Insomniac Hedge Fund Guy

Lessons From 50 Years Of BuffettBy JASON ZWEIGMay 2, 20150 COMMENTSWhat makes Warren Buffett Warren Buffett?That question will dominate this weekend’s annual meeting of Berkshire Hathaway, on the 50th anniversary of Mr. Buffett’s takeover of the company. His letter to shareholders in this year’s annual report offered Mr. Buffett’s thoughts—and those of Vice Chairman Charles T. Munger—on how an introverted and unheralded investor from Omaha turned a dying textile maker in New Bedford, Mass., into the fourth-largest public company in the U.S. by annual revenue. Source: Lessons From 50 Years Of Buffett – WSJ

Bill Ackman, last year’s best performing hedge managers is reportedly targeting student loan default as his next short opportunity.  I agree.  Preliminary names are DFS Discover Financial Services and SLM SLM Corp but we have not initiated any positions as more work is to be done.   By JOSH MITCHELL CONNECT More Americans are behind on student-debt payments than official measures suggest. JIM WATSON/AFP/Getty ImagesStudent loans are proving to be a much bigger burden on households than previously thought.Nearly one in three Americans who are now having to pay down their student debt–or a staggering 31.5%–are at least a month behind … Read more

Much has been made about buy and hold passive investing outperforming active managers.  A lot of the argument revolves around lower tax rates on capital gains.  Taxes are never good and all things being equal a lower tax rate is always better but MOST investors overestimate the benefits. The fact is that a manager would only have to earn 2% more on their returns at a 35% tax bracket to outperform someone paying the lowest tax rate at 15%.  If an active manager can’t outperform the market by 2% or more, they should seriously look for other employment.  Since 2001 … Read more

                          — Three major Shiite militia groups pulled out of the fight for Tikrit on Thursday, immediately depriving the Iraqi government of thousands of their fighters on the groundeven as American warplanes readied for an expected second day of airstrikes against the Islamic State there.The militia groups, some of which until recently had Iranian advisers with them, pulled out of the Tikrit fight in protest of the American military airstrikes, which began late Wednesday night, insisting that the Americans were not needed to defeat the extremists in Tikrit.Together … Read more

Jorge Montepeque, the global director of market reporting at Platts, echoed this sentiment at a London conference on Monday. The price at which US shale plays are profitable are a “moving target” as technological advances improve the longevity of wells and lower prices drive down costs. “The whole pricing structure is coming down . . .[there is a] need to have a rethink.” via IEA says scope of US shale output fall to be limited – FT.com.

Over the long run, big stock indexes finish up or down more than 1% on one-third of all trading days. Last year, it happened on just 14%, and on fewer than 10% in 2013. Recent market swings are a sign that things are getting back to normal. via Oil’s Rebound Lifts U.S. Stocks, but More Obstacles Lurk — Abreast of the Market – WSJ.

Jeff Woodbury, Exxon’s vice-president of investor relations, said on a call with analysts that the group was “alert” to possible bolt-on acquisitions and other investments that could strengthen its long-term production potential. via Exxon eyes deals after oil price falls – FT.com.

“The single best opportunity to invest is distressed debt in energy,” David M. Rubenstein, co-founder of the Carlyle Group, said in January at the World Economic Forum in Davos, Switzerland. Mr. Rubenstein added that one promising strategy might be to “buy the debt at a discount and take control of these companies.” The Blackstone Group and Apollo Global Management say that they are raising billions of dollars to invest in energy assets. via Slump in Oil Prices Brings Pressure, and Investment Opportunity – NYTimes.com.

REUTERS — 8:33 AM ET 02/02/15WASHINGTON, Feb 2 (Reuters) – U.S. consumer spending recorded its biggest decline since late 2009 in December, with households appearing to save the extra cash from cheaper gasoline, which could support future consumption.The Commerce Department said on Monday consumer spending dropped 0.3 percent after a downwardly revised 0.5 percent increase in November. It was the largest drop since September 2009.Economists polled by Reuters had forecast consumer spending, which accounts for more than two-thirds of U.S. economic activity, falling 0.2 percent in December after a previously reported 0.6 percent increase.When adjusted for inflation, consumer spending dipped 0.1 percent, … Read more

Smith & Nephew Surges as Stryker Said to Plan Offer … www.bloomberg.com/…/stryker-said-to-plan-takeover-bi… Bloomberg L.P. Dec 24, 2014 – Smith & Nephew Plc rose in London trading after people familiar … The bid is still being finalized and the timing could change, said the people. That’s the headline last month.  Since then SNN has pulled back to a level that represents some opportunity.  Yesterday at the JP Morgan Healthcare Conference, Styrker management said little to change the dialogue, making me think a deal is more likely than not and at a higher price than projected because its taking a long, long time. ” In terms of M&A, management … Read more

Maria Bartiromo for USA TODAY Saudi billionaire businessman Prince Alwaleed bin Talal told me we will not see $100-a-barrel oil again. The plunge in oil prices has been one of the biggest stories of the year. And while cheap gasoline is good for consumers, the negative impact of a 50% decline in oil has been wide and deep, especially for major oil producers such as Saudi Arabia and Russia. Even oil-producing Texas has felt a hit. The astute investor and prince of the Saudi royal family spoke to me exclusively last week as prices spiraled below $50 a barrel. He … Read more