Tag: MO

Weekend Reading at VIN

Long weekend so here is the list a day early…visit Value Investing News for more.

1. Betting Big, Winning Big: Interview With Bruce Berkowitz
(via online.barrons.com)

Barron’s: You run a very concentrated portfolio, with the top 10 holdings of the Fairholme Fund accounting for roughly 70% of the assets. Why is that?

2. Gannon On Investing: On Ignorance Admitted
(via www.gannononinvesting.com)

How well defined is your circle of competence? How honest are you with yourself? Join Geoff as he discusses these topics and current market environment.

3. Bruce Berkowitz on Sears Holdings (Video)
(via www.bloomberg.com)

4. How value investor Chou wins with bonds
(via www.theglobeandmail.com)

Mr. Francis Chou’s method can be boiled down to a few principles. As he wrote in his 2007 report to unitholders, “the cardinal principle of investing is to think first about preserving capital before thinking about making money. The greater the probability of permanent loss of capital, the greater the spread should be between a particular debt instrument and risk-free treasuries.”

5. Does the magic formula work?
(via www.contrarianvalueinvesting.com)

Ever since its release, much has been written whether or not Joel Greenblatt’s “Magic Formula” works. Joel Greenblatt has consistently said that results should be measured over time and every once in a while there would be stretches where the magic formula does not work.

6. How Bad Will This Get? The US Dollar.
(via www.fwallstreet.com)

“When the markets are flying high, value investors tend to sit back and let things happen. When they crash, we must start looking for opportunities — dissecting information, scouring annual reports and proxy statements, and evaluating which companies will survive and which ones will die. (That’s why I haven’t been around as much lately. Sorry.)”

7. Altria’s Spin: Your Questions Answered
(via valueplays.blogspot.com)

Answers to the most common PMI spin questions

8. How Bad Will This Get? The Recession.
(via www.fwallstreet.com)

Through our investing, we can combat the recession, achieve growth, and keep our heads above water (or fly high). To help us in that endeavor, we must understand the effects of the recession so that we pick the opportunities out of the blood on the streets.

9. World Wrestling (WWE): Cramer is Wrong – Buy for the Dividend
(via collegeanalysts.com)

A look at Cramer’s track record on the stock, and why you should buy even if the capital appreciation will be limited.

Billytickets will vote this down.

10. A Bear Stearns Market
(via www.washingtonpost.com)

“Panic is old hat on Wall Street. Rarely before, however, has there been a crisis so comprehensive as this one. It first materialized last summer in the shape of a disturbance in the low-rated, or subprime, mortgage market. “Contained,” the regulatory establishment hopefully pronounced.

11. Gannon On Investing: An Email on Economic Catastrophe
(via www.gannononinvesting.com)

Excerpt: “The Fed is in a very tough position. This is a credit problem. It’s serious. It’s hard to say what the result will be – but it could potentially be very bad. You can have some pretty catastrophic things happen when people start to panic – as far as what happens with money and how all sorts of things can seize up at once.

12. Mutual Fund Companies Make Better Investments Than The Funds They Manage
(via amateurassetallocator.com)

The stocks of mutual fund companies often make better investments than the funds they manage.

13. Understanding Valuation Measures
(via magicdiligence.com)

The second in a three part series, this article examines several valuation based formulas, explaining for each what it means, how to calculate it, what’s a good or bad number, and a simple example.

14. Special Situation: Steak N Shake a Landslide Victory!
(via streetcapitalist.com)

With the company now trading at about $8 per share there seems to be quite a bit of fear. One of the walls that stood in the way of the company’s value was their stubborn and entrenched management. With Biglari’s landslide win, change becomes very possible.

15. NVIDIA – The Fleeting Advantage
(via magicdiligence.com)

NVIDIA is a leading graphics processor maker. Over the last 3 years it has crushed it’s rival AMD (formerly ATI) in the technology battle, delivering huge revenue and earnings gains to shareholders and improving margins by 400%. But in the face of strong competition, does the company really have any durable advantage?

16. Bloomberg Interview with Jean-Marie Eveillard
(via www.bloomberg.com)

Bloomberg Interview with Jean-Marie Eveillard.

17. Sham Gad : Cash Is King Again
(via www.fool.com)

You usually don’t realize how good something is until it’s gone. For most investors, the red-headed stepchild in their portfolios is cash. When markets are advancing, it’s easy to see cash as a weak, underperforming asset that needs to be put to better use. After all, who wants sit on an asset earning low-single-digit returns when the markets are serving up double-digit gains?

