And on that bombshell, have a wonderful Thanksgiving everyone!!
All-Star Update
November 19th, 2009 by Nicu 2 comments »Finally All-Star portfolio has made it to the blog.
I will provide you with a short update on today’s trades.
Firstly, I will cash out on some of my position in PCX. Stock soared post earnings as they provided great outlook. They expect to contract more for Chinese exports, they modified some of the quality mix of the coal so that they can take advantage of better prices going thorough the next year. Additionally, management declared they have a high degree of operational leverage for their metallurgical coal production and can increase production from 5M tons/year to 9.5M tons/year. I believe the stock might depress a bit more before it stabilizes.
Also with TNP I am taking some money off the table as it seems that the stock is reaching it’s 3 months resistance point of ~17. If it falls again, i’ll pick up again more shares as I did when it traded around 15 and gave us the returns we have.
So far, so good.
See you guys Friday!!!
Low US interest rates and the Asian bubble
November 18th, 2009 by Neha 1 comment »http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aQz3J1NVh0wI
Extended low fed funds rate potentially causing another crisis..in Asia? This time it is the dollar liquidity sparking carry trade, not the yen.
For more on the Asian bubble:
http://www.theedgemalaysia.com/business-news/151587-asia-in-a-bubble-what-bubble.html
Portfolio Update
November 14th, 2009 by Ken No comments »This will just be a quick post to go more into detail about last week’s trades.
First off: I sold out of BEP (S&P500 Covered Call Fund). I fully admit this ETF didn’t hedge downside in any way I expected. And by that I mean it didn’t hedge downside at all. If the market went up, it underperformed, if the market went down it underperformed. Very frustrating, because at least the way I looked at it it’s supposed to do well when it’s an uncertain, not too strong bull market (people want to buy calls, but don’t want to commit by buying stocks). Which has pretty much been the situation since it’s been in the portfolio.
Diana like I keep repeating is a company and stock I really love and barring some catastrophe will be in the portfolio at the end of the year. The main reason I sold out of it was a quasi-trading play, because the day after it rose to 16% on a day of extremely positive trading I was pretty sure some would cash out their gains. Hence, I sold it that night, DSX did indeed fall slightly the next day and I repurchased it at that price. It wasn’t value fare admittedly, but at this point any outperformance is valuable.
However, to quickly renumerate just how strong Diana is – it has a pristine balance sheet (23% leverage vs 90-150% for almost every other shipper), meaning even now it can raise debt very cheaply and easily. It has a substantial cash position, enough to straight out buy 4 more capesize vessels. But with 50/50 it easily has the ability to purchase up to 8 if necessary. On top of that, they have a 99.7% fleet utilization rate (only .2% dropoff from last year) and an average age of 5 years on its fleet meaning very low maintenance and upgrading costs moving forward. And it has a number of charters coming off in the next few months so they can take advantage of the surging BDI.
Bernanke + Geithner = high school lunch ladies
November 11th, 2009 by Daniel 539 comments »James Quinn over at Seeking Alpha has an amusing yet true interpretation of the current US fiscal situation.
I know this is sad, but I woke up out of a sound sleep the other day with the vision of Ben Bernanke and Timmy Geithner as high school lunch ladies. Why you might ask would that vision enter my mind. It has to do with the USD and our $12 TRILLION debt. Below is my visual look at the USD’s future.
The Chinese, Japanese, Indians, Russia, Europe, and the Middle East are the high school kids in the lunch line. Back in the 1990’s, when the U.S. issued debt (served lunch), it was high quality (filet mignon) because deficits were under control, no wars were being fought, and our economy was humming. As time has passed, we have devalued our dollar by spending like drunken school boys on wars of choice, new government departments, new Medicare entitlements, bailing out bankers, bailing out auto makers and their unions, and providing “free” healthcare to all.
Now, when the Chinese, Japanese, Indians, Russia, Europe, and the Middle East saunter up to the lunch counter we shovel a heap of unknown gruel onto their plates and tell them it is filet mignon. They are not stupid high school kids. They know it is crap, but they really have no other options at this point.
But, one of these days someone like Bluto Blutarsky is going to spit the food out and yell food fight. When that happens, all hell will break out. The kids will say no to the gruel and throw it in Bernanke and Geithner’s face. The dollar will collapse and it will take a long tome to cleanup the mess.
Now this would actually be funny if it weren’t true…
Ben and Tim's new look
Click here the full article.
IAG Logo Competition
November 5th, 2009 by Rahul 1 comment »
Guidelines:
- Our current logo is attached at the bottom of this post in a vector format.
- You may choose to revise our current logo or create something completely new.
- No photo art. The logo must be in a vector format.
- No more than 2-4 solid colors. Gradients may look nice, but can create color consistency problems when printed on merchandise.
- Colors must be web-safe and print-safe.
- The font used in the current logo is Tarjan. Other fonts are welcome, but if they are non-standard, you must include a copy of the font.
- All work must be completely original. The only exception is if you are working off the current logo.
Submission Standards:
- Deadline: Wednesday, November 25th at 11.59pm to iag[at]stern.nyu.edu
- Submit your entry in two formats: 1)Vector (i.e. ai, eps, svg – for scalability). 2)Raster (i.e. jpeg, png, tiff – for easy viewing)
- You may submit up to ten sets of variations.
- Each set should include: 1)Logo only. 2)Logo + “Stern IAG” » Read more: IAG Logo Competition
First Initiative Blog Post!
November 4th, 2009 by Ken 4 comments »3…2…1… Liftoff! Alright so this is going to be my first blog post, going to start it off with just some random musings since I didn’t have anything planned (and our presentation is taking up chunks of free time). So, here goes.
Everyone was buzzing about Buffett’s deal for Burlington Northern yesterday. Every financial newspaper rolled out the obligatory article with some variation of “is Burlington Northern worth this valuation?” or analyzing the cash/stock ratio of the deal. With all due respect, they’re missing the point. I don’t doubt that Buffett has a very good valuation of the company, and I’ve been bullish on transportation myself (obligatory tooting of my own horn). My question is why did Buffett choose Burlington Northern? It’s not the only railroad with a large rail system in the Midwest-West. In fact, of the 4 largest railroads (CSX, Union Pacific, BNI, NSC) you have an even split of CSX/NSC in the East and BNI/UNP in the West.
So I’m going to try to follow Buffett’s perspective here. First off, the Western two railroads have an inherent advantage of terrain. Why? The sheer amount of land they cover is much, much larger as well as touches the Gulf and Pacific. I’ll get into why that’s advantageous in a moment. If you’re not sure that it actually is larger, hark back to 3rd grade Social Studies when you learned about the Louisiana Purchase and subsequent land grabs. Alternatively, here’s a handy picture ripped straight from Union Pacific’s Annual Report.
IAG Blog Launched
November 3rd, 2009 by Rahul No comments »
Welcome to the new IAG blog. Our main website is great for posting events, presentations, workshops, and more. However, it’s so not great for with interacting with you, our members.
In the past we’ve had separate blogs for the two portfolio managers. Visiting three different sites for a club (SternIAG.com and two blogs) is inconvenient and slightly confusing. This year we are consolidating the blogs.
The portfolio managers will discuss their investment rationales, as they have done in the past. Moreover, the PMs, the Newsletter Committee, and the board will contribute articles pertaining to finance and investing. We encourage you to comment on this blog.
If you’re interested, the old blogs from 2007-08 are here:
