pelcmarek's blog

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Ideological weapon


I believe that:

1.If EPS triple in 5 years + I don't overpay then I should end higher
2.I'm more able to protect down-risk of my portfolio than to pick sufficient number of high flyers
3.The lower # of (BIG) losers I have, the higher will be my total return
4.Not to lose thinking together with what could go wrong is the KEY here

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Who cares about macro !


NEW YORK (AP)   

Standard & Poor's Index Services on Monday said preliminary figures show second-quarter operating earnings for the S&P 500 companies fell 29 percent, the fourth straight quarterly decline for the index of large companies.

With data available from 96 percent of the companies in the index, S&P said the aggregate results show operating earnings at $17.08 per share, compared with $24.06 per share for the 2007 second quarter.

"As reported" earnings, which reflect results that are not adjusted for special charges and gains, fell to $13.32 per share. That's down 39.1 percent since hitting a record of $21.88 per share in the first quarter of 2007.

Energy companies in the S&P 500 contributed the greatest percentage to operating earnings for the second quarter, at 25.1 percent. Industrials followed at 16.3 percent, with the health care sector close behind at 16 percent.
 
The financial sector was the only sector to have a negative result for operating earnings, showing a loss of 4.1 percent. A year ago, the financial sector contributed by far the largest percentage to operating earnings, at 28.4 percent, with energy companies second at 16.4 percent.

Excluding the financials, S&P 500 operating earnings rose 3.2 percent for the quarter. There are 88 financial companies in the index.

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Buffett's pick: NRG ENERGY (NRG)


Warren Buffett recently bought NRG energy. If you look at financials (stock price,valuation,debt).They look awfull.
Just five years ago, NRG emerged from bankruptcy.NRG is in capital-intensive business that often requires hundreds of billions dollars.

I'm pretty sure W.B bought it because he thinks it is a bargain.

So, what is he up to ?

NRG is a wholesale power-generation company that operates a portfolio of power plants totaling nearly 24,000 megawatts of generation in five countries.

The idea here is quite simple he thinks energy prices will go much higher.Recently he talked about it on CNBC as well.If you compare price of oil with price of gold you find out that they correlate.What does it mean?

It means that Warren Buffett, T.Boone Pickens and Eric Sprott are in the same boat betting on higher energy prices.
I wouldn't bet against them.


I think it will be interesting to compare W.B. pick with ETF especially NLR.
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Eric Sprott interview

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List of oldest companies


Hotel: Ho-shi Ryokan                 (1291 years old)
Restaurant: St.Peter                    (1205 years old)
Wine producer: Goulaine              (1008 years old)
Brewery producer: Weihenstephan  (968 years old)

Glass producer:Barovier&Toso        (713 years old)
Ceramics producer:Sommerhuber   (517 years old)
Pottery producer:Ubaldo Grazia      (508 years old)
Porcelain producer:Royal Delft        (355 years old)

Bank:Monte dei paschi di Siena     (536 years old)
Bank:Berenberg                           (418 years old)
Bank:Wegelin                              (267 years old)

Jeweler:Mellerio                            (395 years old)
Knives maker:Zwilling J.A.Henckles  (277 years old) 
Watch maker:Favre-Leuba              (271 years old)
 

These businesses appear quite often: hotels, farms, brewery, wine, sake, restaurant, porcelain,distillery, jeweler, watches,banks

Here is list of oldest companies in the world:
http://en.wikipedia.org/wiki/List_of_oldest_companies

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James Harris Simons : The smartest billionaire


  
 
James Simons posted 36 percent average annualized net return since he launched the quant-based fund in 1988.
 Simons earned an estimated $2.8 billion in 2007, $1.7 billion in 2006, $1.5 billion in 2005 and $670 million in 2004.

Jim Simons received his PhD  in mathematics at the age of 23.

We are a research organization. We look for people who have demonstrated the ability to do first-class research. We have very high standards and it works. Our business is wonderful as a result.

We hire people to make mathematical models of the markets in which we invest. Most come out of academia.

Some of the work is purely mathematical, like designing better ways to develop algorithms of one sort or another, or to maximize some utility function. Some of the work is really scientific. It's looking at a lot of data and really looking for what underlies that data. There we hire people who are experimental physicists or astronomers.

First and foremost, we look for people capable of doing good science, on the research side, or they are excellent computer scientists in architecting good programs.

I miss the more relaxed tone of things, the constant intellectual stimulation of just being with very bright people all the time. Now we have a lot of very bright people in our company, so I get some of that.

In August 2005 he launched the Renaissance Institutional Equity Fund, a long-short product that invests exclusively in equities and has a longer holding period for its securities than does frenetic Medallion. By maintaining a net exposure to the market of 100 percent, RIEF has been popular among institutional investors looking for higher returns from their traditional equity allocation.

