onyx1

And the reality is that the Senate won't either. Too many fearful democrats up for reelection in 2012. There is only one person demanding tax increases at this point. His attempts to 'go to the public' with frightening scenarios of a default won't work any better than his 72 public attempts to sell America on "deficit neutral" health care overhaul. Several doomsday deadlines have already passed (one in May, and one last Sunday when Asian markets opened) and his "apocalypse credibility" is gone. There is a zero chance of a US debt default. He knows it, Geithner knows it, and now the banks know it: http://www.foxbusiness.com/markets/2011/07/25/obama-to-banks-were-not-defaulting/ It is probably a shock to many in Washington that the GOP freshman would have the gall to stick to their campaign promises, but it looks like they are going to do just that. With complete control of Congress and the WH, democrats could have delt with this issue mostly on their own terms, but chose not to do it (its been 800 days since the Senate passed a budget!). It's time for Obama to accept that elections have consequences take what Congress gives him and move on.

Wait, I thought we could balance the budget by simply taxing corporate jet owners. Not true? :o

It's not as screamingly cheap as last September (when it was left for dead by Mr. Market), but with continued growing demand for storage, and the improved competitive position due to WDC's taking of market share (now 33% vs. 23% in 1Q 2008) there is still much promise. Add in the potential for improved margins once the Hitacchi acquisition is complete in Q4 and I'd peg their (non pro-forma) FCF in the $850mm area, or 15% to current TEV of $5.6bln. And there is 7% top line growth potential on top of that: http://www.storagenewsletter.com/news/marketreport/hdd-industry-needs-transform-idc I think management here is doing a great job operationally, competitively, and with capital allocation. They maintained a debt free BS and took out a significant rival competitor when they had the chance in Hitacchi, and now they are left with basically STX as the competition. I'd prefer to see a shrinking share base, but as long as they run the business well I can live with 1%-2% annual dilution.

If I remember correctly, Tom Ward (CEO, Sandridge), had something to say about the shale plays at our FFH dinner. The specifics escape me, but I recall him saying something to the effect that years down the road the market will look back at the shale plays and see them for house of cards (my term) that they are. Can someone with a better memory confirm this, or add any detail?

The implied financing rate in the 17.5 Jan 13 LEAPS have come down alot in the last week. The time value premium has dropped from .60 to currently offered at .30. The current financing implied is (.30/17.5) / 1.5 = 1.14% annually.

The shares closed today at .56, so the implied price after 52% of shares are sold on the effective date at the non-insider price of .35 is .79. But after the effective date, the company will be a new public company without all the trappings of CPT 11, so I would expect it to trade higher than that the implied by the last Q price.

Plan, Thanks for posting this idea! I can sell my shares right now for more than 2X cost, but seeing the bid indications on the properties there may be another double from here. Your original thesis appears to be working out as expected. Nice work... :)

Rigid ideaology. But I hope you are right and practicality takes hold here.

Tax Holiday support begining to build among some Democrats? Duke Energy alone estimates 15,000-20,000 jobs would be created. Hello White House, anybody listening? http://www.bloomberg.com/news/2011-06-15/tax-holiday-backed-by-google-cisco-gets-democratic-support.html

At the same time, it might also motivate some to spend overseas to show a quick boost to BV.

Lets hope so, because they have a long, long way to go to bring pricing into line, even after the rate increases. Interesting to me will be pricing changes in July 2011 and Jan 2012 once wide spread adoption of RMS v11 is in place. As of 6/2/11 insurers in FL will be able to use the new model in their rate filings. How far off is current pricing? With RMS v11, Flordia's residential-only average annual loss grows 38% (from previous model) to $7.5b/year. Add avg non-cat losses of $2.8b annually and assume a 30% expense ratio, homeowners premiums need to be $14.7b to achieve a 100% CR. What were 2010 premiums? $8.8b! So prices need to rise 67%!! Florida has gone five straight years without a major event, and the industry is playing russian roulett.

Here is another take which says tablets may actually increase sales of PCs: http://online.wsj.com/article/SB10001424052702303657404576357320809616838.html?mod=WSJ_hps_sections_tech#articleTabs%3Darticle

If Ballmer is now responsibile for the stock price of which he has at best indirect control, then Ballmer must be given credit for that which he does control: earnings. On that part he has tripled earnings since 2001 (a period with two recessions). To not give full credit to Ballmer for earnings growth implies that any monkey can run this company. Which further confirms that MSFT is a great company to own. IMO, keep Ballmer as long as earnings continue to grow. We are at a point in valuation that the stock price can no longer ignore earnings and earnings growth.