18. Can’t Grasp Credit Crisis? Join the Club
(via www.nytimes.com)

It has been going on for seven months now, and many people probably feel as if they should understand it. But they don’t, not really. The part about the housing crash seems simple enough. With banks whispering sweet encouragement, people bought homes they couldn’t afford, and now they are falling behind on their mortgages.

19. Sooner Fed bail-outs than the 1930s revisited
(via www.telegraph.co.uk)

Put a clothes peg on your nose. The moral stench of bail-outs for the über-rich will be sickening. None of us wants to pay a farthing to rescue the bankers and assorted debt pimps who got us into this financial mess, and in doing so exposed our societies to such harm.

I found the comments to be the best part. Very thought-provoking

20. Why Paying $5 Per Share For Bear Stearns Might Make Sense
(via stockmarketbeat.com)

Bondholders can use options to hedge a stock buy, and effectively buy the right to vote in favor of the deal for $0.35 per share.

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Tags MO, SHLD

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Altria’s Spin: Your Questions Answered

Post author By ToddSullivan
Post date March 19, 2008

Here are the answers to many questions regarding the upcoming Altria (MO) spin of PMI.

Q: I own Altria shares. What will I receive as a result of the Spin-off?

A: Altria will distribute one share of PMI common stock for each share of Altria common stock outstanding as of the Record Date for the Distribution.

Q: What is the Record Date for the Distribution, and when will the Distribution occur?

A: The Record Date is March 19, 2008, and ownership is determined as of 5:00 p.m. New
York City Time on that date. Shares of PMI common stock will be distributed on March 28, 2008. We refer to this date as the Distribution Date.

Q: What do I have to do to participate in the Distribution?

A: Nothing. You will receive one share of PMI common stock for each share of Altria common stock held as of the Record Date and retained through the Distribution Date. You may also participate in the Distribution if you purchase Altria common stock in the “regular way” market and retain your Altria shares through the Distribution Date. See “Summary—Trading Prior to or on the Distribution Date.”

Q: If I sell my shares of Altria common stock before or on the Distribution Date, will I still be entitled to receive PMI shares in the Distribution?

A: If you sell your shares of Altria common stock prior to or on the Distribution Date, you may also be selling your right to receive shares of PMI common stock. See “Summary—Trading Prior to or on the Distribution Date.” You are encouraged to consult with your financial advisor regarding the specific implications of selling your Altria common stock prior to or on the Distribution Date.

Q: Will the Spin-off affect the number of shares of Altria I currently hold?

A: The number of shares of Altria common stock held by a stockholder will be unchanged. The market value of each Altria share, however, will decline to reflect the impact of the Distribution

Q: What are the U.S. federal income taxconsequences of the Distribution to U.S.
stockholders?

A: Altria has received a private letter ruling from the Internal Revenue Service and an opinion of counsel that the Distribution of PMI common stock to Altria stockholders will qualify as a tax-free distribution for United States federal income tax purposes. You should, of course, consult your own tax advisor as to the particular consequences of the Distribution to you, including the applicability and effect of any U.S. federal, state and local and foreign tax laws, which may result in the distribution being taxable to you. Altria will provide its U.S. stockholders
with information to enable them to compute their tax basis in both Altria and PMI shares. This information will be posted on Altria’s website, www.altria.com/PMIspinoff, promptly following the Distribution Date. Certain United States federal income tax consequences of the Spin-off are described in more detail under “The Distribution—U.S. Federal Income Tax Consequences of the Distribution.”

Q: Is the Distribution tax free to Non-U.S. stockholders?

A: Non-U.S. stockholders may be subject to tax on the Distribution in jurisdictions other than the U.S. It is expected that the Distribution will be tax free in Canada and Sweden, but subject to tax in Denmark, France, Germany, Ireland, Japan, the Netherlands, Norway and Switzerland. We will post the results (if any) of foreign tax authority determinations on our website, including the Canada Revenue Agency’s conclusion whether the Distribution is tax free. See “The Distribution—Tax Consequences of the Distribution to Non-U.S. Stockholders.” The foregoing is for general information purposes and does not constitute tax advice. Stockholders should consult their own tax advisors regarding the particular consequences of the Distribution to them.

Q: When will I receive my PMI shares? Will I receive a stock certificate for PMI shares distributed as a result of the Spin-off?

A: Registered holders of Altria common stock who are entitled to participate in the Distribution will receive a book-entry account statement reflecting their ownership of PMI common stock. For additional information, registered stockholders in the U.S. or Canada should contact Altria’s transfer agent, Computershare Trust Company, at 1-866-538-5172 or by e-mail at altria@computershare.com. Stockholders from outside the U.S. and Canada may call 1-781-575- 3572. If you would like to receive physical certificates evidencing your PMI shares, please contact PMI’s transfer agent. See “Description of Capital Stock—Transfer Agent and Registrar.”

Q: What if I hold my shares through a broker, bank or other nominee?

A: Altria stockholders who hold their shares through a broker, bank or other nominee will have their brokerage account credited with PMI common stock. For additional information, those stockholders should contact their broker or bank directly. Questions regarding the Distribution can also be directed to our information agent, D.F. King & Co., Inc., at 1-800-290-6431.

Q: What if I have stock certificates reflecting my shares of Altria common stock? Should I send them to the transfer agent or to Altria?

A: No, you should not send your stock certificates to the transfer agent or to Altria. You should retain your Altria stock certificates. No certificates representing your shares of PMI common stock will be mailed to you. PMI common stock will be issued as uncertificated shares registered in book-entry form through the direct registration system.

Q: If I was enrolled in an Altria dividend reinvestment plan, will I automatically be
enrolled in the PMI dividend reinvestment plan?

A: Yes. If you elected to have your Altria cash dividends applied toward the purchase of additional Altria shares, the PMI shares you receive in the Distribution will be automatically enrolled in the PMI Direct Stock Purchase and Dividend Reinvestment Plan sponsored by Computershare Trust Company (PMI’s transferagent and registrar), unless you notify Computershare that you do not want to reinvest any PMI cash dividends in additional PMI shares. For contact information for the PMI plan sponsor (Computershare), see “Description of Capital Stock—Transfer Agent and Registrar.”

Q: Why is Altria separating PMI from its business?

A: Altria’s Board of Directors and management believe the separation will provide the benefits set forth below under the caption “The Distribution—Reasons for the Distribution” and that achieving those benefits will result in greater aggregate value to stockholders who retain their Altria and PMI shares than would be obtained under the current structure.

Q: Why is the separation of the two companies structured as a spin-off?

A: A U.S. tax-free distribution of shares in PMI is the most tax efficient way to separate the companies.

Q: Are there risks to owning PMI common stock?

A: Yes. PMI’s business is subject both to general and specific business risks relating to its operations. In addition, the Spin-off presents risks relating to PMI’s being a separately-traded public company. See “Risk Factors.”

Q: Does PMI plan to pay dividends?

A: Yes. PMI plans to pay a dividend at the initial rate of $0.46 per share per quarter, or $1.84 per year. Dividends are subject to the discretion of PMI’s Board of Directors in accordance with applicable law. See “Dividend and Share Repurchase Policy.”

Q: What will the relationship between Altria and PMI be following the Distribution?

A: After the Distribution, Altria will not own any shares of PMI common stock. However, in connection with the Distribution, we are entering into a number of agreements with Altria that will govern the Spin-off and our future relationship with Altria. See “Relationship with Altria.”

Q: What will Altria own following the Distribution?

A: Altria will own 100% of PM USA, Philip Morris Capital Corporation and John Middleton, Inc., as well as its 28.6% economic interest in SABMiller plc.

Disclosure (“none” means no position):Long Both Companies

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The Week’s Best At VIN

Post author By ToddSullivan
Post date March 15, 2008

Here are the week’s top stories at Value Investing News

1. Why Warren Buffet is richer than the Hedge Fund managers – a tale of two business models | Aroha

(via www.arohanvalue.com)

Forbes rankings are still topped by Business leaders even when hedge fund managers are earning mind boggling amounts of money. This article examines why that may be the case with help from an analysis done at Financial Times

2. Notes From A Conversation with Munger`

(via rationalangle.blogspot.com)

Tonight I got to see A Conversation with Charlie Munger at Caltech in Pasadena. I took some notes on the discussion below. C refers to Charlie Munger speaking, while T stands for Tom Tombrello, the interviewer. These are not their exact words.

3. Berkshire Letter P2: Selling Market Puts

(via www.futureblind.com)

Buffett has pulled it off again. He’s made a creative, favorable bet that may pay off handsomely for long-term Berkshire shareholders. Over the past year, Berkshire Hathaway sold put options on the S&P 500 and three foreign indices. These options have a potential profit of over $36 billion.

4. Sneak Preview of The Four Filters by Bud Labitan

(via www.fatpitchfinancials.com)

Read Chapter 5 of Bud Labitan’s book, The Four Filters: What I learned from the Invention of Warren Buffett and Charlie Munger. This short read examines the invention that Buffett and Munger created to guide their investment decisions.

