Icahn's New Blog is Up and Running - Reviews are Mixed

Everyone's favorite corporate raider, Carl Icahn, had been promising that his new blog was in the works for months. It's finally here. The Icahn Report can be found here.

Reviews of the site have been mixed. Some say that the typical Carl (acerbic, ornery) is barely seen in his posts. There is no mention of Yahoo!, Motorola, or Biogen. It seems like his blog is more generalized rants about corporate America.

Last Few Posts

All,

A few more posts not withstanding, this blog will cease from being updating on a regular basis, if at all. It's been a while since I last made a post, so I'll try to make a bunch from now until Monday night.

Blogging has been a blast, and I want to thank all of you for your support throughout my blogosphere "learning experience." I only regret not being able to post more often.

Cheers.

Interesting Insight into Bear Stearns and the CDS market

So Bloomberg had a really interesting background piece that related the Bear Stears bailout to the CDS market in Bear's debt. Check out the article here.

The article has some interesting revelations from people privy to the CDS space, but the basic takeaways are that the thought of counterparties having to pay Bear CDS holders if the company went belly-up was of paramount concern to the Fed (and may have been the reason for the JPM (with the Fed's blessing) bailout). The ripple effect could have been huge and many other financial institutions likely could have seen their own liquidity issues result in a bankruptcy. Other insights: pricing transparency is horrible in the CDS space, the banks often hedge their CDS exposure and enjoy having the dealer status where they can be the gatekeeper to all of the CDS paper while minimizing their own risk, while hard the measure, the CDS market is actually predicted to be bigger than the NYSE.

Inside One Man's Attempt to Fund a Movie's Budget Through Hedge Funds and Private Equity

The NY Times had an interesting article in Monday's paper about a man named Sanjay Sanghoee's pursuit of making a movie based on his Wall Street-related book called "Merger."

More from the Einhorn - Ackman CNBC Day

Barry Ritholtz has provided more clips from the CNBC session with Bill Ackman and David Einhorn. Great stuff.

Ackman Talks Investing

Renowned hedge fund manager Bill Ackman of Pershing Square Capital Management talks investing on CNBC.

Detailed Notes from Annual Berkshire Conference

The Reflections on Value Investing Blog has very detailed notes on what was said/discussed at the Berkshire Hathaway Conference. See the summary/notes here.

Tomorrow's Buzz: Xobni - Fast Searching on Outlook

For those of us that use Outlook as our primary email program, we may have found the greatest thing to hit computing since Firefox's browser. The NYTimes covered the program - Xobni - in it's paper for Monday (tomorrow) and I started using the program tonight. It's amazing. The program's purpose: allow you to search your inbox very quickly. We all know that Outlook's email search is, for lack of a better word, "a disaster." It's just way too slow. Google Desktop did solve some of the problems, but Xobni (which is free) is just so much better (and quicker at indexing). Be sure to download it when you get a chance. Here is the Xobni website.

Great Overview of the Real Estate Market from T2 Partners

Whitney Tilson's Fund, T2 Partners, has put together a very compelling report on what caused the collapse in the housing market. The numbers are astounding and T2 has done a great job of laying out its thesis with a myriad of facts/figures and logical analysis that make the crisis easier to understand.

WSJ Goes Inside the Yahoo-Microsoft Saga's Latest Developments

Nice reporting from the WSJ on Microsoft's decision to back down on the Yahoo! deal.

A Behind the Scenes Look at the Rating Agencies

The NYTimes has an interesting behind-the-scenes look at the rating agencies, and specifically, Moody's.

Live Blogging from Berkshire Conference

CNBC's live blog from the Berkshire conference.

There is also a link to the afternoon session live blog as well.

Einhorn's Speech that Started it All: The Allied Short Saga

The Street had a review of Einhorn's book on his Allied Capital saga and the review also provided readers to a link to Einhorn's speech on Allied Capital that became the basis for David's book. Here is a link to the video.

More from Sir Warren

More from Warren Buffett to help you get ready for tomorrow's shareholder meeting in Omaha.

This is an excerpt from his recent meeting with Wharton students.

See the article here.

Great quotes in here:

"[I get offered all] kinds of deals from LBO operators. I would just love to bet against the projections of every one that they give me. They hand me these books, which I don't even want to look at, but they hand me the books, and of course they always just project like that [points upward like a graph that only increases]. I would just love to make a career out of betting against the figures presented in those books, but I don't get a chance to do that. If you ever get a chance to short investment banker books, that would be a great activity."

Lessons from the Trading War Trenches

The Kirk Report had a nice post yesterday on lessons learned from renowned trader Nicolas Darvas. Check out the post here.

