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Article Archive: Stocks Fairfax shares merit consideration 10/11/22   Stocks "Even better, the massive decline in long-term bond values is constraining competitors' capacity to write new policies, allowing Fairfax to aggressively capitalize on this opportunity." Cement, concrete, and gravel 05/01/22   Stocks "I have always found it interesting how some great watchlist companies can trade at very high valuations for long periods of time. In some cases, their valuations just get higher and higher, especially during bull markets." A victory for shareholders 08/14/20   Stocks "a key highlight is the decision that shareholders in Delaware have an absolute right to know about management compensation and related party transactions" Hertz donut 06/20/20   Stocks "The stock of Hertz will, with high likelihood, go out at zero. Start with this: the firm has filed for bankruptcy. Stockholders mostly get nothing in bankruptcy. Sometimes they might get a little new stock or some warrants to help them save face, because they are delaying the reorganization, but this is usually a trivial amount of money, and implies a big loss to the stockholders." Micro machine 06/20/20   Stocks "Maj Soueidan on nano cap investing with Tobias Carlisle" [video] The horse story 09/06/19   Stocks "I admit, FFH is not exciting. It's not fake meat or pot or sending billionaires into space. But it shouldn't hurt you and has potential to deliver a very nice return. The current disappointing share performance could be, in the spirit of the horse story, a gift." The Costco cult 07/07/19   Stocks "Since the day Costco went public in December of 1985, investors have complained that the company has been 'too generous' with its customers and employees. They've called for higher markups on goods, steeper prices, and reduced benefits for workers. But Costco has always insisted that their policies aren't just altruistic - they're good for business" Most Amazon brands are duds 03/18/19   Stocks "Turns out most Amazon-branded goods are flops that don't threaten other businesses at all, according to Marketplace Pulse." Getting high on their own supply 03/18/19   Stocks "The industry will surely grow on a macro level, but whether the stocks are investable is a different story. Incorporating even the most optimistic assumptions about future growth, the industry is trading at nosebleed valuations. The total market cap of all marijuana stocks in the US and Canada is about $50 billion, despite sales of only $580 million. That translates to a price/sales multiple of 85x." Absolute joy and relative misery 09/10/18   Stocks "Facebook is currently in its deepest drawdown of the last five years. Misery loves company, and right now with the S&P 500 near all-time highs, Facebook investors have little company." Auto parts retailers hit the skids 08/20/17   Stocks "Within a few years buying auto parts on the internet became capitalism incarnate with junkyards (car-part.com) and parts specialists (1-800-Radiator.com, LKQ Online) offering easy interfaces that let every consumer have same day service for a long list of parts. My waits became shorter, my parts bills became far cheaper, and my business with the auto parts retailers went down by nearly 80%." Mayday at Home Capital 05/14/17   Stocks "In the early hours of Monday, May 1, exhausted representatives for Home Capital and a group of lenders hung up the phone in frustration. A deal to give the company an emergency $2-billion loan appeared to be falling apart. Directors at the mortgage firm felt that without the money, they wouldn't be able to open for business a few hours later." [$] Einhorn rediscovers preferred stock 04/02/17   Stocks "Every four years or so, David Einhorn, the founder of Greenlight Capital LLC, rediscovers the concept of preferred stock and publishes a big presentation about it. I think it is about the most moving and beautiful recurring event in finance, like the migration of the Demoiselle cranes over the Himalayas, but for preferred stock." Looking for the next Amazon 01/06/17   Stocks "This massive outperformance has led to an explosion in hindsight bias, with investors fooling themselves into believing Amazon's ascent was somehow obvious or inevitable. But the truth is this 38,000% return was handed to nobody, it was earned through enormous dedication. Actually, lunacy might be a better way to describe it, being that you had to be some sort of sociopath - void of any human emotions, to earn these monstrous gains." A severed horse's head 09/17/16   Stocks "Tonight, I am talking about a different sort of scam that sucked in a different class of people. This scam was a corporation where the management took a firm into bankruptcy that could easily pay its debts, at least in the short-run. The management likely conspired with the bondholders against its shareholders, seemingly in an effort to gain a greater reward from the bondholders who would own the firm post-bankruptcy than they could from operating the firm outside of bankruptcy." Canadian banks to face headwinds 03/26/16   Stocks "Canadian bank stocks provide a generous current yield of 4 per cent or better and trade at about 11 times earnings, so they are not in danger of imminent collapse. Part of their attraction to investors has been the robust growth in dividends over the past few years. The recent trend in marginal return on equity may not erode all the way to 11 per cent, but we should look for lower dividend growth in the future." A select group 02/07/16   Stocks "Tech-boosters would doubtless love to see a prolonged bout of jostling for top spot between Alphabet and Apple (which before this week had held on to its crown for 653 consecutive days). But an obvious threat to both comes from a company that isn't even listed yet: Aramco, Saudi Arabia's state-owned oil giant, which is almost certainly the world's most valuable firm and is toying with an initial public offering." Bank of Nova Scotia is sector buy 01/02/16   Stocks "Instead, Scotiabank gets this stamp of approval because its stock was a dud in 2015. It fell 15.6 per cent and lagged all of its big bank peers, which is good news for 2016: Buying last year's underperforming bank stock, and holding it for a year, is a remarkably simple and effective stock-picking strategy." [$] Lehman Bro Life of the McDonald's franchisee 09/20/15   Stocks "His final day as a franchisee was a Tuesday last November. He went to the Hastings restaurant that evening to meet Berg. They counted uniforms and emptied the safe of Jarvis's cash. Berg wrote Jarvis a check for the inventory; Jarvis posed for a farewell photo with Snyder. He didn't leave till after midnight. His eyes well up at the memory. 'It's like I sold my family,' he says." Back to basics 05/03/15   Stocks "The business, which had lost its triple-A rating, was designated a 'systemically important financial institution,' and that limits the amount of leverage it can use and subjects it to tougher regulations." How much does it really cost to mine gold? 09/26/14   Stocks "A scan of major gold producers' earnings suggests the cost of mining gold has risen dramatically over the past few years. Part of that is a true increase, owing to inflation and the expense of digging out tough-to-reach grades. But most of it is due to a change in the cost metric that gold miners emphasize in their reports to the investing community." Y So Cheap? 08/10/14   Stocks "I think Y is a solid investment. It may not trade much above BPS in the near term; their stated goal is to increase BPS 7-10%/year over time, and I think it's great if they can achieve that and worth BPS if that is the case." A Different Look at Neglect 08/02/14   Stocks "It's good to look at stocks that not everyone else is looking at. A little neglect can be a good thing." Professor Damodaran's updated stock data 01/12/14   Stocks "In 1992, I had just finished a spreadsheet that contained the average PE ratios for companies in different sectors in the United States. There was little of substance in it, but I decided that since I had it, I might as well share it. I posted that spreadsheet for students in my class to download and made it available to others who visited my website (more hopeful thinking than an actual plan, since there were relatively few people looking for data online). Each year since, I have added to the data collection, initially expanding my list of data items for US companies, and in the last decade, adding to the collection by looking at non-US companies. It is my first task each year and it takes up the first week of the year, and I just uploaded the data today for the 2014 update." Cohen hauls fortune in unmarked trucks 08/10/13   Stocks "There's a reason why Richard B. Cohen escapes attention. The chairman of C&S Wholesale Grocers Inc. works out of a nondescript office park once slated to house a county jail in Keene, New Hampshire, a leafy mountain hamlet 90 miles northwest of Boston. The truckers who deliver goods from the company's 54 distribution centers drive unmarked tractor-trailers. Cohen's last interview was published a decade ago. Even the Keene Chamber of Commerce overlooked C&S as one of the town's largest employers." Markel thrives on buy and hold 06/09/13   Stocks "Piece by tiny piece, Thomas Gayner is building the next Berkshire Hathaway." Aswath Damodaran compiles global stock data 01/20/13   Stocks "For the last two decades, I have dedicated the first two weeks of each new year to a ritual. I obtain/collect/download data on all publicly traded companies listed globally, using a variety of data sources, and then analyze and present the data, aggregated at a number of different levels: by country, by region (US, Europe, Emerging Markets, Japan, Australia and Canada) and by industry. I report on measures of operations (profit margins, turnover ratios, working capital), measures of leverage (debt ratios), measures of risk (beta, standard deviation, equity risk premiums, country risk premiums) and pricing measures (earnings multiples, book value multiples, revenue multiples). I just completed my 2013 update and you can find it by clicking here." Acquisitions: Winners and Losers 12/08/12   Stocks "The winner in public company acquisitions is easy to spot and it is the target company stockholders, who gain about 18% over the 41 days. On average, bidding company stockholders have little to show in terms of price gains - the stock price for acquiring firms drops about 2% during the announcement period and about 55% of all acquiring firms see their stock prices go down. Note that while the percentage price drop is small (relative to the price increase for the target firm), acquiring firms are typically much larger than target firms and the absolute value that is lost by acquiring firm stockholders from acquisitions can be staggering. A study of 12,023 acquisitions by large market cap firms from 1980 to 2001 estimated that their stockholders lost $218 billion in market value because of these acquisitions. While this number was inflated by some especially bad deals done between 1998 and 2000, they illustrate the potential for massive value losses from acquisitions and the reality that one big, bad deal can undo decades of careful value creation in a company." Big Insurance worries about the future 07/01/12   Stocks "Life insurance used to be the quintessential safe and boring business in Canada. No more." Mauboussin on buybacks 06/23/12   Stocks "This report looks at buybacks from four distinct points of view: companies, shareholders, prospective shareholders, and the media. Naturally, the issues are intertwined." Housing market jitters keep lid on Genworth 06/07/12   Stocks "Mortgage insurer Genworth MI Canada Inc has a perception problem and its bargain-basement valuation tells the tale." RIM's stock falls below book value 11/02/11   Stocks "Research In Motion's stock fell below its book value for the first time in nine years, a signal investors consider the BlackBerry maker to be worth less than the net value of its property, patents and other assets." Most S&P 500 stocks yield more than bonds 09/29/11   Stocks "With the 10-year US Treasury yield now down to a record low level of 1.77% and equities getting crushed, the number of stocks yielding more than Treasuries continues to expand. As of this morning, 52.6% of stocks in the S&P 500 have a higher yield than the 10-year US Treasury. While equity dividends are by no means guaranteed, it seems that with each week that passes more companies are raising dividends than cutting them. This week, Microsoft (MSFT) became the latest mega-cap company to raise its dividend with a 25% hike in its annual payout bringing the yield above 3%." Mega Brands merits attention 09/08/11   Stocks "To its great credit, management somehow kept the company going while negotiating a recapitalization in 2010, issuing an enormous amount of stock to get rid of most of its debt. Fairfax, Invesco Trimark and the founding Bertrand family participated in the new financing, as did other strong hands, who now own about half the stock." Bank of America 08/25/11   Stocks "Still I am bullish on BofA at these prices. Very bullish. I think the politically driven finance bloggers (Yves Smith at Naked Capitalism) should be seen for their (I think justified) anti-bank agenda. Most of the rest are fitting their analysis around the stock price. There is an awful lot of stock-price doing the analysis here." A little yellow 08/02/11   Stocks "I will also note that eMails such as the one I received are how the retail perspective transmits to institutional portfolios: I can assure you that in this kind of situation, with dramatic market movements and heavy media coverage, a lot of Portfolio Managers sell (sometimes against their better judgement, if they have any) simply so they won't have to explain their holdings to their clients. The business is, in general, not