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Archive for May, 2009

Mutual Fund Flows – Inverse Indicator

May 31st, 2009 No comments

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Notice that mutual fund flows are an inverse indicator for every major high and low in the stock market. No, the timing is not perfect every time. However at every major high and low, I bet that month the flows are inversely correlated in size.

-In May 2008, flows were strongly positive and the market peaked and crashed the rest of the year.
-In October and November 2008, flows were very negative and the market bottomed ahead of a large 2 month rally.
-In January 2009, flows were positive and the market sold off hard till early March.
-In March 2009, flows were negative and the market bottomed and rallied.
-In April and May 2009, flows are once again strongly positive. Hmmm, what’s next?

Categories: News

Robin Hood Foundation Videos – Paul Tudor Jones, Roberto Testimony, Mayor Bloomberg, Tom Brokaw

May 31st, 2009 No comments

Paul Tudor Jones is simple THE man, my hero, and role-model. Watch and be inspired. Roberto’s testimony made me tear up.

Other Robin Hood Videos – Link

Categories: News

Tech Specs of Sony PSP Go! and First Look Video

May 30th, 2009 No comments

-16 gigabytes of flash memory
-no physical UMD drive, digital downloads only
-Memory Stick Micro slot
-3.8 inch screen
-Bluetooth support
-43% lighter than PSP-3000
-new PSP Gran Turismo, Jak & Daxter, Little Big Planet, and Metal Gear Solid titles on their way
-Old UMD PSPs will still be sold along-side
-release date is this Fall

Categories: News

2009 Ira Sohn Conference Stock Picks

May 28th, 2009 No comments

Peter Thiel, Clarium Capital: fade recovery, commodity inflation, deflation of owned assets

Joseph Healey, HealthCor Partners: Long Valeant Pharmaceuticals (VRX), Long Hologic (HOLX), Long Life Technologies (LIFE)

Mark Kindgon, Kingdon Capital: Long Bank of America (BAC)

Steve Mandel, Lone Pine Capital: Long Strayer Education (STRA)

Jim Chanos, Kynikos Associates: Short for-profit education companies, Short high margin health-care companies like Lincare Holdings (LNCR)

Lee Hobson, Highside Capital: Long Millicon International (MICC), Short Ritchie Bros. (RBA)

David Einhorn, Greenlight Capital: Short Moody’s (MCO)

Categories: News

2008 Ira Sohn Hedge-Fund Stock Picks Results

May 25th, 2009 3 comments

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A year ago, famous portfolio managers presented their stock picks during the Ira Sohn charity event. The only one that did well was was David Einhorn of Greenlight Capital. Many value investors such as Michael Price, Rich Pzena, and Bill Miller got their heads handed to them to say the least.

These results prove that even the most famous managers can get it wrong and it’s pure folly to follow blindly. The 2009 event will be on May 27th.

Categories: News

NPD U.S. April 2009 Videogame Sales

May 15th, 2009 No comments

US VIDEO GAMES INDUSTRY – APRIL 2009
Software: $510.74M (-23%)
Hardware: $391.63M (-8%)
Accessories: $129.45M (-15%)
Total Games: $1.03B (-17%)

TOP-SELLING HARDWARE – APRIL 2009
Nintendo DS: 1.04M (+151%)
Wii: 340,000 (-52%)
Xbox 360: 175,000 (-7%)
PlayStation 2: 172,000 (+34%)
PlayStation 3: 127,000 (-32%)
PSP: 116,000 (-40%)

TOP-SELLING SOFTWARE SKUs – APRIL 2009
Title / Publisher / Units**
1 Wii Fit w/ Balance Board (Wii) / Nintendo / 471,000
2 Pokemon Platinum (DS) / Nintendo / 433,000
3 Mario Kart Wii with Wheel (Wii) / Nintendo / 210,000
4 Wii Play w/ Remote (Wii) / Nintendo / 170,000
5 The Godfather II (360) / EA / 155,000
6 Resident Evil 5 (360) / Capcom / 122,000
7 New Super Mario Bros. (DS) / Nintendo / 119,000
8 Mario Kart DS (DS) / Nintendo / 112,000
9 Guitar Hero Aerosmith (360) / Activision Blizzard / 110,000
10 The Godfather II (PS3) / EA / 91,000

