Cardboard
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Smart money... Really? Where are the definite reports on this?
"Icahn declined to comment on LightSquared."
It all sounds like rumours to me. There was rumours coming out about each weak before the deal with Sprint was announced.
The guy has invested the vast majority of his hedge fund into this venture, a private company and has blocked his unhappy investors from getting out. It is becoming clear that this spectrum will be mostly worthless, at least in the near term (5-10 years?). He is also the subject of an SEC investigation for a loan he got from the fund. What has he done so well other than making a huge bet against subprime and winning with it?
I would also be very curious to see how many shares he is short Clearwire.
An asymetrical bet on Falcone? Find a willing dealer in Vegas and bet that he does jail time?
Cardboard
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Hey, I own BAC. All I am saying is that people seem a little exuberant. For example, many seem quite interested in the warrants. They are long term so that is ok, but if we have a crash for some reason, then book value will likely decline and time will become the enemy of shorter term options. Especially if far out of the money. I have been burned before, so I sleep well with straight equity. I also had home runs with options and know how tempting it is to try to do it again...
I am even looking at the AIG warrants which seem to be much lower priced than the BAC-A warrants and with 2 more years to expiry.
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Poor Hubert! Almost made me cry.
http://argent.canoe.ca/lca/affaires/canada/archives/2012/02/20120202-170428.html
At least, he may finally be worth his $85,000 this year. Being Chairman has to mean more responsibilities than just showing up at a meeting 5 or 6 times a year to endorse whatever the CEO is proposing. Hubert schedule might be a little easier nowadays if he had stopped his executives from thinking that they could simply issue shares to fund whatever. So Prem said no and sent him to do overtime!
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People here are getting quite excited! Lots of discussion about bank warrants, options and mentions of not owning enough...
It sounded very different only 2 months ago. While I agree that U.S. numbers are continuing to get better, it would only take one small thing to reverse everything. Things are still fragile and I don't like what is going on with Iran. And it sounds like that we will finally, yes finally stop hearing about Greece, but then Portugal and others may be next. I also don't like the extreme correlation that remains. I would prefer to see more stocks moving somewhat independently from the market.
While I still see a lot of upside in my portfolio and someday, the Dow and other indices will have to hit new highs, I have a feeling that we will see some bumps between now and then. Anyway, I don't recall a year since I started investing where there has not been a 5% to 10% pull-back of some sort. I guess it will happen again this year, but when and how I don't know. It would be nice to have some dry powder when it happens.
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Where is the formal valuation? Where are the competing offers? What is taking so long for these guys to get things done?
If they think that they will be able to remain in power by suing and wasting shareholder capital in court they are wrong. I will tender my shares to ABH on Feb 13 and along with many of you I hope and send Côté, Ducharme and Lacroix find another host elsewhere.
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I have to agree with Tim on how little the Buffett rule does.
Whatever the motive, Buffett is smarter than that and should have only endorsed a solution where he truly believed that the outcome would result in a meaningful impact to society. The guy is 82, so if he wants to have a positive legacy on politics and the country, then the solution has to be a little bolder.
I used to consider Warren Buffett an independent and that is why I liked him so much before. He pushed hard for many years for companies to reform their pension assumptions which were unrealistic. He pushed hard also for stock options to be expensed. He also described very clearly the impact of continued trade deficit. These were logical things, totally removed from choosing a political side. He didn't care if it made a Democrat or Republican go mad, he just wanted to do what was right.
While I do agree with him that the rich should pay higher taxes than now, he should have demanded Obama to commit to reduce spending by "X" amount or to reform certain program before accepting to have his name over the "rule". Now, it seems that he talked about the tax percentage paid by the rich being too low, then Obama proposed a plan that solves next to nothing and Buffett now is endorsing Obama or essentially giving him carte blanche.
Seems all about politics, just like Obama refusing natural gas in the early part of his mandate and now embracing it. At the same time, he refuses the XL pipeline. Now the Buffett rule is a way to side and appeal to the middle class. That is not leadership, it is just trying to gather votes from as many sides as possible.