about performance it's about story telling." Mining the portfolio 07/22/11   Stocks "Mining the portfolio, in essence, is taking information and news from current portfolio holdings, and using it, and the second order effects stemming from that information, to allocate capital in other investments." Swinging for the fence not a sustainable strategy 06/22/11   Stocks "There are many investors who roll the dice on just a one or two stocks. Some people choose well and hit the jackpot - again through varying proportions of luck and skill. These are the investors that often visit firms like ours for advice. We just don't see the other investors that saw their concentrated bets work against them. In other words, while hearing many of the strike-it-rich stories can give the impression that this is the path to prosperity, believe me when I tell you that far greater numbers of investors have permanently destroyed wealth using this approach. This is not a high probability way of building wealth." Partner casts doubt on Sino-Forest 06/19/11   Stocks "Embattled Sino-Forest Corp. , once Canada's biggest publicly-traded timber company, appears to have substantially overstated the size and value of its forestry holdings in China's Yunnan province, according to figures provided by senior forestry officials and a key business partner there." Why Groupon not as rosy as it appears 06/13/11   Stocks "It would seem Mr. Lefkofsky has an extensive history of taking investors' money for himself, then bankrupting the businesses invested in." All revenue is not created equal 05/28/11   Stocks "With the IPO market now blown wide-open, and the media completely infatuated with frothy trades in the bubbly late stage private market, it is common to see articles that reference both "valuation" and "revenue" and suggest that there is a correlation between the two. Calculating or qualifying potential valuation using the simplistic and crude tool of a revenue multiple (also known as the price/revenue or price/sales ratio) was quite trendy back during the Internet bubble of the late 1990s. Perhaps it is not peculiar that our good friend the price/revenue ratio is back in vogue. But investors and analysts beware this is a remarkably dangerous technique, because all revenues are not created equal." Groupon no bargain at even half the price 03/23/11   Stocks "Let's look at a couple of pro-Groupon arguments designed to counter this whole barrier-to-entry argument. One is that Groupon has "first-mover advantage," which is said to be exceptionally important in the tech space. I was going to use my Netscape browser to access the Excite search engine to research this concept more, then share what I found on Friendster, but decided to move on to the next point instead." Sometimes a Great Notion 02/27/11   Stocks "One common thought in the equity world has been that a rotation of investor dollars toward shares of 'high-quality' companies should be imminent. This is a sane and sober idea, and one that generally hasn't worked in the past couple of years, when markets have been lifted by improving credit conditions, a snap-back in corporate profits and surging risk appetites. These drivers of market action almost always favor smaller, more volatile, more cyclical and less well-capitalized stocks, which have led this bull market." Don't enter the dragon 01/24/11   Stocks "Yet, because the railways offered - and sometimes delivered - the prospect of enormous wealth, the money kept flowing. Today, the same is true. China's boom is real enough, and so it's possible for investors in small Chinese stocks to believe that they're heeding Deng Xiaoping's famous admonition "To get rich is glorious." Unfortunately, many of them are just proving the truth of another famous adage: "There's a sucker born every minute." " The Groupon Bubble 01/18/11   Stocks "The paper reports that Groupon, which turned down $6 billion from Google last month, is in talks with Wall Street for an IPO that Wall Street is pitching to investors valuing the company at between $15 billion and $20 billion. The NYT says the two-year-old Groupon "is pushing ahead with plans for its initial public offering," and I'm sure it is. I'd be pushing to cash in too before this bubble pops." Worthless Stocks from China 01/16/11   Stocks "Bird's involvement would evolve from irritation that a company could get away with making a claim that so obviously defies basic business logic to the conviction that many pieces of the Chinese miracle that trade in the U.S. are, in his words, 'flat-ass' frauds. And what started as a retiree looking into a company has turned into a dispute that has drawn in other shorts, the Securities and Exchange Commission, auditors, and, according to recent reports, the U.S. House Committee on Financial Services. It has also revealed significant flaws in U.S. markets and how they are regulated. Although the stocks trade on U.S. exchanges, and thus project a sense of having to play by American rules, the assets and the principals of many of the companies reside in China. The companies operate on their terms, leaving injured parties and the SEC powerless. Bird says the carnage is just beginning. 'The whole thing has no place to go but to blow up,' he says. 'That's a rational position for an investor to start with, that every one of these Chinese reverse mergers is a fraud.'" How to Erase the Lost Decade? 10/17/10   Stocks "Whatever figure turns out to be right, the bottom line is that "people should ratchet down their expectations for stocks," he said."There's no harm in hoping that things turn out better," Mr. Arnott added. "But the danger is assuming and planning for the best while saving as if the market can do your work for you."" Share buybacks put a shine on Danier 10/09/10   Stocks "The market, in other words, appears to be assigning scant value to Danier's ongoing business - and that's hard to understand. In the year to June - certainly no boom time for the Canadian economy - it produced 7.2-million in earnings, or about 1.58 for each of the shares remaining at the end of the most recent quarter. If the market were willing to pay even 12 times those earnings, Danier would be a 19 stock." Travelling through Universal Travel Group 09/16/10   Stocks "The company claims in its most recent quarterly balance sheet to be carrying 43 million in cash and accounts receivable of almost 20 million. If the airline and hotel business are dubious then the profits generated that cash are dubious. In that case the cash itself is dubious.I know people will buy this as Ben Graham net-net stock if it collapses. Unless this company can get a big four audit firm to sign-off for them I think you can - at least for the moment question the entire balance sheet. " Turning Japanese 07/21/10   Stocks "I have maintained throughout this blog that I thought that zero interest rates in America would have a different outcome to zero interest rates in Japan because Japanese banks are predominantly deposit franchises and zero interest rates are very bad for them - but that American banks - especially larger American banks - are fundamentally lending franchises and zero interest rates would not impair their ability to make a spread on the loan book." A perfect predator 07/21/10   Stocks "Flatt seems to go out of his way to paint Brookfield as boring. 'We own 129 office buildings. Some are a little taller, some are a bit shorter,' he says laconically. The strategy? 'We're in the business of buying assets of great quality at less than replacement cost.' The company's remarkably consistent objective over the years simply has been to earn a 12% to 15% compound annual return per share. 'We have no goal to be large or significant,' says Flatt. 'If [reaching our objective] meant we should shrink in size, we'd do that.' Even Brookfield's logo is understated, and its 2009 annual report looks like something thrown together at Kinko's. Move along, everyone, nothing to see here. The reality is that this slender 45-year-old executive runs a conglomerate that manages $108-billion worth of real estate, utilities and infrastructure across the planet." Bank of America comes clean 07/14/10   Stocks "Bank of America has finally admitted that it understated the quarter end assets and liabilities for the years 2007 to 2009. It does not (yet) admit that similar transactions took place in many other years and it does not spell out the effect of these transactions on BofA.s need to carry capital." Short First Solar 04/09/10   Stocks "A technology, to be a really great investment, must do two things. It must change part of the world in a useful way - a big part of the world is better of course - but you can be surprisingly profitable in small niches. And it must keep the competition out. " Selling puts naked 01/30/10   Stocks "Like other Canadian insurers, Manulife was sideswiped during the financial crisis due to its exposure to guaranteed annuity products it had sold to clients across North America and Asia. Most have issued significant amounts of new shares to raise their capital levels since stock markets plunged in the fall of 2008. A major player in the business, Manulife hadn't hedged its segregated funds. That exposure created a capital risk that attracted the attention -- and intervention -- of the Office of the Superintendent of Financial Institutions (OSFI), Canada's financial services regulator." The restaurant-failure myth 01/27/10   Stocks "His research - consistent with similar studies - found that about one in four restaurants close or change ownership within their first year of business. Over three years, that number rises to three in five." How Visa dominates a market 01/11/10   Stocks "Every day, millions of Americans stand at store checkout counters and make a seemingly random decision: after swiping their debit card, they choose whether to punch in a code, or to sign their name. It is a pointless distinction to most consumers, since the price is the same either way. But behind the scenes, billions of dollars are at stake." 'D' is for death 12/29/09   Stocks "One day you will die. This is sad. It is also an investment opportunity. Funeral homes are one of the few businesses that are guaranteed a growing audience for their services, not only over the next decade, but over the next several decades. As Boomers age, the industry made famous in the television series Six Feet Under is emerging from the low-mortality period that a funeral home expert calls "death valley" and entering a period in which customers will become more and more common." When an annual report speaks volumes 12/20/09   Stocks "Want to find a great long-term investment? Look for an annual report that treats you like a human being. Most don't. The standard-issue annual report features heroic photos of the CEO, staged snapshots of maniacally grinning workers, and vague assurances that, despite enormous challenges being faced by the stalwart management team, the future looks just fine. Only a handful of annual reports talk to you like a partner. These reports don't spend a fortune on glamour shots of smokestacks basking in the sunset. They avoid canned promises to "respect all our stakeholders." Instead, they deliver a blunt assessment of both the firm's successes and its failures. In a high proportion of cases, these exceptionally honest reports come from companies that are also exceptionally good at making you money." Ten years after 12/20/09   Stocks "I've been working on a year-end piece - this is my last day at the office in 2009 - and I came across an article from Feb. 20, 2000, in which 10 money managers each chose one stock to buy then and hold until 2010. It's almost 2010, so I checked to see how they had done. For most, not well." and yet "Here is more good news. Thanks largely to Henry Schlein, an investor who bought $1,000 of each of those 10 companies, and held on, would now have more than $13,000, even with losses on eight of the holdings. That performance is much better than that of the overall market." Murdoch to Google: search this 11/10/09   Stocks "As unlikely as it sounds, Rupert Murdoch may end up being our last best hope for a peaceful solution to the Internet's war on professional journalism. A man who many blame for commodifying, globalizing, sensationalizing, and cheapening news is considering taking a stand against a force even bigger than himself: the Web link." Why banks stay big 10/26/09   Stocks "Maybe megabanks are what we need. Certainly most developed nations have banking systems even more concentrated than ours. The trouble is that the 'market' for banking is so distorted - by switching costs, by government subsidies and guarantees, and by the banks' market power - that it's hard to know whether big banks are adding value or are simply exploiting their oligopolistic positions." The return of the Why-P.O. 10/23/09   Stocks "What in tarnation is a Why-P.O. you ask? It's an IPO so pointless for investors to be involved with that you can only scratch your head after reading the prospectus and ask 'Why?'