5. Marvel – Superhero Value?

(via magicdiligence.com)

Marvel Entertainment runs an attractive business, licensing it’s stable of superhero characters for use in movies, TV, video games, and general merchandise. It’s position on the Magic Formula indicates it’s attractiveness as a value play. But can the company succeed in it’s new venture as a movie studio?

6. Buffett: The ultimate self-made man

(via www.nzherald.co.nz)

“I’ve reluctantly discarded the notion of my continuing to manage the portfolio after my death,” he wrote, “abandoning my hope to give new meaning to the term ‘thinking outside the box’.”

7. Berkowitz Sees Volatility As An Opportunity

(via money.cnn.com)

“Volatility equates to opportunity and not risk,” said Bruce Berkowitz, one of the fund’s FAIRX three managers. “Risk is the chance for a permanent loss. This is the kind of environment that Warren Buffett has been patiently awaiting for many years.”

8. Just think, the fees you could charge Buffett

(via www.ft.com)

The news that Warren Buffett is now the world’s richest man led to the predictable round of stories about his frugal habits – the cherry Coke, the well-done steaks and the bungalow in Omaha that has been home for 50 years. There is a point here. Like Bill Gates, whom he has toppled from the top spot, Mr Buffett is primarily interested in the business rather than the wealth that results.

9. “Abolish the Fed”

(via www.cnbc.com)

If Jim Rogers, CEO of Rogers Holdings, woke up as Ben Bernanke, he’d quit and close up the Federal Reserve for providing ‘socialism for the rich’.

10. A Solid Bet: The Case For Ternium Steel

(via shamgad.blogspot.com)

My approach to investing has fit the philosophy, “Give a man a fish and you feed him for a day, but teach a man how to fish and you feed him for life.”

Today, I’ll make an exception and outline my analysis for Ternium Steel, one of the most profitable steel companies in the world.

11. Understanding Business Statistics

(via magicdiligence.com)

A review of business efficiency statistics, how to calculate them, what’s “good” or “bad”, and examples that beginners can understand.

12. Ten great investors

(via www.incademy.com)

Context

A select band of great professional investors have shown that it is possible to beat the market averages consistently over long periods. They act as an inspiration and example to less experienced investors. Their methods can also act as a starting point for beginners seeking to familiarize themselves with the basics of growth or value investment.

Contents

1. Warren Buffett

13. Berkshire Letter P1: See’s Candy & PetroChina

(via www.futureblind.com)

What makes See’s Candy a cash-generating machine, and commentary on last week’s letter to Berkshire Hathaway shareholders.

14. Does the magic formula work?

(via www.contrarianvalueinvesting.com)

15. Altria’s Investor Day Notes

(via valueplays.blogspot.com)

16. Icahn on 60 Minutes

(via valueplays.blogspot.com)

17. Free RSS Feeds for Company Filings on EDGAR

(via www.fwallstreet.com)

Joe Ponzio’s F Wall Street Blog just announced a great new feature. You can now generate company specific RSS feeds for SEC filings using the F Wall Street Blog’s RSS Feeds for EDGAR Filings generator.

18. Perini (PCR) Trading At a Homebuilder Valuation

(via collegeanalysts.com)

Perini is a construction company and the stock has been crushed because of that. But with half the share price in cash and continued strength in key sectors like gambling and government spending, should the stock be so low?

19. Perini (PCR) Trading At a Homebuilder Valuation

(via collegeanalysts.com)

20. EMCOR (EME): Cheap, Boring, and a Screaming Buy

(via collegeanalysts.com)

EMCOR might be a boring business, but with a soaring backlog and generous cash flows it shouldn’t be trading for a single-digit earnings multiple.

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"Fast Money" for Wednesday

Post author By ToddSullivan
Post date March 11, 2008

Wednesday’s Picks
Tim Seymour recommends Taiwan Semiconductor (TSM) $10.52

Guy Adami, Karen Finerman and Pete Najarian all say Goldman Sachs (GS) $163.07

Tuesday’s Results
Guy Adami likes The Shaw Group (SGR) $55.71 Close $59.87 GAIN

Karen Finerman prefers Altria (MO) $74.74 Close $75.34 GAIN

Pete Najarian recommends Burger King (BKC) $26.04 Close $26.59 GAIN

Tim Seymour thinks the iShares MSCI Emerging Markets Index (EEM) $130.99 is a buy Close $139.54 GAIN; or he recommends shorting the UltraShort MSCI Emerging Markets ETF (EEV) $90.9 Close $78.33 LOSS

2008 Records:
Brian Schaeffer= 0-1
Carter Worth= 0-1
Jon Najarian= 4-1
Jeff Macke= 17-13
Tim Seymore= 8-5
Guy Adami= 17-17
Pete Najarian= 16-14
Karen Finerman= 16-17-1

2007 Results (Since 6/21):
Guy Adami= 58-46 = 56%
Jeff Macke= 60-40 = 60%
Pete Najarian= 49-41 = 54%

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Altria’s Investor Day Notes

Post author By ToddSullivan
Post date March 11, 2008

Altria (MO) had its investor day in NY to discuss it upcoming spin.

