Archive for November, 2009

  • Stock of the Year: Ford Motor
    , November 18th, 2009 at 5:31 pm

    I’m being a bit premature, but I’m going to called Ford Motor (F) my 2009 Stock of the Year. Think of what this stock has been through. Shares of F closed out 2008 at just $2.29 a share. Today, the stock broke above $9 to reach a high of $9.14. The shares haven’t been this high in over two years.
    The big reason Ford gets props from me is that they haven’t had any help from the Uncle Sam. At the White House Correspondent’s Dinner, President Obama joked that he had been named Car & Driver’s “Auto Executive of the Year.” Funny, sad and true—but it doesn’t apply to Ford.
    Last quarter, Ford snapped a five-quarter losing streak by actually posting a profit of 26 cents a share. The consensus on Wall Street was expecting a loss of 12 cents a share. Think of it this way: Ford has gone from burning through $7.7 billion in cash to positive cash flow of $2.8 billion. You know, like, making money!
    One major reason for Ford’s success is the Ford Fusion. While U.S. auto sales are down 25% this year, sales for the Fusion are up 15%. Plus, the Fusion was just named Motor Trend’s “Car of the Year.”
    Now everyone on Wall Street expects profits and more profits. The fourth-quarter consensus is up to a 22-cent profit from a 12-cent loss. For 2010, the Street average is a gain of 42 cents a share.
    There’s even word that George Soros has picked shares of Ford. Paul Ingrassia at the WSJ wrote, “In fact, there’s almost too much good news coming out of Ford’s Dearborn, Mich., headquarters these days.” He’s referring to the ability of union folks to find out where the money is being made.
    Ford isn’t out of the woods just yet. The company is currently carrying about $27 billion in debt. However, if business continues to improve, Ford will have achieved one of the most remarkable business turnarounds in U.S. auto history.

  • The Florida Land Boom of the 1920s
    , November 18th, 2009 at 2:53 pm

    Joe Weisenthal lists a number of the most amazing bubbles in history. I’ll add one more to the list — the great Florida real estate boom of the 1920s. Here’s a description of the madness from Wikipedia.

    By the 1920s, its economic prosperity had set the conditions for a real estate bubble in Florida. Miami had an image as a tropical paradise and outside investors across the United States began taking an interest in Miami real estate. Due in part to the publicity talents of audacious developers like Carl G. Fisher of Miami Beach, famous for purchasing a huge lighted billboard in New York‘s Times Square proclaiming “It’s June In Miami”,[1] property prices rose rapidly on speculation and a land and development boom ensued.[2] By January 1925, investors were beginning to read negative press about Florida investments. Forbes magazine warned that Florida land prices were based solely upon the expectation of finding a customer, not upon any reality of land value.[3] New York bankers[who?] and the IRS both began to scrutinize the Florida real estate boom as a giant sham operation. Speculators intent on flipping properties at huge profits began to have a difficult time finding new buyers. The inevitable bursting of the real estate bubble had begun.

    On January 10, 1926, the Prinz Valdemar, a 241-foot, steel-hulled schooner, sank in the mouth of the turning basin of Miami harbor. The old Danish warship had been on its way to becoming a floating hotel.[4]

    The Prinz Valdemar, capsized and blocked the port of Miami for several weeks in January of 1926, helping to usher in the end of the real estate boom. Florida Photographic Collection

    The railroads, already strained by the burden of transporting both food and building supplies, had already begun raising shipping rates. When the sea route to Miami was blocked the city’s image as a tropical paradise began to crumble. In his book Miami Millions, Kenneth Ballinger wrote that the Prinz Valdemar capsize incident saved a lot of people a lot of money by revealing cracks in the Miami façade. “In the enforced lull which accompanied the efforts to unstopper the Miami Harbor,” he wrote, “many a shipper in the North and many a builder in the South got a better grasp of what was actually taking place here.”[5]

    In October 1925, in an effort to improve Florida’s clogged rail system, the railroad companies placed an embargo on all railway goods other than food, which further contributed to Florida’s skyrocketing cost of living.[citation needed] New buyers failed to arrive, and the property price escalation that fueled the land boom stopped. The days of Miami properties being bought and sold at auction as many as ten times in one day were over. The first Florida real estate bubble had burst.

    The land boom was also part of the story of the Marx Brothers first movie, The Cocoanuts.