." The pyramid principle 10/22/09   Stocks "Right now America.s banking system resembles a pyramid. At the top, two or three firms are doing well. But beneath them are a handful of giant conglomerates that are struggling towards profits, a tier of middling banks with overexposure to risky assets, and a vast base of small banks in deep, deep trouble." Toxic loans topping 5% 08/16/09   Stocks "More than 150 publicly traded U.S. lenders own nonperforming loans that equal 5 percent or more of their holdings, a level that former regulators say can wipe out a bank.s equity and threaten its survival." Amazon's troubling reach 07/29/09   Stocks "Last week, in a stunning display of public irony, Amazon.com remotely deleted digital copies of George Orwell's novels "1984" and "Animal Farm" from customers' Kindles after learning that the electronic publisher of these works, MobileReference, did not have the rights to them. For a couple of days, observers in print and on the Web outdid themselves, noting that in "1984," government censors rewrite history by consigning offending news items to an incinerator chute known as the memory hole. Orwell's technological vision might have been primitive, but he seems to have predicted something fundamental about the dangers of information systems." Philip Morris gets its tobacco bill 06/15/09   Stocks "The Family Smoking Prevention and Tobacco Control Act is revealed as yet another Beltway deal for Big Government and Big Business. Those who proclaim it a victory for public health and the public good are blowing smoke." Why you should be long the NYT 06/14/09   Stocks "The Times is the greatest journalism brand in the world. Journalism is going through a period of intense, painful consolidation, at the end of which there will be many fewer competitors, leaving the ones who survive with extraordinary market power and more cultural influence than they have today. The Times will unquestionably survive because it is the best, which will make it an incredibly profitable enterprise. In fact, I'd wager to say that the worse things get for the media industry generally, the better things get for the Times." Investor exits and leaves puzzlement 06/01/09   Stocks "I've seen my share of odd moments during annual meetings, but until Thursday I'd never seen a grown man cry during one. O.K., maybe 'cry' is a bit of an overstatement for what happened. Still, it was pretty startling when, in the middle of his speech to Target Corporation shareholders, William A. Ackman, the hedge fund manager who had waged an expensive, high-profile proxy fight against the company, suddenly choked up and stopped speaking. He wiped away a tear." Chrysler's sorry state revealed 05/11/09   Stocks "Among the thousands of pages of documents filed in connection with Chrysler's Chapter 11 bankruptcy are affidavits from Chrysler executives that open up a window on the auto business previously closed to outsiders in this intensely competitive business. They reveal an almost unimaginable complexity in the design, manufacturing, and distribution of new cars. But what's more revealing is that the affidavits expose Chrysler's inability to successfully compete and the dangers facing the company in a prolonged bankruptcy." Why capital structure matters 04/21/09   Stocks "My belief -- first stated 40 years ago in a graduate thesis and later confirmed by experience -- is that capital structure significantly affects both value and risk. The optimal capital structure evolves constantly, and successful corporate leaders must constantly consider six factors -- the company and its management, industry dynamics, the state of capital markets, the economy, government regulation and social trends. When these six factors indicate rising business risk, even a dollar of debt may be too much for some companies." Paper money 04/02/09   Stocks "In other words, the newspaper companies that have failed wholesale were essentially set up to fail by inexperienced managers who believed piling huge amounts of debt on businesses whose revenues were shrinking even when the economy was growing was a shrewd means of value creation." Cash-rich firms 04/02/09   Stocks "One way to look at stocks is to view each share as a claim on a company's future earnings. But another way is to view each share as a claim on a company's assets. During times like these where markets for many assets are either frozen or slow-moving, liquid assets deserve a premium. So companies with high levels of cash and little or no long-term debt are well worth a look." The next AIG scandal? 03/19/09   Stocks "Thomas Gober, a former Mississippi state insurance examiner who has tracked fraud in the industry for 23 years and served previously as a consultant to the FBI and the Department of Justice, says he believes AIG's supposedly solvent insurance business may be at least as troubled as its reckless financial-products unit. Far from being "healthy," as state insurance regulators, ratings agencies and other experts have repeatedly described the insurance side, Gober calls it "a house of cards." Citing numerous documents he has obtained from state insurance regulators and obscure data buried in AIG's own 300-page annual reports, Gober argues that AIG's 71 interlocking domestic U.S. insurance subsidiaries are in hock to each other to an astonishing degree." Content, once king, becomes a pauper 02/11/09   Stocks "The value of content has never been ethereal. It has always been directly tied to what owners could "get" for it, either through advertisers or subscribers. For content to have a value, it could never be free. Its position as royalty depended on that. Content is rapidly being devalued." Life at Wal-Mart 02/03/09   Stocks "The picture above is of me, finishing my shift at the world.s largest retailer. How did I move from being a senior writer at Wired magazine to an entry-level position in a company that is reviled by almost all living journalists? It started when I read Nickel and Dimed, in which Atlantic contributor Barbara Ehrenreich denounces the exploitation of minimum-wage workers in America. Somehow her book didn.t ring true to me, and I wondered to what extent a preconceived agenda might have biased her reporting. Hence my application for a job at the nearest Wal-Mart." I see dead bankers! 01/29/09   Stocks "In The Sixth Sense, Haley Joel Osment's character is terrified because he sees dead people walking the streets, working, going to school, playing, seeing patients, oblivious to the fact that they are no longer alive. I get the same feeling today watching CNBC, reading the newspapers, walking through midtown Manhattan and counting the Town Cars idling outside the headquarters of investment banks. Like John Thain, there are lots of people who continue to act as if they are living, breathing, Wall Street players, oblivious to the fact they've been reduced to nicely dressed corpses." Will Exxon Get Googled? 01/14/09   Stocks "And while nothing in our current energy infrastructure operates at the theoretical limits, pretty much everything is within spitting distance of Mother Nature's hard stop in terms of energy density and efficiency. Of course, there's room for progress. A 20 to 30 percent gain in efficiency in our national energy bill translates into serious money. Airlines, as well as most businesses, do back handsprings for such efficiency gains. But compared to the efficiency-created disruptions in the digital-info world, 30 percent is chump change. The reality is that we are stuck with limitations imposed by things like, well, Earth's rotation and distance from the sun, which determine the maximum energy possible from solar power. Or the biochemistry of photosynthesis, which ultimately determines biofuel economics, or the physical chemistry that dictates potential energy per pound of oil, ethanol, or lithium. " Too big to succeed 01/14/09   Stocks "Indeed, when it comes to conglomerates, we tend to see a two-part cycle. During the first part, acquisitions, mergers, big combinations are all the rage. Its a giant ego stroke for the CEOs, and it generates lots of fees for the iBankers. The second half of the equation comes when the awful handiwork of the M&A binge needs to be unassembled. That generates criticism of the CEOs, and lots of fees for the iBankers." What's in a name? 12/24/08   Stocks "Underlying the best brands are usually sales pitches of great stuff. Macs don't crash. The iPhone 3G is fast. FedEx gets there every time. The Lexus parks itself. Canon is the professional's camera. Even Pepsi - the company that more or less created modern branding with the slogan "The Taste of a New Generation" - decided in the end that, actually, it was easier to sell soda with the Pepsi Challenge taste test. At the very top of the Interbrand list you will find Coca-Cola, the great outlier of the brand world. Far from the model of how brands work, Coke is the great exception. The vast majority of great brandmakers knows that you cannot sell products by telling people about your brand - you can sell your brand only by telling them about the product." News you can lose 12/21/08   Stocks "The peculiar fact about the current crisis is that even as big papers have become less profitable they've arguably become more popular. The blogosphere, much of which piggybacks on traditional journalism's content, has magnified the reach of newspapers, and although papers now face far more scrutiny, this is a kind of backhanded compliment to their continued relevance. Usually, when an industry runs into the kind of trouble that Levitt was talking about, it's because people are abandoning its products. But people don't use the Times less than they did a decade ago. They use it more. The difference is that today they don't have to pay for it. The real problem for newspapers, in other words, isn't the Internet; it's us. We want access to everything, we want it now, and we want it for free. That's a consumer's dream, but eventually it's going to collide with reality: if newspapers. profits vanish, so will their product." 'Already bankrupt' GM won't be rescued by loan 12/13/08   Stocks "For General Motors Corp., the question is no longer whether it will get a government loan or if Chief Executive Officer Rick Wagoner will be replaced. It's whether anything can prevent the largest U.S. automaker from sliding into bankruptcy. " $73 an hour: adding it up 12/11/08   Stocks "That figure - repeated on television and in newspapers as the average pay of a Big Three autoworker - has become a big symbol in the fight over what should happen to Detroit. To critics, it is a neat encapsulation of everything that's wrong with bloated car companies and their entitled workers. To the Big Three's defenders, meanwhile, the number has become proof positive that autoworkers are being unfairly blamed for Detroit's decline." BCE fails key test 11/27/08   Stocks "Shortly after markets closed on Tuesday, a team of auditors in KPMG's Toronto offices ushered a trio of BCE Inc. executives into a meeting room to advise them that the world's largest leveraged takeover had effectively been killed. The culprit? A five-line clause that virtually no one had noticed in the company's much-scrutinized $35-billion sale agreement. Over the course of more than two hours, the solemn auditors explained to BCE's stunned chief executive officer George Cope and two of his senior executives that the communications company had not passed a so-called solvency test, one of the last hurdles standing in the way of a Dec. 11 deadline to close the sale of the company to a group lead by the Ontario Teachers' Pension Fund. Now, baring a financial miracle, there is little hope that the deal will survive." Landmark BCE takeover in doubt 11/26/08   Stocks "The massive planned privatization of telecommunications giant BCE Inc. is in jeopardy after the company failed a preliminary solvency test conducted for the would-be purchasers, led by the Ontario Teachers' Pension Plan Board. BCE said Wednesday it received a 'preliminary view' from auditing firm KPMG that 'based on current market conditions, its analysis to date and the amount of indebtedness involved,' it does not expect to be able to deliver an opinion on the closing date of Dec. 11 that BCE 'would meet the solvency tests as defined in the definitive agreement.'" How AIG got Uncle Sam over a barrel 11/14/08   Stocks "The Treasury has secured crowd-pleasing concessions; for example limits on executives. bonus payments. But the real question is whether the preference shares are safe. AIG has a trillion-dollar balance-sheet. There is now a thin buffer of core equity between the taxpayer.s preference shares and any further losses. The hope is still that as markets recover, AIG can sell the crown jewels of its insurance business at a premium to book value. That may well take years. Plenty of time to reflect on how an offer of a temporary loan, to a company that barely made the list of systemically vital firms, spiralled into one of the biggest corporate bail-outs ever." How AIG failed 11/03/08   Stocks "The lesson, of course, is simple, but hard to learn: it's not the risks you measure which bring you down, it's the risks you don't measure. But protecting against those risks is very, very hard." Next likely bank failures 10/20/08   Stocks "U.S. banks large and small are buckling under the pressure of the credit crisis. The Federal Deposit Insurance Corp. has seized 13 institutions this year, most recently Washington Mutual. The regulator, which maintains a list of "problem" banks, doesn't disclose which others raise red flags. But one measure, the so-called Texas Ratio, may offer a clue." Profit from panic 10/09/08   Stocks "The "other Berkshire" is Fairfax Financial a P&C insurer headed by brilliant capital allocator Prem Watsa. Fairfax is about as close as you can get to investing in a company that does great in good markets and exceptionally well in disastrous ones." Lehman bankruptcy gets ugly 10/02/08   Stocks "It's looking like Lehman, contrary to the conventional wisdom, may have been too big to fail after all. And the fallout from the bankruptcy may further undermine investors. confidence in the financial system." Citigroup to buy Wachovia banking assets 09/29/08   Stocks "Citigroup will acquire Wachovia's massive deposit network, as well as over $300 billion worth of Wachovia's loan portfolio and the company's debt. Citigroup said it will absorb up to $42 billion of losses on those loans, while the Federal Deposit Insurance Corporation will be on the hook for anything beyond that." JPMorgan buys WaMu's deposits as thrift is seized 09/25/08   Stocks "The U.S. government closed Seattle-based Washington Mutual amid customer withdrawals of $16.7 billion since Sept. 15, the Office of Thrift Supervision said in a statement. WaMu had 'insufficient