It was a heinous month for current generation hardware units with Wii, PS3, and Xbox 360 posting paltry numbers. The economy is finally hitting this industry in full force. Nintendo DS units were up big due to the release of the DSi SKU. PS2 units did well with the recent price cut to $99.

It’s pretty sad to see New Super Mario Bros. and Mario Kart DS continue to dominate the charts years after their release. Guitar Hero Aerosmith probably made the top 10 because it went on fire-sale at $10 at many retailers.

So what do videogame stocks do off these punkish numbers? Rally of course. TTWO was up 7.6% on the news Icahn had bought more shares. ATVI was flattish. GME up 1.93% rebounding off a big correction in recent weeks. ERTS was up 4.7% on the news it actually had a top 10 selling game for once.

Categories: News

Stepping on the Gas Pedal Type Market

May 10th, 2009 No comments

Presented without further comment. Source

Uri Landesman, head of international equities at ING Investment Management, bought stocks in Russia and Brazil last week. Currently, his funds have about 30% of their assets invested in emerging markets — his largest proportion ever.

“I’m really stepping on the gas pedal,” he said.

Categories: News

Recommended Posts

May 9th, 2009 No comments

-“Trust your Stuff” Investing Link

-Annie Duke Poker Tips that are Applicable to Trading Link

-Sun Tzu Art of Trading Link

-David Einhorn Investment Strategy Link

-Seth Klarman Baupost Group Notes Link

-Investment Advice from Charlie Munger Link

-Warren Buffett Interview Notes Link

-Alice Schroeder Q&A Notes, Buffett Biographer Link

-John Paulson 2008 Year End Report Notes Link

-Buffet’s Holy Grail of Investing Link

-Reminiscences of a Stock Operator Quotes Link

-Lessons from Paul Tudor Jones Link

-Glenn Greenberg of Chieftain Capital Notes Link

-Warren Buffett Investment Strategy Simplified Link

Categories: News

Investment Advice from Charlie Munger

May 5th, 2009 No comments

Warren Buffett didn’t really hit his stride until he met his investment partner Charlie Munger. He is famous for converting the best investor in history from last puff cigar butt value investing to buying great franchise businesses for the long-term. Here are some general investment tips from Charlie:

-Bet very seldom
-You have to figure out where you’ve got an edge. And you’ve got to play within your own circle of competence
-Bet big when you have the odds in your favor and know something is mis-priced. Berkshire, all the billions of gains, top 10 insights account for most of it
-What determines behavior are incentives of the decision maker. Management matters
-Ultimate no-brainer, will find a few times in a lifetime, huge untapped pricing power they’re are not using
-Look for superb business hidden inside a bad mess, once you cut out the folly, big winner. (Geico)
-“Good jockeys will do well on good horses, but not broken-down nags.”

Categories: Articles

Seth Klarman – Baupost Group Video Notes

May 3rd, 2009 No comments

The Ben Graham Centre for Value Investing had a great video conference with Seth Klarman of the Baupost Group on March 17th, 2009. These are my notes. Mr. Klarman has produced a net annual return of over 20% since 1983 with only one down year and no use of leverage. SourceH/T to Todd

