Myth465

What do you think about the company?

I tend to agree with broxburnboy, though the quality of this board is higher then most. Obama is doing what everyone else did but getting killed because we arent in a bubble economy. Sea Island - I think you are only looking at one side of the coin. Obama is actually quite powerless. Its his friends in Congress, that write and pass laws. With regard to unemployment extensions, you guys are talking about nickels and missing dollars. First its peanuts. Second you have to do something for everyday people, given that we have had the longest recession since WW2. I didn’t say Obama was a far right radical Economic / Social Darwinist. I said he was a Corporatist, with great speaking skills. A pragmatic one who knows you have to throw your base some kibble from time to time. 4 out of those 5 groups posted, are big business inmo. Big is determined by the size of the Checkbook, not the entity. Brake down the chamber of commerce by who contributes what to it, then let me know how big or small they are. Also perform the same analysis on Congress. Corporations can now advertise directly to voters so this doesnt even matter much going forward. Also our healthcare system sucks, you forgot to include (our healthcare system works perfectly fine for ME) It works well for me too but not for 1/6 (and growing) of the population. The world will agree with that analysis. It costs to much and insures too few. We have 46.6 million uninsured Americans out of $300 million. I don’t think that’s a roaring success. We are also at or near the bottom in most stats for developed countries. A socialist would have adopted the UK, Canada, or Oz system instead of the hodgepodge of crap we went with. What does our system do. Well it mandates and socializes hospitals, doctors, pharma, and insurance. Also every tax system in place in just about every developed and developing country basically redistributes or "spreads around the wealth". Bronco - Businesses have a legal right / mandate to maximize profits, and lobbying for what they want and should play a big part in that, but at this point they basically buy what they need. With regard to shareholders and big companies, its a broken system. The ownership society really only works when you have a manager with a large stake or shareholders with large stacks. What we have is Managers who own as little as possible and run the company for their benefit (Empire Building) and Shareholders who are part time renters of stock. As Joseph Siglitz would say - We have a Principle / Agency problem with modern markets. I don’t know how you fix that, but votes wont matter when people hold stock for seconds to days. I don’t know one person who really cares about voting for the companies they own. I don’t care about voting, and I am a value investor. I know my less than $100k of a billion dollar company means literally nothing. --- Please hold your noise and listen to this link, I understand the source will present you with issues but I think its very useful in terms of explaining the Corporatist label, the first 5 min will do. This is what the left thinks and I agree with them. Bush and Obama pretty much have the same policies, Obama presents it better though. He even features the same economics team. Judge Obama by what He does, ignore what he says. http://www.democracynow.org/2010/9/21/tariq_ali_on_the_obama_syndrome TARIQ ALI: I know some of his supporters might feel it’s a little harsh, but I think that we’ve had two years of him now, Amy, and the contours of this administration are now visible. And essentially, it is a conservative administration which has changed the mood music. So the talk is better. The images of the administration are better, the reasonable looks. But in terms of what they do—in foreign policy, we’ve seen a continuation of the Bush-Cheney policies, and worse, in AfPak, as they call it, and at home, we’ve seen a total capitulation to the lobbyists, to the corporations. The fact that the healthcare bill was actually drafted by someone who used to be an insurance lobbyist says it all.

Too bad its not an auditor. Lol.

I hope everything is alright.

I think FUR is still a good deal for an owner manager company. I think its close to fairly priced but you get Ashner's ability in a depressed RE market as a free kicker. When it was undervalued they did a rights offering, I think they are selling shares now because its closer to fair value. I think they are buying shares because they already know what they want to do with the cash. The return will likely make the shares look cheap. The only thing I wonder about though, is why they dont do a private placement with Bruce B. I figured at some point they would sell him a significant amount of shares for him to up his stake. Right now FUR is a rounding error in his portfolio. I think they want to use the cash to purchase more loan assets or may have something to do with Sty Town (but I doubt it). I like the loans because they get cash flow, and if the loans arent repayed they get the buildings on the cheap. Its a win win and beats dealing with a building war on distressed realty. ---- Update Acquisition Pipeline We have a network of long-standing relationships with real estate professionals, individual and institutional real estate owners and national and regional lenders. We believe our network of relationships provides us access to an ongoing pipeline of attractive acquisition opportunities. We are currently in discussions regarding a number of acquisition opportunities that have come to our attention through our network of relationships. As of September 20, 2010, we were tracking and evaluating acquisition opportunities that include 17 loan asset opportunities with respect to loans with a face amount of approximately $165,000,000 and two direct property acquisitions for an aggregate purchase price, before financing, of $52,000,000. Although we are continuing to engage in discussions and preliminary negotiations with sellers and have commenced the process of conducting diligence on some of these assets or have submitted non-binding indications of interest, we have not agreed upon terms relating to, or entered into binding commitments with respect to, any of these potential acquisition opportunities. As such, there can be no assurance that we will complete any of the potential acquisitions we are currently evaluating.