Full CNBC interview with Warren on the Mars/Wrigley Deal

A few posts today to get you ready for the Berkshire annual meeting, which is slated to have 30,000 attendees this year (the most ever).

CNBC has posted the transcript of its Wrigley/Mars related interview with Warren. See the link here.

John Gapper of FT: Rise of High Risk Optimism?

With all the hoopla regarding this week's Milken Global Institute Conference, it's natural that the media is covering anything and everything regarding the former junk bond king, Michael Milken. It seems that the talk of the financial community is a 10-page paper that Milken put out just last week that lays out why once again his thesis that the risk-reward trade-off with junk bonds outweighs that of investment grade debt. His evidence? The slew of write-offs of so-called investment grade securitizations.

John Gapper of the Financial Times discusses the Milken paper today in his column. This is a follow-up to Sorkin's column for the NYT. I am trying to get a copy of this Milken paper, but I can't seem to find it online. If anyone has it, please send it to me at nshah3@chicagogsb.edu.

Even More on Einhorn

Does the media move in bunches on topics? Following up on recent posts on Einhorn, here is another profile of the hedge fund manager from yesterday's WSJ.

More from Einhorn - Speech at Grant's Interest Rate Observer Conference is Generating Buzz

Ben Stein had a column over the weekend in the NYTimes that asked the question: what is to blame for the meltdown of our financial system and our weakening economy? Stein answers that we may not have to look much further than David Einhorn's speech at a conference for Grant's Interest Rate Observer earlier this month. Einhorn lays out a pretty compelling argument for why many of the failing (or failed) firms were able to take on excessive amounts of leverage while hiding the riskiness of some of their investments from regulators.

Here is Einhorn's speech.

"Best Operated Airline," Continental, Says it No Longer Covets United

The need for consolidation in the airline industry have been outweighed by the increasing problems at United, as Continental announced today that it was backing out of its intended merger with UAL.

"Continental decided to drop the discussions after UAL announced worse-than-expected earnings, which sent shares falling last week. On Tuesday, United said it lost $537 million during the first quarter, on sharply higher costs for jet fuel. The airline, which spent more than three years under bankruptcy protection earlier this decade, said it would cut flights and eliminate a further 1,000 jobs."

David Einhorn's New Book: Fooling Some of the People All of the Time

The WSJ has reviewed David Einhorn's new book: Fooling Some of the People All of the Time

Einhorn's book covers his experience trying to short Allied Capital's stock, and the frustrations he had trying to bring to light the accounting gimmicks that he saw within the Company.

What gives the book a special value, beyond its backstage look at the life of an elite trader, is its insight into two important but usually neglected aspects of the investment business. First, Mr. Einhorn's carefully documented battles with Allied Capital say a lot about the temperament needed to be a great investor. Tenacity is vital. So is patience. And so, too, is an ability to keep a sane perspective.

As Mr. Einhorn's own firm prospered, he could have jammed far more money into his Allied Capital short position, determined to prevail by brute force. He didn't. He kept 3% of assets in that position but invested most of his money in other ideas that worked out better. Such discipline, we come to realize, is what distinguishes the wisest long-term investors from obstinate short-timers who veer between triumph and ruin.

The book also shows why good accounting really matters. It is easy to mock finicky people with green eyeshades who worry about financial footnotes. But reliable numbers are essential if capital is to be allocated properly in our economy. Otherwise good projects starve and foolish ones burn up money.

Mr. Einhorn is a hard-liner, wanting strict accounting standards that punish missteps quickly. Allied Capital, to judge by his version of events, liked living in a more lenient world, where there was plenty of time to patch up problems quietly. Regulators were comfortable with an easy-credit philosophy, too, to a degree that startled Mr. Einhorn.

In the current financial shakeout, people like Mr. Einhorn are entitled to say: "I told you so." It's to his credit that, telling the Allied story, he is often angry but never smug.

Last Lecture Buzz Continues with Pausch's Book

Many of us probably remember the buzz regarding CMU professor Randy Pausch and his "last lecture" that was given to the CMU community several months ago. Pausch, who is terminally ill with cancer, spoke about following your childhood dreams and the video became viral almost instantly. The WSJ seems to have started the buzz with its September 2007 article which highlighted the "Last Lecture" that Pausch gave.

Now the buzz is around Pausch's book, which has been hard to get a copy of.

Brookfield Asset Management CEO Speech - Bruce Flatt: Investing in Turbulent Times

Bruce Flatt, the CEO of Brookfield Asset Management, spoke recently about investing in the current environment. Brookfield invests in infrastructure assets (real estate, power plants, timber, etc).