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ETF Commodities


just type lon:symbol bellow to  http://finance.google.com to see the chart

   
ETFS Wheat (WEAT)                              x    ETFS Short Wheat (SWEA)
ETFS Sugar (SUGA)                               x     ETFS Short Sugar (SSUG)
ETFS Soybean Oil (SOYO)                      x    ETFS Short Soybean Oil (SSYO)
ETFS Soybeans (SOYB)                         x     ETFS Short Soybeans (SSOB)
ETFS Cotton (COTN)                             x     ETFS Short Cotton (SCTO)  
ETFS Corn (CORN)                               x      ETFS Short Corn (SCOR)
ETFS Coffee (COFF)                             x      ETFS Short Coffee (SCFE)

Natural Gas (NGAS)                            x         ETFS Short Natural Gas (SNGA)
ETFS Crude Oil (CRUD)                       x        ETFS Short Crude Oil (SOIL)
ETFS Zinc (ZINC)                               x         ETFS Short Zinc (SZIC)  
ETFS Nickel (NICK)                             x         ETFS Short Nickel (SNIK)
ETFS Copper (COPA)                          x         ETFS Short Copper (SCOP)
ETFS Aluminium (ALUM)                     x          ETFS Short Aluminium (SALU)

ETFS Live Cattle (CATL)                     x          ETFS Short Live Cattle (SLCT)
ETFS Lean Hogs (HOGS)                    x          ETFS Short Lean Hogs (SLHO)  

ETFS Silver (SLVR)                            x          ETFS Short Silver (SSIL)
ETFS Gold (BULL)                             x          ETFS Short Gold (SBUL)  
ETFS Palladium (PHPD)                      x          
ETFS Platinum (PHPT)                        x         ETFS Short Platinum (SPLA)   
 
 

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Why David Einhorn likes Microsoft !


I posted here about David Einhorn's top pick (Microsoft)
I posted here my view on Microsoft business model and Microsoft battle with Google.


I still couldn't figure out why David Einhorn picked Microsoft as his top pick.Here is the reason why:

Microsoft chief executive Steve Ballmer  is about to buyback as much as $US20 billion, according to a top-rated software analyst Heather Bellini. 

Heather Bellini of UBS AG, ranked the best software analyst by Institutional Investor magazine in 2007.
   
A buyback of between $US15 billion and $US20 billion would increase earnings per share by as much as 10 cents annually, Bellini said. She expects shares of the Redmond, Washington-based company to climb 53% to $US40 in the next year.
    
Analyst Jane Snorek at First American Funds said she has lost confidence that Mr Ballmer would ever get it right on internet businesses. Only a big buyback will change her mind, she said.

"They can't catch Google. They're wasting money on a battle that they've already lost.''

 
 
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Short nr.8 Doral Financial (DRL)


My short number 8 is Doral Financial (DRL)

Price is 13.87
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This powder keg is going to blow (Who is next Bove list)

by Doug Kass

After a big bank in California collapsed in mid-July, Mr. Richard X. Bove rushed out a report with a provocative title: “Who’s Next?” What followed was a list of 107 banks, ranked according to two measures of their financial strength.

But No. 10 on the first list, BankAtlantic Bancorp of Fort Lauderdale, fired back. The bank said Mr. Bove’s numbers were wrong — and sued him and his employer, a small brokerage firm called Ladenburg Thalmann, for defamation.

Mr. Bove, 67, who has analyzed banking stocks for 26 years has gained a certain reputation as one of the few bank analysts to predict the blow-up in the housing market and subsequent problems at many banks. He is also one of the few whose advice, if heeded, would have made money for investors over the past year.

Mr. Bove is also something of a maverick.He is not afraid of making enemies. Back in 2005, when he came out with his initial negative outlook on the housing market, a television anchor warned him that he might not have a job much longer. Soon afterward, Mr. Bove began downgrading the banks he covered, eventually putting a sell on 60 percent of them, even as others dismissed his prediction that “this powder keg is going to blow.”

A Who Is Next list by Richard X. Bove of financial institutions at risk of default like Indy Mac includes some surprisingly big names like Bank of America and JP Morgan.

The Who Is Next Bove list defines “at risk” institutions as having more than 5.0% of its reserves plus common equity outweighed by non-performing assets plus 90-day in arrears loans.


The formula is non-performing assets + 90-days late loans divided by bank reserves + common equity. Any financial institution with a ratio over 40% is in the danger zone and over 20% is at risk of needing additional capital.


