bathtime

I really don't know. I'd been looking at cheap big tech and at HPQ as a value play, Klarman continues to buy, but now that DELL has come down in price I'm finding it more interesting in risk/reward. I'm much more comfortable with management, debt position better. DELL's intentions regarding acquisitions seem a lot smarter than HPQ's continual mistakes on that front. The new software VP has top notch credentials and past successes and will be key to making these integrations work. Certainly there is uncertainty. I'm also guided by a technical tool I use to time intermediate buys, which I can find helpful. It has DELL in the "accumulation zone" prior to a buy signal: http://rsi.caracommunity.com/RSIApp/RSIApp.html#dell

A Dell engineer's blog post on Windows 8 - in repsonse to an email from Michael Dell soliciting his thoughts: http://cathcam.wordpress.com/2012/06/10/windows-8-hero-or-villain/ Dell's reply was, "Sounds great Mark and I am seeing this in a similar way to your view below but you’ve added some new insights." Forrester analyst on Dell's hiring of John Swainson to head their software group in Feb 2012: http://blogs.computerworlduk.com/infrastructure-and-operations/2012/02/suddenly-dell-is-a-software-company-and-can-flourish-under-new-president-john-swainson/index.htm "The next six months will tell you a lot about Swainson's impact. We expect him to make some audacious moves soon to indicate his intentions. An example would be a major acquisition. It has a good cash position as you can see in the chart. If Dell remains silent or ambivalent through this period, dump Dell. If the company does - as we expect - make some ambitious moves, Dell will be a very serious contender for your future data centre. " Then in April 2012 Dell announced three acquisitions Wyse, Clerity Solutions, and Make Technologies. The engineer commented: http://cathcam.wordpress.com/2012/04/06/back-to-the-future/ "A great set of solutions to let organizations looking to really get their older apps into a modern execution and device environment. Exciting times for the Dell team supporting these customers. This very much reminds me of 14-15 years ago and a whole slew of projects where we were trying to drive similar modernization into applications. IBM Network Station was about to be launched; we had a useful first release of the CICS Transcation Gateway and their was a great start at integrating Java with COBOL based applications and some fledgling work on extending the COBOL language to support object oriented principles. My poster session at the IBM Academy of Technology was on legacy modernization. In those days it was obvious that customers needed tools to help them get from where they’d been to where they would be going. Enough never really got there, the financial case wasn’t often enough. However, given the performance, scalability and reliability of today’s x86/x64 systems, the lack of progress and demand for change have passed compelling, it’s essential." Then in July he posted: "Yesterday was a big day for Dell Software Group under the direction of new Senior Vice President, John Swainson, as Dell announced the acquisition of Quest Software. And in other news, I’m moving from Enterprise Systems Group at Dell, to work for VP and CTO of Dell Software Group, Don Ferguson. I previously worked with Don at IBM, we overlapped in a couple of roles, in my early work on the Java connector architecture, and later in IBMs corporate On Demand initiative. We also worked together in the IBM Academy of Technology and the Systems Group Advanced e-business Council. Another former IBM colleague also emailed me this morning to confirm he had resigned and would be coming to work with us. Exciting times."

It's been mentioned in this thread, but Michael Dell talks of dropping the acquisitions into Dell's existing customer network, so the acquisitions have an expanded customer base leading to new growth. I liked M. Dell's philosophy on acquisitions - allowing those companies to maintain a certain independence (rather than merging them into the whole), while offering them access and resources to expand more quickly - which also results in better employee retention in the acquired.