liquidity' and was in an 'unsound' condition, the OTS said." AIG gets up to $85 Billion Fed loan 09/16/08   Stocks "The U.S. government agreed to lend as much as $85 billion to American International Group Inc. in exchange for a 79.9 percent stake to save the country's biggest insurer from collapse." AIG falls 09/15/08   Stocks "AIG, seeking to raise $20 billion in capital and sell $20 billion of assets, rejected investments from buyout firms KKR & Co., TPG Inc. and J.C. Flowers & Co., people familiar with the talks said. AIG instead sought a $40 billion bridge loan from the Federal Reserve, the New York Times reported, citing an unnamed person. The shares plunged $6.25 to $5.89 at 9:42 a.m. in New York Stock Exchange composite trading. Warrren Buffett, chairman of Berkshire Hathaway Inc., 'is thought to be in talks' with AIG about a possible investment, the Insurance Insider reported today, citing unidentified sources." [It seems likely that Buffett would take a pass on the firm but be willing to buy some of its assets at fire-sale prices.] Lehman files biggest bankruptcy case 09/15/08   Stocks "Lehman Brothers Holdings Inc., the fourth-largest U.S. investment bank, succumbed to the subprime mortgage crisis it helped create in the biggest bankruptcy filing in history. The 158-year-old firm, which survived railroad bankruptcies of the 1800s, the Great Depression in the 1930s and the collapse of Long-Term Capital Management a decade ago, filed a Chapter 11 petition with U.S. Bankruptcy Court in Manhattan today. The collapse of Lehman, which listed more than $613 billion of debt, dwarfs WorldCom Inc.'s insolvency in 2002 and Drexel Burnham Lambert's failure in 1990." [So much for the too big to fail idea] Wall Street banks teeter 09/15/08   Stocks "In one of the most dramatic days in Wall Street.s history, Merrill Lynch agreed to sell itself to Bank of America for roughly $50 billion to avert a deepening financial crisis, while another prominent securities firm, Lehman Brothers, hurtled toward liquidation after it failed to find a buyer. The humbling moves, which reshape the landscape of American finance, mark the latest chapter in a tumultuous year in which once-proud financial institutions have been brought to their knees as a result of hundreds of billions of dollars in losses because of bad mortgage finance and real estate investments. But even as the fates of Lehman and Merrill hung in the balance Sunday night, another crisis loomed as the insurance giant American International Group appeared to teeter. A.I.G. sought a $40 billion lifeline from the Federal Reserve, without which the company may have only days to survive." Bank of America said to buy Merrill 09/14/08   Stocks "Bank of America Corp. reached a deal to acquire Merrill Lynch & Co. for about $44 billion, the Wall Street Journal reported, after shares of the third-biggest U.S. securities firm fell by more than 35 percent last week and smaller rival Lehman Brothers Holdings Inc. neared bankruptcy." Lehman said to prepare bankruptcy filing 09/14/08   Stocks "Lehman Brothers Holdings Inc. prepared to file for bankruptcy after Barclays Plc and Bank of America Corp. abandoned talks to buy the U.S. securities firm and Wall Street prepared for its possible liquidation. Lehman and its lawyers are getting ready to file the documents for bankruptcy protection tonight, said a person with direct knowledge of the firm's plans. A final decision still wasn't made, though none of the other options being considered appeared to have much standing, the person said, declining to be identified because the discussions haven't been made public." How can the New York Times be worth so little? 07/30/08   Stocks "At its current $12.48 stock price - down 46.3% from a year ago - Times Co. has a $1.79 billion market cap. To put this in perspective, CBS recently acquired tech publisher CNET, a much weaker media brand, for $1.8 billion. Add in the company's $1.1 billion of debt, subtract $42 million for its cash on hand, and the company's total enterprise value - a valuation measure that totals up those items in such a fashion - is just $2.85 billion." Selling the family jewels 07/30/08   Stocks "Selling heirloom assets is frequently a last-ditch alternative. In instances in which assets have appreciated massively (such as SunTrust's Coca-Cola stock or Merrill's stake in Bloomberg), the sales can generate hefty tax bills. Such moves are also recognitions that management has screwed things up so royally in the core business that it has no alternative but to sell the remaining assets that the market still likes. But in this climate, many banks may find they don't have a choice." IndyMac seized by U.S. regulators 07/12/08   Stocks "IndyMac Bancorp Inc. became the second- biggest federally insured financial company to be seized by U.S. regulators after a run by depositors left the California mortgage lender short on cash." Bank failures to surge in coming years 06/23/08   Stocks "Only three banks have failed so far in 2008. But that number is set to surge as the credit crunch slows economic growth and hammers some lenders that grew too fast during the recent real-estate boom, experts say. The roots of today's banking crisis grew out of the boom and bust in the real estate market." The Texas ratio and Canada's big banks 06/23/08   Stocks "Back in the recession of the 1980s, when the oil market was in the tank and banks in Houston and Dallas were dropping like rain in April, Gerard Cassidy and his team of bank analysts at RBC Dominion Securities came up with a way to predict the likelihood of any given bank failing. They took the total of a lender's non-performing loans and divided it by the sum of its tangible equity capital plus its loan-loss reserves, yielding the Texas ratio. It's a nifty idea. What Mr. Cassidy and his team discovered was that when a bank's Texas ratio got to 100 per cent, or one to one, it was likely to become toast. The ratio was an accurate predictor of Texas bank failures and also worked a treat with troubled New England banks in the next recession in the early 1990s. Applying it to today's U.S. banking scene, MarketWatch says Mr. Cassidy and his colleagues predict that at least 150 U.S. banks will go bust in the next two or three years, and if the current economic slump morphs into a recession as deep as the ones in the 1980s and 1990s, that number may get as high as 300." Is Royal getting risky? 05/26/08   Stocks "I was most interested to learn that Royal Bank had an Assets-to-Capital ratio of 22.05 as of the 1Q08 filing. It is my understanding that the general maximum allowed by OSFI for this ratio is 20.0, which may be increased to 23.0 upon prior application to the Superintendant. Is this correct? If so, then: (a) When did Royal Bank apply to have the maximum increased? (b) On what grounds did the Superintendant allow the increase? (c) Were any terms, conditions, or time limits attached to the approval?" [You'll be rewarded if you take some time to more fully explore Mr. Hymas' PrefBlog.] Bear Stearns second brush with bankruptcy 05/05/08   Stocks "Bear believed that if it failed to get a new agreement that reaffirmed JPMorgan's guarantee of Bear Stearns' obligations, Bear could have been cut off from JPMorgan's Fed-backed funding and forced into bankruptcy - an outcome that many investors assumed had been forestalled by the March 16 merger agreement. The dispute that nearly brought Bear down a second time turned on whether JPMorgan would stand behind Bear Stearns' massive credit default swap book and other liabilities. The firm's lack of access to other funding had Bear lawyers preparing for a possible bankruptcy the weekend before the revised merger agreement was unveiled." New Bear Stearns bid 03/24/08   Stocks "JPMorgan and Bear were prompted to renegotiate after shareholders began threatening to block the deal and it emerged that several 'mistakes' were included in the original, hastily written contract, according to people involved in the talks. One sentence was 'inadvertently included,' according to a person briefed on the talks, which requires JPMorgan to guarantee Bear's trades even if shareholders voted down the deal. That provision could allow Bear's shareholders to seek a higher bid while still forcing JPMorgan to honor its guarantee, these people said. When the error was discovered, James Dimon, JPMorgan's chief executive, who was described by one participant as 'apoplectic,' began calling his lawyers at Wachtell, Lipton, Rosen & Katz to seek a way to have the sentence modified, these people said. Finger pointing over the mistakes in the contracts began as bankers blamed the lawyers and vice versa. As it began to look more possible late last week that the deal might be struck down, JPMorgan approached Bear in earnest on Friday about renegotiating the sale price to guarantee its completion and brought the Federal Reserve into the talks as well, people involved in the negotiations said." JPMorgan buys Bear Stearns for $2 a share 03/16/08   Stocks "JPMorgan Chase & Co. agreed to buy Bear Stearns Cos. for about $2 a share after a run on the company ended 85 years of independence for Wall Street's fifth- largest securities firm and prompted a bailout by the Federal Reserve." What Citigroup says isn't what it does 03/15/08   Stocks "Real estate developer John Wimmer paid Citigroup Global Markets Realty Corp. almost $1 million last year to lock in a 5.6 percent mortgage rate on the refinancing of six commercial properties. At the November closings, Citigroup, citing plummeting demand for mortgage bonds, boosted the rate to 7.123 percent." F.D.R.'s safety net gets a big stretch 03/15/08   Stocks "It was an old-fashioned bank run that forced Bear Stearns to turn to the government for salvation on Friday. The difference is that Bear Stearns is not a commercial bank, and is therefore not eligible for the protections those banks received 75 years ago when Franklin D. Roosevelt halted bank runs with government guarantees. Bear was, instead, emblematic of a financial system that grew up over the last two decades, one that largely marginalized traditional banking and that enabled lenders to evade much of the regulatory framework that had also begun during the Roosevelt administration." Bear Stearns gets emergency funds 03/14/08   Stocks "Bear Stearns Cos., teetering on the brink of collapse from a lack of cash, got emergency funding from the Federal Reserve and JPMorgan Chase & Co. in the largest government bailout of a U.S. securities firm. After denying earlier this week that access to capital was at risk, Bear Stearns Chief Executive Officer Alan Schwartz said today that the 85-year-old company's cash position had 'significantly deteriorated' in the past 24 hours. The central bank agreed to provide financing through JPMorgan for up to 28 days, the bank said in a statement today." The complete guide to free stock screen tools 02/21/08   Stocks "There are a growing number of free stock screen tools on the Web, but trying to decide among the many available could be the cause of a headache or two. It would help to have a guide. Hence, the following survey: It describes some of the better packages with the help of reviews and experienced users." Wall Street losses partners never imagined 02/12/08   Stocks "Less than a decade after Wall Street's last major partnership went public, stockholders are paying the price for bankrolling the industry's expanding risk appetite. Four of the five biggest U.S. securities firms lost about $83 billion of market value last year, almost 90 percent of their net income since 1999, data compiled by Bloomberg show. That cut the annual average return for Morgan Stanley, Merrill Lynch & Co., Lehman Brothers Holdings Inc. and Bear Stearns Cos. during those nine years to 9.7 percent from 16.8 percent. The private partnerships that once dominated Wall Street guarded their capital, used less leverage and limited their risk to trading blocks of stock for clients and shares of companies in mergers, said Roy Smith, a finance professor at New York University's Stern School of Business and a former partner at Goldman Sachs Group Inc. Since raising money from the public, many of the biggest firms have abandoned that caution." Ever more fleeting? 