Saturday, May 11, 2013

Here are the best ideas from some of the world's greatest investors

While Paul Singer, Kyle Bass, and Stan Druckenmiller got the headlines, there were in total 14 worthwhile speakers at yesterday's Ira Sohn conference. Though many of the themes were unsurprising, it is nonetheless useful to compare your own views to those of these professional money managers who are now bludgeoned daily by the 'idiot-maker' rally... of course, that is, until they are proved 100% correct.

Jones Trading Recap of Ira Sohn Conference  (Yousef Abbasi)
Paul Singer - Elliot Management
  • Singer talks about the global banking environment, notes that it is opaque and very highly leveraged.
  • He says that Value-at-Risk (VAR) is not the appropriate measure for a financial institution's health.
  • He notes that the average person is not feeling the recent equity rally, says they are worried about jobs, paying more for life necessities.  This distortion is furthering class warfare.
  • On bonds, they are mispriced in the US, UK and Japan.  He does not say short bonds, but says that there are distortions in the market.
Kyle Bass - Hayman Capital
  • Stock Idea - Long DEXO - Company is a re-org but has a solid turnaround plan that should take shape over the next three years.  He says that it is a cheap option, although it is risky.  He says debt should trade to par and that shares could rise 5x.  (more)
Please share this article

The Biggest Retirement Myth Ever Told

One of the darkest risks facing America is that so few of us are prepared for retirement.
It's shocking, really. According to ConvergEx Group, "Only 58% of us are even saving for retirement in the first place. Of that group, 60% have less than $25,000 put away ... a full 30% have less than $1,000." According to Nielsen Claritas, Americans age 55 to 64 have a median net worth of $180,000 -- less than they'll likely need for health care spending alone during retirement.
I recently asked Joseph Dear, chief investment officer of CalPERS, one of the world's largest pension funds, whether America was ready for retirement. Without delay, he snapped: "No!"
We have a retirement problem. A very serious one that shouldn't be discounted.
But it is nothing new.
Same as it ever wasThe notion that these challenges are new -- that there was some golden era when Americans were prepared to kick up their feet and enjoy retirement in financial security -- is a myth. By some measures, retirees are in a better position today than at any other time in modern history.
Let's start with something simple. The entire concept of retirement is unique to the late-20th century. Before World War II, most Americans worked until they died.
The best way to show this is the labor force participation rate for men age 65 and up:
Source: Economic History Association, Bureau of Labor Statistics.
For most of us, I think the nostalgic sense of America's golden era of retirement is set between the 1950s and the 1990s. That, we often hear, is when workers had pensions and were able to retire with security. But as much as twice the percentage of men were still working into their elderly years back then compared with today. (more)

Please share this article

Genetically Modified Foods in America - Health Documentary Food industry

A genetically modified organism (GMO) is an organism whose genetic material has been altered using genetic engineering techniques. Organisms that have been genetically modified include micro-organisms such as bacteria and yeast, insects, plants, fish, and mammals. GMOs are the source of genetically modified foods, and are also widely used in scientific research and to produce goods other than food. The term GMO is very close to the technical legal term, 'living modified organism' defined in the Cartagena Protocol on Biosafety, which regulates international trade in living GMOs (specifically, "any living organism that possesses a novel combination of genetic material obtained through the use of modern biotechnology").

This article focuses on what organisms have been genetically engineered, and for what purposes. The article on genetic engineering focuses on the history and methods of genetic engineering, and on applications of genetic engineering and of GMOs. Both articles cover much of the same ground but with different organizations (sorted by organism in this article; sorted by application in the other). There are separate articles on genetically modified crops, genetically modified food, regulation of the release of genetic modified organisms, and controversies.

Please share this article


Conns, Inc. engages in the specialty retail of durable consumer products in the United States. The company's stores offer home appliances, which include refrigerators, freezers, washers, dryers, dishwashers, ranges, and room air conditioners; furniture and mattresses comprising furniture and related accessories for the living room, dining room, and bedroom, as well as traditional and specialty mattresses; consumer electronics, such as LCD, LED, 3-D and plasma televisions, Blu-ray players, home theater and video game products, camcorders, digital cameras, and portable audio equipment; and home office products, including computers, tablets, printers, and accessories. It also provides repair service agreements and installment credit programs, as well as various credit insurance products, such as credit life, credit disability, credit involuntary unemployment, and credit property insurance. As of May 2, 2013, the company operated 70 retail stores, including 58 in Texas, 6 in Louisiana, 3 in Oklahoma, 2 in New Mexico, and 1 in Arizona. Conns, Inc. was founded in 1890 and is based in The Woodlands, Texas.
To review Conns stock, please take a look at the 1-year chart of CONN (Conns, Inc.) below with my added notations:
1-year chart of CONN (Conns, Inc.) CONN has formed a solid resistance at $45 (red), which would also be a 52-week high breakout if the stock could manage to break above it. In addition, the stock has been climbing a trendline of support (blue). These two levels combined have CONN sandwiched within a common chart pattern known as an ascending triangle. At some point, the stock will eventually have to break one of those two levels.
The Tale of the Tape: CONN has an up trending support and a 52-week resistance level to watch. A long trade could be made on a breakout above the $45 resistance or on a pullback to the support, which currently sits near $42. A break below the up trending support could be an opportunity to enter a short trade.
Please share this article