Shareholders as of March 19 will receive 1 share of Phillip Morris International for each Altria share they hold on March 28, the spin date.

Guidance:

Altria (MO):
* 2008 full-year diluted earnings per share from continuing operations are projected to grow approximately 9% to 11% from an adjusted base of $1.50, excluding PMI.
* Long term total annual shareholder return of over 12% when combined with the dividend
* EPS growth in the range of 8% to 10%
* An anticipated dividend payout ratio of 75%, with an initial post-spin annualized dividend rate of $1.16 per share;
* A planned share repurchase program of $7.5 billion over the next two years, which will commence in April of this year;
* Approximately $1.0 billion in cumulative annual cost savings, $300 million of which were realized in 2007 and approximately $700 million in additional savings to be realized by the end of 2011.
* Tests in both smokeless and snus are going “very well”

Presentation:

Phillip Morris International (PM):
* Full-year diluted EPS from continuing operations are projected to grow 12% to 14% from a 2007 pro-forma adjusted base of $2.78.
* Long term revenue growth, net of excise taxes, of 4% to 6%; shipment volume growth of 1% to 2%; operating income growth of 6% to 8%; earnings per share growth in the range of 10% to 12%
* Dividend policy anticipates a pay-out ratio of 65%. The initial annual dividend rate has been set at $1.85 per share.
* A share repurchase program of $13 billion over two years.
* Expect to return approximately $21 billion to shareholders over the next 2 years.
* $1.0 billion in cumulative annual cost savings by the end of 2010; and a cumulative total cash flow of approximately $22 billion by the end of 2010.

Presentation:

Why is the cig biz so good? Altria’s cost to produce 1000 cigarettes is $16.40. Talk about profit margin? This is 16% to 21% lower than the competition.

I own Altria and plan to hold both for the foreseeable future…

Disclosure (“none” means no position):Long MO, Long PM (post spin)

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"Fast Money" for Tuesday

Post author By ToddSullivan
Post date March 10, 2008

Tuesday’s Picks
Guy Adami likes The Shaw Group (SGR) $55.71

Karen Finerman prefers Altria (MO) $74.74

Pete Najarian recommends Burger King (BKC) $26.04

Tim Seymour thinks the iShares MSCI Emerging Markets Index (EEM) $130.99 is a buy; or he recommends shorting the UltraShort MSCI Emerging Markets ETF (EEV) $90.9

Monday’s Results
Guy Adami likes Alcoa (AA) $36.66 Close $35.64 LOSS

Karen Finerman prefers Microsoft (MSFT) $27.87 Close $28.05 GAIN

Pete Najarian recommends buying puts in the Materials SPDR (XLB) $39.59 Close $38.74 LOSS

2008 Records:
Brian Schaeffer= 0-1
Carter Worth= 0-1
Jon Najarian= 4-1
Jeff Macke= 17-13
Tim Seymore= 7-4
Guy Adami= 16-17
Pete Najarian= 15-14
Karen Finerman= 15-17-1

2007 Results (Since 6/21):
Guy Adami= 58-46 = 56%
Jeff Macke= 60-40 = 60%
Pete Najarian= 49-41 = 54%

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"Fast Money" for Tuesday

Post author By ToddSullivan
Post date March 3, 2008

Tuesday’s Picks
Pete Najarian thinks ConocoPhillips (COP) $83.44 is a buy.

Karen Finerman likes BJ Services (BJS) $25.91

Guy Adami prefers UTEK Corp. (UTK) $11.97

Jeff Macke recommends shorting the Dow by buying Short Dow30 ProShares (DOG) $64.03.