Who Is Next Bove List:

  1. IndyMac Bancorp, Inc. - IMB - 146.2%
  2. Downey Financial Corp. - DSL - 95.4%
  3. Doral Financial Corporation - DRL - 85.7%
  4. BFC Financial Corporation - BFF - 77.8%
  5. BankUnited Financial Corporation - BKUNA - 75.6%
  6. Corus Bankshares, Inc. - CORS - 69.9%
  7. First BanCorp. - FBP - 53.4%
  8. FirstFed Financial Corp. - FED - 52.6%
  9. Flagstar Bancorp, Inc. - FBC - 48.4%
  10. Santander BanCorp - SBP - 45.8%
  11. Washington Mutual, Inc. - WM - 40.6%
  12. BankAtlantic Bancorp, Inc. - BBX - 38.4%
  13. Anchor BanCorp Wisconsin Inc. - ABCW - 28.7%
  14. First Horizon National Corporation - FHN - 27.7%
  15. Guaranty Financial Group Inc. - GFG - 26.9%
  16. AMCORE Financial, Inc. - AMFI - 26.5%
  17. Oriental Financial Group Inc. - OFG - 26.0%
  18. National City Corporation - NCC - 25.7%
  19. Popular, Inc. - BPOP - 25.4%
  20. Capitol Bancorp Ltd. - CBC - 24.8%
  21. Pacific Capital Bancorp - PCBC - 20.5%
  22. Fifth Third Bancorp - FITB - 20.2%
  23. Irwin Financial Corporation - IFC - 20.1%
  24. Park National Corporation - PRK - 19.4%
  25. UCBH Holdings, Inc. - UCBH - 19.1%
  26. Citizens Republic Bancorp, Inc. - CRBC - 18.6%
  27. Synovus Financial Corp. - SNV - 18.4%
  28. Central Pacific Financial Corp. - CPF - 16.0%
  29. SunTrust Banks, Inc. - STI - 15.7%
  30. South Financial Group, Inc. - TSFG - 15.6%
  31. Sterling Financial Corporation - STSA - 15.3%
  32. KeyCorp - KEY - 14.1%
  33. Colonial BancGroup, Inc. - CNB - 14.0%
  34. TCF Financial Corporation - TCB - 12.8%
  35. Marshall & Ilsley Corporation - MI - 12.8%
  36. PrivateBancorp, Inc. - PVTB - 12.8%
  37. Wachovia Corporation - WB - 12.0%
  38. Whitney Holding Corporation - WTNY - 11.8%
  39. First Commonwealth Financial Corporation - FCF - 11.7%
  40. Boston Private Financial Holdings, Inc. - BPFH - 11.4%
  41. Wintrust Financial Corporation - WTFC - 11.3%
  42. Comerica Incorporated - CMA - 10.9%
  43. Trustmark Corporation - TRMK - 10.6%
  44. Northwest Bancorp, Inc. (MHC) - NWSB - 10.3%
  45. Wells Fargo & Company - WFC - 10.3%
  46. Citigroup Inc. - C - 10.3%
  47. Old National Bancorp - ONB - 9.9%
  48. United Community Banks, Inc. - UCBI - 9.4%
  49. Signature Bank - SBNY - 9.3%
  50. Zions Bancorporation - ZION - 9.3%
  51. Astoria Financial Corporation - AF - 9.2%
  52. Associated Banc-Corp - ASBC - 9.0%
  53. BB&T Corporation - BBT - 8.9%
  54. IBERIABANK Corporation - IBKC - 8.7%
  55. Webster Financial Corporation - WBS - 8.6%
  56. Fulton Financial Corporation - FULT - 8.4%
  57. Bank of America Corporation - BAC - 8.0%
  58. Provident Bankshares Corporation - PBKS - 7.9%
  59. Regions Financial Corporation - RF - 7.8%
  60. Cathay General Bancorp - CATY - 7.7%
  61. Sovereign Bancorp, Inc. - SOV - 7.6%
  62. First Midwest Bancorp, Inc. - FMBI - 7.4%
  63. Wilmington Trust Corporation - WL - 7.4%
  64. M&T Bank Corporation - MTB - 7.3%
  65. TFS Financial Corporation (MHC) - TFSL - 7.2%
  66. WesBanco, Inc. - WSBC - 7.0%
  67. U.S. Bancorp - USB - 6.8%
  68. NBT Bancorp Inc. - NBTB - 6.7%
  69. Umpqua Holdings Corporation - UMPQ - 6.6%
  70. City National Corporation - CYN - 6.3%
  71. East West Bancorp, Inc. - EWBC - 6.1%
  72. BOK Financial Corporation - BOKF - 6.1%
  73. Capital One Financial Corporation - COF - 5.8%
  74. Susquehanna Bancshares, Inc. - SUSQ - 5.6%
  75. MB Financial, Inc. - MBFI - 5.6%
  76. United Bankshares, Inc. - UBSI - 5.4%
  77. JPMorgan Chase & Co. - JPM - 5.2%

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