ growth
-No launch date for Lich King, it will NOT be in the September quarter
-Expect $40-50M in revenue from downloadable content
-Going to learn from managing 50,000 servers, customer support, etc. from WOW for the future of Guitar Hero and Call of Duty franchises

Take-aways
-The Guitar Hero acquisition continues to pay enormous dividends with the release of Aerosmith and On Tour for the DS. Infinity War’s Call of Duty 4 was another grand slam home-run.
-Key questions are will the new Guitar “Rockband-like” Hero World Tour do as well this holiday vs. Rockband 2? And what will the growth profile of World of Warcraft be in the coming year?
-Inference to learning from World of Warcraft for the future of Call of Duty and Guitar Hero franchises. Does that mean we’ll see a COD and GH MMO in the future?

Press Release
-Revenue of $137.6M. Non-GAAP ex-deferred revenue was $121.1M
-Key titles were WALL-E, Wii Big Beach Sports, WWE Smackdown vs. Raw 2008, and MX vs. ATV Untamed
-EPS -0.38 per share
-Future lineup: de Blob in September, Saints Row 2 and WWE vs. Raw 2009 in December quarter, Red Faction Guerrilla, Darksiders: Wrath of War, and WWE Legends of Wrestlemania in March quarter. UFC 2009 in June quarter 2009
-Guidance for September 2008 quarter: $160-170M, net loss -0.35 to -0.39. March FY2009: $1150-$1175M, EPS 0.80-0.90
-Sold 1M units of WALL-E, new multi-year relationship with Marvel (Marvel Super Hero Squad), Dreamworks “Master Mind” 2010 animated film
-$332M cash, $39.4M in LT debt

Conference Call
-Lowered expectations on WALL-E. Moved Destroy All Humans: Path of Furon and Bratz Girlz Really Rock to December quarter

Q&A
-de Blob to launch September 26th. Saints Row 2 to launch October 14th. WWE first weekend of November
-WALL-E is off to a slightly better start than Ratatouille and will sell several million units, but below what they expected

Take-aways
-WALL-E was below expectations. For kids, nothing compares to Pixar’s Cars and Nemo.
-The pipeline still looks weak. Red Faction E3 demo looked pedestrian. Saints Row 2 is what will drive THQ, but even this game was delayed. Delayed games usually don’t turn out well, but we’ll see.

-Never play macho man with the market. Never over-trade relative to the equity in your account
-his first mentor has “steel hard emotional control”
-always liquidate half his position below new highs or lows
-after having 60-70% draw-down, he was so depressed he nearly quit. “Mr. Stupid, why risk everything on one trade? Why not make your life a pursuit of happiness rather than pain?”
-he then first decided to learn discipline and money management. Become disciplined and business-like about trading
-”Now I spend my day trying to make myself as happy and relaxed as I can be. If I have positions going against me, I get right out; if they are going for me, I keep them”
-Be quicker and more defensive. Always think about losing money as opposed to making money. He always has a mental stop. If it hits that number, he is out no matter what
-”Risk control is the most important thing in trading” Stop out at near 10% monthly draw-down. He never wants to lose 10% in a month
-Try to picking turning points. Keep trying, but cut position size down if trading poorly (after successive losing trades)
-Don’t ever average losers. Decrease your trading volume when you are trading poorly; increase your volume when you are trading well. Never trade in situations where you don’t have control. For example, I don’t risk significant amounts of money in front of key reports, since that is gambling, not trading
-If you have losing position that is making you uncomfortable, the solution is very simple: Get out, because you can always get back in. There is nothing better than a fresh start
-The most important rule of trading is to play great defense, not great offense. Every day he has stop risk points for his positions, so he define his maximum drawdown. He spends the rest of the day enjoying positions that are going in his direction. If they go against him, he has a gameplan to get out
-Don’t be a hero. Don’t have an ego. Always question yourself and your ability. Don’t ever feel that you are very good. The second you do, you are dead
-He wants to invest in things that allows him to get liquid “very quickly”
-His investment philosophy is “I don’t take a lot of risk, I look for opportunities with tremendously skewed reward-risk”
-Don’t ever let them get into your pocket – that means there’s no reason to leverage substantially. There’s no reason to take substantial amounts of financial risk ever because you should always be able to find something where you can skew the reward risk relationship so greatly in your favor that you can take a variety of small investments with great reward risk opportunities that should give you minimum draw down pain and maximum upside opportunities
-You’ve got to look at good traders historically. If a trader can on average annually deliver two to three times their worst draw down, then that’s a very good track record, and I’d say that that’s what I try to do. If I thought that for the funds that I managed that 10% would be the worst that I would tolerate in a given year then hopefully I’d annualize two or three times that and that’s probably what I’ve done. Maybe a little below that in the ’90′s and a little above that in the ’80′s.
-The secret to being successful from a trading perspective is to have an indefatigable and an undying and unquenchable thirst for information and knowledge. Because I think there are certain situations where you can absolutely understand what motivates every buyer and seller and have a pretty good picture of what’s going to happen. And it just requires an enormous amount of grunt work and dedication to finding all possible bits of information.
-the most important thing is how good are you at risk control. Ninety-percent of any great trader is going to be the risk control.

Take-aways: Discipline and risk management is 99% of trading. Don’t ever take substantial leverage or risk. Don’t be a hero. Wait for the fat pitches, don’t gamble, work hard, and have an unquenchable thirst for information/knowledge. Spend your day trying to make yourself happy and relaxed – get rid of losing positions and ride the winners.

Source: Various interviews found on the internet