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Archive for November, 2009

Chris Pia, Ex-Moore Capital Profile

November 30th, 2009 No comments

-ran $20 million for Shearson when he was 21 years old in 1988
-2 years later joined Louis Bacon to launch Moore Capital and stayed there for 18 years to $10B in AUM
-as a PM Pia’s book went up 7X from 1996 to 2008
-Left in November 2008 to start a fund with Joe Niciforo (ex-Tudor). They raised $800 million
-”Louis taught me to get out when the market moves against you by even a modest amount and to avoid getting emotionally attached to your positions”
-Pia sells any positions that drops 3%
-typically holds his positions for 3 weeks to 3 months

Calls
-Short dollar -10% vs. Euro: China and other Asian exporters are maxed-out on their dollar reserves. They will diversify into gold and the euro as they worry about U.S. inflation
-Gold to $1300: smart play under market crises, populist appeal, and central banks buying
-Oil $70-100: Oil now goes up with stocks. He predicts oil with swing between $70 and $100. So buy at low end and sell at high end of this range

Source: Fortune

Categories: News

Warren Buffett's Secrets to Success from Alice Schroeder

November 29th, 2009 No comments

-works incredibly hard
-mental vacuum cleaner for information
-intensity and focus 18-20 hour days
-”intensity is the price of excellence”
-took the long view (not monthly performance oriented)
-distance himself physically and emotionally from Wall Street
-natural independence and non-conformity
-batting average is better than most people, but he’s really risk averse. Makes sure he doesn’t take a lot of risk. Limit the downside

Categories: News

John Arnold, Hedge-fund Legend, 35 year old Billionaire

November 24th, 2009 No comments

Some noteworthy quotes from a Fortune article:

His Houston-based hedge fund, Centaurus Energy, which manages more than $5 billion in assets, has never returned less than 50% in seven years of business.

Arnold has the brain of an economist, the experience of a veteran gas man, and the iron stomach of a riverboat gambler.

Arnold’s early trading experience, which gave him insight into the needs of gas customers all over the country, lent him an edge once virtual trading took off.

“He’s like a poker player who can see everyone else’s cards,” says a longtime trader who has known Arnold since his Enron days.

Arnold, an intense worker with a wide network of contacts, aims to win by understanding the fundamentals of the gas market better than anyone else.

“I try to buy things whenever they’re trading below what [our] analysis shows to be fair value and sell things whenever our analysis shows that the forward curve is higher than our analysis of fair value.”

Arnold combines that knowledge with a willingness to make giant moves. Indeed, Centaurus earns the lion’s share of its profits on a small number of enormous trades. “He only really puts on a trade of substance once or twice a year,” says a person familiar with the fund. “But when he goes for it, he’s so big he makes a fortune each time.”

Arnold’s ability to make megabets is helped by the fact that the fund has been closed to new investors since 2005. He has repaid nearly all his investors and now invests only his and his employees’ capital, with none of the strings that come attached to other people’s money.

“He and those lucky enough to be in his inner circle have a huge edge in that they can do whatever they want,” says a commodities fund placement adviser.

Traders familiar with Arnold’s style also credit a calm and disciplined manner that helps him stay eerily focused on the fundamentals of the market when other trades are creating distractions.

The price was “still a long way from fundamental value,” Arnold argued. In fact, he had separately been buying contracts that would pay off if prices tumbled even further — and he was dead right. Arnold’s timing was “remarkably accurate,” according to the Senate report. Centaurus went on to 200% gains that fall, while Amaranth was forced to liquidate.

Centaurus’s trading in those months netted nearly $1 billion. The result was a reported 317% return overall for Centaurus in 2006, a year when another natural-gas fund, MotherRock, also imploded trying to sustain a losing bet.

While others had panicked, Arnold had remained patient, waited until the right moment, and then opportunistically relieved others of their money. The best compliment may have come from a competitor who once described Arnold and his trading team to reporters as “like being on the Yankees, and he’s Babe Ruth.”

He attended Vanderbilt University, where professors remember him as an economics whiz, able not only to understand concepts instantly but also to do complex math in his head.

On Enron’s natural-gas trading desk, which handled contracts totaling more than $1 billion a day, when he was only in his mid-twenties, Arnold alone reportedly earned Enron nearly $750 million in 2001. One colleague dubbed him the “king of natural gas.”

Categories: News

The Key to Get Rich? Stick to What You Know

November 24th, 2009 No comments

Invest only in things you know something about. The mistake most people make is that they listen to hot tips, or act on something they read in magazines. Most people know a lot about something, so they should just stick to what they know and buy an investment in that area. That is how you get rich. You don’t get rich investing in things you know nothing about.” – Jim Rogers

“We invest in what we know and understand.” – Jon Gray of Blackstone

“We do anything I think I understand, where I think the odds strongly favor making money.” – Warren Buffett

True that! Peter Lynch had this saying that retail investors spend dozens of hours researching what stereo or washing machine to buy, but then have no qualms about investing $10,000 in a company they know nothing about because of a “hot stock tip”. Think about how irrational that is.

