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To: Spekulatius who wrote (30043)2/14/2008 8:21:11 AM
From: Grommit
   of 70582
I don't think you understand the company. We'll see. I think that they cleaned up the issue of improper valuation of European Capital.

page 35 and others.

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To: Grommit who wrote (30044)2/14/2008 10:02:12 AM
From: Wallace Rivers
   of 70582
I'm glad I resisted the temptation of investing in LIZ. Down hard today, the brands are underperformning.

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From: Archie Meeties2/14/2008 6:16:35 PM
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Interesting study on share buybacks.

One critism of the study is that their time frame is too narrow. Really need a multi decade study that compares vs. and index return and also factors in a comparison vs. use of cash for dividends.

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To: Grommit who wrote (30044)2/14/2008 9:43:10 PM
From: Spekulatius
   of 70582
I don't think you understand the company. We'll see. I think that they cleaned up the issue of improper valuation of European Capital. .

I understand book value. The revaluation of European capital was just a component of said writeoff. FWIW, not all numbers in the presentation link are that great - foe example average interest coverage of 2x (for portfolio companies) is below the values in earlier recessions (or slowdowns <g>) - P.10
Also past Due loans have been rising quite significantly, from a low of 4% last year to 7.95 now.

I understand the importance of NOI but i would not purchase ACAS based on that alone. in order for me to buy, i would like ACAS to be below tangible book, which is at about 32.5$. When it dipped below that value recently, i bought and when it went to a premium I sold. it's that simple. others may have a different value proposition for ACAS, but this is way I value the stock.

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To: Wallace Rivers who wrote (30035)2/15/2008 1:46:33 AM
From: rllee
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Latest credit-market trap could hit closed-end funds

Failures of auctions to reprice this debt has already walloped municipal bonds
By Laura Mandaro, MarketWatch
Last Update: 7:45 PM ET 2/14/08

SAN FRANCISCO (MarketWatch) -- Auction-rate securities, the latest minefield in the credit market, may soon claim a new victim: closed-end funds.

J.P. Morgan analysts said Thursday they anticipated the costs from some of these funds, which had issued auction-rate securities as a source of cheap financing, could increase after the market for these securities nearly dried up.

"The cost of leverage will rise for closed-end funds," J.P. Morgan analysts Kenneth Worthington and Timothy Shea wrote in a report, noting that these higher costs "should weigh on returns."

Closed-end funds are different from their cousins, mutual funds, because they do not continuously offer shares for sale. Firms such as Eaton Vance Corp. (EV) , Nuveen Investments, Calamos Advisors and BlackRock Inc. (BLK) manage closed-end funds that have used the auction-rate market for a source of funding. They've done this by issuing what's known as auction-rate preferred shares.

"Auction failures means this preferred market may go away," the analysts said.

From muni bonds to Bristol-Myers

Once a large but formerly low-profile segment of the financial markets, auction-rate securities are the latest investment vehicles to convulse, singeing investors and cutting off financing for issuers. Municipalities, whose bonds made up many of these vehicles, have seen the rates on their debt skyrocket after investors have shunned recent auctions.

"It just speaks to the interconnectedness of capital markets," said Tanya Azarchs, banking analyst at Standard & Poor's. "This has been a little like pulling on a string."

'A year ago, no one talked about or thought about this market. It had been functioning the way it had for 20 years.'

Tanya Azarchs, Standard & Poor's

When running smoothly, the $331 billion market works the following way. An investor such as a corporate treasurer buys auction-rate securities, often municipal bonds but also sometimes preferred stock or corporate bonds. These have long-term maturities, but act like short-term investments because the holders can sell them at weekly or monthly auctions, when their rates reset. Some investment managers regarded them as a cash alternative for investors looking for safe but liquid investments.

Investors ranging from family trusts to large corporations like Bristol-Myers Squibb Co. (BMY) and 3M Co. (MMM) had used auction-rate securities to get a little more yield on their savings for not much more risk -- or so it seemed.

"A year ago, no one talked about or thought about this market," added Azarchs. "It had been functioning the way it had for 20 years."

A manager of a money-market fund that has an obligation to buy only short-term, highly rated securities could choose auction-rate securities as a place to park cash, for instance.

Closed-end funds, for their part, issued auction-rate preferred stock and used the proceeds to buy longer-term instruments for common shareholders. This use of leverage boosted the yield for common shares in these funds, J.P. Morgan said.

Bidders skip town

The problem for issuers and their investors is that the door has recently shut on those investment auctions. Investors, skittish about the unraveling in other parts of the credit market, have sat them out.

With roughly half of the outstanding auction-rate securities held by individuals, "a significant, albeit likely short-lived liquidity crunch is again emanating out of the credit markets," wrote Banc of America Securities analyst Jeffrey Rosenberg.

Past auction failures has culminated in the refusal of brokers to make a markets in these securities, Banc of America Securities said. About 80% of auctions failed on Wednesday, the brokerage estimated.

The link between auction-rate securities and the disruptions in other parts of the credit market is a complicated one, but it all traces back to the surprise surge in mortgage defaults that started last year.

Losses in pools of these soured mortgages, structured securities known as mortgage-backed securities and collateralized debt obligations, not only racked up big losses at investment banks; they also jacked up claims on the companies that insured holders of the structured securities. With a load of claims to repay, the financial standing of these bond insurers, most notably Ambac Financial Group (ABK) and MBIA Inc. (MBI) , suddenly looked shaky. Concerns about the credit ratings of the insurers, by proxy, made everything else they had insured looked vulnerable -- including municipal bonds.