By the way, I don't agree either with Gingrich to simply reduce taxes and somehow hoping for growth to create revenue and solve all the problems. I just wish that one guy could lay out a solid plan for the country to fix its debt issue and resume growth with realistic numbers.
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Kiltacular,
Very good point!
The issue I see is that it will take almost a generation for people to forget about retirement for all at 55. With stocks not returning 10% a year consistently as was inputed in so many retirement programs and treasuries yielding so little, retirement age will have to be bumped up by quite a bit and with government support inevitably declining it will become a pipe dream for many.
I think that we are in the early stages to get this accepted by the population. As this information becomes more main stream, both Democrats and Republicans will be able to add this to their platform and entitlement reform will become reality. Anyway that is my hope, since more taxes from whoever is not likely to solve the problem in its entirety.
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I would like the debate to remain calm and polite if possible.
Barack Obama mentioned 3 times the need for better skills and education in his State of the Union address. He pointed out the lady that has upgraded her skills at Siemens, the guy who found a job at a company that stopped making yachts and is now making wind turbines in Wisconsin and that millions of job postings go unfiled. So I would like to think that this is not a conservative notion that I am bringing up.
Where I have a problem with Obama is his tone and implementation plan. If you listen to the speech, notice the tone when he talks about the company that was making yachts before. He makes it sound like that making yachts is some kind of evil activity. While I am shocked when I see the spending of some very rich people and think a good portion of it is irresponsible, I do believe that demonizing such things leads to dangerous consequences.
Say that taxes are raised on the rich, which I agree with for the most part, and that it does not provide the boost to the economy or the reduction in debt hoped for. Very likely if it is not applied directly to the debt and used to increase spending on what is usually poor use of capital. Then I think that the way it is being presented now, the next logical step will be nationalization and asset seizure of the rich. Venezuela is a good example of populism turned bad. Raising taxes on the rich is not the all inclusive solution. It will likely help the government balancing his budget if done right, but will not address income inequality and fix all problems.
The other point I would like to make is that we often hear about the 99% thing, but what I find amazing is that at each election, the vote is split roughly 50% Democrats and 50% Republicans. If society is so unequal, then why so many people that are poor or in the 99% continue voting for Republicans which basically oppose bigger government, higher taxes or asset redistribution? Isn't because most people are having most of what they need? Food, shelter, education, healthcare and most commodities of modern life?
So what I would like to see is a Romney win in 2012 and for him to implement higher taxes on the rich, tax reform and growth plans through education. CEO's, star athletes and hedge fund managers should all pay more taxes and be denied many current tax loopholes and yes their income gap with the poor and middle class is out of whack. Not sure what is the solution on the latter although. I simply believe that the implementation by a conservative or a moderate Democrat would be a lot easier and would not lead the country down to a war against wealth. The pressure is now there, so no matter who wins, something will get done. How it is done is key.
Finally, the people that you mentioned: hair dressers, retail workers, etc. don't make big money. However, you would be surprised to see the income of some of these people (garbage men and farmers for example), but let's stick with the low income folks discussion. Their situation is difficult I must admit especially if they live in expensive urban areas. So I do think that the best solution is for reasonable minimum wages to be implemented based on where work is conducted for them to afford what is essential. And for them to improve their situation significantly, I still think that they would have to look at doing something else or finding a sideline. Financial literacy and better budgeting skills should also be considered.
On the other hand, it is wrong to assume that these people should be able to afford all they would like: expensive cars, latest Xbox, large homes, NFL seats, etc. Everything for everybody has never occured in human history under any system and will likely never happen. I can't have it myself and I am I guess close or in the 1%. Capitalism is based on merit and wanting to improve its own situation. While morally, it is certainly not perfect and it probably needs to be tweaked once in a while to avoid abuse, it generally works better than other things that have been tried. I don't have stats for it, but I would like to think that there is much more than 1% of Americans that do enjoy good living.
Cardboard
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"People like to espouse this myth, but good luck telling that to the people working two jobs to keep food on the table."