Monday’s Results
Jeff Macke thinks Wal-Mart (WMT) $49.59 is a buy with a 4-handle. Close $49.90 GAIN

Guy Adami prefers Home Depot (HD) $26.55 Close $27.04 GAIN

Karen Finerman recommends Yahoo! (YHOO) $27.78 Close $27.74 LOSS

Pete Najarian thinks Altria (MO) $73.14 is a buy. Close $72.98 LOSS

Tim Seymour tells the panel to short emerging markets with the iShares MSCI Emerging Markets ETF (EEM) $139.62 Close $150.38 GAIN

2008 Records:
Brian Schaeffer= 0-1
Carter Worth= 0-1
Jon Najarian= 4-1
Jeff Macke= 16-11
Tim Seymore= 7-4
Guy Adami= 15-14
Pete Najarian= 13-11
Karen Finerman= 13-14-1

2007 Results (Since 6/21):
Guy Adami= 58-46 = 56%
Jeff Macke= 60-40 = 60%
Pete Najarian= 49-41 = 54%

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"Fast Money" for Monday

Post author By ToddSullivan
Post date March 2, 2008

Monday’s Picks
Jeff Macke thinks Wal-Mart (WMT) $49.59 is a buy with a 4-handle.

Guy Adami prefers Home Depot (HD) $26.55

Karen Finerman recommends Yahoo! (YHOO) $27.78

Pete Najarian thinks Altria (MO) $73.14 is a buy.

Tim Seymour tells the panel to short emerging markets with the iShares MSCI Emerging Markets ETF (EEM) $139.62

Friday’s Results
Jeff Macke and Guy Adami recommend shorting the Dow by buying Short Dow30 ProShares (DOG) $62.48 Close $63.60 GAIN

Tim Syemour prefers shorting Petrobras (PBR) $124.86 Close $117.34 GAIN

Pete Najarian thinks Applied Materials (AMAT) $19.83 is a buy. Close $19.17 GAIN

2008 Records:
Brian Schaeffer= 0-1
Carter Worth= 0-1
Jon Najarian= 4-1
Jeff Macke= 15-11
Tim Seymore= 6-4
Guy Adami= 14-14
Pete Najarian= 13-10
Karen Finerman= 13-13-1

2007 Results (Since 6/21):
Guy Adami= 58-46 = 56%
Jeff Macke= 60-40 = 60%
Pete Najarian= 49-41 = 54%

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The Weeks Most Popular Stores at VIN

Post author By ToddSullivan
Post date March 1, 2008

Here are this weeks winners at Value Investing News

1. Notes from Buffett Meeting 2/15/2008

(via undergroundvalue.blogspot.com)

Students from Emory’s Goizueta Business School and McCombs School of Business at UT Austin were invited to come visit Mr. Buffett for a Q&A session.

2. Whitney Tilson on Sears (video)

(via valueplays.blogspot.com)

Whitney says the “break up ” value is $250 a share

3. Free! Why $0.00 Is the Future of Business: Story of Gillette

(via www.wired.com)

Simply awesome. This article details the interesting story of Gillette (one of Buffett’s more famous investments).

4. Video conference with Mr. Walter J. Schloss, CFA (direct link to windows media player)

(via www.bengrahaminvesting.ca)

Mr. Walter J. Schloss, CFA, Walter & Edwin Schloss Associates, New York, NY (February 12, 2008) – Videoconference

5. Leucadia Files 13-d on AmeriCredit

(via valueplays.blogspot.com)

Leucadia ownership now over 30%

6. Value Idea: Buyout of CHC Helicopter

(via myvalueidea.blogspot.com)

With announced buyout of CHC Helicopter it presents an opportunity for workout return.

7. It’s a matter of reading and asking questions

(via www.businessday.co.za)

A QUESTION Warren Buffett and Charlie Munger are often asked is: how do you learn to be a great investor? “First of all,” says Charlie Munger, “you have to understand your own nature.

8. Unconventional Investing Can Beat This Bear

(via www.fool.com)

A bear market can be hard on your psyche. It’s depressing watching the value of your portfolio fall day after day.

9. Mark Sellers: Take advantage when good companies come to market

(via www.ft.com)

When Google completed its initial public offering in August 2004, the stock seemed overpriced. Even after reducing its IPO price from $108 to $85, the company’s trailing price/earnings ratio was well over 200. Journalists, analysts and market pundits exclaimed that Google was the most overpriced IPO in years, and warned investors to avoid it.

10. Charlie Munger’s Humorous Advice

(via www.fool.com)

If you’ve ever been lucky enough to hear Berkshire Hathaway (NYSE: BRK-A) Co-chairman Charlie Munger speak, you’ve undoubtedly walked away feeling wiser and slightly humbled. And wondering, “Did he really just say that?”

11. The guys who had a gut feeling for risk

(via secure.globeadvisor.com)

The item was a 50th birthday gift for the chairman of Fairfax Financial Holdings Ltd., but also serves as a source of inspiration. The Templeton principles, after all, underpin much of Fairfax’s investment philosophy: Be flexible; search around the world for the best bargains; and above all else, go against the crowd – buy when others are pessimistic, and sell when optimism rules.

