Friday, January 27, 2012

What We're Reading ~ 1/27/12

A good performance year for some Tiger Cubs [Institutional Investor]

David Einhorn rapped for insider trading in UK [FINalternatives]

Ken Griffin's Citadel back above high watermark [Dealbreaker]

20 common sense investing rules [Reformed Broker]

Is anyone any good at picking hedge fund managers? [Big Picture]

On why Sears (SHLD) isn't going private [ValuePlays]

Pivot Capital on China's investment boom (& pending bust) [Zero Hedge]

On the value of an independent financial review [Research Puzzle]

Rethinking the equity risk premium [CFA Institute]

The great hedge fund humbling of 2011 [Reuters]

Warren Buffett's apprentice makes strong debut [FinancialPost]

Days of easy money for fund managers are over [Bloomberg]

Federal officials charge 7 in insider probe [WSJ]

Joel Greenblatt assesses his Magic Formula results [Morningstar]

How to conquer a banking job [Salon]

Thursday, January 26, 2012

Biggest Discount to the Value Investing Congress Expires Tomorrow

We wanted to let readers know that the Spring Value Investing Congress is right around the corner on May 6th & 7th. This year it's taking place in Omaha, Nebraska right after Warren Buffett's annual meeting at Berkshire Hathaway at the CenturyLink Center. Now you can squeeze two value investing events into one trip.

Biggest Discount Expires Tomorrow!

If you sign-up before tomorrow at midnight, our readers save $1,600 by clicking here and using discount code: O12MF3

Here are the speakers announced thus far:

Doug Kass - Seabreeze Partners
J. Carlo Cannell - Cannell Capital
Keith Trauner - Goodhaven Capital
Larry Pitkowsky - Goodhaven Capital
Thomas Russo - Gardner Russo & Gardner
David Nierenberg - D3 Family Funds
Matthew Swaim - Advisory Research
Bruce Zessar - Advisory Research
Whitney Tilson - T2 Partners
Glenn Tongue - T2 Partners

One thing worth highlighting: Trauner and Pitkowsky previously worked at Bruce Berkowitz's Fairholme Capital before founding their new firm Goodhaven Capital so it will be interesting to hear their ideas.

Click here to receive the biggest discount to the Value Investing Congress and use discount code: O12MF3. Act fast because the discount expires tomorrow at midnight!

East Coast Asset Management's Q4 Letter: Embracing Uncertainty

Christopher Begg is out with East Coast Asset Management's Q4 2011 letter to investors. In it, he discusses the concept of embracing certain uncertainties. He writes,

"We observe a general misclassification between uncertainty and risk. Looking forward, we also anticipate the general perception of 'risk' versus 'risk-free' assets will change. Central bank intervention to mitigate the effects of the inevitable deleveraging cycle will raise the cost of capital and compromise the value of paper currency. We expect this could be a disappointing realization for those seeking long-term shelter in cash and bonds."

They've somewhat touched on this notion before when in a past letter they outlined why they see heightened and prolonged inflation ahead. This falls into one of their seven broad views in which they have constructed their portfolio currently:

1. Deleveraging
2. 'Fair Wind' for high quality equities
3. Inflation
4. Emerging market consumer
5. Eurozone consequences
6. Jobs and housing
7. Adaptation

We want to draw specific attention to their focus on the emerging market consumer because they aren't the only firm fixated on this phenomenon. Hedge fund Kleinheinz Capital has pointed to the power of the emerging market consumer, but also cautions that inflation is the biggest threat in emerging markets.

On the subject, Begg writes that, "This 'impression, sunrise' of the emerging market consumer is one of the most underappreciated change agents that will ultimately drive global economic growth over the decades to come, and help move the world economy beyond the deleveraging currently at hand."

Embedded below is East Coast's Q4 letter:

Given that East Coast's letters often serve as vehicles for passing along timeless educational aspects of investing, be sure to check out their pieces on competitive advantage and gaining an investment edge.

David Einhorn's Greenlight Capital Q4 2011 Letter: Covered First Solar, Bought Dell

After a brief hiatus, is back in action covering top hedge funds. Right to the action: if you missed it, we wanted to post up David Einhorn's Greenlight Capital Q4 2011 letter to investors.

Key Takeaways:

- Covered their short in First Solar (FSLR)
- Covered short in Diamond Foods (DMND)

- New position: bought Dell (DELL) @ average price of $15.53
- Re-established position: bought Xerox (XRX) @ average price of $7.61

- Sold Travelers (TRV): Greenlight cut their forward earnings forecast
- Sold Pfizer (PFE)
- Sold Becton Dickinson (BDX) due to disappointing guidance
- Sold CVS (CVS) to fund more compelling opportunities

Embedded below is David Einhorn's letter where you can read Greenlight's rationale for their new buys of Dell (DELL) and Xerox (XRX):

For more from this hedge fund, you can also check out Greenlight Capital's Q3 letter as well as David Einhorn's short case on Green Mountain Coffee Roasters (GMCR).