And that is exactly the source of the problem. These people need to be told that they need to make changes in their life because it won't get any easier. They likely have a problem budgeting or they need to upgrade their skills to make more money or they need to work more. Receiving a cheque from the state is not going to address their long term demise. There is no luck in there. It is making choices and sacrifices. I know it is harsh and no politician wants to go there, but it is a lot about facing reality. Maybe that Suze Orman should go for President? I also know that there are exceptions to what I am saying and that is why there are safety nets. However, they are not for the majority.
Regarding "wanting to keep all my money", I won't keep a dime of it! I would like to be able to do like Buffett and give it to who I want. Not to a state that is transforming itself to communism. But, yes I am totally willing to pay my fair share and I agree that taxes in the U.S. overall for investment income are too low. Anyway that is if I compare to Canada.
What I have a real problem with is this jealousy that I see emerging. For example, Romney has invested a fair chunk of his money in municipal bonds. As you know this is taxed at lower rates to encourage people to put money in there. If this gets taxed at the normal rate, who is going to invest in these riskier bonds vs treasury at these very low returns? Investors will demand a higher rate which in turn will be bad for municipalities and will make them raise taxes. That is not going to help the middle class. So people are upset because he pays a low rate and he is rich. That could take us to a very dangerous path.
So yes, fix the loopholes, remove deductions for private jets, catch tax evaders and raise rates to a "reasonable" level or competitive on a global scale. I am all for it. However, be careful how far you take this and how it is done.
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The money that both Obama and Buffett want to tax at higher rates will simply leave the country and every other place will welcome them with arms wide open. They could also go into "tax avoidance" schemes as described by Ericopoly. Let's mention once again that Mr. Buffett is and has been the master at this kind of tax evasion.
IMO, the problem with Western nations is not about taxing the rich or income inequality. It is about lack of education for the majority to compete with emerging nations and excessive consumption. The middle class is now not much more skilled than their global counterparts and they have the terrible habit of wanting everything now. So they are like Chinese workers wanting to live the life of stars.
If I compare the people on this board and the folks that I am talking about, which is the majority, you immediately see a big difference. The folks on this board have made sacrifices to improve their lives by putting money aside. Then they spent time to figure out how to best invest it. They are not the kind of people that constantly seek adrenaline. You know the kind that are never home, are always hiking, skiing, playing the Xbox, going out, talking to friends on Facebook, going for massage, traveling or doing other fun activities.
These are the people that will complain the most about the current system. They envy the rich because they see what they don't have on TV and feel that they should have it too. For the most part, they have good well paying job, but they are underperformers. They hate working, 40 hours is a lot and feel that society owes them something. They are spoiled. Forget about them saving for retirement.
So why would the rich or people that have made true sacrifices to get where they are today, made people work and paid a lot of taxes along the way be taxed more on their savings to encourage these people that should contribute a whole lot more to society? Said differently, why would people that have prepared themselves for the future be held accountable for those that have tried to enjoy everything now, have not saved a penny for retirement and likely got into too much debt?
Keep this populism mantra go long enough without morality reform and Western civilization will go the way of the Romans. And that is just a few decades from now.
Cardboard
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We should never put Reagan and Obama in the same sentence.
One has put pressure on communism and ended up tearing it apart, turned around a demoralized country thinking that only Japan could do well and planted the seed of an economy that created benefits for nearly 30 years.
The other one... what has he done? Oh yeah, planting the seed of civil unrest and dividing the country more than ever.
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This may have something to do with it:
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Hi Sanjeev,
I doubt that there is any link between their RIMM investment and LVLT. Ma Bell and others are still in between the two, so there is no synergy that I can think of. However, the trend of higher use for the two companies is still firmly in place. Data transportation is going up exponentially and with more apps, social networking and other new found uses, smartphones are used more and more.
Regarding RIMM, I have a really hard time understanding the attraction. The competitive landscape for that business is getting worse by the day. Even Apple seems slow getting their first 4G phone out while Samsung and others are miles ahead. Maybe that RIMM will be able to carve out a niche within the business market, but that is a big maybe.
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Bmichaud,
$0.96 is exactly what I got as current "cleaned up" or adjusted EPS. Gives it a very poor ROE and ROA. However, fair value for that has to be close to $12 or right around tangible book value. It is a very conservative forecast and a significant discount to book to account for these poor returns and no growth. Still lots of upside potential from that $12 if things get better.
