ValuePlays

So, if you are attempting to become the world’s leading bio-products company, who would you hire? How about the guy who coordinated all these programs for the Department Of energy?

Todd A. Werpy joins Archer Daniels Midland Company (ADM) in the newly created position of VP, Biofuels & Biochemical Research, effective June 11, 2007.

Werpy comes to ADM from the U.S. Department of Energy’s (DOE) Pacific Northwest National Laboratory, one of the DOE’s nine multi-program national laboratories,where he has served as relationship manager since 2005.

As vice president, biofuels; biochemical research, Werpy will be responsible for leading ADM’s new research into second generation biofuels and biochemicals. He will report to Tom Binder, president, Research.

“Todd Werpy brings additional expertise to our BioEnergy research and development team,” said ADM vice president and chief technology officer Michael Pacheco. “He has exceptional knowledge of developing technologies for the conversion of renewable feedstocks to value-added chemicals, including biofuels, gasification, enzymes and fermentation. We are confident he will make a strong addition to our team.”

As relationship manager at the Northwest National Laboratory, Werpy coordinated the DOE’s relationships with the Office of Biomass Programs and various industry clients, as well as leading the development of proposals and acquisition of funding for the biobased products program.

From 1998-2005, he served as senior program manager where he directed and managed all research programs in the biobased products area. He is the co-author of several patents in the area of chemical conversion for creating value-added products from renewable resources.

From 1995-1998, Werpy served as director, research and business development for
the National Corn Growers Association where he developed the organization’s research and business development strategy. In this role, he worked with the DOE to establish the first formal program in renewable chemicals from alternative feedstocks.

Werpy also served as a senior research scientist at Michigan Biotechnology Institute where he worked with a team of scientists and engineers to develop new processes for converting biomass. Werpy received a Ph.D. in chemistry from Michigan State University and a Bachelor of Science degree in chemistry from Southwest State University.

Archer Daniels Midland Company (ADM) is the world leader in BioEnergy and has a premier position in the agricultural processing value chain. ADM is one of the world’s largest processors of soybeans, corn, wheat and cocoa. ADM is a leading
manufacturer of biodiesel, ethanol, soybean oil and meal, corn sweeteners, flour and other value-added food and feed ingredients. Headquartered in Decatur, Illinois, ADM has over 26,000 employees, more than 240 processing plants and sales for the fiscal year ended June 30, 2006 of $37 billion. Additional information can be found on ADM’s Web site at http://www.admworld.com/.

SOURCE Archer Daniels Midland Company

This will not get much press but is quite possibly the most important thing ADM has done this year. This guy knows what everyone is doing in the biomass industry, who is working on what, what is or is not working and do you think ADM will have trouble getting any gov’t funding for it’s efforts? Already the world’s leader in ethanol, biodiesel and biodegradable plastic production ADM is now taking step to assure that lead will only increase. In the past ADM has alluded to cellulose ethanol being economically viable in a couple of years. They recently received DOE funding for a project in conjunction with Purdue University for cellulose research and we have the hire of Werpy. This guy was not hired to “start” something but to get ADM to the finish line.

In all fairness to the Apple (AAPL) lover’s out there whose feeling I may have hurt, here is a pro-apple article from Frank Lara Jr. at the Stockmasters

The iPhone. I could end the article right there, you’ve all seen those commercials, and they are nothing short of amazing. As consumers, we all know that the first new releases of the iPhone might be buggy, they’ll figure out the quirks, then on about the third release it’s going to be a stellar product. But let’s face it, this is Apple (AAPL) we are talking about and everything from their MacBooks to iPods are great performing inventions. Those commercials for Macs vs. PC’s really hit home and it’s true, how often do you hear about people complaining about their Macs or the blue screen of death?

Last week UBS reiterated Apple Inc. (AAPL) with a “buy” rating while Piper Jaffray raised its price target on the stock to $160 per share. Joseph Hargett at SchaeffersResearch.com pointed out that the Dow Jones Newswire listed several (14 to be exact) large blocks of AAPL shares crossing the tape last week and all of the blocks numbered 100,000 shares or more. Everyone is getting excited about the iPhone launching at the end of the month, and I’m betting the powers that be send Apple’s stock to $160 sooner than we all think.

Personally I think buying Apple’s stock is ridiculous at this point, but just when you think the stock is going to fall they release another product, get an upgrade, or Steve Jobs parts the Red Sea and everyone cheers and throws money at him. I like the plays from the iPhone that include AT&T (T) and Research in Motion (RIMM), everyone on Wall Street has mentioned those picks including Todd Sullivan who wrapped it up beautifully with a ribbon on top (read Todd’s reasoning).