12/03/07   Stocks "There are still way too many analysts who expect too many companies to generate annual long-term earnings growth of 20% to 25% or more. Analysts pay too little attention to how easily such a rapid rate of growth can fade after just a few years. Research departments aren't shy about putting out lists of companies they expect to generate annual earnings increases of 15% or more for at least five years. One value of Leuthold's work is the reminder it provides that such high sustained earnings growth is truly rare." Freddie and Fannie's Achilles' heel 11/26/07   Stocks "Mortgage giants Freddie Mac and Fannie Mae need capital - in today's credit crisis, there's no doubt about that. Freddie even said last week that it was "seriously considering" cutting its $2 annual dividend by half, a radical step indicating how strapped the company is. Freddie also reported it had hired two Wall Street firms to explore "capital-raising alternatives." And Freddie and Fannie are going to need some especially creative alternatives. Why? When either Freddie or Fannie attempt to build capital, they are handicapped by a peculiarity that very few investors know about: They cannot sell the most popular kind of preferred stock, the "cumulative" variety, because their regulator will not let these securities count toward capital." Citigroup: 'Gimme shelter' 10/29/07   Stocks "This may sound silly, but let me ask you a question. Let's say that I maxed out my credit at Citigroup to speculate on a house whose market price is now less than what I paid. Citi wants its money, but instead I say, "Sorry, the house is selling for less than its true value. As soon as it sells for what it should, I'll send you a check." What do you think Citi's reaction would be? How about "Sir, where should I send the repo man?" Well, folks, Citi seems to have put itself in just such a fix by borrowing lots of money to buy assets that have dropped in market value. But instead of summoning the repo (as in repossession) man, some of the world's biggest hitters are trying to set up a huge fund to buy time for Citi and some other institutions with similar problems. " A beautiful mind 10/26/07   Stocks "If you believe that thinkers never accomplish much in the real world, you should meet Rob Morrison. He's a quiet, analytical man who started out as a competitive chess player before becoming fascinated by the world of money. Over the past 25 years, while working from his computer in his comfortable Toronto home, he has thought long and hard about how to invest well. By putting his ideas into practice, he has grown his personal portfolio from a few hundred thousand dollars to more than $10 million." Bear Stearns' bad bet 10/14/07   Stocks "The revelations shed new light on the murky dealings inside the booming $1.3 trillion hedge fund industry, which now accounts for up to a third of all daily trading on Wall Street. They seem to underscore critics' biggest complaint: that many hedge funds use astonishing amounts of leverage, or borrowed money, in sometimes reckless ways. The risks of "fair value" accounting, the practice that allows money managers to estimate the values of securities for which they can't find true market prices, are thrown into sharper focus as well. Coming soon, for better or worse: louder calls in Washington for more oversight of the largely unregulated hedge fund industry." Crisis at Northern Rock 09/14/07   Stocks "Northern Rock, a former Newcastle building society taken public in 1997, thrived and then was brought down by its innovative business model. With a relatively small deposit base, it used securitization of mortgages and other capital-markets funding to grow rapidly to a nearly 19% share of the British mortgage market by the first half of 2007. But a few weeks ago, Northern Rock suddenly found that its various funding strategies were all shutting down simultaneously. In a crisis of confidence, the business model that had looked so good turned out to be no model at all." Coal? Yes, Coal 06/15/07   Stocks "Little known outside the energy industry, Peabody is well respected within it. The company is often referred to as the "Exxon of Coal" for its strategic judgment and its immense energy resources. Peabody's 10.2 billion-ton coal pile has nearly twice the energy content of Exxon's petroleum reserves. Its massive mines in Wyoming's Powder River Basin are among the most productive and technologically sophisticated in the world. And its well-timed acquisitions of properties in Australia have proved rewarding, forging a valuable path into fast-growing markets such as India and China. International business now contributes 30% of profits, up from under 1% in 2001." The darker side of shareholder democracy 05/19/07   Stocks "In truth, shareholder democracy still isn't remotely like democracy as most people think of it. New research shows how twisted it really is and suggests why it could even be the source of the next big business scandal. The research comes from Yair Listokin, an associate professor at Yale Law School, who studied shareholder voting on proposals put forward by management. Those are critical votes, concerning mostly executive compensation but also merger approvals and other large matters. A majority vote is generally required, and much is riding on the outcome. When Listokin collected data on thousands of such votes, he discovered an amazing thing: On hard-fought issues with significant shareholder opposition, management frequently wins by tiny margins - just a couple of percentage points or even less - but almost never loses by tiny margins. " Feds investigating homebuilder Beazer 03/27/07   Stocks "Amid the meltdown of the subprime housing sector, mortgage lenders and brokers have come under fire from state and federal officials for predatory lending practices with those risky borrowers. Now one national homebuilder is feeling the heat. BusinessWeek has learned that federal investigators have opened a broad criminal probe into lending practices, some financial transactions, and other dealings at Beazer Homes USA (BZH)." Five breakup possibilities 03/26/07   Stocks "A company's various businesses can be worth much more than Wall Street's appraisal of the entire enterprise. In this installment of our Beyond the Balance Sheet series we examine five breakup possibilities." Every bite you take 02/22/07   Stocks "It comes as little surprise that institutions like hospitals, universities, and military bases flock to Sysco's pre-cooked foods. But well-regarded bistros and pubs have also begun to offer such items to save time and money. Recently, New York magazine reported that Thomas Keller uses frozen Sysco fries at his Bouchon bistros. (While a company spokeswoman wouldn't confirm the brand, she confirmed the use of frozen fries.) Mickey Mantle's Restaurant, an upscale sports bar, serves Sysco's pre-made soups, like Manhattan clam chowder and vegetarian black bean. And then there's Edgar's restaurant at Belhurst Castle, which has won numerous awards of excellence from Wine Spectator magazine. There, the kitchen takes Sysco's Imperial Towering Chocolate Cake out of the box, lets it defrost, and then sprinkles it with fresh raspberries before serving it to diners. "We've had a lot of success with that cake," executive chef Casey Belile says. The Edgar's menu, of course, does not list the dessert as a Sysco pre-made cake, but it does charge $8.95 for the experience." Now that's rich 02/21/07   Stocks "On April 3, 2006, the first day of post-CCAA trading, Stelco's stock closed at $19.49. The next day, the price was $24. Today, after posting its latest string of losses, the shares are pretty much worth what they were trading at during Mott's first week on the job. But his million-plus options are worth about 15 million bucks. Mott.who was also allowed to buy a million shares at $5.50, netting him more instant millions - insists it's common to offer strike prices equal to the value of shares on the day options are granted. He's right. But Stelco has a reputation for handing out unjust executive rewards, so my question is: why didn't it wait a few days and let the market set a fair price?" Costco: The 'anti-Wal-Mart' 02/16/07   Stocks ""Retailing isn't rocket science. Costco has figured out the big, simple things and executed with total fanaticism," says Charles Munger, a Costco director for the past 10 years. The outspoken Munger, 82, is better known as Warren Buffett's longtime partner at Berkshire Hathaway, where he serves as vice chairman." The number of free stock screeners is dwindling 02/04/07   Stocks "A few weeks ago, BusinessWeek magazine shut down its free Quick Stock Search and Advanced Stock Search screeners. That's unfortunate, because BusinessWeek's screeners were easier to use than others with similar capabilities. If you're not familiar with the term, a screener is a program that allows you to search the entire market for stocks or mutual funds meeting your selection requirements. For instance, you could use a screener to list stocks with price/earnings ratios between 15 and 20, and annual sales greater than $20 billion. The demise of BusinessWeek's screeners leaves only two full-feature screeners that we can use for free, MSN Money's Deluxe Screener and Reuters' PowerScreener Lite. Both offer more screening choices than BusinessWeek's screeners did, but both take some time to learn. It's time well spent, however, and once you get the hang of using them, they'll become your best friends." Top NYSE stocks under $5 01/16/07   Stocks "In 2003, Tim Melvin, the co-author of recent bestseller The Little Book of Value Investing with Christopher Browne from Tweedy Browne, told me about a system he tested for 2002. At the beginning of every month, buy every stock below $3 on the NYSE. Sell at the end of the month and begin again." Bad for GM, bad for America 04/11/06   Stocks "General Motors has launched a time bomb that could push the company into Chapter 11 -- and take down the financial markets with it." Last tango in Detroit? 04/07/06   Stocks "The reason is that GM's cash mountain is not so much an asset, but something for the UAW to fight over. Selling the stake in GMAC adds to the available cash. That is likely only to postpone the day of reckoning and may thus prove a huge and costly mistake, says Dale Oesterle, a law professor at Ohio State University. Far better, he thinks, would be for GM to seize the day by handing its cash mountain back to shareholders in the form of a special dividend, and filing for Chapter 11 right away." Chicken Run: Value manager's dream? 03/22/06   Stocks "On the surface, chicken stocks like Sanderson Farms, Gold Kist, and Pilgrim's Pride are a value manager's dream. Most of them are not very leveraged, they generate a decent return on capital, and best of all, they trade at single-digit P/E based on last year's earnings.So, are chicken stocks the value manager's dream, or are they a value trap in the making?" A sleeping giant 03/15/06   Stocks "Want to buy a stock that trades at close to its five-year lows despite posting 13% annual earnings-per-share growth over that period? What if the stock also traded at a discount to the market on a price-to-earnings basis? Furthermore, what if Berkshire Hathaway (led by the legendary Warren Buffett) had initiated a sizable position during 2005? And lastly, what if the company stood to benefit greatly from a potential stabilization in energy prices?" Was death of newspapers greatly exaggerated? 03/15/06   Stocks "If Bruce S. Sherman wanted to persuade Wall Street that investors were undervaluing newspaper stocks, he failed." The tragedy of General Motors 02/07/06   Stocks "The Detroit giant is a weird, scarred combination: a carmaker doing poorly, and an insurance company engulfed by its obligations. It's heading for a wreck -- which is why CEO Rick Wagoner has the toughest job in business." The dirty little secret about buybacks 01/13/06   Stocks "The problem, says Thomas M. Doerflinger, an equity strategist at UBS, is that you can't easily tell how much of what companies say they're spending actually gets to investors. In a recent report on what he calls "vanishing buybacks," Doerflinger found that the number of shares in the S&P 500 has continued to increase despite the bigger share-repurchase outlays by companies. In 2004, when companies reported spending some $197 billion on buybacks -- nearly 2% of the market value of the index -- the number of shares outstanding increased by 1.8%. In the 12 months through June 2005, shares increased 0.7%, and only a third of the companies actually shrank their share counts by at least 1%." The wit and wisdom of Peter Lynch 01/05/06   Stocks "Peter shared his rules/observations on investing (8 of them) and proceeded to share some thoughts on each point and then talked about 10 wrong-headed and dangerous things that people say (often to themselves) about investing. It never hurts to review the fundamentals and glean insights from superstars like Peter so we took the time to share the essense of his message below." Bargain-hunting time 01/03/06   Stocks "Lots of top-quality stocks are trading near 52-week lows, so investors have plenty of opportunities." Newspapers: buys among the battered 12/16/05   Stocks "If newsboys still stood on corners trying to hawk papers, this could be one of their pitches: "Extra, Extra, Read All About It! Pundits Ring Death Knell for Newspaper Biz!" The demise of the newspaper industry has become a favorite topic on both Wall Street and Main Street. Doomsayers point to perceived fundamental weaknesses as circulation figures weaken and advertisers shift spending away from newspapers and toward other media." Philip Morris wins 12/16/05   Stocks "'This win is very helpful on the litigation scene,' said David Dreman, who oversees $15 billion at Dreman Value Management in Jersey City, New Jersey, including 14.6 million Altria shares and 3.1 Reynolds American shares as of Sept. 30. 'This is a case that a lot of other states were watching.'" 