I'd rather Romney have picked Portman to reinforce his economic strengths. Portman has a good reputation for working with Dems, whereas Ryan seems an ideologue - see his behavior on the Simpson-Bowles commission, for example. http://www.politico.com/news/stories/0812/79724.html ------------ Now the saintly, do-good aura that surrounds Simpson-Bowles presents an awkward challenge for Mitt Romney and his running mate. Romney is pitching Ryan as a problem solver who wants to use his command of the budget to forge bipartisan deals to solve the nation’s fiscal crisis. But in reality, Ryan, according to the recollection of some commission members and staffers, was a key part of the dynamic that undermined the commission and allowed the triumph of partisan and ideological loyalties over a budget deal. ---------- Karl Denninger, a libertarian financial blogger, really dislikes Ryan: http://market-ticker.org/akcs-www?post=210028 ------------- And Ryan is one of the liars-in-chief in the House. If you need your memory refreshed may I recommend you read the following links: (discretionary budget, welfare reform, retirement security and more) (voted for and supported TARP) (Medicare, cost-shifting at gunpoint and more) (more Medicare lies) (Ryan's fraudulent -- for the second time -- budget proposal) and of course (Ryan's lies about the sequester ex-post-facto creating exemptions to it) The problem with Ryan is that he's not a "conservative" at all. Beyond the fiscal mess documented up above -- a mess he not only helped create but is promulgating and continuing, along with the explicit and implicit support of frauds up and down the line in our financial system via TARP and other schemes he also supports blatantly unconstitutional laws on top of it, including The Patriot Act, warrantless wiretaps, retroactive immunity for telecommunications firms that broke the law on warrant requirements and more. -------------

http://farm3.staticflickr.com/2467/3875724101_44712c92aa.jpg

Lovely post Parsad, I admire your large-hearted ways. Thank you for the book recommendation, oddballstocks. Looks fascinating, I will check it out.

Parsad, thanks for posting links to those newspaper articles - great investigative reporting. I used "unwittingly" in the title for this thread as I didn't know to what degree Wolinsky had researched SNPK. I had run across SNPK in April and was surprised at the incongruity of Wolinsky covering it as I remembered him having his own value blog and then writing for Gurufocus. Perhaps I'm off the mark, but I don't think it's a stretch to refer to him as a value investor. I was appalled by the SNPK saga as a whole and still can't understand how such a questionable company achieved a billion dollar market cap - let alone in five weeks. The regulators were nowhere in site. Yesterday I happened to check the stock price of SNPK for the first time in a few weeks and remembered Wolinsky's article. Since he is familiar to this community I thought the unusual incident noteworthy of discussion and that I might learn more about it as a result. While I would be the first to admit that I get more from this board than I give in return, I am not a newcomer to the site.

Jacob Wolinsky has posted to this board, linking to material at his site valuewalk.com. Useful material, such as hedge fund letters by Klarman, Loeb, etc. His bio there describes his value investing background. On April 5, 2012 on Seeking Alpha, Wolinksy published a paid promotional article on Sunpeaks Ventures (SNPK) titled "Aggressive Growth Plan Sets Sunpeaks Ventures Up For Bright Future": http://seekingalpha.com/article/481511-aggressive-growth-plan-sets-sunpeaks-ventures-up-for-bright-future A record of news releases shows a massive penny stock promotion began on April 5 by penny stock websites: http://www.otcmarkets.com/stock/SNPK/news On April 18, eight trading days later, SNPK topped at $2.40 (near a billion in market cap), having a achieved a 500% return since its stock market debut, five weeks prior. Later that day, on no news, SNPK dropped nearly 75%. On July 2 the stock closed at $0.04 - a 98% loss in ten weeks for anyone unfortunate enough to have bought at the peak. http://stockcharts.com/h-sc/ui?s=SNPK&p=D&yr=0&mn=6&dy=0&id=p54457278803 Wolinsky prefaced his article, "I have received compensation to research Sunpeaks Ventures (SNPK.OB). Nevertheless, I have tried to write to the best of my ability an unbiased review of this company." His analysis included the following: "Players in the vitamin and OTC drugs industry include such giants as Herbalife (HLF) and Perrigo (PRGO), both sporting market caps of over $8 billion. So the potential for Sunpeaks is there. To get an idea of the upside that awaits Sunpeaks one has to look back a few years. Just in the past three years, Herbalife has risen from a split adjusted just over $8 a share to nearly $70 now. A similar jump in Sunpeaks would take the stock to $8 a share." Wolinsky commented on his article on April 15, "I was very transparent in my disclosure and SA allows sponsored posts. I did my best job to prevent [sic] the long side. I am not recommending anything." That was the last occasion on which he mentioned SNPK.

I haven't followed the banks closely as investments. So the first time I listened to Dimon and Moynihan present was in recordings of that bank conference the other day. I found Dimon surprisingly arrogant and off the cuff (especially considering the recent losses), whereas Moynihan was boring nuts-and-bolts - what you'd want in a banker.