AT&T (T) is the exclusive carrier of the iPhone and will gain wireless subscribers hand over foot. Just wait until AT&T starts selling more services from the iPhone and we will all watch AT&T morph into the largest corporation on the planet that eventually builds the Death Star. So that would make AT&T’s CEO Randall Stephenson the Emperor and CFO Richard Linder be Darth Vader – I knew they had it in them.

If AT&T is the “Dark Side”, sign me up for Sith training school (along with Overstock.com’s Patrick Byrne) because it’s going to be a galactic-kegger (thank you Rip Torn from MIB) this year and next at AT&T thanks to the iPhone partnership.
Research in Motion’s (RIMM) products will serve as an alternative to customers not on AT&T’s (T) wireless network. The devices also sell for less than $200, versus iPhone’s incredible $500 to $600 price tag. RIMM could also benefit from any disappointment or delays with the iPhone. Let me add the mighty Jim Cramer (the true Sith Lord) has given his blessing on AT&T and Research in Motion as iPhone plays, so believe me America, it’s on.

So Apple shares sit at around $125 a share, it’s hard to believe isn’t it? But they are unlike any company in their field, their technology, innovation and products have us all screaming for more. If they build a Mac compatible blender I bet they could take out the Juiceman overnight (wouldn’t the infomercial’s be fun for that?) Come June 29th, we all know shares of Apple will not be falling on that day, oh no, they’ll be screaming. I would love to short Apple right now, but it’s a losing battle, maybe a year from now, but Apple Inc. is a hard hitting technology machine that is going to push its stock to new levels come July and August.

Using the power of the Force, Piper Jaffray’s Gene Munster predicted Apple will sell 45 million iPhones by 2009. Sound a bit much? I don’t think Pet Rocks sold that fast back in the 70’s but I could be wrong. Steve Jobs has projected sales of 10 million iPhones in its first year, so it’s reasonable to say the iPhone is going to do well, even if sales come in below expectations. Then again, iPhone sales may blow everyone away like the superlaser from the Death Star, it could happen — do you think Steve Jobs has plans for the iDeathStar?

Better trademark that name ASAP. As much as I hate to say it, Apple is on fire, and will continue to be for months to come. But just like any fire, all it takes is a little water to cool the blaze, and you can bet Microsoft (MSFT) is standing in the corner with a big bucket of water.

Visit the Master’s Here

Now that we are nearing the 1/2 way point in 2006, let’s take a look at the stocks that make up the Dow Jones Industrial Average (DJIA) and see who has not benefited from the record breaking run so far this year.

Value if $1,000 Invested at the end of 2006 (largest loser first):

1- Johnson & Johnson (JNJ)= $953

2- Home Depot (HD)= $956

3- Citigroup (C) = $977

4- Proctor & Gamble (PG) = $992

5- Disney (DIS)= $988

Not bad. 5 out of 30 stocks in the red. The big winners? Caterpillar (CAT) at $1,292 and Alcoa (AA) at $1,355

The FCC announced it is “seeking comment ” on the proposed merger between the only two satellite radio companies in existence. Am I the only one who wonders they are even bothering?

Based on recent decisions like the one in which the FTC contested the Whole Foods (WFMI) and Wild Oats (OATS) $560 million buyout, I cannot fathom a scenario in which the only two companies in an industry are allowed to form only one. While I feel the Whole Foods opposition is nonsensical, the fact there is opposition to it is what it is. The merger between XM (XMSR) and Sirius (SIRI), valued at $4.7 billion is currently being opposed by both consumer groups and the National Association of Broadcasters and really, I cannot find anyone who favors the merger except folks and shareholders of XM and Sirius.

For a little history we only need go back to the attempted Direct TV (DTV), Echostar (DISH) merger a few years ago. There we had two companies attempting to merge to create more competition against other pay TV companies (cable) like Time Warner (TWC) and Comcast (CMCSA). . The FCC opposed and squashed it because they said the merger would eliminate competition in rural areas and the same scenario holds true in this instance. Also hurting this attempt is that we have no pay radio competition at all for the combined entity to argue they need to merge to help combat in other areas. The profitability with the two companies is not due to lack of consumer interest, it is due to moves like giving Howard Stern hundreds of millions of dollars to essentially do what he did for for a fraction of the price on free radio. Heck, if they had just waited the guy probably would have pulled an Imus soon enough and got himself tossed off the air anyway, then they could have picked him up on the cheap. The only difference now is that without the specter of the FTC coming down on him at any minute, the cache and risk is gone and so all you have is a middle aged guy swearing on the radio, it’s get boring after about 3 minutes. There is a reason he has not been in the news the last 2 years, nobody longer cares.

