Tuesday, November 16, 2010
16 November 2010 You Like Me You Really Like Me
I was blown away to have several people send me e-mails and one actually called regarding content from last night. First was the call I got that pointed out that I never gave the name or the Ticker for the Melanoma drug test company awaiting word from the FDA that was supposed to be released on Thursday. Well the Lord works in mysterious ways as I did not tell you the stock, I did not buy any and the FDA announced today instead of Thursday. Close but no cigar. Mela Sciences Inc did not get the go ahead some were expecting. The good news is that Barron’s got it spot on. The article said if they get the go ahead we might see a double. If they don’t the value could crash to at least half. The stock is down today about 54.67%. Good call.
Then I got an e-mail from the other side of the world from someone who noted that it was a bit late in the year to be working on my 2010 budget. Good catch Thomas. Obviously we are working on our 2011 Budget. Then I had a couple of folk who did get into CSCO. I chose to start a position as well and went directly to the equity versus the options we discussed yesterday.
In other pin action in the Salve Lucrum portfolio (and others) we added to our KO position which was looking really cheap today. (WE added at 62.99 a share). We started and added some VXX at 49.69 a share looking for the volatility play. Now the Euro took a hit today against the dollar and China's threatening interest rate hikes is playing havoc with all of our commodity plays so we bought more on the dip. We added DBA, JJG, and PPLT to most of the portfolios. The main portfolio is at 40% cash waiting for this correction to conclude.
How Low Can You Go?
As you all know I am not a chartist, but we have been looking at the DJIA chart and see this index coming to a very important support point at $10,980. That is just about the 50 day moving average. If it falls through that figure and we continue to see negative volume like we did today and on the 11th, we could see the Dow drop to a level somewhere between the 50 day average and the 200 day average. That would put the Dow around $10,700. That would bring the S & P 500 to about $1,094.
Cute and Cuddily QE II
I have spoken at length about QE II or Quantatative Easing, but one of our readers sent me this link. Please watch as the two fluffy charecters below give an incredible explanation of QE II. It is about 6 minutes long but definitely worth the time.
So What Does A Billionaire Buy?
The SEC 13F-HR filing reports are coming out and that is where people like me can go though the delicate drawer of great men like Buffet, Soros, and Paulson. If you want to feel the silky shorts of these bad boys, feel free to do your own voyeuristic exploration by going to the SEC website and search your favorite billion to see where they are parking their goodies.
Type in the name or company name of the person you want to look at and look for the 13F-HR filing from the latest quarter. Now that will tell you what they own now. To compare to an earlier quarter, just go back 3 months and look for that 13F-HR.
Here are some highlights from Mr. Buffets holdings. Now these holding are held in joint accounts at Berkshire Hathaway Life Insurance Co. of Nebraska, BH Columbia Inc., Blue Chip Stamps, Buffett, Warren E., Columbia Insurance Co., Cornhusker Casualty Co. Cypress Insurance Company, Fechheimer Brothers Company, GEC Investment Managers, GEICO Corp., Government Employees Ins. Corp., Medical Protective Corp., National Fire & Marine, National Indemnity Co., National Liability & Fire Ins. Co., Nebraska Furniture Mart, OBH LLC., U.S. Investment Corp., Wesco Financial Corp., Wesco Financial Ins. Co., and Wesco Holdings Midwest, Inc.
The overall 48 billion dollar portfolio improved by 4.4% from the previous quarter.
The first thing I noticed was he took a new position in BK The Bank of New York Mellon Corporation, a financial services company, provides various products and services for institutions and individuals worldwide. The company's Asset Management segment offers a range of equity, fixed income, cash, and alternative/overlay products, as well as distributes investment management products. Its Wealth Management segment provides investment management, wealth and estate planning, and private banking solutions to high-net-worth individuals, families, endowments, and foundations and related entities. The company's Asset Servicing segment offers global custody and fund services, securities lending, global liquidity services, outsourcing, government securities clearance, collateral management, and credit-related services to corporate and public retirement funds, foundations and endowments, and global financial institutions. Its Issuer Services segment provides a range of products and services to fixed income and equity issuers, including corporate trust, depositary receipts, employee investment plan services, and shareowner services. The company's Clearing Services segment offers operational support; trading services; flexible technology; and various investment solutions, including managed accounts, mutual funds and cash management, practice management support, and service excellence to financial intermediaries, broker-dealers, independent registered investment advisors, and hedge fund managers. Its Treasury Services segment includes cash management solutions, trade finance services, international payment services, global markets, capital markets, and liquidity services. Additionally, The Bank of New York Mellon Corporation involves in leasing, corporate treasury, business exits, and corporate overhead businesses; and provides fund accounting and transfer agency services for asset managers and financial advisors. The company was founded in 1784 and is headquartered in New York, New York.
Now when Buffet takes a position, he does not muck around. He bought just hair under 2 million shares with an average cost of $26.10 a share. Today the stock is selling for $27.69. Now we don’t own the stock and have never kicked the tires on it but at face value, the forward looking PE ratio is just a little below 11, making it relatively cheap for the market but not for the financial sector. With target prices in the 32-33 range it has a decent safety of margin. Other than that I can’t really get excited about the stock. I hope he did his homework.
He left his KO position alone at 42 million shares.
Buffet really bumped his position in Comcast from 186,000 shares to over 12 million shares at an average cost of $16.41. The current share price is above 20 and this stock has much better fundamentals. CMCSA seems to be a sound company with manageable debt. With 2 billion shares outstanding, 12 million share is not much, but I was surprised to see buffet take a position in such a closely held company. The Robert’s family contol about 35% of the company through some class B preferred stock. I hope he did his homework.
Hey where did Home Depot go? It looks like Buffet pulled completely out of HD. He had 2.7 million shares. Interesting decision? Anyway you can go holding by holding and see what he is doing.
What is The President Up To Today?
After a difficult election season and a humbling trip to the G-20 meetings and taking a long hard look at his cabinets depth of knowldge and experience, The President decides to break out the books and get a better understanding of this thing called economics.