http://www.marketwatch.com/story/winthrop-realty-trust-announces-public-offering-of-3000000-common-shares-2010-09-21?reflink=MW_news_stmp This confirms my thoughts that FUR was fairly priced at $14 or so. I lightened up a bit last Friday but should have sold a bit more. Management wouldnt issue shares at a significant discount. I dont mind it too much because I figure they must have a good place for the money. The loan transactions look like they will be extremely profitable.

He clarified this on a recent interview. Half of him is happy due to buyback option, half wants FMV. It makes sense to me.

I think its risky long term, but probably a good trade. My IT guy has an IPhone and mentioned a few years ago that they were looking at moving towards Windows Mobile or the Iphone. They were interested in dumping the BB server and the costs associated with it. I dont see a government doing that, but companies with 20,000 employees are thinking about it.

Very true, which is why you need a double discount to really consider buying.

Ya I sold PWE for the same reason. The div doesnt allow them to really explore / keep production so they just keep issuing shares. Its like a giant ponzi scheme. The share issues in MLPs only work when they buy new assets that can cover the divs on the new shares. When you issues shares and cash flow is the same, you basically have less cash flow per share and it becomes tougher to support divs. I think in Oil and Gas you can have growth (SD, CHK, XEC) in production or you can have yield. Its hard to get both.

I think you have to take into account DDA of $2.04 for a 33% margin. This would give you the all in costs. Also Canadian nat gas tends to get lower prices due to the transportation costs of getting it to the US. Finally they seem like they issue shares periodically which to me will make it difficult to keep the div.

Thanks Sea Island, hopefully I can answer some of your questions below. I think the Key is Big Business, not all businesses. You help those who help you, by writing the big checks. I like politics and bounce between left, far left, free market, and right wing circles. I tend to know a bit about each group. One theme I see is Big Corporations, working with Big Government to screw everyone and profit. Whether its BP, Financials, Health-care, Monsato with seed lawsuits, factory farming (most small farmers are screwed, they are dominated by Monsato or Tyson, or the Beef people)... To me its simple. Big Business pays big Government to look the other way. When bills are passed, they are give aways to these corporations, and when the public demands bloods its pretty much a show trial. Compare financial reform to the 1933 and 1934 Securities acts. There is no comparison. The finance lobby wrote the bill and got 85% of what they wanted. Healthcare wrote the bill and got what they wanted. Things are shifted around but Big Phrama, Insurance, and other industries were ring fenced and now have a Government mandate to help juice sales. Where is the socialism. Public money was simple given to Private Enterprise. Real socialist actually want a UK / Canada system where the middle man is cut out. Our system sucks its the worst of all plans ever implemented. Typically you want Big Government providing smart regulation for Big Business and providing access for small businesses to compete. Big business now even uses regulation to stifle competition. Basically cash goes from Business to Government to buy votes, and favors go back to business. If you cant afford to play you get nothing. Realistically Obama cant bit the hand that feeds him (despite the rhetoric, he talks a good game but what has he really done (The GM bailout was needed, and pronounced a success)). The Corporate sector is doing amazingly well for a socialist president, just like they did well under Bush, and will do well under .... ---- Keynes was one of the greatest Economist who ever existed but the last thing he would be doing is sticking to ancient econ theory. I was shocked that Munger said he would do what Pimco said, and what others have said. Push Green technology. I think its respected because taking your medicine and suffering 24% unemployment while the economy magically heals itself doesnt sit well for a Siting President or Congress. Supply side econ has been dis proven but its still quite popular in some circles. I think Keynes theory has been misapplied and doesn't work in its current form. I would set a goal, a grand goal and rely on business to implement it and Government to finance it (not pay for it). The Economist talked about Siemens being a conglomerate and how it helped get deals done. Siemens Energy can analysis a power plant, design and sell some efficiencies, and Siemens Finance will finance them, Siemens Corporate grantees a return making it a no brainier. Thats ingenious to me. There are no risks or costs for the power plant and Siemens books a profit if they execute. Why cant the Government put aside $1 billion, get the banks to put in $9 billion, and do the same thing for every federal building in the US. It would create hundreds of companies, jobs, and skills, and ideally would all be paid back. Then you could expand it to private buildings. Government connected the entire US via Highway, and that investment yielded returns for decades. I see spending, but no investment. Little hodgepodge things arent going to do anything for anyone. We can sit around arguing for free market while China, Sinapore, Brazil, and others manage there market right past us. Either way I hope I will do fine.