10 rock-solid stocks 12/16/05   Stocks "After reviewing the latest research and interviewing dozens of analysts and money managers, we trained our sights on 10 moderate-P/E stocks positioned to benefit from secular -- not cyclical -- trends." Clicks, bricks and bargains 12/02/05   Stocks "The internet was supposed to batter traditional retailers. Instead they are coming to dominate it" Ben Bernanke's favorite stock 11/23/05   Stocks "If you found out that Warren Buffett, Peter Lynch, or Alan Greenspan held only one stock in their personal portfolio, chances are you'd want to know what it was. So when I learned that Ben Bernanke, who is likely to succeed Alan Greenspan in the world's most powerful economic policymaking post, held only one stock, I found that newsworthy. Bernanke held stock of a company that evokes strong feelings -- both pro and con -- among investors. That company is Altria Group, formerly Philip Morris, one the world's largest manufacturers of cigarettes." Value investors value newspapers 11/03/05   Stocks "Despite obituaries detailing their demise, newspaper companies still hold intrigue for some contrarians. Here's why they haven't written off old media yet." Six feet under 10/21/05   Stocks "Is Batesville Casket deviously fixing prices and gouging the bereaved? Or is it just a tough company protecting the channel?" Now for the reckoning 10/14/05   Stocks "Wilbur Ross, a financier who made an impasse-breaking deal with the USW that enabled the bankrupt steel industry to consolidate and leave Chapter 11 in good shape, notes two important lessons from that experience that the UAW - and others, too - might do well to heed. First, American firms need to be globally competitive and can no longer afford to award pay and fringe benefits solely according to American norms. Secondly, "at the end of the day, the only job worth having is one at a solvent company. What's the point of a gold-plated contract with a firm that is going bust?"" Which side are you on? 10/14/05   Stocks "Delphi's Mr Miller would have us focus on one: the clash between the interests of young workers and those of their predecessors. As he put it stirringly in an interview with the Financial Times, inter-generational warfare looms "as young people increasingly resent having their wages reduced and taxed away to support social programmes for their grandparents' income and health-care concerns". Short of flinging the oldsters to the sharks, there is no escaping the demographic trend that has fewer workers supporting more baby-boom retirees in most of the developed world (and part of the developing world). The question is whether the burden should fall on workers in specific firms, on all workers, or on taxpayers in general." Beyond bling 09/25/05   Stocks "Claire's Stores meets five of those six criteria and has two other points of note. It has increased its dividends by at least 10% a year, on average, over the past 12 years, and it has no long-term debt. It has certainly made money for its shareholders. But should we care particularly about one smallish company, whose main stock in trade is selling flash fake jewellery?" The taming of the screw 09/15/05   Stocks "For centuries now the screw has held things together, and for almost as long it has been frustratingly inept at its central purpose. Concrete cracks when it is punctured by a screw. Plastic creeps away from the pressure, sliding down the threads so that even a tightened screw loosens almost instantly. Carmakers have to mold brass inserts into plastic parts to accept screws; otherwise they might loosen and cause a dreaded rattle. Kenneth LeVey has a better idea. A product development director at Illinois Tool Works, the nation's biggest screwmaker, he has reinvented what the company dubs the threaded fastener in a way that lets it grip tight where it used to let loose--and compete with cheaper screws made by offshore rivals." America's airlines, flying on empty 09/15/05   Stocks "The benefits of Chapter 11 are supposed to be avoiding the unnecessary liquidation of businesses, and the job destruction and total loss to creditors this can involve. But in the airline industry this emergency ward for stricken companies has turned into long-term intensive care, inadvertently wreaking further damage on rivals. In mid-October tougher new rules for Chapter 11 will come into force, so troubled airlines have an incentive to go bankrupt soon, to benefit from today's more benign regime." When to sell a stock? 09/14/05   Stocks "So when should you sell? The best answer was provided by the elegant Philip A. Fisher, who died in 2003 at the age of 96 after a 74-year career as a money manager. In his important book, "Common Stocks and Uncommon Profits," published in 1958 and currently available in a paperback edition, he wrote, "It is only occasionally," he wrote, "that there is any reason for selling at all."" Extinction of the predator 09/11/05   Stocks "How merger mania has been a disaster for the world's great car manufacturers" Bic sells 100 billionth pen 09/08/05   Stocks "It was also one of the first examples of globalization. You can find these pens everywhere because Bich had a modern concept of low-cost, global marketing. They invented or adopted many of the principles we talk about now, but at a very early stage." Wal-Mart becomes a lifeline 09/07/05   Stocks " When the hungry man threatened to get his gun if Wal-Mart's doors didn't open the day after Hurricane Katrina smashed through town, store manager Ray Mathews knew he had trouble. The storm had shattered skylights and flooded the west end of his Wal-Mart Supercenter in Columbia, Miss., 20 miles north of the Louisiana border. The lobsters had died, and the meat and the vegatables were spoiling as the power was out. Mathews couldn't reach most of his 400 workers, either. They were largely stranded when the storm ripped open their homes, knocked down trees, and shut down area gasoline stations. Now, desperate local residents who depend on the Wal-Mart in this remote town were knocking loudly on locked doors." Google's stock sale mystery is simply solved 08/26/05   Stocks "There is no mystery here, folks. When companies think their stock is undervalued, they buy it back. The Googlers are in the opposite fix. Their stock is overvalued, so what do they do? Sell more. Quickly. Before sanity returns to the marketplace." Beat the S&P with strong consumer brands 08/25/05   Stocks "Peter Lynch, in the book One Up on Wall Street, refers to these companies as "The Stalwarts." Jeremy Siegel, in one of the great investment books of the year, The Future for Investors, calls them "corporate El Dorados." Warren Buffett has long preached the virtues of these types of companies having "economic castles protected by unbreachable moats."" Google's new shares: are they worth the price? 08/18/05   Stocks "In the end, Damodaran's analysis produced a value that's far less than the current stock price. He figures Google is currently worth just $110 per share. And this assumes that the company will grow like gangbusters, taking in $49 billion in sales by mid-2015, compared with just $3.2 billion last yearan increase of some 1,400%." Six 5-star stock ideas from master investors 08/18/05   Stocks "Investment companies can themselves make great investments. These businesses often benefit from significant managerial ownership and much longer investment horizons than mutual funds subject to quarterly evaluation by "consultants" dare pursue." Harry Potter and the all-too-rare windfall 07/18/05   Stocks "The latest volume in the Harry Potter series is set to break all publishing records, to the delight of booksellers. The success of the Potter books has also made its author vastly wealthy and provided a windfall for its publisher. But it is an oddity in an industry that is growing slowly and rarely sees bumper profits" Something wicker this way comes? 03/14/05   Stocks "Chukumba suspects that a primary reason Pier 1's stock isn't yet trading even lower in the mid-single digits is because of Buffett's interest in the company. "Wall Street is not as bothered as it should be because of Buffett. He's legendary for investing in undervalued companies for the long haul. Absent Buffett and Pier 1 would be in more trouble," Chukumba said, although he did admit to Pier 1's low-debt, significant free cash-flow generation and consistent dividend returns as a few other positives cushioning the stock." AGF investors have reasons to hang in there 03/03/05   Stocks "In other words, the worst-case scenario is largely priced into the stock. If the rescue plan doesn't work, there's not a lot of downside here. If it succeeds, the Goldrings have just made a very shrewd investment, and Randy Ambrosie will be allowed to eat red meat again." How to recognize wide-moat firms 02/19/05   Stocks "People often think that analyzing moats is as simple as looking for strong historical profitability. Ah, if only it were that easy. In truth, history is an imperfect guide, since the value a company will create for shareholders is dependent on how well it fends off competition in the future. High returns on capital attract competitors, and those great historical numbers will fade fast if a firm doesn't have a strong competitive advantage. Oftentimes, that competitive advantage isn't obvious--you have to do some digging into the firm's business model to figure it out." Is Wal-Mart good for America? 11/20/04   Stocks "I was trying to make the same point that the great economist Joseph Schumpeter made about the Industrial Revolution. In his book, "Capitalism, Socialism and Democracy," he said, "The capitalist achievement does not typically consist in providing more silk stockings for queens, but in bringing them within the reach of factory girls in return for steadily decreasing amounts of effort."" What's going on behind Nortel's closed doors? 11/12/04   Stocks "Of all of the accounting tricks in the book, revenue games are probably the sleaziest. The principles of revenue recognition are fairly straightforward. In simple terms: If you've done the work, the customer accepts ownership of your product and is likely to pay the bill, you can count it as revenue. If not, you can't. No points for shipping your products to your own warehouses, or sending out phony invoices, or selling stuff to customers who don't have the money to pay. So let's look at what Nortel did. It booked revenue "before legal title . . . had passed to customers," and before the company had done anything to earn the money (i.e., it hadn't delivered on the contract). It booked revenue when it knew it probably couldn't collect. And the company played these tricks during the go-go years, when people were paying $100 or more for the stock on the basis of -- you guessed it -- unprecedented growth in revenue, while Mr. Roth and other insiders gorged on their stock option gains." Some shoppers find fewer happy returns 11/10/04   Stocks "As the holiday shopping season gets into full swing, a number of major retailers -- including KB Toys and Sports Authority, according to store personnel -- are rolling out electronic systems that weigh the number of returns and exchanges a person has made, the dollar value of the items, and the dates of the transactions to decide whether a consumer should be granted another. The systems are designed to catch shoplifters and those who "wardrobe," wearing clothes and then returning them for a full refund." Best Buy hopes to exorcize devil patrons 11/10/04   Stocks "As far as the old adage "the customer is always right" goes, Best Buy doesn't buy it. The massive retailer is being vocal about something that at first might sound a little uncouth: frankly, they'd rather not have 20% of their customers as customers. In an age where it seems like everyone casts their nets as wide as possible to bring in more eyes, feet, and wallets, Best Buy is doing the opposite. They believe that a small portion of their customers are bad for business, and they're looking to shut them out." Customer service saved Xerox 10/29/04   Stocks "Salvation for Xerox Corp. started with a steak dinner in Nebraska four years ago. As Xerox's newly named president and chief operating officer, Anne Mulcahy faced many tasks, including resuscitating a company burdened with debt, a free-falling stock and a dwindling customer base. Who was she gonna call? Famed financier Warren Buffett, who invited her for dinner at one of his favorite restaurants and told her she had been "drafted into a war" she didn't start and to focus on customers." Market realities can't sustain TransAlta's dividend 10/21/04   Stocks "We note that the dividend yield, at 6.1 per cent, is only modestly higher than the yield on the company's 2011 bonds (about 5.5 per cent). (The gap is larger than it appears because of the dividend tax credit.) Still, to the conservative investor who's looking for TransAlta for income, what's better to own: a high-yield stock that's likely to cut its payout, or a slightly lower-yielding bond that, by comparison, looks pretty secure?" Big Mac's makeover 10/16/04   Stocks "The world's biggest fast-food company has pulled off a remarkable comeback" Taking advantage of the terminally stupid 10/04/04   Stocks "After years of miserable performance, Concord Communications management came up with a novel approach to ensure that the stock options it granted during the bubble didn't expire worthless. In a public filing last week, Concord unveiled a plan to buy back employee options at prices up to $4. The trouble is, with a $9 share price, options granted at $40 are worth basically nothing." Costco has its own formula for success 09/26/04   Stocks "Munger considers Sinegal one of the 10 best retailers of the past century. He'll need all his smarts to keep Sam's at bay. For seven of the first eight months of this year, Costco's U.S. same-store sales, a key measure of retail growth, have outpaced Sam's, says retail consultant Management Ventures." Buffett of the North 09/16/04   Stocks "Insurer Fairfax Financial has been able to compound its book value at 31% annually since 1986 because of the exceptional investing abilities of its managers. Unfortunately, some recent questionable acquisitions have weakened its balance sheet significantly. Now Fairfax is priced at a huge discount to its sector, making it a high-risk, high-reward investment." Flight into the red 08/30/04   Stocks "It's a basic problem of supply and demand: too many seats and too few passengers willing to pay full-fare prices. During the last downturn a decade ago, carriers lost more than $13-billion. Since the Sept. 11 terrorist attacks, airlines have lost $18-billion and project a loss of $10.7-billion more this year, counting the effects of a war with Iraq. That's enough to wipe out the industry's cumulative profits since commercial aviation took wing at the end of World War II." The sorry saga of KHI 08/15/04   Stocks "The infamous fiascos at Bre-X Minerals Ltd., YBM Magnex Inc. and Nortel Networks Corp. have some new company. The rise and fall of a little-known Halifax company, Knowledge House Inc., is turning into one the largest, messiest morasses of securities litigation in recent memory." The benefits trap 07/12/04   Stocks "Workers bear the brunt of it. Bill Luoma, head of the Mahoning Valley Steelworkers Retirees Council, which counts bankrupt LTV retirees among its members, says that with their health insurance gone, many have stopped visiting doctors other than for emergencies. For