Check out the video interview here.

Brookfield Asset Management stock performance

Flatt's Thesis (courtesy of Gurufocus):
1. never deviate from the following 7 principles.
2. execution. Success depends on ability to execute, is what separates BAM from competition. Remember this principle and put it into practice every day.
3. build with quality people. Business and life, do things you enjoy. Finding good people, team players most important thing, greatest asset of company. Brilliant but non team players can be divisive. BAM believes they have edge because of quality people.
4. invest against the common trend.
5. don't be moved by bad news or good news.
6. prudently finance your assets. Many people get #7 and #8 right (buy great quality asset), but then mess up by mismanaging finance and getting caught by liquidity crisis, overleveraging, etc. Best assets are worthless if you can't hold it to see another day.
7. invest for long term – buy under assumption we will own it forever. Never try to catch latest fad. Tax benefits, etc.
8. we like great assets, are willing to pay more for quality and location, and great fundamentals. We've paid more, but in premium locations like NY, sydney, london, etc. Irreplaceable assets and locations. Rarely buy cheap land where barrier of entry is low, easy to duplicate

David Winters: Barron's Interview

Last week's issue of Barron's had a great interview with fund manager David Winters. See the reprint here (no login required).

Barron's Interview with Steve Tananbaum of GoldenTree Asset Management

Barron's had a good interview with GoldenTree Asset Management fund manager Steve Tananbaum in this weekend's issue.

Tananbaum laid out a bullish thesis on the bank loan market vis-a-vis the high yield bond market.

See the article here.

Martin Whitman and Richard Haydon Discuss the Markets at Syracuse Conference (Video)

Famed investors Martin Whitman of Third Avenue and Richard Haydon of Neuberger Berman spoke at Syracuse's annual Breakfast Panel and the video of the interview is available on the web here.

Warren Buffett on the Market, the Economy, etc.

Fortune Magazine had a decent interview with Warren Buffett that stemmed from his recent meeting with over 100 Wharton students in his Berkshire offices.

Private Equity's Style Drift

The Prince of Wall Blog's had an interesting post on the state of the private equity industry. As the post points out, the typical private equity fund has diversified its lines of business, which may not necessarily be great for PE investors.

As a follow-up, the Economist has published a similar article on the structural shift in private equity.

Tonight: George Soros Interview on PBS

For those that are free (or have a DVR), Charlie Rose is interviewing George Soros on PBS tonight. In Chicagoland, it's on PBS WCCY (channel 20 on RCN). If you miss the interview, go here tomorrow to watch the full thing.

More from Kedrosky: Pete Peterson Interview

More from Kedrosky's Blog - Good interview from Charlie Rose's show with Blackstone CEO Pete Peterson.

Kedrosky questions if online journal n+1's interview with an anonymous hedge fund manager is genuine

Paul Kedrosky had a post recently that questioned if n+1's interview series with an anonymous hedge fund manager is an interview with an actual hedge fund manager.

Here is the n+1 article in question.

April Fools Hoax Part of Rally?

Alan Abelson's column yesterday brought to light an extremely bullish column written by uber-bear Doug Kass. Of course the whole thing was an April Fool's joke, and yet, as Barry Ritholtz mentioned in his blog, several "elite" (Bloomberg, WSJ) members of the financial media took the article for its actual contents. The market rallied on the day, and while correlation might not imply causality (there was also other "bullish" news, including the fact that Lehman and UBS are raising capital), it would be hard to say that Kass' column wasn't instrumental in part of the bump.

One line from Kass' column: While I initially expected a 5% to 10% decline in the S&P 500 this year, my new year-end S&P target is 1,666, for a gain of 26% from current levels. I might be low.

FT Sits Down with Naseem Nicholas Taleb

The FT had a nice interview with Black Swan and Fooled by Randomness author Naseem Nicholas Taleb.

Soros: False ideology at the heart of the financial crisis

It's been a while since I've updated the blog, but expect more updates going forward (7-10 links a week). I had been busy with wedding planning and am now catching up on reading, so hopefully this weekend you'll start seeing a deluge of posts.

George Soros had an interesting column in today's Financial Times. See the article here.

Essentially Soros argues that the Fed (and other market-related government organizations) have held a belief that the markets will naturally self correct for things like asset bubbles, liquidity issues, etc. While these government orgs may believe that the market has a way of playing itself out, it is interesting then that the Fed has been intervening to prevent perceived market crises. This intervention (and perhaps the belief from market participants that somebody will intervene if the market goes south) may be fueling the excessive credit environment and moral hazards that brought us to where we are today.