Re: Berman. I was convinced he's off the mark after watching the Natural Gas presentation at the Milliken institute elsewhere on this board. There was consensus that his view is incorrect. The rep from BP Capital basically said, look, we've seen more data on production than just about anybody, that thesis is just not true.

CHK addresses Berman and the RS article here: http://www.chk.com/news/articles/Pages/1699243.aspx Count me as a skeptic of Berman's thesis.

Slick production. The video seems targeted to the retail investor. My dental assistant, who dabbles in penny stocks, asked me if I was going to be buying the Facebook IPO. He was surprised that I had no interest. I spoke with a friend in his mid-20s yesterday whose passion is the future of technology. He has pointed opinions and is skeptical about companies like Facebook remaining successful in the long term. He foresees a mass explosion of data that people aren't yet comprehending. He made an analogy that people are aware of the sound of the ocean behind them, but haven't turned to see that a tsunami is approaching. He believes people will find better ways than Facebook to mediate and organize the data. I hope he's correct as despite their marketing lingo, I get little feeling of connection when using Facebook. Even interactions with my closest friends feel superficial. I receive much more out of a community like the one here at Corner of Berkshire. I don't believe that Zuckerberg cares about the user experience in the way Steve Jobs did. Facebook's user interface design and its questionable privacy practices seem to revolve around maximizing Facebook's ability to exploit, monetize, and market user data. I think Jobs' spiritual orientation brought a level of introspection, inquiry, and depth to his ideas and creations. I don't see or feel this when I watch Zuckerberg talk or use his products.

Great reply!

The SEFE video IS pretty amusing! Doesn't exactly inspire confidence.

Sorry if this has been mentioned before, but insiders purchased around $1.40-1.55, so I thought they'd like to see a sale at $1.40 or better to make themselves square.

Acquisition seems way expensive, but yes, they're paying with overpriced stock. Anecdotally, I've seen Instagram being used by people more socially networked than me, and they're really into it as a platform for posting and viewing each others photos on smartphones. I had thought it was just a photo filter app, but that's not the case. I bet Facebook saw it as a competitor that had more appeal to people as a way of sharing/viewing photos on a mobile platform than the mobile Facebook app.

Harris Kupperman's latest comments on EGD (http://adventuresincapitalism.com/askkuppy.aspx) on3/12/12: Kuppy, I believe you have stated that EGD is a fairly large position for you. How do you determine your end game for it? Do you have a specific price target? Do you just ride it as long as you think it has legs? Or until its stock price more accurately represents a fair valuation? Thanks for the great column. I intend to own it until the business has stopped growing. That would only happen if either mining companies replaced all their depleted reserves, or substantial competition shows up. Of course, as a very large position, I have internal position limits and from time to time, I sell a few shares as you have to stay disciplined about position limits. Kuppy- I was reviewing some Energold info and came across their updated presentation that cites having 234 rigs (as of 1/16/12). I believe this certainly includes those that they acquired with Bertram & Dando, but it still seems higher than I expected. I'm just curious if based on the latest you've seen how their trajectory falls within your expectations. In all honesty, I don't really have any expectations for rig count. I track it looking backwards for ease of reference, but I've always found models to give you a false sense of confidence on things. If it doesn't make sense at first glance, and if it doesn't seem cheap on the back of a napkin, I'm just not interested. Once you start building models, you start to justify ideas that just might not be that good. Sorry I cannot help on this one. Kuppy, I see Fred at EGD is addicted to these bought deals. Love that he throws in an extra 6% cash commission and 6% warrants too. Must be a struggling enterprise with an overleveraged balance sheet desperate for cash! Seems Fred would make a great VP of operations. EGD needs a real CFO, from the outside. When they promoted from within I knew nothing would change in this respect. Still, they did the deal because business is booming so it’s just a short-term set back. But you would think that knowing they are on the verge of announcing a strong Q4 they would do the financing after the announcement which would likely get them a better price. Each time they announce one of these deals the stock tanks. You would think that would get their attention. Do you think Fred isolates himself from the financial community? I mean, doesn’t he feel any pressure to improve his financings? Let's face it, these guys are just awful at the capital markets. For a bunch of guy from Vancouver..... Unfortunately, when you're in a growing business, you need to work with the markets. Not against them!!! The whole point is that you want your shares to be fairly valued so that you do not dilute your shareholders every time you do something. Energold is horribly undervalued--but maybe this is because they keep dumping bought deals on investors and have lost the confidence of the investment community. I think you are right. Fred is a great COO. They need some professional help on the capital markets side. I have no issues with companies issuing shares to raise capital and grow the business. In fact, I would expect Energold to continue raising money in the future. Thus far, all their acquisitions have been brilliant. I just spent two days with Brian Bertram up in Fort McMurray. His company is really well run and in massive demand. My complaint is that the shares trade at a mid-single digit multiple on earnings and they need to do more to fix this valuation gap before just blindly spraying the street with shares. I don't object to financings. I just simply abhor the concept of bought deals. They're about as shareholder friendly as a death spirl convert. ... Hi Harris, what is your opinion on EGD's recent $20MM bought deal financing? I am a little confused why management chooses to raise capital at this moment. It seems that under current pricing and capacity utilization, EGD will have more than enough cash to build a lot of rigs, unless management wants to do acquisitions. I'm guessing that they're either looking at acquisitions or buying some much larger (more expensive) rigs for Bertram. In either case, I'm sure the money will be used well. I have no problem with raising capital. I just hate bought deals. I think if they had waited until Q4 was out, they could have gotten much better prices on this financing.