-Graduated from Harvard Business school in 1982 during a time of high interest rates (12% U.S. treasuries going to 14%) and with a stock market at Dow 700 which had done nothing in 18 years
-Worked for Mutual Shares for couple of years when it was a $40 million no-load mutual fund
-Value investing is a risk-averse approach – first focus is on risk before you focus on return
-Ben Graham, Buffett, and himself started with a small amount of capital rummaging around for mis-priced situations. He likes to find the reason for the mis-pricing and a catalyst to cause you to make money
-He is not in favor of investing by a few simple math formulas like P/B, P/E, P/CF, and dividend yield. Value investing by itself only adds 1-2% a year vs. the market. Why trust a blind formula when you can do better with your own analysis?
-He can tell if something is superficially cheap from 1) inventories being obsolete 2) receivables being uncollectible 3) bad assets on the books 4) off balance sheet liabilities like litigation and environmental problems
-He suggest following value principles, but improve upon them through in-depth fundamental analysis and detailed research
-3 underlying pillars: 1) Focus on risk before return using multiple scenarios. How much can you lose? What are the probabilities of each scenario? 2) World is oriented to relative performance as everyone is an asset gatherer. He is focused on “absolute returns” 3) importance of being bottoms-up, not top-down (macro)
-When he formed Baupost in 1982, he wanted 1) flexibility from his clients for a broader mandate. He wanted more weapons at his disposal to investing in real estate, equities, debt, or stay in cash 2) He put his own money alongside his clients 3) He identified his “edge” that is legal and legitimate and reasons why he thinks he will out-perform. a) biggest edge is long-term orientation. Since he only has clients that are wealthy families and institutions. No fund-of-funds, pensions funds, sovereign wealth funds, and public mutual fund money. How can you invest for a 3-5 years long-term hold when you might get a redemption in 6 months? b) relationships with best brokers. He wants to be the best or 2nd best client, especially in real-estate where he gets first shot at mis-priced assets and can move fast
-He doesn’t think they are the word’s best business analysts. He does think they are very good at complicated situations, “the messier the better.”
-His favorite areas are 1) distressed debt. Senior debt has it’s own catalyst going into a bankruptcy. There is a huge constituency of forced sellers as many of owners can’t own debt in a bankrupt company. You wanted to buy when people don’t know what they are doing. 2) spin-offs 3) index changes.
-For equities, he likes off-the-beaten path type ideas that have some kind of event catalyst. He wants egregious mis-pricings, low risk/high return situations, and is very careful with his analysis
-They never hold for the last nickle. They sell near fair value. If a stock is worth $20 and they bought it at $10, they are out by $18-18.50. Always sell too soon and always buy too soon. Never use margin, don’t use leverage, and have minimal short exposure. Position sizing is 3-5% and at times 8-10%. Always act with integrity
-To hedge they use out of the money put options for disaster insurance. He doesn’t think shorting adds any value most of the time. It makes you focus on short-term analysis, whether they will beat or miss a quarter. This impacts your thinking into a short-term orientation, which is not good for a long-term investor
-They entered 2008 with 35% cash (did he mean 2009?). They are in the high-teens/low 20s now
-Financials got to be 40% of SP500’s earnings. In early 2007, he realized things could be really bad as the housing market started to turn down
-When doing analysis, they look for a range of value using book value, PV of CF, P/E, P/CF, sum of parts, and private market value. If it’s below this range, it’s of interest. If it’s in the middle of this range, it’s not interesting. Try to look at things differently than consensus. When the world thinks of a stock as a business, he thinks of it as pile of assets.
-He owns a couple Oil/gas LPs that are trading at 20% and 30% yields and 1/2 or 1/3 of their reserve value.
-He owns PDL Biopharma, which he thinks as a 30% IRR due to its royalty stream
-He like News Corp. Fox News is incredibly valuable. He thinks break-up value is $10-20 today and $20-30 in a normal environment. Debt maturities are 10 years out. They bought it too soon, but they have been adding
-He admires Buffett and Munger. On long-only side, he like Bob Rodriguez at FPA Crescent, Southeaster Management, and Tweedy Brown. On hedge-fund side, he likes Paul Singer, David Abrams, Perry Capital, Jeff Hallis at Tindall (sp?), Mike Lowenstein at Kensico, Steve Mandel at Lone Pine, and Brookside Capital

Categories: Articles