Kudlow Says the Market was Down 190% between 1965-1982

Former Reagan economist and former Chief Economist at Bear Stearns was on his show last night discussing this WSJ article when he made a comment that made me question why anyone listens to him.

Basically, in talking about returns over several time periods, Kudlow said that the market was down 190% between 1965-1982. 190%!?! Of course that's impossible, and yet, there was Kudlow telling his viewers about other past market funks.

Short traders would love it if -190% returns were possible

Check out the video clip here.

Watch from about 2:10 to 2:25

Final ChiBus Column

Here is a link to my last column for the ChiBus

A Good Overview on Bear

Morningstar had a nice video interview that discusses the crisis at Bear Stearns. Check it out here.

60 Minutes Profiles Carl Icahn

60 Minutes profiles Carl Icahn here.

Most Recent ChiBus Article

Here is my most recent ChiBus article. Enjoy.

Bankruptcy Lawyer: Expect The Worse

Bankruptcy lawyer Harvey Miller had a good interview with IDD in the magazine's latest issue. Check out the article here.

Seth Klarman's Speech at MIT

Famed investor Seth Klarman gave a speech at MIT that is worth a read. Check out a transcript of the speech here.

Mark Sellers: Great Franchises Often Undervalued At IPO

Fund manager Mark Sellers had a great column in the Financial Times a few days ago that discussed the opportunities for investors to buy great businesses at attractive IPO prices given the market's inability to see a company's ability to ramp up performance through operating leverage and maintaining an economic moat.

Sellers talks about several examples of IPOs that have turned into homeruns including Google, Mastercard, the CME, Chipotle, and Morningstar.

In each case "analysts are too cautious at first. They do not know the company that well, so their estimates are all over the place. Investors can play this to their advantage by buying and holding great companies when they go public, ignoring what pundits or analysts say and betting that analyst estimates will rise and become more clustered, causing the p/e ratio to rise at the same time as earnings expectations."

Seller's Two Main Characteristics of Great IPO Candidates:

"There are two fundamental factors all these companies share. First, they have an “economic moat”, or natural defence against competitors, allowing them to generate high returns on capital. Second, they have lots of operating leverage (as opposed to financial leverage); in other words, a 10 per cent increase in revenue translates into far more than a 10 per cent increase in bottom-line profits. Operating leverage is almost always underestimated by analysts when they are not very familiar with a company."

Economist: Special Report on the Money Management Industry

The Economist has a special report on the money management industry in its latest issue

Here are links to the relevant columns:

Money For Old Hope
Trillion Dollar Baby
Fund-management fundamentals
Managers and their skills
Funding alternatives
Polishing their image
Diversifying investments
The benefits of specialising
The future of fund management
Audio interview

Buffett's Annual Shareholder Letter for Berkshire

Berkshire Hathaway published its annual shareholder report, which includes Buffett's closely watched letter to shareholders. See the letter here.

The biggest thing to come out of the letter: that Buffett has four people in mind to that would be the next successor for managing Berkshire's investments once Warren retires. Thoughts on who will be on the short list of four candidates? Eddie Lampert makes sense? Others?

Walter Schloss Interview

There is a pretty good interview with renowned investor Walter Schloss that has been circulating around. Check out the video here.

Global Credit Card Graphics

Foreign Policy had an interesting post discussing global credit card use that should bode well for the growth story behind the Visa IPO and perhaps the success of MasterCard's IPO. Check out the link here.

NYT: Markets Need Someone to Act

The NYTimes published an interesting article on the current crisis' lack of a leader that can step in and try to bring calm to the storm. Past meltdowns have been met with collective action by a small group or even a single person that has brought buyers and sellers and rationality back to the market, but a brave soul has yet to step-up in the current market.

A Litmus Test for VC Investments?

The New York Times had an interesting article out about two Oxford students that have developed a site called Younoodle.com that apparently uses an algorithm to determine if a prospective VC investment idea will be a sound investment. Check out the article here.

"YouNoodle’s financial backers include Paypal co-founders Max Levchin and Peter Thiel, and the Founders Fund, a venture capital firm. YouNoodle has not disclosed the amount of its seed financing."

New Yorker Covers Steve Schwarzman

I meant to post this earlier, but didn't get around to it. Check out the New Yorker's profile of Blackstone chairman Steve Schwarzman.

The End of the Road?

A NYTimes columnist wrote an interesting Op-Ed a few days ago that discussed what has driven the recent years of decadence into the looming recession.

"The problem lies deeper. It is the culmination of three decades during which American consumers have spent beyond their means. That era is now coming to an end. Consumers have run out of ways to keep the spending binge going."

See the article here.