This attempt will be squashed and consumers will win in the long run. Short term, shareholders will get hit.

Well, it is finished, my interview on Wall St. Radio. Click on this link to hear it..

I have put a permanent link on the blog to hear the other ones.

Alan Greenspan was arguably the country’s most powerful financial cop in his 18 years as chairman of the Federal Reserve. But Mr. Greenspan’s regulatory record has received far less scrutiny than his management of the economy.

Article Originally Published in The WSJ

That may be changing. A former colleague says Mr. Greenspan blocked a proposal to increase scrutiny of subprime lenders under the Fed’s broad authority. That added scrutiny might have helped curtail questionable lending practices now blamed for soaring defaults by mostly low-income borrowers. Democrats in Congress are now turning up the heat on regulators, especially the Fed, for failing to do more to stamp out those practices, and the Fed appears increasingly likely to overhaul its approach.

Edward Gramlich, who was Fed governor from 1997 to 2005, said he proposed to Mr. Greenspan in or around 2000, when predatory lending was a growing concern, that the Fed use its discretionary authority to send examiners into the offices of consumer-finance lenders that were units of Fed-regulated bank holding companies.

“I would have liked the Fed to be a leader” in cracking down on predatory lending, Mr. Gramlich, now a scholar at the Urban Institute, said in an interview this past week. Knowing it would be controversial with Mr. Greenspan, whose deregulatory philosophy is well known, Mr. Gramlich broached it to him personally rather than take it to the full board.

“He was opposed to it, so I didn’t really pursue it,” says Mr. Gramlich, a Democrat who was one of seven Fed governors.

Greenspan’s Response

Mr. Greenspan, in an interview, says he doesn’t recall a specific discussion of the idea but confirmed his opposition to it.

There is “a very large number of small institutions, some on the margin of scrupulousness and very hard to detect when they are doing something wrong,” says Mr. Greenspan, who retired in February last year. “For us to go in and audit how they act on their mortgage applications would have been a huge effort, and it’s not clear to me we would have found anything that would have been worthwhile without undermining the desired availability of subprime credits.”

Mr. Greenspan adds that borrowers might get a false sense of security from a lender that advertised itself as Fed-inspected.

Ben Bernanke, Mr. Greenspan’s successor, told Congress in March that he has asked his staff for “a complete review of our powers and practices” in examining holding-company units. A Fed spokesman this past week said “that review is under way.” The Fed Thursday will conduct a public meeting on steps it could take to strengthen laws governing subprime lending.

On June 29, the Urban Institute will release a book by Mr. Gramlich, “Subprime Mortgages: America’s Latest Boom and Bust.” It argues, among other points, that all lenders affiliated with banks and thrifts could “be brought under the same supervisory conventions as their parents seemingly without major culture shock.” It wouldn’t be a huge undertaking by policy makers, and it would lead to more uniform, stringent practices.

Mr. Gramlich, who is being treated for cancer, says, “There are certain things that unsupervised lenders do that a Fed supervisor would not let you get away with,” such as not escrowing taxes and insurance, not verifying an applicant’s stated income, or assessing the borrower’s ability to repay based on an introductory “teaser” rate. But he said the proposal’s reach would have been limited by the fact that many lenders would still have no federal supervision.

At the time President Clinton appointed Mr. Gramlich to the Federal Reserve Board, he was a University of Michigan academic who had served on commissions studying Major League Baseball and Social Security. Mr. Greenspan put him in charge of the board’s community and consumer affairs committee.

Mr. Gramlich often pushed the Fed to expand fair-lending and consumer-protection rules, winning the admiration of consumer groups that often accuse the Fed of being too supportive of the financial industry. Despite their differing philosophies, Mr. Gramlich says he got along well with Mr. Greenspan, who supported him on most initiatives, especially those involving increased disclosure.

Nonetheless, his remarks represent a rare insider’s criticism of Mr. Greenspan’s regulatory record. Mr. Greenspan says he didn’t get heavily involved in regulatory matters in part because his laissez-faire philosophy was often at odds with the goals of the laws Congress had tasked the Fed with enforcing.

“I basically listened to the staff and tried as best I could to support the staff’s recommendation,” he says. He notes that with one exception, on a highly technical issue, he always voted with the board majority.

Still, Mr. Greenspan’s views did color the regulatory environment, facilitating growing concentration in banking and a hands-off approach to derivatives and hedge funds. That approach, broadly shared by both the Clinton and Bush administrations, is coming under increased scrutiny.