What I see on Twitter is a lot of people chasing micro-caps because they are up big on silly hype press releases and “greater fool theory” momentum. It’s ALWAYS ends in tears for almost everyone that trades those kind of names. They are called micro-CRAPS for a reason. The fundamentals ALWAYS win in the end.

Want to get rich? It’s simple. Stick to what you know and nail a fundamental trend doing deep intensive research. There are no short cuts. If someone says otherwise, run away.

Categories: Articles

MasterCard SpendingPulse Data – 1st Half November 2009

November 24th, 2009 No comments

Retailers do about 40% of their annual sales and 50% of their profits from the holiday season.

1st Half November 2009 y/y
Electronics +6.1%
Women’s apparel -3.3%
Luxury goods -9.2%
Specialty apparel -5%
Men’s clothing -1%
Shoes -1.5%

Before people get too excited about the electronics number, much of the upside is from Activision’s Modern Warfare 2 and Microsoft’s Windows 7 launches, which are both one-time events. Modern Warfare 2 was the biggest entertainment product launch ever at $550 million in sales in its first 5 days. The retail sales overall point to a weak holiday season, especially in apparel.

Categories: News

Twitter Metrics

November 20th, 2009 No comments

-$1 billion valuation by venture capital firms in September
-Sales more than $4 million a year from companies that pay to use Twitter data
-58 million users
-plans to offer commercial accounts
-will start an advertising business in 2010 Source

Categories: News

NPD U.S. October 2009 Videogame Sales

November 12th, 2009 No comments

US VIDEO GAMES INDUSTRY – OCTOBER 2009 (Oct. 4-31)
Hardware: $380.74 million (-23%)
Software: $572.73 million (-18%)
Accessories: $118.88 million (-2%)
Total Games: $1.07 billion (-19%)

TOP-SELLING HARDWARE – OCTOBER 2009
Wii: 506,900
Nintendo DS: 457,600
PlayStation 3: 320,600
Xbox 360: 249,700
PSP: 174,600
PlayStation 2: 117,800

TOP-SELLING SOFTWARE SKUs – OCTOBER 2009 (not combined sales)
Title / Publisher / Units**
1. Uncharted 2: Among Thieves (PS3) / Sony / 537,000
2. Wii Fit Plus (Wii) / Nintendo / 441,000
3. Borderlands (360) / Take-Two / 418,000
4. Wii Sports Resort w/ Wii Motion Plus (Wii) / Nintendo / 314,000
5. NBA 2K10 (360) / Take-Two / 311,000
6. Halo 3: ODST (360) / Microsoft / 271,000
7. NBA 2K10 (PS3) / Take-Two / 213,000
8. Forza Motorsport 3 (360) / Microsoft / 175,000
9. Kingdom Hearts 358/2 Days (DS) / Square Enix / 169,000
10. FIFA Soccer 10 (360) / Electronic Arts / 156,000
11. Demon’s Souls / Atlus
12. Brutal Legend (360) / Electronic Arts / 150,000
13. FIFA Soccer 10 (PS3) / Electronic Arts
14. Mario & Luigi: Bowser’s Ins. Story (DS) / Nintendo
15. WWE Smackdown vs RAW 2010 (360) / THQ
16. Tekken 6 (PS3) / Namco Bandai
17. Borderlands (PS3) / Take-Two / 113,000
18. Madden NFL 10 (360) / Electronic Arts
19. Pokemon Mystery Dungeon: EoS (DS) / Nintendo
20. Mario Kart (Wii) / Nintendo

Music genre $53 million vs. $137 million last year

Categories: News

Insights on the Auto-Bailouts

November 7th, 2009 No comments

Steven Rattner, the administration’s auto czar, wrote an unusually frank article in Fortune about his time working on the auto bailouts and re-structurings. It’s a must read: Article Link

The President’s political advisers were as torn as his task force: Polls universally showed the public strongly opposed to the auto bailouts. At the same time, the advisers recognized the severe economic and political consequences of a Chrysler shutdown across broad swaths of the industrial Midwest. We were dazzled that chief of staff Rahm Emanuel — a former congressional leader — could identify from memory the representatives in whose districts the large Chrysler facilities lay. After about an hour, the President asked for any final comments and then said, “I’ve decided. I’m prepared to support Chrysler if we can get the Fiat alliance done on terms that make sense to us.”

Even by that low standard, I was shocked by the stunningly poor management that we found, particularly at GM, where we encountered, among other things, perhaps the weakest finance operation any of us had ever seen in a major company.

Certainly Rick and his team seemed to believe that virtually all of their problems could be laid at the feet of some combination of the financial crisis, oil prices, the yen-dollar exchange rate, and the UAW. It seemed completely obvious to us that any management team that had burned through $21 billion of cash in a year and another $13 billion in the first quarter of 2009 could not be allowed to continue.

Categories: News