12. Bond rating

(via www.investingblog.org)

Just like personal credit scores, the bond markets have their own credit system that decides a corporations credit rating or score.

13. Leucadia a 10% Investor in Pershing Square

(via valueplays.blogspot.com)

Reading Leucadia’s 10-k uncovered this

14. Betting on Brazil

(via www.cnbc.com)

Warren Buffett is placing his bets on the Brazilian real, with Joyce Chang, JP Morgan; Geoffrey Dennis, Citi; and CNBC’s Dylan Ratigan.

15. Altria: conservative value

(via ei-forum.com)

For investors looking for stability in this current economic climate and a ‘nice’ 4,1% dividend yield, Altria (MO) seems to be an excellent opportunity. We believe that it would be quite reasonable for investors to target a share price appreciation of between 15 and 20% in the next 24 months whilst enjoying the dividend yield.

16. AMD on multiyear lows

(via www.investingblog.org)

A quick look at a chart of AMD and you might just think its a print of someone’s heart monitor.

17. How to Use Variable Annuities the Right Way

(via amateurassetallocator.com)

How to use variable annuities correctly to invest for retirement and avoid outrageous fees and expenses. Shows which asset classes to hold inside a variable annuity and where to get them.

18. Wall Street likes Buybacks

(via www.investingblog.org)

IBMs announcement of a stock buyback plan really lifted wall street today.

19. Visa IPO should be worrysome

(via www.investingblog.org)

The credit card company Visa will IPO sometime around March 20th to raise around $19 Billion.

20. Federal Homeowner Preservation Corporation

(via www.investingblog.org)

That’s the new buzzword on the street. Bank of America which is hurting greatly from the subprime credit crunch, has proposed an offer to Congress, asking for the creation of the Federal Homeowner Preservation Corporation.

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Tags buffett, MO, SHLD

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"Fast Money" for Monday

Monday’s Picks
Jeff Macke likes Disney (DIS) $32.57

Guy Adami prefers Wachovia (WB) $34.33

Karen Finerman recommends Yahoo! (YHOO) $28.42

Tim Seymour thinks Home (HXM) $58.81 is a buy.

Friday’s Results
The enthusiasm for Starbucks (SBUX) $17.83 is gone, Jeff Macke said. That means it’s time to buy. Close $18.25 GAIN

Guy Adami would take the risky trade and buy Genentech (DNA) $71.75 before the Avastin decision comes down. Close $71.60 LOSS

Karen Finerman’s still playing defense with Altria (MO) $73.39 Close $73.60 GAIN

Tim Seymour would take this opportunity to sell Stillwater Mining (SWC) $18.22 which is up 100% over the last month. Close $18.90 GAIN

2008 Records:
Brian Schaeffer= 0-1
Carter Worth= 0-1
Jon Najarian= 4-1
Jeff Macke= 13-9
Tim Seymore= 4-4
Guy Adami= 12-13
Pete Najarian= 12-8
Karen Finerman= 13-10-1

2007 Results (Since 6/21):
Guy Adami= 58-46 = 56%
Jeff Macke= 60-40 = 60%
Pete Najarian= 49-41 = 54%

Disclosure (“none” means no position):

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Tags MO, sbux

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"Fast Money" for Friday

Post author By ToddSullivan
Post date February 21, 2008

Friday’s Links
The enthusiasm for Starbucks (SBUX) $17.83 is gone, Jeff Macke said. That means it’s time to buy.

Guy Adami would take the risky trade and buy Genentech (DNA) $71.75 before the Avastin decision comes down.

Karen Finerman’s still playing defense with Altria (MO) $73.39

Tim Seymour would take this opportunity to sell Stillwater Mining (SWC) $18.22 which is up 100% over the last month.

Thurday’s Results
Jeff Macke likes Hasbro (HAS) $27.39 Close $27.72 LOSS

Guy Adami prefers GameStop (GME) $45.74 Close $45.99 GAIN

Karen Finerman recommends Microsoft (MSFT) $28.22 Close $28.10 LOSS

Tim Seymour suggests investors short emerging markets via the iShares MSCI Emerging Markets Indx (EEM) $141.33 Close $139.54 GAIN

2008 Records:
Brian Schaeffer= 0-1
Carter Worth= 0-1
Jon Najarian= 4-1
Jeff Macke= 12-9
Tim Seymore= 3-4
Guy Adami= 12-12
Pete Najarian= 12-8
Karen Finerman= 12-10-1

2007 Results (Since 6/21):
Guy Adami= 58-46 = 56%
Jeff Macke= 60-40 = 60%
Pete Najarian= 49-41 = 54%

Disclosure (“none” means no position):

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Tags MO, sbux

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Altria and UST: Why Now?