companies struggling to compete in the global economy, carrying those burdens themselves is like strapping on a 200-pound weight to run a 40-yard dash. But to shed them is to leave decades of workers devastated. In the end, someone will have to pay. The only question is who." Biggest leveraged buyout ending as a costly fizzle 07/10/04   Stocks "The greatest leveraged buyout ever is ending, not with a bang but with a whimper of loss. After 15 years of scrambling and pain, Kohlberg Kravis Roberts is through with its investment in RJR Nabisco and its afterlife of ownership of Borden Chemical." Super-duper shares yield super-duper pay 05/16/04   Stocks "Or maybe I should be thinking of him as a consultant, a very valuable and highly paid consultant whose hourly rate deserves to surpass almost any other professional in Europe. Let's see -- at eight hours a day, seven days a week, 52 weeks a year, what would Mr. Stronach's hourly rate come to? Hmm, I get over $13,000 an hour. And I thought my lawyer was expensive!" Take lid off inside sales before IPOs 05/14/04   Stocks "But one loophole still remains, and it is being used by Salesforce.com, a software company that will soon go public. One indicator that investors look at in initial public offerings is whether the insiders are cashing out. The fact they are selling their shares does not prove the offering is overpriced, but it is not a good sign." Presto stays its course 05/12/04   Stocks "Presto's an interesting story. In the 1960s and 1970s, both Benjamin Graham and Warren Buffett heaped praise on the company and its management, with Buffett calling Melvin Cohen one of his "home run hitters" at a time when Buffett's partnership held Presto stock." How big can it grow? 04/15/04   Stocks "The world's biggest retailer is defying its critics by continuing to grow vigorously" Hopping 04/04/04   Stocks "A big brewing merger prompts a rethinking of shareholders' rights" Size still doesn't matter 03/31/04   Stocks "Several alert readers argue that our BofA-bashing size-vs-efficiency analysis, posted on Monday, missed an important point. Rather than compare banks' size with their efficiency at a given point in time, they say, it's more relevant to see whether there's a systematic improvement (or erosion) in efficiency over time, as banks gets bigger." Self-delusion down in Charlotte 03/30/04   Stocks "Only one problem! In financial services, there's no connection between an institution's size and its efficiency--or its profitability, or growth, or any other number investors care about." Banks' use of client cash probed 03/26/04   Stocks "Banks are deliberately hanging on to overpayments worth hundreds of millions of dollars made by customers, the Financial Times has found. In one case, the Financial Services Authority, the financial watchdog, launched a probe into Royal Bank of Canada after warnings that managers were withholding money from customers that had overpaid on foreign exchange transactions." I'd like to buy the world a Coke 03/20/04   Stocks "Rome, a hamlet an hour up the road from Coca-Cola's Atlanta headquarters, is known -- at least among Coca-Cola executives -- as the place that consumes more Coke per capita than anyplace else on earth" Once again, Nortel is covered in question marks 03/12/04   Stocks "In cases like this, perhaps it's better to take the advice of Dr. Elitzur, who teaches accounting at the Rotman School of Management, and look at the cash flow. But at Nortel, you won't find much. The company used $347-million in cash in its operations last year, and you have to go back to 1999 to find a year when it actually produced free cash flow." Power to the shareholder? 03/09/04   Stocks "Michael Eisner of Disney and Sir Philip Watts of Shell have both been forced to relinquish their roles as chairman. These changes have been chalked up as victories for shareholders. But have investors really got the better of the imperial boss?" Requiem for the record store 02/07/04   Stocks "Now a new threat looms. The market for legally downloadable music is tiny today, but the success of Apple's iTunes online music store and the rush of rival services to the marketplace is expected to gobble up an ever-larger share of the pop music pie. A recent study by Forrester Research, which examines technology trends, predicts that in five years fully one-third of all music will be delivered through modems, and the CD itself will be passe, if not obsolete, in the years after. This isn't necessarily bad news for the record labels, but it could be lethal for brick-and-mortar stores." Finding money in banks 01/31/04   Stocks "Year in and year out, financial stocks make remarkably stable and productive investments. In fact, it's kind of a mystery. If they're so good, why are they so consistently cheap?" Out of control 01/29/04   Stocks "The poison pill is one of the most egregious creatures of American corporate law. It exists to stop shareholders enjoying their full ownership rights by threatening, if triggered, to dilute the value of those shares in certain circumstances specified by a firm's board. They first caught on in the 1980s, when boards used them to deter hostile takeover bidshostile, at least, to the board, though not necessarily to shareholders." Black crossed the line and now he will pay 01/19/04   Stocks "Conrad Black has always been a corporate executive of exceptional talent -- not so much at running businesses but at buying and selling them. Over the years, his deal-making savvy has contributed enormously to his wealth, if not always that of his shareholders. But above all else, Lord Black has been a master at exploiting the grey area between what is acceptable to shareholders and what is legal, and he has taken full advantage of his skill and flexible approach to extract as much money and privilege as he felt he could." Liquidator: 6,500 tech firms among 'walking dead' 01/08/04   Stocks "Amid rising hopes for a high-tech turnaround, there's this sobering sign: Martin Pichinson -- a man who has buried nearly 150 failed startups since 1999 -- has swooped into Silicon Valley like a vulture lurking over a pack of wounded animals." Apple debuts lower-priced iPod 01/06/04   Stocks "Apple Computer Inc. Tuesday introduced a new lower-priced version of its popular iPod, just weeks after the portable music players flew off the shelves, one of the holiday's season's hottest sellers." Layoffs coming at Kraft? 01/06/04   Stocks "Kraft Foods Inc. plans to lay off 10 percent of its salaried work force as the company tries to revamp its slow-growing North American business, a person familiar with the situation said this week." The year of the car 01/04/04   Stocks "But now that the Japanese, South Koreans and Germans have unleashed an assault on the light-truck market, Detroit has to respond aggressively. Do the Big Three have what it takes to fight back this time? Their new cars must win customers and do so profitably. This looks like the only way Detroit can stay on the road." Banks feel the heat in Parmalat scandal 01/03/04   Stocks "International banks felt the heat from the multi-billion-euro Parmalat scandal Saturday as the Securities Exchange Commission in Washington said it was investigating whether they were negligent or reckless by selling the food firm's bonds." Milking lessons 12/29/03   Stocks "On the face of it, a financial-holding company seems to have been used to grab cash from the operating company, before losing that money through the silly use of derivatives and other speculative financial dealings. As the losses mounted, instead of coming clean, it seems that the stakes were raised in a desperate and ultimately futile effort to keep the scam going. If such a picture is broadly accurate, then Parmalat will look much like other corporate scandals. Until then, the worry is that fresh horrors may yet emerge." Self-Destruction, mother of invention 12/24/03   Stocks "But what does the joy of destruction mean for investors? A lot. Peters cites a study by Richard Foster and Sarah Kaplan of McKinsey & Co., who examined the first list of the biggest U.S. companies published by a magazine, the Forbes 100 of 1917, and compared it with a similar list 70 years later. Of the 100, only 39 managed to survive, and only 18 of those were among the top 100 in 1987." Corporate scandals 12/23/03   Stocks "The near failure of Parmalat is raising questions about how well Europe is reforming its corporate governance." Parmalat admits $5bn black hole 12/22/03   Stocks "Many of Italy's biggest banks are exposed to Parmalat, leading to fears of a system-wide meltdown if the company were to collapse." Big trouble for Big Pharma 12/05/03   Stocks "The industry's bloated overheads appear to be driving its decisions on the sort of drugs it seeks to develop. Like a supermodel who will not get out of bed for less than $10,000 a day, Big Pharma has decided that it is simply not worth investing in anything but a blockbuster. This means that lesser, albeit interesting, compounds fall by the wayside. An oft-quoted figure from the Tufts Centre for the Study of Drug Development puts the average cost of bringing a new drug to market at $897m. But as F.M. Scherer, an economist, points out, this is an average cost for big firms producing drugs for chronic diseases. Other firms can bring drugs for other complaintsinfectious diseases or rare conditions, sayto the market for around $100m-200m." Trustmark, Walgreens join 'clean stocks' list 11/30/03   Stocks "The bad guys get all the headlines, but don't let them scare you into putting your money in the mattress. So far, the "Clean Stocks" project I launched last July has identified six stocks that are clean enough for investors who worry about the never-ending round of financial scandals, yet know they must stay in the markets to stand any chance of reaching their own financial goals." The big candyman 10/31/03   Stocks "'Trick or treat?', once an American question, is now a feature of Halloween celebrations everywhere. As a result, October 31st has become the global high point of the confectionery year, as millions of children dress up as ghosts, goblins or Britney Spears to be rewarded with vast amounts of teeth-rotting goodies. This year, confectioners expect to generate Halloween sales of $2 billion in America alone. Last year, the country's total confectionery sales were $24 billion - the highest anywhere." Haggling 09/06/03   Stocks "During a three-year investigation by America's Department of Justice into Executive Life, a Californian insurer that collapsed in 1991 and was bought by Cr dit Lyonnais, a big French bank, it sometimes seemed that the affair was about little more than transatlantic regulatory nit-picking. This week proved how much bigger the scandal really is." Whistleblower says he just wanted Coke to listen 08/30/03   Stocks "Eleven years after getting his dream job, Whitley is just drinking water. His wife sold the Coke plates, glasses and memorabilia at a garage sale. He is out of his $140,000-a-year job after accusing officials of the world's largest soft drink maker of shady accounting and fraudulent marketing practices." Apple picking 08/29/03   Stocks "Wall Street analysts have missed the boat on Apple's big stock move. So why listen to them now?" Five undiscovered picks from small-cap managers 08/26/03   Stocks "By and large, small-cap stocks aren't household names. There are exceptions, of course. Home decorators, party planners, and cooks (not to mention followers of the criminal justice system) are no doubt familiar with small-cap Martha Stewart Living Omnimedia. But few small caps get anywhere near as much analyst coverage or ink in The Wall Street Journal as giant companies like General Electric and Microsoft. With fewer analysts and investors closely following smaller companies, the odds are better that you'll find stocks whose virtues aren't appreciated by Wall Street in small-cap land than in large-cap territory." Don't buy these 10 stocks! 08/13/03   Stocks "With the S&P 500 up about 12% and the Nasdaq up more than 23% this year, many investors have decided it's safe to jump back into the pool. Human nature being what it is, the majority of investors naturally will sell stocks when the market is going down, and do the opposite when the market is going up. Although this is a recipe for poor long-term returns, it's also a fact of life." Gillette nicked by Schick 08/09/03   Stocks "Tensions escalate in the shaving wars as the world awaits the arrival of the four-blade razor." Tough sell for Noranda 08/09/03   Stocks "Noranda's decision to slash its quarterly dividend rate to 12 cents a share from 20 cents was a surprise as most analysts were caught looking for a cyclical recovery." Pension plans face $225-billion shortfall 05/24/03   Stocks "Canada's public and private pen-sion plans are facing a collective funding shortfall of $225-billion - an amount roughly equal to 20 per cent of the nation's gross domestic product - new estimates com-piled by three major benefit con-sulting firms show. Closing that funding gap will require billions of additional dollars from plan sponsors and perhaps employees, the research warns. It puts the extra funding demands at 2 per cent of GDP annually over the next 15 years, provided there are no further gains or losses." It pays to inspect annual reports 05/23/03   Stocks "Next, we come to the real guts of the annual report -- the consolidated balance sheet, statement of earnings and cash flows, plus the all-important notes to the financial statements. Here's a brief explanation of each" Tobacco stocks live to fight again 05/21/03   Stocks "Shares of "Big Mo" surged from January 2000 through mid-2002, while the rest of the market was tanking. On Wednesday they were back in the limelight, leaping almost 10 percent to $38.30 after a Florida appeals court threw out a record $145 billion punitive damages award against the industry." Insurance sector should emulate Fairfax 04/15/03   Stocks "Not as many people know Prem Watsa, which is just fine with the publicity-shy CEO at Fairfax Financial. But those who have heard of Mr. Watsa would also think of him as a pretty darned good stock picker." From scrap to Slinky 04/09/03   Stocks "The making of an old-fashioned toy from scrap metal offers a lesson in how technological advances have helped revolutionize business. It also illustrates some shortcomings." The limits of bankruptcy 04/02/03   Stocks "Some say the most efficient way to bring down capacity is to allow the industry to consolidate. With two or three giant airlines competing to fly just about everywhere, each might be able to make a consistent profit, they say." Humm, see Air Canada... McDonald's: Back to basics? 