Based on this metric, MSFT is at Spring of 2009 levels! Enjoy. (See attched .ppt slides)

Very Sad. I'll never forget his broadcast when the first tower fell.

But by operating this way you are earning superior risk adjusted returns for your investors. Hopefully current and future investors will appreciate this.

How they went about this is very interesting for the future. They raised appx. $25mm via a specific fund last fall for the sole purpose of buying an influential position of RRGB to be used to gain representation on the board. It worked in spades for their new investors as the cost basis was around $20. These guys were right on WEST, SNS, DENN and now RRGB. They have a lot of credibility now and it wouldn't suprise me to see them use it to take aim at bigger targets. A great day for all us RRBG holders!

http://www.zerohedge.com/article/whitney-tilsons-comprehensive-presentation-life-economy-and-everything Go to page 59 to see a short case for CRM, also long case for MSFT starting on page 40.

If I understand his point correctly, he attributes the growth in M2 to government spending where banks lend to the government (not the Fed) by buying their bonds. The government spends that money somewhere, leading to an increase in money supply. As long as the government keeps spending, M2 can grow even in the face of pritave sector contraction. The M2 growth is unsustainable though, as (in my view) the government will probably embark on some degree of fiscal consolidation. Even if the government doesn't consolidate, can we really expect to get out of a balance sheet recession without private-sector credit expansion?

For me the how and why. Also Bernanke's thinking written in plan English. Also I need to hear things 4-5 times before they really click. ^ this, except sometimes I need more than 4-5 times. :)

Thanks for posting this well written paper. For anyone who has an interest in the thesis behind FFH's deflation bet, read this.

"Rex Tillerson, the boss of ExxonMobil admitted last week that the price of oil–based purely on supply and demand- should be in the $60 to $70 a barrel range. The reason it’s above $100 a barrel, Tillerson explained, is due to the oil majors using futures contracts to lock in current high prices...." If I we locking in higher prices, I'd sell futures contracts. How does this in any way drive up oil prices?

MSFT then, and now. Five years ago this month, David Einhorn (Greenlight Capital) presented his case for MSFT at the Ira W. Sohn Investment Research Conference for charity. A link to his speech can be found here. His case was based mostly on relative value. His argument was that MSFT “is simply the best company built in the last 30 years” and with its growth potential, it should not be trading at a multiple lower than Coca-Cola, Kellogg, Colgate, Adobe, or RIMM. He also argued that the market was assigning zero value to the 15% of revenue in R&D spent each year. I thought it would be interesting to take a snapshot of MSFT five years ago vs. today, here are the results: LTM LTM March 2006 March 2011 % Change --------------- ---------------- ------------ Revenue (bil) 43 69 +60% EBIT (bil) 17 28 +65% EBIT Margin 39% 40% Avg Shares (bil) 10,578 8,562 -19% EPS $ 1.26 2.52 +100% Dividend $ .42 .61 +45% R&D (bil) 6,387 9,000 +41% Share price $23.00 $25.82 +12% Net Cash/share $ 3.17 $ 4.15 Price less net cash $19.83 $21.66 + 9% P/E adj. for net cash 16X 9X Einhorn believed it was a sure thing that MSFT would grow earnings, and he was right on that part. The stock price, however, hasn’t even come close to keeping up with earnings growth.

Sorry to change the subject, sightly. But the often-criticized CIA interrogators derserve some credit here !! (though I dont think they will get it) From the Associated Press: "Officials say CIA interrogators in secret overseas prisons developed the first strands of information that ultimately led to the killing of Osama bin Laden. Current and former U.S. officials say that Khalid Sheikh Mohammed, the mastermind of the Sept. 11, 2001 terrorist attacks, provided the nom de guerre of one of bin Laden's most trusted aides. The CIA got similar information from Mohammed's successor, Abu Faraj al-Libi. Both were subjected to harsh interrogation tactics inside CIA prisons in Poland and Romania. "

I guessed that Mr. Market would have taken this information and bid it up much like when BRK takes any new position in a public company. Wrong! MSFT down on the day. Wow, not even a Buffet endorsement can lift MSFT.