The Fed has taken heat recently for not more vigorously using its power to write consumer-protection rules for the entire industry, not just the lenders it oversees directly. Before it proposed new standards last month, the Fed hadn’t conducted a broad review of its credit-card disclosure requirements since 1981 — six years before Greenspan took office.

In 2005, 52% of subprime mortgages were originated by companies with no federal supervision, primarily mortgage brokers and stand-alone finance companies; 23% by banks and thrifts; and 25% by finance companies affiliated with banks and thrifts, including units of bank holding companies.

According to Inside Mortgage Finance, an industry publication, in 2006 three of the eight largest subprime mortgage lenders were units of bank holding companies. The Fed is one of four federal regulators that supervises deposit-taking banks and thrifts. It also has oversight over bank holding companies, with the discretion to delegate authority over their operating units to other agencies.

Thus the Fed generally leaves regulation of nationally chartered banks to the Office of the Comptroller of the Currency; of securities-dealer units to the Securities and Exchange Commission; and of consumer-finance companies to the states.

However, state regulation is generally considered inconsistent and usually less rigorous than federal oversight. Moreover, 18 states offer some form of exemption from state regulation to bank holding company units, according to the Conference of State Banking Supervisors.

The Fed periodically examines the finance-company units to ensure that they pose no threat to the “safety and soundness” of their deposit-taking affiliates and to assess their controls for things like money laundering. In special situations, it does scrutinize their practices for compliance with consumer-protection laws. In 2004, it fined Citigroup $70 million for alleged abuses by its CitiFinancial unit.

But Mr. Gramlich fretted that extending those standards to holding-company units would create an unlevel playing field unless stand-alone lenders were subjected to the same thing.

Jim Strother, general counsel for Wells Fargo & Co., said oversight of bank holding company units isn’t “where the need is,” noting the Fed does examine Wells Fargo Financial, a major subprime mortgage lender. “The gap is for companies that aren’t in the banking system at all.”

Abdalla El-Badri, Secretary-General of the Organization of the Petroleum Exporting Countries (OPEC) said the biofuel strategy being pushed by President Bush and European leaders would backfire because “you don’t get the incremental oil and you don’t get the ethanol”. In this scenario, he warned, oil prices would go “through the roof”.

He said OPEC members had so far maintained their investment plans but he warned: “If we are unable to see a security of demand…we may revisit investment in the long-term.” Why the change? In the past OPEC had all but mocked biofuel’s potential. This is the first public expression of concern.

“They are really concerned,” said Julian Lee of the Center for Global Energy Studies in London. “Opec will continue investing, but with biofuels on the horizon, they may not invest enough.”

OPEC is caught between a rock and hard place. On the one hand,if they keep prices high like they have become accustomed to, the rest of the world will continue it’s quest for alternative sources. Should they ramp up production to bring prices down in an attempt to make biofuels cost prohibitive, their wallets suffer. What to do?

I think if anything this is proof positive that oil production is currently at a peak level. If OPEC could, it would flush the world with oil and dampen it’s desire for alternative sources and make them less profitable. The fact that they haven’t means they can’t.

Here is another odd point. With OPEC clearly scared about both the current reality and the future surrounding ethanol, why are US ethanol makers currently nowhere near 52 week highs? When you have the US and Brazil, who between them produce over 10 billion gallons a year of the stuff rushing to partner production practices, shouldn’t that excite us? When the world’s #1 producer of biodiesel, ADM (ADM) has set up shop in Brazil, will produce biodiesel there in August and is aggressively seeking an ethanol partnership, ought we not be more positive about the future of these companies?

Let’s not forget other US Agribusiness companies like Bunge (BG) and Corn Products (CPO) are in the process of producing from South America also.

Here is another miscellaneous thought. If the Dems take the White House (and even possibly if they do not) oil companies like Exxon (XOM), Chevron (CVR), and BP (BP) will once again find them selves in front of congress answering for record profits and high gas prices. Dems have wanted to grab some of these profits for years and may soon be in a position to actually do it. Can you think of anything that would get anyone of them off the hook faster than being able to say “We are also the #1 (or #2) ethanol producer in the US”? With half the ethanol sector near 52 week lows, valuations are ripe for buyouts by big oil flush with cash, looking for some real nice PR in their commercials and as a way to protect their profits from congress’s hands.

When you have the organization that controls 40% of the world’s oil publicly worried about ethanol, I find the current apathy towards companies that produce it odd. Maybe that is what a value investor is, finding the value in what others overlook.

Time for an update of the various lead paint suits winding their way to obscurity throughout the US.
The main defendants are Sherwin Williams (SHW) and NL Inustries (NL). I have taken this post in it’s entirety from Jane Genova’s Law and More since, as I have said here numerous times before, investigating the legal aspect of lead paint litigation begins and ends with Jane’s blog.