Can you elaborate on the downside protection for CDH. Trapeze has made this argument, but they've made the wrong call on this one before. Cash position is only $7m, how long can they keep the lights on? What's the likelihood of potential upside working out in your view?

Good post on SWN's potential liquids play (written by my favorite independent energy analyst): http://seekingalpha.com/article/399751-southwestern-energy-street-proves-dense-regarding-new-play

They're only $45 million in the money (not sure why they chose Aug 24 for the $376 strike price), so will only be worth $400 million if stock goes up another 350 points. I think that's right, at least.

Happy holidays to each and every one of you! Much appreciation as always for the great forum, Prasad.

Oh dear, video of Ann Barnhardt burning a copy of the Koran (after she bookmarks selected pages with strips of bacon):

JSArbritage - thanks, that makes sense. I got lost in the details.

JSArbitrage, you make some fair points. I find it unfortunate that the government has taken little civil and criminal action. I think that would be for the good of the country. Here's a good article on the case: http://newsandinsight.thomsonreuters.com/Legal/News/ViewNews.aspx?id=34198 And a recent Walnut Place court filing which includes their legal argument: http://newsandinsight.thomsonreuters.com/uploadedFiles/Reuters_Content/2011/12_-_December/walnutvcountrywide--MTDresponse.pdf I'm not so sure whether much good for the country will come out of this legal battle. I read through the above filing and was left with the feeling it just seems to come down to lawyers using very fine legalese to battle over money. One excerpt from page 6 of the Walnut Place argument: --- The Walnut Place entities own securities issued by two of Countrywide's trusts. Concerned by widespread reports about the poor quality of Countrywide's loans, Walnut Place spent many hundreds and thousands of dollars to investigate the true quality of the loans in the two trusts. It found that hundreds of loans in each trust were not of good quality and breached several of the representations and warranties that countrywide had made about them. --- At this point I wish they had inserted, "We were shocked, I tell you, shocked!" On page 12 of the document a crucial argument is discussed, which is what comprises an "Event of Default." I'm no expert, but on a cursory reading I don't buy the Walnut Place argument on that question from a "common sense" reading of the paragraph, which is not to say that they can't prove their point with enough legal argument, which they provide aplenty.

From the article: --- "In a May court filing, Bank of America said that Baupost sent letters to the Bank of New York Mellon, claiming it was a certificate holder and that loans in two trusts did not comply with representations and warranties made by Countrywide Home Loans. They said appraisals were inflated and other information had been misrepresented. Baupost demanded the trustee give notice of the alleged breaches to Countrywide, according to the document, and require Countrywide to repurchase the loans. On December 21, 2010, the trustee received a letter concerning one of the trusts from entities including the "Walnut Place" entities." --- It's not as if "Walnut Place" was ignorant of the nature of these MBS when they bought them. To a lot of people the optics of this will look like another case of the rich getting richer because they know how to game the system. While many working people are struggling to make ends meet, a billionaire with a few good lawyers can make hundreds of millions for his company in a settlement over acts that hurt those working people.