Managers are paid by market cap it seems. They tend to pile up cash and want to buy other companies. Its what I would do if I didnt own much stock. Everyone wants head count. Everyone wants to Manager more. Think about how good it feels to say you manager a $20 billion company vs a $5 billion dollar one that has a high ROI / ROIC. FFH, L, are owner Managers. They want a return because they own the company.

Also to clarify with HERO and HAWK. I have looked at buying leaps (lottery tickets) on them or shorting them. They have cash and will limp along for a while so a short seemed pointless. If I had to pick one I would short, and they are on my watch list to check my thesis. I think the rigs are old and crappy and will be last to go to work. I think Management is keen on empire building and wont scrap rigs until its not worth doing. So I wait, and watch. HAWK has been getting alot of value investor interest.

T Bone thanks for the reply. I have learned quite a bit in those few paragraphs. I agree with everything you wrote, but agree with SD (I think). People are waiting to drill wells, literally waiting for a turn. So unless we get a super spike they will drill the prices right down there. What is compelling is the decline rates being 70%, but it seems that you are betting on a shortfall causing a super spike prior to other drillers ramping up. I think thats an interesting bet, and might be worth some leaps, but prefer oil because its raise is sustainable. It is also a good inflation hedge and will work out well should the dollar fall. I like the long term boom in oil and like the fact that we have huge super fields declining with no offsetting increases in cheap production. Most of the new production is expensive which increases the marginal costs. We also have a world wide growth story with oil. I see nat gas being a see saw. I am not sure if it will dip from boom to bust rapidly or in a more gradual $4-$6 fashion. Everywhere I look I see oversupply. We have rigs, acreage, and hungry companies looking to drill. I dont see the big draw with PDS as well. They will hit a wall when rigs are returned, and rates will crash (then I will buy). The drillers are still building more rigs. If gas touches $6 everyone will hedge and drill pushing it back down to $4. Oil will hopefully stick around $70 which would make us a decent amount of money with SD. All they have to do is execute and it seems as though they are. Everyday a few more wells are drilled. You can also get leaps / shares on problem producers like ATPG in hopes that they turn things around. Oil should be money good unless demand falls off a cliff and if that happens, we will have bigger problems. The only real short term hope I see for gas, is this fracing review that is going on. Outside of that grey swan I think we will have a see saw. Now will it be violent causing a spike to $15 or gradual leading to $6 with everyone drilling to bring it back down. I dont know, and thats why I have a hard time with gas vs oil. Now I want gas exposure. We get a spike SD can sell some acreage or drill some wells (after some hedging) getting us decent cash flow. But I don't want to bet the farm on gas, until I can see the horizon. You are right though, buy then it will be too late and the farm will cost quite a bit more. ---- With that said I am a sucker for cheap assets, and I know CHK is mirroring SD. Do you think they can turn on the oil as well as SD, the stock is literally hated so there may be something to look into. ---- One more thing. Why do you think the majors are keen on gas? I mean they cant all produce it. http://www.gurufocus.com/news.php?id=107598 I think they are in run off and this is the only way to grow production. One interesting thing though is they can really push for a change in the gas markets by lobbying for new uses.