  • Top Stocks of the Decade
    , November 18th, 2009 at 8:57 am

    GMCR…………..Green Mountain Coffee Roasters………….7,895.4%
    HANS……………Hansen Natural………………………………….6,504.1%
    BYI……………….Bally Technologies……………………………..6,394.2%
    SWN…………….Southwestern Energy………………………….5,108.4%
    CLH………………Clean Harbors……………………………………4,456.0%
    DECK……………Deckers Outdoor………………………………..3,669.5%
    AMED……………Amedisys………………………………………….3,669.2%
    TNH……………..Terra Nitrogen…………………………………….3,611.5%
    BOOM…………..Dynamic Materials………………………………3,519.4%
    QSII……………..Quality Systems………………………………….3,497.2%
    JOSB…………….Jos. A. Bank Clothiers………………………….3,419.5%
    CETV…………….Central European Media Enterprises……..3,263.4%
    XTO………………XTO Energy………………………………………..3,191.2%
    SIRO …………….Sirona Dental Systems…………………………3,142.0%
    AFAM…………….Almost Family…………………………………….3,071.6%
    MCF………………Contango Oil & Gas……………………………..3,034.0%
    JST………………..Jinpan International……………………………..2,974.2%
    TRA………………..Terra Industries………………………………….2,339.7%
    MDVN……………..Medivation………………………………………..2,321.6%
    RRC………………..Range Resources………………………………2,231.9%
    ISRL………………..Isramco…………………………………………….2,093.5%
    CGA………………..China Green Agriculture………………………2,064.3%
    CEDC………………Central European Distribution……………….2,049.2%
    FCN…………………FTI Consulting…………………………………….2,044.3%
    GROW……………..U.S. Global Investors……………………………1,887.3%
    Performance Through November 15, 2009

  • Goldman Sachs Apologizes
    , November 18th, 2009 at 8:32 am

    How exactly do you apologize for being smarter than everyone else?

    A little more than a week after Goldman’s chairman and chief executive drew fire for saying the Wall Street giant was “doing God’s work,” the bank said Tuesday that it would spend $500 million — or about 3 percent of the $16.7 billion it has so far set aside to pay its employees this year — to help thousands of small businesses recover from the recession.
    At the same time, the executive, Lloyd C. Blankfein, also showed a bit of humility, acknowledging at a conference in New York that Goldman had made mistakes, and that it was sorry. “We participated in things that were clearly wrong and have reason to regret,” he said. “We apologize.”

  • Seaboard Corp. (SEB)
    , November 17th, 2009 at 1:55 pm

    I like finding oddball stocks that few people know about or bother following. One of the great things about investing is that little-known stocks can be great investments. Just look at the great performance of a stock like Leucadia National (LUK) which is up about 22,000% over the last 30 years. LUK is rarely mentioned in the news, which is how the company likes it. I can’t think of another company with a market cap of $5.5 billion that had a website that looks like this.
    Recently, I’ve been looking at Seaboard Corp. (SEB) which is another little-known stock. Seaboard is in the pork business. There’s almost no news. Tiny volume. Not much volatility and no analysts follow it. Plus, they never split their stock.
    Thirty-five years ago, you could have picked up a share for $5-1/8. Today, it’s going for $1,549. That’s over 30,000%. Over the same time, the S&P 500 is up by 1,500%.
    I think I don’t get is why Seaboard pays a quarterly dividend of 75 cents a share. At the current price, that’s less than 0.2% a year. Why bother?

  • Oh Charlie!
    , November 17th, 2009 at 1:19 pm


    (Via TBI)

  • The Barofsky Report
    , November 17th, 2009 at 12:58 pm

    Neil Barofsky’s report is out today and it says that the government gave away too much when AIG went under. I can’t say I’m surprised nor can I claim to be terribly upset. To me, the mystery is that some folks actually expected the government to get it right. What were they expecting? The policy was to throw as much money as possible at the problem and hope that it will work. Only UBS (this Swiss??) agreed to take a haircut. Barofsky said that TARP will almost certainly lose money. The lesson is that when the market panics, the government can panic just as well.

  • Was Belichick Right to Go for it?
    , November 17th, 2009 at 11:06 am

    Brian Burke says yes:

    A punt from the 28 typically nets 38 yards, starting the Colts at their own 34. Teams historically get the TD 30% of the time in that situation. So the punt gives the Pats about a 0.70 WP.
    Statistically, the better decision would be to go for it, and by a good amount. However, these numbers are baselines for the league as a whole. You’d have to expect the Colts had a better than a 30% chance of scoring from their 34, and an accordingly higher chance to score from the Pats’ 28. But any adjustment in their likelihood of scoring from either field position increases the advantage of going for it. You can play with the numbers any way you like, but it’s pretty hard to come up with a realistic combination of numbers that make punting the better option. At best, you could make it a wash.

    Greg Mankiw adds: “Randomness is a fact of life, even if Patriots’ fans do not fully appreciate it.”

  • What Do You Think?
    , November 16th, 2009 at 6:14 pm

    Check out this chart. Do you think it’s forming a bottom?
    image872.png
    Could be. I honestly can’t say. So what’s the stock?

    (more…)

  • Buy List +42% YTD
    , November 16th, 2009 at 5:03 pm

    Thanks to big gains from stocks like Joe Banks (JOSB) and Nicholas Financial (NICK), our Buy List made a new high for the year (up 42%) and a new relative strength high (19.19% more than the S&P 500). I think the big surprise was NICK breaking out today without any warning.
    Not only is this blog completely free, but it makes you money. If you started with $1 billion at the start of the year, I made you $420 million!
    You’re welcome.