While I still have my concerns about sovereign debt loads, the returns here just seem too good to pass up. Not seen that very often with mega caps.
Cardboard
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Canadian net-net producing drilling equipment and offering services to oil & gas drillers. Profits have returned despite low gas prices due to higher activity in the WCSB and from them seaking international contracts. Although, this return of profits has been very slow and still weak. Sales are closing in on records, but margins are too low. They are working on that.
Shareholders dissatisfaction is extremely high with 40% of votes last year against all board members. This is without any outside holder above 10%, no proxy fight, no visible coalition. Insiders own around 20%.
Cardboard
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I still hold this underperformer. If one of you is still a holder, please send me a message so we can chat.
Cardboard
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"North American Softwood Pulp Markets Weak..."
True, but look at European and Chinese markets at Paperage.com which is where I believe you found this article. Both are turning up and they are the big boys. NA will follow as usual.
So I think that Fibrek was right saying that ABH is making an opportunistic bid: low stock price and dip in the pulp cycle. Regarding the value of the assets, I would say that the NBSK mill has plenty of value even at these pulp prices. If Abitibi was not gouging them on the supply side, it would look closer to Canfor Pulp's operations. So if a big Quebec based player can come in with a better supply solution, they would make a lot of money.
The RBK side remains an issue as I have always said. Not sure at all what is the strategy to fix it and not sure what ABH would do with it. To me that this the portion of the business that needs to be sold to a larger entity that can use recycled pulp in its existing operations: reduce supply cost, sell more of it hence improving productivity.
Cardboard
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Management needs to find a better deal or be fired. The old say: "Foul me once shame on you, foul me twice shame on me." applies very well. We cannot trust these people any longer. Garneau is right to say that all they have done so far is to bulk up their compensation package and to setup a poison pill. Before that they were looking to dilute your shares right at the bottom to make an "accretive" acquisition.
So no, calling these guys and telling me to turn the company in some type of income trust won't work. Not with them anyway! If they had done what you suggested we would not be there currently.
Cardboard
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150K, acquired recently as risk arbitrage. With European and Chinese pulp prices firming up recently and with all stock prices of pulp producers moving up nicely since December, the risk of loss here even if forced to hold seems minimal. At least over the next few months.
As a group, I count just over 2 million shares which is not very much or around 1.5% of outstanding. So I hope that the big guys out there are in agreement with us to influence things.
I believe that the valuation study will come out higher than $1. How much higher I am unclear. I also like that Cote is finally seeing a lot of pressure. It will make him work harder for us. I simply love this quote from Garneau or a good kick to his ego:
"Since we announced our offer late in November, Fibrek has found time to adopt the tactical poison pill and enhance compensation packages for senior management, but has yet to provide its shareholders with a competitive alternative to our offer. Shareholders must now be given the opportunity to decide for themselves whether or not to accept our offer."
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"We haven't gone totally defensive or anything. We are still very much long our U.S. financials, but certain other investments continue to rise where we have and will continue to take small profits from. As well, things like Winn-Dixie were bought out."
Well Sanjeev, it sounds like you had better luck than I did in 2011. It seems that my stocks all went up a little bit at a time, then all went down a fair bit. Now, they are all going up a little again. The high correlation thing I guess. I wish I could take some profits, but none seems to deviate enough from the rest or to get close enough to fair value for me to let go. It is a real pain, since you never have "new" cash to reinvest in new opportunities and to cristalize some advance. Same with takeovers. Each year I would see one or two, last year none.
I guess that I could voluntarily raise cash, but it just doesn't seem to make much sense since it is selling underpriced marchandise in the hope of buying it back or something else cheaper.
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Then you see Yang and Bostock doing everything they can to prevent Yahoo! from being bought out by someone who could right size the company and sell the Asian assets which are around 80% of its value. What they will likely do instead is sell a portion of the Asian assets and then buyout some overpriced web business. Probably among the worst managers in the world.