http://www.forbes.com/forbes/2010/0927/politics-socialism-capitalism-private-enterprises-obama-business-problem_5.html Honestly the first 2 pages are awful. Piss poor. Bailouts, unemployment, mortgage controls, gee those have nothing to do with the economy. Its a hodgepodge of crap thrown together in an illogical way. Its every headline over the last year taken out of context, or mismanagled. Past that just about every African, Member of the African Diaspora, and Native American kind of believes that they were raped historically and the US / UK was built of their backs / land. Its part of being a minority, and basically part of history. I am sure the Aboriginals are anti colonial as well. Arent they entitled to be? The article is a jumbled mess. Just days prior to the deep water spill, Obama supported expanded drilling. I think there are far easier ways to explain his actions then this far reaching mess. I could respond to each bit of the article but its not worth the time. I have read his second book, but not the first so, that may be the missing link for me, but this article is a mess. --- Here is the Paul Article in Audio Format, I have some issues with Paul but feel he is a bit closer to the reality here - http://www.youtube.com/watch?v=IDGs9HKFY_M I dont really know how people can really argue against it. Here is a Frontline Video which shows how the healthcare debate went down - http://www.pbs.org/wgbh/pages/frontline/obamasdeal/view/?utm_campaign=viewpage&utm_medium=grid&utm_source=grid

If I didnt invest in companies with stock options or high CEO pay, my only holdings would be BRK and FFH. Not bad, but quite limiting. I look at cash flow vs share price which tends to take into account pay. I dont overpay even if the company overpays its Management. Loews is good when its businesses are cheap. The double discount effect is very useful. All of the subs are cheap, and the parent is cheap creating a double discount / buying op. When energy picks back up you might want to lighten up a bit but for now its fairly cheap if you are bullish on oil and gas / and a turn around in CNA. I would add FUR, LRE.

Do you mind linking the article. I would like to read it, though the premise sounds way off base from what I have seen. The fact that you see a bit of value in it has peaked my interest. Though its a tough pill. Gingrich said the same and I thought it was way out of left field. --- Labels may be problematic. Everyone has one lol. Both Amy Goodman and Ron Paul (2 people who agree on very little) would call Obama a Corporatist. http://www.thenewamerican.com/index.php/economy/commentary-mainmenu-43/3303-ron-paul-obama-is-another-corporatist-not-a-socialist The idea that President Barack Obama is a socialist is popular among many conservatives; all of us have seen automobiles sporting the bumper sticker reading, Don’t Blame Me; I Didn’t Vote For the Socialist — obviously referring to Obama. Not so fast, says, of all people, Ron Paul (R-Texas). Addressing the Southern Republican Leadership Conference during its third day, Dr. Paul told the audience, “The question has been raised about whether or not our president is a socialist…. I am sure there are some people here who believe it. But in the technical sense, in the economic definition of a what a socialist is, no, he's not a socialist.” Dr. Paul continued, “He's a corporatist. And unfortunately we have corporatists inside the Republican party and that means you take care of corporations and corporations take over and run the country.” What he means, and whether or not he is right, depends on what we mean by socialism and what by corporatism. In its classical usages (classical here meaning within classical Marxist usage and its derivatives) socialism means: an economic system that is abolishing or has abolished the private ownership of the means of production in favor of public (i.e., state) ownership, with all wealth shared. In this classical sense, Obama is clearly not a socialist. Nothing he has done, not even in the recent healthcare bill, seems aimed at abolishing private ownership of the means of production. Much of what he has done since taking office, however, has vastly increased government control over the means of production — e.g., when he personally demands that a CEO step down (think General Motors). Is this what we mean by corporatism? Ron Paul described the healthcare bill as containing many corporatist provisions: “We see [corporatism] in the financial institutions, we see it in the military-industrial complex. And now we see it in the medical-industrial complex.” Corporatism is often seen as monopolistic capitalism in which business and governmental elites partner with each other. This isn't too far from the mark. Business elites possess what we might call the power of the purse — they have the money. Governmental elites possess what we might call the power of the sword — they write the rules. We might debate which one, if either, is truly dominant since both scratch each other’s backs and benefit handsomely from having thwarted both genuine marketplace competition and a truly open political and electoral process. Corporatism hardly began with the current administration, of course, or its predecessor. In an article published in 2002, which deserves far more attention than it has ever received, commentator Robert Locke outlined the basic ideas behind corporatism and traced some of its history and influence. According to Locke, corporatism “has the outward form of capitalism in that it preserves private ownership and private management, but with a crucial difference: as under socialism, government guarantees the flow of material goods, which under true capitalism it does not.” (Emphasis in original.) Corporatism does not really trust the marketplace to provide. It manipulates the marketplace “to deliver goods to political constituencies [which now include] basically everyone from economic elites to ordinary consumers.” What has made corporatism so tempting is thus not hard to see. Locke explains further: Big business, whatever its casuists at the Wall Street Journal editorial page may pretend, likes big government, except when big government gets greedy and tries to renegotiate the division of spoils. Although big business was an historic adversary of the introduction of the corporatist state, it eventually found common ground with it. The first thing big business has in common with big government is managerialism. The technocratic manager, who deals in impersonal mass aggregates, organizes through bureaucracy, and rules through expertise without assuming personal responsibility, is common to both. The second thing big business likes about big government is that it has a competitive advantage over small business in doing business with it and negotiating favors. Big government, in turn, likes big business because it is manageable; it does what it is told. It is much easier to impose affirmative action or racial sensitivity training on AT&T than on 50,000 corner stores. This is why big business has become a key enforcer of political correctness. ----- Bronco our thoughts on Corporate taxes aren't too far off. As I said I would support Paul Ryan's position except for maybe a 5% - 10% Corporate tax rate, he wanted tax equalization with overseas countries and to eliminate Corporate taxes. Though I would raise taxes on you (and my self) to offset this.