“These updates come by way of the monitoring, research and interpretation of LexisNexis [TM] Mealey’s Litigation Report. This Mealey’s briefing is focused totally on the lead issue. I have radically downsized the content of the original report. Also I have added my own commentary.

Documents associated with these developments are available from Mealey’s at www.lexisnexis.com/mealeys or James.Cordrey@lexisnexis.com

RHODE ISLAND:

Abatement:

1. Defendants Sherwin-Williams, NL Industries and Millennium Holdings filed a joint objection to the state’s recommendation for special master of Mary Jean Brown, MD of the U.S. Centers for Disease Control and Prevention. The reason, say the defendants, is that it appears “from available information [Brown] has had from any years been involved in reviewing (and to some extent shaping) the evidentiary facts regarding childhood lead poisoning and lead abatement in Rhode Island.” The person functioning as special master, of course, should have no ties to any one party in an adversary proceeding.

2. On June 4, Superior Court Judge Michael Silverstein heard from plaintiff and defendants about their recommendations for a special master. He did not indicate when he would rule on this.

3. On May 16, plaintiff filed proposed abatement schedule indicating it would file a detailed plan by Sept. 15. Defendants have 60 days to file objections to the plan. The plaintiff also proposes defendants shall pay all fees and costs incurred by the function of special master.

Appeal to RI Supreme Court:

Both the plaintiff and the defendants had filed an appeal. On May 21, the RI Supreme Court issued an order and briefing protocol for the defendant paint companies.

The schedule requires the completion of the official transcript, certification of the original papers and exhibits and docketing of the matter in the RI Supreme Court. As we have been informed previously, this could take months. Sources predict this might not be done until early 2008.

After that, there will be a conference with plaintiff and defendants to work up a schedule for filing briefs. When that date is set and the briefs have been actually filed, then a date will be made for oral arguments before the Court.

Since the contingency issue has already been fully briefed, there is no additional filing related to this one matter. The other issues will be briefed in five phases:

* Appellants’ briefs
* Appellees’ briefs
* Amicus briefs
* Reply briefs
* Replies to amicus briefs.

WISCONSIN:

City of Milwaukee v NL Industries. Plaintiff rested its case on June 6. The jury returns June 8. Then the defendant will present its case. Since as part of the defense teams in the RI lead paint trial, NL Industries lead attorney Donald Scott didn’t present a defense, lead-paint watchers are curious who he will call as witnesses and what strategies he will use.

Steven Thomas et al. v. [Many]. On May 10, the judge ruled the defendants could compel Steven Thomas’ guardian ad litem to provide deposition testimony, subject to limitations. Defendants argue exculpation defense should be allowed. Atlantic-Richfield claims no liability since its lead carbonate was not sold in Milwaukee.

Called for short “The Thomas Case,” this upcoming trial is viewed as the most severe test the former lead paint industry and its former trade association Lead Industries Association (LIA) have encountered. Part of the challenge is how the legal concept of liability is being approached because of a WI Supreme Court ruling.

CALIFORNIA:

In County of Santa Clara, et al. v Atlantic Richfield Co, et al. the judge issued an order staying the case until the appellate review.

MISSISSIPPI:

The state Supreme Court denied Sherwin-Williams’ motion for a rehearing and the case [a personal injury one] will go to trial.

OHIO:

SS 117 Veto. The state Supreme Court, which heard oral arguments on May 1 regarding if Senate SS Bill 117 had become a law because of the former Governor’s not vetoing it, will probably rule by the end of June.

Preemptive Strike by Sherwin-Williams. On May 14, the city of Columbus and other cities in OH filed a brief seeking to prevent Sherwin-Williams from being allowed to take “the extraordinary step of prohibiting the defendants from engaging legal counsel of their choosing in pending state court claims.” It also requested a dismissal of Sherwin-Williams’ request for a preliminary injunction against litigation. The cities contend that this filing by Sherwin-Williams represents an attempt to evade responsibility for creating a public nuisance.”

Here are the top 5 sectors YTD ranked by return.

1- Chemicals / Fertilizers +68% (13 stocks)

2- Steel Producers +30% (22 stocks)

3- Trucks & Parts Heavy +45% (13 stocks)

4- Food- Dairy Producers +30% (9 stocks)

5- Transportation / Ships +20% (49 stocks)

Rankings are done by price performance of all stocks in the group. So, a sector that has 5 stocks, one up 100% and 4 up 1% will not be ranked as high as a sector that has 5 stocks all up 15%, thus the differential in rankings vs return.