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I can't wait to receive my copy of: "Buy High, Sell Higher" from Joe Terranova. Priceless on any book shelf. ::)
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"The partnership has operated for 9 years & we’ve never been challenged."
And it will never be if there is no complaint. If there is one, then you will find out quickly that you need to be a registered portfolio manager to do what you are doing. They would simply challenge your structure to demonstrate that it is what you are doing. Anyway, that is what I have found out in all my research on the topic under the OSC. Sticking with family members and close friends as you have done should keep you away from trouble.
Hence the problem, unless they are "rich" and contribute a lot upfront (minimum $50,000), then it is a waste of time. Well, I should say that you will learn a lot and may feel good about helping your close ones making money, but you will not make big money out of it. You won't turn into Buffett, Ackman or other hedgie.
IMO, you will be sacrificing options that are valid to an individual investor in order to be a good fiduciary: no or very little debt/margin, no or very little stock options, diversification (no massive overweight). Remember that these are your friends and family members. They will be the most patient, but losing their hard earned capital is not an option. So if you invest your funds along with them, you may lose some options negating the benefit of managing other people money, while if you don't put most of your money into this venture, then why would they trust you to manage theirs in the first place?
You also don't want them to invest more than they can afford with you. It has to be funds that they will not need for a long time. If not, you will get into trouble with redemptions and if you have only something like 10 partners, just one redeeming his or her fund could create you a lot of trouble in managing the portfolio. One of them could also die, divorce or turn ill. You have to consider these things upfront.
The goal of setting up an LP is to manage a lot of money and to benefit from a 2/20 or 0/20 structure. It is 0 cost float. I know that Buffett started with only $105,000 in partners money, but this was in 1956. Today you would need something like $1,000,000 to match that. And, then he did quickly setup 9 more partnerships before merging them into the Buffett Partnership in 1962. By then, he was managing $10.6 million and if I recall properly, he had about 100 investors including partnerships since some had to setup their own partnership to avoid triggering the 100 limit. Again that would be close to $100 million today. This is a big business guys. I don't care what your returns are, but to garner that kind of money, you need to advertise in some form or you need rich connections.
And don't forget that if you are very successful that at some point, you have no choice, but to register if you invest a lot of money in the stock market. I believe it is $25 million in Canada and it is also necessary for individual investors.
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Scorpioncapital,
The case you mentioned seems like a U.S. one since there is the mention IRS. I checked on the Deloitte Canadian site and did not find one specifically about the CRA and this issue.
By the way, did you file that T-123? What is the purpose of it since I have always filed my taxes using capital gain treatment for securities and never heard a thing from CRA about needing this? Also, if they declare you a "trader" or subject to what I have described, then what is that election doing for you?
Cardboard
Resolute Forest Products Commences Takeover bid of Fibrek
in General Discussion
Posted
I think that there could be other interested parties as they said they received "proposals". We shall know very soon since bidding closed Friday at 5 pm and Abitibi's offer currently expires Monday next week at 5 pm.
Then the fair valuation came out on Monday with a range of $1.25 to $1.45. Which is not too far from ABH's bid and likely right around where other parties might have bid to just beat ABH. That is the support the board needed to make shareholders accept an offer at what looks like opportunistic prices based on very recent history.
Every additional dime costs Abitibi around $13 million, but considering the cost involved in these transactions and the fact that they are paying for the shares and assuming the debt and pension of FBK, it is probably worth paying a little more just to close the deal. The only way that I see the current ABH bid succeeding is that no other offer is made and that shareholders currently unwilling to tender start to panic. I would say that the odds of that are low since very few of the shares needed have been tendered so far, management will likely continue to reject the offer and shareholders believe the offer is too low and see the power deals down the road.
As you pointed out, risk and cyclicality of this business is simply too large for companies to pay some of the valuations suggested on this board. The buyer has to get something in return for forking over so many dollars. The power deals might be necessary to entice buyers into buying a firm that may lose money or break-even overall for the next 2 to 3 years on its pulp business. So I would say that it will get settle in the fair value range unless ABH wants to outbid an offer made and accepted by management in that range. A bidding war is the only way here to make a lot of money, at least short term.
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