T Bone those are tough points to argue, and I have learned quite a bit from you in the SD thread. My main issue with CHK is nat gas. I dont think its moving up, because of all the points you raise. With that said what makes you bullish on gas? Is it the fact that its below its production costs?

If gas was at $15 SD would have no problem turning into a Gas Company. They have both assets and can take advantage of either. CHK is stuck if gas sucks wind for a long time. CHK also has very shady Management. The short on VIC is a good write up and I wouldn't touch CHK when you can get gas for free at Loews (Highmount), for cheap at MCF, or with an oil kicker at SD. All of those will survive 5 years of crappy gas prices.

This is a most interesting debate. Its really mucking up the board, but more then a few of use appear to have a keen interest in politics. I pride myself on calling a spade a spade and my interest in this thread perked up when rich people started saying they werent even rich, when people who do better than 98% of everyone else wont even admit that, then the country has issues. I reviewed the Munger interview and Him, Buffett, and Obama are on the same side of the issue. They are all socialist is the obvious reply. Everyone with a counter point is a socialist / Marxist. Just like everyone who disagrees with the left is a racist. It really stifles debate, and is a great tactic. Munger is one of the greatest mind I have ever come across, and him and everyone worth listening to can admit that we are in a bind with few good choices. He is pro keeping the social programs, and so is the Republican Darling Young Gun Paul Ryan. But yes they are all socialists. I also saw a Charlie Rose interview with David Brooks and he brought up a good point. This economic Darwinism world that you all dream about has never existed. Government and Business have always gone hand and hand in building this country. Every successful country has had a healthy dose of Government intervention (and all the growing ones feature a significant amount of it - Brazil, China, Other Asian Countries). Bronc I always enjoy chating with you, and you are right. Americans feel poorer and we are all hurting. This issue though is its unsustainable and I think where we are now is much healthier. --- I know I know - Krugman is a rabid socialist who hates anyone who has made any money but his thoughts mirror mine. These arguments are just lame, and I would prefer for you guys to simply say I have earned it and I want to keep it, if Joe gets a cut, I want mines to. I may not agree, but I can respect that. I would endorse a 2 year extension (to deal with the recession and then cancel all cuts) but I know the Republicans would start this whole debate over again in 2 years. Not that my opinion matters much. Paul Krugman: The Angry Rich from Econo View by Mark Thoma 8 people liked this The "rage of the rich" is broadening and intensifying: The Angry Rich, by Paul Krugman, Commentary, NY Times: ...These are terrible times for many people in this country. Poverty, especially acute poverty, has soared in the economic slump; millions of people have lost their homes. Young people can’t find jobs; laid-off 50-somethings fear that they’ll never work again. Yet if you want to find real political rage — the kind of rage that makes people compare President Obama to Hitler, or accuse him of treason — you won’t find it among these suffering Americans. You’ll find it instead among the very privileged, people who don’t have to worry about losing their jobs, their homes, or their health insurance, but who are outraged, outraged, at the thought of paying modestly higher taxes. The rage of the rich has been building ever since Mr. Obama took office. At first, however, it was largely confined to Wall Street. ... When the billionaire Stephen Schwarzman compared an Obama proposal to the Nazi invasion of Poland, the proposal in question would have closed a tax loophole that specifically benefits fund managers like him. Now, however, as decision time looms for the fate of the Bush tax cuts ... the rage of the rich has broadened, and ... craziness has gone mainstream. It’s one thing when a billionaire rants at a dinner event. It’s