Could Canada become the next Cyprus

An intriguing article titled "Canada Includes Depositor Haircut Bail-In Provision for Systemically Important Banks in 2013 Budget" was recently published in
The somewhat lengthy title offers all the information necessary, but for those who – quite understandably – may not be able to accept that they have just watched Canada tumble down the Cypriot rabbit hole, here is a bit more detail from the approved budget itself:
"The Government proposes to implement a bail-in regime for systemically important banks. This regime will be designed to ensure that, in the unlikely event that a systemically important bank depletes its capital, the bank can be recapitalized and returned to viability through the very rapid conversion of certain bank liabilities into regulatory capital."
Customer deposits could certainly fall under the label of "certain bank liabilities," and converting them into "regulatory capital" without permission is just a gentle way of describing confiscation. Though Canadian officials have denied that the term "certain bank liabilities" includes customer deposits, we must note that the government in Cyprus also promised that customer deposits would not be touched, only to renege on that promise at the onset of the crisis. Remember lesson #1 of the Cyprus debacle: "Do Not Trust Politicians." (more)

Please share this article

How to Survive The Main Street Meltdown

The collapse of the subprime mortgage market in the United States has led to stock market drops across the world. See the effect those investments have had on the European and Asian markets, reminding if of how connected we are in the global economy. But not just Wall Street is feeling the Squeeze; Main Street America is feeling the credit crunch as millions of Americans lose their homes or are unable to find loans even with excellent credit.

Please share this article

Auto Retail Stocks: Too Good to be True?

Could an investment be too good to be true?
Lost amidst the earnings reports by such investor favorites as Apple and Procter & Gamble were the earnings reports of the auto retailers.
I'm not talking about the auto manufacturers like Ford and Toyota. I'm talking about the retailers who simply sell, and in many cases, repair, cars and trucks. I was surprised to learn that a handful of these companies are publicly traded and that some of the retailers have dealerships all across the country.
A bunch of them recently reported earnings and they didn't just have good quarters, they had unbelievable quarters. They had the kind of quarters most businesses only dream about.
Auto Sales Returning To "Normal"
But how is that possible more than three years into the auto recovery? It's not as as if auto sales haven't been rising the last few years. Car sales bottomed in 2009 at 10.4 million and have been steadily rising ever since. Automobile analysts expect 2013 sales of 15.1 million. That is near a "normal" auto sales market for the United States.
But a perfect combination of improving credit availability with zero down loans, pent up demand from buyers driving older cars for longer than they otherwise would have, and a housing market recovery fueling pick-up sales, has resulted in the best of times for the retailers.
Three Auto Retail Stocks With the Best Fundamentals
Even though the auto stocks have had big run-ups, it's not too late to get into the sector. Valuations are still attractive. The companies are also expected to have double digit earnings growth this year as analysts expect the growth to remain through 2013 and possibly into 2014.
It doesn't get much better than buying both solid fundamentals and big earnings growth.
However, not all of the auto retailers are created equal. These three auto retailers have the best combination of fundamentals and the Zacks Rank in the sector. All three are Zacks Rank #2 (Buy) stocks.  (more)

Please share this article

What "Dow Theory" is saying about the stock market now

According to Dow Theory, a bull signal is in force when both the Dow Industrials and Dow Transports move to new highs. Well, this happened today as both the Dow Industrials and Dow Transports forged fresh 52-week highs. The April lows become the first levels to watch for signs of a bearish signal.
 Click this image for a live chart.
Please share this article

"Bond king" Bill Gross calls a major top in the bond market

Treasuries fell, with 10-year note yields climbing to the highest level in six weeks, as signs the U.S. economy is improving amid central-bank monetary stimulus sapped demand for U.S. debt.

Benchmark yields were set for their biggest weekly increase in two months as the dollar continued to rally versus the yen after passing the 100 level yesterday. The Fed and other central banks are pumping cash into their economies or cutting interest rates, prompting money managers to seek higher-yielding assets. Pacific Investment Management Co.’s Bill Gross wrote in a message on Twitter that the 30-year bull market for bonds “likely ended” on April 29.

“We are seeing the ramifications of the yen move that had the effect of exacerbating the already short-dollar position on the street,” Richard Gilhooly, an interest-rate strategist at Toronto-Dominion Bank’s TD Securities unit in New York. “The move is causing trouble for a bond market that is getting longer as the duration is increasing during the selloff.” A long position is a bet that an asset will increase in value.

The U.S. 10-year yield climbed eight basis points, or 0.08 percentage point, to 1.89 percent at 3:53 p.m. in New York, after touching the highest since March 26, according to Bloomberg Bond Trader prices. The 1.75 percent note due in May 2023 fell 23/32, or $7.19 per $1,000 face amount, to 98 23/32. (more)

Please share this article