Post author By ToddSullivan
Post date February 3, 2008

Rumors are circulating that the “financial flexibility to respond to opportunites” Altria’s (MO) Louis Camilleri was alluding to last week means that the company is going to acquire UST (UST). I am not so sure…

According to an article in Reuters
“The writing is on the wall, and has been on the wall for years, that this was the inevitable combination,” said one consumer investment banker, who declined to be named.

“Altria has made no secret of its intentions for the smokeless market. But Altria had a lot of steps to make before they could make a move. Of course, in that time, UST’s prize smokeless business has deteriorated some,” the banker said.

All of the above is true, but, if Altria has had the acquisition in mind for years, why would they have spent millions developing and testing their own product? wouldn’t it just have made sense to make the purchase of UST before?

I do not believe any delay in a potential purchase had anything to do with the recently announced PMI spin. Both Phillip Morris USA (PMUSA) and Phillip Morris International (PMI) have made acquisitions during the past few year. As a matter of fact as recently as last fall PMUSA announced they were buying cigar maker John Middleton.

Further, if UST is facing declining usage of it products (they are), then why make the move now? Altria’s own smokeless products are virtually set to be rolled out nationally and based on the latest conference call, Camilleri was almost giddy over the results to date and the products potential.

Assuming Camilleri is not lying, wouldn’t the prudent thing to do be to wait? Let your products further erode UST’s smokeless business even more and then correspondingly watch the price you have to pay for UST to decline in tandem?

What if Camilleri’s enthusiasm if warranted and Altria has a massive hit on its hand? They would in effect take a giant swath of business from UST and any price paid today, would look excessive down the road.

It isn’t that a potential purchase of UST would be bad for Altria (it would be great), it is that the timing of doing it now just would not seem to make a whole lot of sense. It would seem that doing it a year or so ago or a year or two from now would be a far more economically sound decision.

Disclosure (“none” means no position): Long MO, None

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Tags MO, PM

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ValuePlays Most Read Posts for January

Post author By ToddSullivan
Post date February 2, 2008

1- Ackman’s Letter to Moody’s: A Must Read

2- Lampert’s Move: Yes, Its About Brands

3- DeBeers Diamond Refunds

4- Lampert’s Letter to Associates: “No Direct Reports”

5- Altria Releases Spin Details

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Tags ackman, MO

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Altria Earnings Call Notables

Post author By ToddSullivan
Post date January 31, 2008

Here are the notable items from Altria’s (MO) earnings call yesterday

CEO Louis Camilleri

Regarding smokeless products”
“…Marlboro Moist Smokeless Tobacco. The latter introduction has [inaudible] much debating in ink in the recent past. While it is still early days, let me just say that we are very encouraged by the results to date, particularly in terms of the consumer response to the product and repurchase rates.”

PMI
** 70% of PMI’s top 25-income markets registered improved trends in the fourth quarter

Effect of share repurchases:
** “benefit of share repurchases in ’08 is slightly less than 1% in terms of growth, and clearly it will impact 2009’s growth rate a lot more.”
** combination of the buybacks plus the dividends equals 20% of the market cap
** Altria will start in April and PMI will start in May

Litigation risk to PMI:
“No, it’s certainly not non-existent. There has been litigation internationally as you are aware and as the disclosure showed. However, the industry has been very successful, and I think we will continue to be successful. That is not to say that there won’t be claims and litigation internationally, but it’s not something that I’m unduly concerned about.”

Most of the really big questions were deferred until the investors conference on March 11th. At that time the details of both companies will be discussed.

Disclosure (“none” means no position):Long Altria

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More On Altria

Now that Altria (MO) has announced the spin details, let’s look at some numbers.

If we assume a multiple of 15 times earnings, a fair one considering MO ought to grow at 9% to 11% and 20 times earnings for PM (PMI) as it ought to grow 12% to 14% and be free of litigation.

That gives us an initial share price of $22.50 for MO and $57.40 for PM. These will adjust slightly but the exercise is to give more details to what is being announced. Currently the combined entities trade at $76 and change so the above numbers are fairly accurate.

The dividend yield at those price levels will be 5.1% for MO and 3.2% for PM

As of 9/30 there were 2.1 billion shares outstanding giving MO a new market cap of approx. $47 billion and PM of $120 billion. The share repurchases will equate to roughly 16% of MO’s outstanding shares and 11% of PM’s.

The earnings call at 1pm today ought to be interesting…

Disclosure (“none” means no position): Long MO and will be long PM

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Tags MO