another when Forbes magazine runs a cover story alleging that the president of the United States is deliberately trying to bring America down as part of his Kenyan, “anticolonialist” agenda, that “the U.S. is being ruled according to the dreams of a Luo tribesman of the 1950s.” When it comes to defending the interests of the rich, it seems, the normal rules of civilized (and rational) discourse no longer apply. At the same time, self-pity among the privileged has become acceptable, even fashionable. Tax-cut advocates used to pretend that they were mainly concerned about helping typical American families. Even tax breaks for the rich were justified in terms of trickle-down economics, the claim that lower taxes at the top would make the economy stronger for everyone. These days, however, tax-cutters are hardly even trying to make the trickle-down case. ... Instead, it has become common to hear vehement denials that people making $400,000 or $500,000 a year are rich. I mean, look at the expenses of people in that income class — the property taxes they have to pay on their expensive houses, the cost of sending their kids to elite private schools, and so on. Why, they can barely make ends meet. And among the undeniably rich, a belligerent sense of entitlement has taken hold: it’s their money, and they have the right to keep it. “Taxes are what we pay for civilized society,” said Oliver Wendell Holmes — but that was a long time ago. The spectacle of high-income Americans, the world’s luckiest people, wallowing in self-pity and self-righteousness would be funny, except for one thing: they may well get their way. Never mind the $700 billion price tag for extending the high-end tax breaks: virtually all Republicans and some Democrats are rushing to the aid of the oppressed affluent. You see, the rich are different from you and me: they have more influence. ... And when the tax fight is over, one way or another, you can be sure that the people currently defending the incomes of the elite will go back to demanding cuts in Social Security and aid to the unemployed. America must make hard choices, they’ll say; we all have to be willing to make sacrifices. But when they say “we,” they mean “you,” Sacrifice is for the little people Obama is a corporatist simply trying to appease a public that is feed up with bailouts. Follow the actions and ignore the lip service. Wall Street got off basically Scott free when the fueled the biggest crisis in my lifetime. The fair left is extremely pissed of. The regular left is extremely pissed off. His healthcare bill is a Corporate bailout, his bailout, was a Corporate bailout, no cap and trade, no cardcheck (to date), BP was handled with kid gloves for screwing up the 3rd coast. I just dont see it. I dont see this socialist that you all are so scared off, niether does the Economist (but ya thats far left as well).

I wouldnt beat on this horse. I think SD is a better way to play nat gas.

I have HAWK and HERO on my watch list. I think they will either be big duds or you will make out like a bandit. My problem is there rigs will be the last back to work and the first to be stacked. The new rules regarding plugging wells should be good for them. I am heavy into Oil and Gas. I own. SD ATPG DVR ESV ATSG L FUR FTR LNET SSW FBK LRE TRXBQ - a small bit

I agree, the average man is a financial dim wit. Unfortunately the truth hurts. With that said they are equally dim when it comes to mutual fund selection. A smart man would be setting up a gold fund now after closing his oil and gas fund in 2008. Out of all my non value investing friends - all own stocks and couldnt really tell you why (from a financial prospective). Its always a story stock but with no mention of value. 3 of these guys are even accountants. I have tried explaining value investing to them and its hopeless. They pitch me an Idea and I say whats it worth. Then they say it is at $5 and was trading at $40, then I say but whats it worth. It just keeps going back and forth from there. They start telling me about buy and hold, and how its a long term deal for them. Its very interesting.

I really like his thoughts on cash and will incorporate them into my framework. Thanks for the notes.