Those municipal bonds, issued by school districts and county governments, are the connection with the recent collapse in auction-rate securities. They're a big part of that market. Now the risk that some of these municipal bonds might not keep their high credit ratings is keeping investors away from auction-rate securities.

"It's more about the supply-demand balance than about any deterioration in municipal-bond credits," said S&P's Azarchs.

She expects that some of the investment banks that arranged these deals -- including Citigroup Inc. (C) , Goldman Sachs Group (GS) , JPMorgan Chase & Co. (JPM) , Lehman Brothers Holdings (LEH) and Merrill Lynch & Co. (MER) -- will take some of these securities onto their balance sheet as an extension of goodwill to their municipal-bond clients.

"There could be some write-downs this quarter from any of these programs," Azarchs commented. Besides auction-rate securities, similar upsets have happened in structured vehicles known as variable-rate demand bonds and tender-option bonds. "But I don't expect them to be really large -- not like the fourth quarter."

For the closed-end funds, auction failures may mean the market for auction-rate preferred stock issuance has shut as well.

J.P. Morgan estimated that funds at Nuveen and Calamos Advisors have some of the most leverage, putting their funds more at risk for higher costs. In a worst-case scenario, if Eaton Vance were to deleverage its closed-end funds that used these securities, that could cost the publicly traded company 10 cents 15 cents a share annually, the bank's analysts said.

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To: rllee who wrote (30048)2/15/2008 8:25:42 AM
From: Wallace Rivers
   of 70582
Dodged a bullet as I missed a fill on BBY yesterday. Trading down around 5%, it will remain on my watch list, becoming particularly attractive when it gets closer to its 52 week low.

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To: E_K_S who wrote (30034)2/15/2008 11:15:33 AM
From: Jurgis Bekepuris
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Can you tell me why Buffett's share is not disclosed in BRKA's 13F form? It's definitely not because it's too small... All I find while searching is 2006 articles of Buffett buying some Tesco, but I do not see anything in his 2007 13Fs. Did he sell it?

BTW, SWCEY position is not disclosed either, I am not sure why, though it might have been acquired after 12/31.

On the other news of Buffett buys, his most recent 13F was released today. It's somewhat underwhelming. Buffett bought KFT during 2007. However, I find it difficult to find value in KFT: margins low, ROE low, balance sheet looks like crap - although it should look that way, since Altria put a lot of debt on it. The only positive is that they are slowly slowly paying off debt. 38b of intangible assets, 7b debt, theoretical equity of 28b, but negative tangible assets. Oh well. Not very low PE, 3.7% dividend per Yahoo... Not sure I would want to follow Buffett.

Buffett also bought more KMX. Another one where I don't see great value. Low margins, cleanish balance sheet.

Finally, press is making a big thing of BRKA's GSK purchase. It is really funny, since the position is very very tiny. I will hold my own very tiny GSK position though and see what happens. :)

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To: Jurgis Bekepuris who wrote (30050)2/15/2008 11:57:14 AM
From: E_K_S
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Hi Jurgis - Buffet's Tesco investment first came to my attention in his letter to shareholders in March 2007 when he announced that Berkshire started a position at the end of 2006 valued at $1.82 Billion. He added to the position in 2007 with two additional purchases that brought his position up to $4 Billion. These holdings were not detailed in any of his 13G filings when I scanned Berkshire's insider holdings ( I do not know why it is not on the insider holding report. Perhaps it has something to do with Tesco being a foreign company.

Notice that in his most recent filing he added to holdings in U.S. Bancorp (USB), Burlington Northern Santa Fe , Carmax (KMX), Wells Fargo & Co. (WFC), and trimmed stakes in Ameriprise (AMP) and Iron Mountain (IRM).

I plan to watch Kraft as his recent buy represents a pretty large stake (8.6%) and he probably sees some "hidden" value in the company not obvious in the balance sheet.


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To: E_K_S who wrote (30051)2/15/2008 12:07:30 PM
From: Jurgis Bekepuris
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You might be right that Buffett does not have to disclose shares of foreign companies in 13F although I wonder why he had to disclose GSK shares. Maybe because he bought GSK ADRs while he bought Tesco in Britain. I don't really know. I am also wondering about his Posco PKX holdings that were rumored but again there is no disclosure.

USB and WFC adds are tiny, so I would not make much of it, even though I also got some USB and WFC.

You are right, I forgot BNI add. However, with current BNI runup, I am hesitant to add to my tiny position.

Regarding Kraft, I agree that he sees something there. On the other hand, I am not sure Buffett's low margin buys are very much on target. For example, I still think that McLane purchase was not very good move, although it is tougher to extract its performance from BRKA reports now. I think that KFT is more interesting that KMX though although both have pluses and minuses.

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To: Jurgis Bekepuris who wrote (30050)2/15/2008 12:32:49 PM
From: SI Bob
   of 70582
I heard that Tesco is entering the US Markets. True?

I'm in London right now and love Tesco. Right in town they're about like a QuikTrip but several times larger and with higher quality product. I can go to the one by the office daily for a sandwich and go to the one by the flat occasionally to stock up on groceries. And they're constantly busy. Built to really encourage a fast, smooth flow of people into the door, past the products, and on to the till.

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