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?
-16 gigabytes of flash memory
-no physical UMD drive, digital downloads only
-Memory Stick Micro slot
-3.8 inch screen
-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
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.
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.
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.
-Looks for situations where mis-pricing is large and risk is small
-He wants to understand why it is cheap and misunderstood
-Buy it cheap and don’t worry about price targets
-If he decides he is wrong on something in terms of why he bought it, he exits. Period
-Never invent reasons to hold a position if original reasons are no longer valid
-Write-up outline: what’s it worth to a value buyer, market position, profitability/cash flow. Is it a great business? What’s the FCF with normalized margins 2 years out? Why is it misunderstood? What is the opportunity? Do a valuation and business analysis of each segment of the business, comparison to other companies in the sector, financial engineering potential?
-Einhorn is known to be very disciplined at sticking to what he is good at. He is excellent at figuring out the 3 key drivers to analyze, has the courage of his convictions, and is active on the short side
-“There are lots of smart people out there. I don’t think all of them have the ability to read the rest of the players as well as David. He can actually see how stocks move on different pieces of news and judge what facts the market seems to be acting on. Then he assesses what analytical edge he has over the other players”
Sources: articles on David Einhorn and interviews with people that know him
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.”