From WSJ:

More money-market mutual funds are getting headaches after holding troublesome debt investments.

The latest instance: a money-market fund offered by FAF Advisors Inc., a unit of U.S. Bancorp. According to recent filings, in late October one of its large money-market funds, First American Prime Obligations Fund, sold some of its troubled securities to an affiliate.

In a presentation recently, U.S. Bancorp's chief executive officer, Richard Davis, said FAF Advisors "has some exposure to liquidity and credit issues" -- a reference to the fact that some securities had gotten tougher to sell recently. He said U.S. Bancorp would support all affected funds.

The risk to money-market funds is that a decline in the value of a single investment can cause them to "break the buck," or allow their net asset value to fall below the $1 level the funds are required to maintain.

The title just says it all.  Paul Eustace lost $208 million of nearly $300 million in his hedge funds, lied to his shareholders about performance, stole their money, cheated on his wife with a stripper, used investor money to give the stripper $1 million worth of gifts including paying for breast implants, and while waiting for the legal system to work everything out, he is now working for $25 an hour as a bookkeeper.  Unbelievable!

Article on Canada's Fund Manager of the Year, Allan Jacobs.

Since halting redemptions on their money market funds, Sentinel Management Group has now filed for Chapter 11 bankruptcy protection.

If you are holding money market funds thinking you are safe from this subprime mess, I would suggest you verify this.  Paul Kedrosky just blogged about how Sentinel has halted redemptions on their money market funds.  Bill Fleckenstein also suspects many other money market funds will discover their Triple-A pieces of paper are not worth 100 cents on the dollar.

I feel like I might get chastised by the Value Investing community for pointing this out.  But after reading the Tweedy Browne 1st Quarter 2007 report, I noticed the Value Fund isn't really beating the market.  Over the past 5 years their returns were 5.24% yet the S&P 500 produced 6.25%.  Over the past 10 years Tweedy returned 8.55% which is slightly more than 8.20% for the S&P 500.  Am I reading the following table wrong?

ABC Funds released their quarterly newsletter for April 2007 today.  I just spent a couple of hours reading the report and dissecting their latest stock picks.

One thing to note is that although they have an overall positive market outlook for 2007 - due to low interest rates, strong corporate earnings, and the increasing number of takeovers of Canadian companies – most of their portfolios have about 25% in oil & gas and 25% in mining/precious metals.  A 50% concentration in those two sectors speaks volumes.  

Ever since the dot-com crash, the popularity of value investing has gained tremendously.  You can tell by the shear number of value investing blogs out there (mine included).  This is a good thing because value investing works.  Simple strategies like spin-offs, insider buying, low P/E, stock buybacks, and large cash flows have made people fortunes over the past 70 years (ever since Ben Graham - the father of value investing - first published "Security Analysis" in the 1930s).

Today there even more options for the value-minded investor.  The March 16, 2007 edition of Investor's Digest of Canada featured an article written by Larry MacDonald titled "New ETFs now promise the returns of hedge funds".  Mr. MacDonald lists a handful of exchange-traded funds, each using a tried-and-true value strategy, that offers the performance of hedge funds, but without high charges and minimum-investment requirements:

• Claymore/Clear Spin-Off (CSD)
  Mirrors the share prices of 40 companies that have spun off from their parent companies and score high on P/E ratio, ROE, free cash flow, and other screens.  Studies show that this index earned an annual return of 11.3% between 2001 and 2005, versus 0.6% for the S&P 500.  This fund only allows spin-offs older than six months because of the usual initial selling pressure after a stock is spun-off.
  
  
• PowerShares Buyback Achievers (PKW)
  Indexed to a basket of companies that have repurchased at least 5% of their outstanding stock over the past year.  From 1996 to 2006, the index turned (before fees) $10,000 into $50,000, nearly double what the S&P returned.
  
  
• Claymore/Ocean Tomo Patent (OTP)
  Tracks a sample of 300 companies meeting two main criteria: valuable patent portfolios and low P/E ratios.  According to back-testing results, the index has outperformed the S&P 500 by 3% annually over the 10 years to December 2006.
  
  
• Claymore/Sabrient Defender (DEF)
  Seeks to perform well in down markets.  It is based on a proprietary basket of stocks that held up well on down days in the previous quarter.  From the end of 1999 to the close of 2006, $10,000 turned into $45,500, trouncing the S&P 500's return of $12,400.
  
  
• Claymore/Sabrient Insider (NFO)
  Tied to an index of 100 equally weighted stocks selected according to insider-buying reports and positive revisions to analysts' forecasts of earnings.  Back-testing shows an average annual return greater than 17.5% over the past 10 years, more than double the market's record.
  
  
• Claymore/Sabrient Stealth (STH)
  Screens "neglected" stocks (followed by two or less analysts) using various criteria such as cash flow, earnings changes, valuations, etc.  Over the past 5 years the index has risen in excess of 23% annually, at least twice the rate of the Russell 2000 index.

Hi Everyone, sorry I have been gone for a while.  I see my StokBlogs portfolio is hopelessly out of sync with what I am holding in the real world, so I will try to update it soon.

I have recently become ever more of a believer in Closed-End Funds, so much so that I have largely given up on evaluating individual stocks.  Most of my recent purchases have been CEFs, with the notable exceptions of Berkshire and Markel, both of which are almost CEF-like.

I do not claim to know where oil is heading, but if it goes up I want to have a part of it.  In keeping with my plan to make new purchases primarily in CEFs, I bought Petroleum and Resources Corporation (PEO).

If you like cheap oil (oil companies, that is), PEO gives you the following:

Exxon Mobil Corp.	$83,539,500	10.7
Chevron Corp.	41,186,100	5.3
Schlumberger Ltd.	34,736,800	4.4
ConocoPhillips	33,151,721	4.2
BP plc ADR	27,871,500	3.6
BJ Services Co.	22,296,200	2.8
Devon Energy Corp.	21,471,000	2.7
EOG Resources Inc.	20,816,000	2.7
Weatherford International, Ltd.	20,591,323	2.6
Noble Energy Inc.	19,603,700	2.5
Total	$325,263,844	41.5%

Rather than purchasing these companies at full price, if you purchase PEO you will get them at a 10% discount from NAV.  This is about average is 9-10% discount, so this is neither a screaming buy nor sell, judging by discount alone.

PEO's portfolio turnover averages about 10%, and its expense ratio about 0.50%.

Greg

Looks like Bill Miller's amazing 15-year streak has ended:

Miller's $21 billion Legg Mason Value Trust was up 6.7 percent as of yesterday, trailing the 16.5 percent gain of the S&P 500. The mutual fund is the worst performer of 108 "multicap value'' funds tracked by Bloomberg that buy stocks managers perceive as being cheap. Miller's fund, which holds fewer than 45 stocks, was hurt by Amazon.com Inc. and UnitedHealth Group Inc.

...

Miller, who has helped run Legg Mason Value Trust since its inception in 1982, buys shares of companies he considers inexpensive relative to potential earnings growth. He's known for picking stocks that are out of favor and holding them for years. The fund's performance is ranked with others that have no limits on the market value of the companies they can buy.

He held 43 stocks at the end of September. His biggest holdings included AES Corp., Tyco International Ltd., Qwest Communications International Inc., Sprint Nextel Corp. and UnitedHealth.