03/28/03   Stocks "The fast-food giant may go back to burgers and fries -- why didn't it think of that before?" It's time to shed light on insider equity monetization 03/13/03   Stocks "When members of the Bombardier family quietly monetized some of their stock five years ago, they did so by issuing exchangeable debt. And who bought $52.4-million of the $327.5-million issue? Teachers of Ontario. Like every other buyer, the pension plan would have learned of the deal through the banks hired to handle the sale, in this case Midland Walwyn (now owned by Merrill Lynch) and RBC Dominion, Royal Bank's investment bank. The first paragraph of the Bombardier offering memorandum says: "Under no circumstances are its contents to be reproduced or distributed to the public or the press. Securities legislation in all provinces prohibits such distribution." The minimum investment is $150,000. Do you get the feeling that small investors are out of the loop?" Don't shoot the messenger 03/02/03   Stocks "Although it is under fire, short-selling should be encouraged." When you can't sell the goods, sell the shop 01/18/03   Stocks "But experience shows that retail mergers are tough to pull off and frequently end up destroying value-partly because local customs and tastes still vary greatly, and partly because global synergies in purchasing and the sharing of best business practice have been slow to materialise. Ahold of the Netherlands, for example, has come spectacularly unstuck after a three-year buying spree, and Carrefour is still licking its wounds after difficulties in integrating Promodes, which it bought in 1999. Strategic deals, like the bid for Safeway, are often the biggest failures of all." The bear facts about pensions 01/17/03   Stocks "The three-year bear market has left many companies with big pension shortfalls, which may weigh heavily on share prices for years to come." Buy, Sell and Hold On! 01/15/03   Stocks "If you thought stock research was simple and transparent in the wake of Eliot Spitzer's crusade, you haven't looked closely at Wall Street's new rating systems." The paradox of corporate democracy 11/08/02   Stocks "Here's a job for an aspiring philosophy student: Give us a pithy thesis on the tyranny of corporate democracy. It sounds ambitious but you won't have to look far for a case study. The tale of a little ice cream shop called CoolBrands International is perfect." The long shadow of Big Blue 11/08/02   Stocks "Can Microsoft now hold on to its dominant position-or might it go the way of IBM in the 1980s?" The stupid loan bubble 10/22/02   Stocks "The case of Motorola and Nokia vs. the Uzans may read like a gangster novel. But it also opens a window onto an unexamined chapter of Internet mania, one with urgent relevance for the ongoing crisis in the telecom industry. Motorola and Nokia agree with the Uzans on only one thing: that the loans looked sensible from the dizzying heights of the bubble, when dozens of telecom start-ups vied to rule the coming Internet world. Many of the world's most famous banks are now in trouble because of bad loans they extended to telecom start-ups. But at least JPMorgan and Commerzbank have some expertise in the business of lending money. The two biggest mobile-phone makers in the world could hardly make the same claim. And it was not only Motorola and Nokia but Lucent, Cisco, Nortel and others that started acting as reckless creditors, vying with one another in a race to extend millions, even billions, in financing to-telecom-bubble start-ups, often after those companies were refused loans by real banks." Lights out for Lucent 10/21/02   Stocks "How all this happened - one of the most damning chronicles of failure in the whole sweep of American enterprise - is not the story of lazy, over-indulged workers (the excuse of the 1970s). Nor is it the story of those scheming Japanese and their unfair trade in the American market a decade later (the excuse of the '80s). At the end of the 1990s, we confront the excuse none dare utter - the total, complete, and abject failure of the one group that plotted and maneuvered to seize the reigns of power for 30 straight years; then, having gotten them, went giddy-up at the gate and in no time at all fell flat on its face: The management class of American business." Pay up! 10/10/02   Stocks "Hey Microsoft, Cisco, Oracle and Dell! Give us some money! None of these technology giants offers investors a dividend. But all of them, despite massive drops in their stock prices, are still stable market leaders with healthy balance sheets. As a result, some money managers think it's time for them to suck it up and start doling out some of their earnings to shareholders." Flood warning 10/05/02   Stocks "Insurance companies almost everywhere are being squeezed between falling stockmarkets, record claims and worsening economies. Unless share prices stage an unexpected revival, expect an increasing number to merge or fold." Rising empire 09/18/02   Stocks "L.A. chef Nancy Silverton sold her ultra-trendy bread-baking business for millions. So how'd she pull that off without selling out?" An immigrant's tale 09/17/02   Stocks "It's the kind of business nobody wants to run: selling PCs to price-conscious customers. But Edy Bedoya has spent a lifetime preparing for it." Are Value Stocks Riskier than Growth Stocks? 09/13/02   Stocks "And so, without mangling syllogistic logic, must it not follow that because they have higher returns, a portfolio of value stocks must indeed have higher risk? The problem is that this risk is not readily apparent." Home wrecker 09/05/02   Stocks "William Aldinger says he built one of the few successful lenders to bad credit risks by managing smarter. People suckered into his mortgages cite other tactics: lies and deceit." Lights, camera, cash burn 08/31/02   Stocks "The first secret to running a business that does nothing but burn cash is location: You're better off in the Great White North, where the rules are firmly on your side." The power of WorldCom's puff 07/24/02   Stocks "Internet traffic, went the industry's favourite statistic, doubles every 100 days. The claim assumed unimpeachable status when it appeared in a report published by America's Department of Commerce in April 1998. Unfortunately for the telecoms firms that rushed to build networks to carry the reported surge in traffic, it wasn't true." Revisiting Graham and Dodd 06/07/02   Stocks "Originally published in 1934, Security Analysis by Benjamin Graham and David Dodd could have been written yesterday. The players have changed but the conceptual framework is as fresh as ever. The introduction and the first chapter of this opus are especially chilling. Intended as an indictment of the excesses of the roaring Twenties, these first 15 pages of a more than 700-page book are equally applicable to our bubble -- and, by inference, to much that is now unfolding in its aftermath." Putting "dis" in full disclosure 06/06/02   Stocks "'Most public companies go out of their way to please Wall Street analysts. Then there's Expeditors International of Washington Inc.', writes Robert McGough in today's Wall Street Journal." The AOL TW black hole 04/30/02   Stocks "The verdict is finally in: The AOL Time Warner merger should not have happened. That's the message from last week's latest balance sheet convulsion to shake what was once known reverentially in certain parts as the House Of Luce." The blue-chip penny stocks 04/15/02   Stocks "The reality is that a company's share price tells you absolutely nothing about its valuation or market capitalization. That can be a little hard to remember these days, though, with so many well-known companies sporting stock prices that would seem to be screaming "buy me." The problem is, that isn't what they're really saying." Tech stocks: keep your shirt on 04/06/02   Stocks "Technology changes constantly. That is what makes it so fascinating. Investment speculation in technology, on the other hand, almost never changes - as Templeton, the mutual-fund guru, knew better than most. Whether based on steel, silicon or pulses of light, the great innovations since the start of the Industrial Revolution have lured in the suckers, capturing their imagination and then their money." Efficient Frontier Spring 2002 04/04/02   Stocks Articles include: Only Two Centuries of Data, When Risk and Return Become the Same,Efficiency Rationality and Arbitrage, Of Markets Economies and Populations,Links of the Month. Shares do not a shelter make 03/25/02   Stocks "On one level, popular capitalism has been successful. Socialism has been seen off. Industry has been privatised in the UK and elsewhere in Europe, with a fair proportion of the equity ending up in the hands of the public. Share options and profit-sharing schemes are now widely used to motivate the workforce. But part of this approach has been muddle-headed. Too little consideration has been given to the long-term economic interests of those involved. Investors have been steered in the wrong direction, at great cost to many." Fool me twice, shame on me 03/13/02   Stocks "On this scale (as of December 31, 2001), the P/E of the S&P 500 is the highest in all of recorded U.S. history back to 1871. Stocks cheap? I think not." Confidence lost 02/20/02   Stocks "Following the go-go era of the late 1960s, after the shares of a group of popular but speculative technology stocks collapsed, investors fled from companies with confusing balance sheets. They shifted their funds to dependable companies such as Xerox, Avon Products, and McDonald's, whose business models were so simple to understand at the time that investors referred to them as "one decision" stocks. The end result: the creation of yet another bubble, this one in the stocks of what would later be dubbed the Nifty Fifty." Enron losses 'off the scale' 01/31/02   Stocks "And the emerging shape of the Enron scandal was almost identical to one of 70 years ago, which prompted the setting up of the first regulators to govern the way companies report their performance, he said. That regulation has been chipped away to the point where it is no better than it was in the 1920s, Mr McCullough said." Pricey stocks risk a fall into the GAAP 01/29/02   Stocks "The gulf between what corporate America would like people to think it earns and what it has actually been earning, according to the rules of accounting, has never been so wide. Perhaps that's because if investors started looking at actual bottom lines, rather than their jazzed-up ones, stocks might be significantly lower." - Check out the keen P/E graph. Shakespeare's preferreds 01/19/02   Stocks "Nevertheless, because of the attractiveness of dividend investing for those in the bottom tax bracket, and because of inefficiencies in the preferred share market, careful investors can be well rewarded as long as they pay attention to detail." Show me the earnings! 01/14/02   Stocks "In this surreal bubble-era in which we curiously find ourselves still languishing in the United States, the average stock investor seems to have totally forgotten that the only ultimate reason to own a given company is earnings!" Of risk and myopia 01/12/02   Stocks "To repeat: the risk tolerance of an investor is determined largely by how often he checks his portfolio. This is nothing new. Benjamin Graham commented in The Intelligent Investor that holders of obscure mortgage bonds happily held onto them through the depths of the Depression until they eventually recovered their value because they were highly illiquid and not often quoted. On the other hand, holders of frequently-quoted corporate bonds (far less risky but priced daily in the papers) panicked and sold after their initial drop." Bubbles, Human Judgment, and Expert Opinion 12/22/01   Stocks "The widespread public disagreement about whether the stock market has been undergoing a speculative bubble in the past few years reflects an underlying disagreement about how to view human judgment and intellect." [PDF] The stock market level in historical perspective 12/04/01   Stocks "By historical standards, the U.S. stock market has soared to ex-tremely high levels in recent years. These results have created a sense among the investing public that such high valuations, and even higher ones, will be maintained in the foreseeable future. Yet if the history of high market valuations is any guide, the public may be very disappointed with the performance of the stock market in com-ing years." [PDF File] Risk and expected return 11/21/01   Stocks "There is only one way to achieve spectacularly high returns like those achieved by US investors in the latter half of the last century-you must start out with the price of assets at very distressed levels, and end up with them at very elevated levels." Don't sell 'em short 11/12/01   Stocks "Economists used to think investors were always coldly rational. Now they know that's wrong. And research is shedding light on how strangely markets can behave. In what follows, I'll explain several fascinating studies that turn conventional ideas about short selling upside down."	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