The Insider Report

HSBC Bombshell: Oil Will Run Out in 50 Years

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The senior global economist at the world’s second largest bank warned that the global oil supply might run out in under 50 years. “Energy resources are scarce,” wrote Karen Ward, HSBC’s senior global economist in a research report that was obtained by CNBC. “Even if demand doesn’t increase, there could be as little as 49 years of oil left.” Speaking on CNBC, she raised her estimate by a year.  “We’re confident that there are around 50 years of oil left…There’s possibly more out there, but the confident estimates are around 50 years.” Here’s Ward on CNBC: Peak oil theorists are … Read more

Oil Hysteria: The Resurrection of Peak Oil

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It would be great if I’m wrong but chances are we’ll see prices for crude hit $140 before we see $80 barrels again….After hovering around $103 a barrel for the past week, light, sweet crude had jumped to over $107 a barrel on the Nymex (and Brent over $117 a barrel).  Let’s take a step back and try to understand why this is happening……

The situation in Libya is looking like a shit-show. Pro-Gadhafi forces have pushed back rebel forces, in spite of the coalition-imposed no-fly zone.  Plus the reports of British Ops & the CIA tearing it up in Libya, doesn’t make matters any better.  And let’s not forget about the geopolitical unrest in Syria, Yemen and Bahrain.

The situation in Libya raises a broader, far more concerning set of questions. If it can happen in Libya, why not in Saudi Arabia, where the government is still essentially tribal in nature and will not be winning any prizes for their human rights record anytime soon. Women are still not allowed to drive. Take their 12 million barrels/day off the market, even for a few days, and the geopolitical implications are large, very large (despite the fact that the US imports only 2 million barrels a day from the mid east).Having said that, Canada is now our largest foreign supplier, followed by Mexico and Venezuela (I’ll save my opinions on Chavez for a later date). But oil is a globally traded commodity, and if you prick the supply line in one place we all have to pay. Remove Saudi Arabia from the picture, and the results could be catastrophic, for China first, but for ourselves as well.

While unlikely, if the US keeps demand relatively flat through the use of new alternatives (which there are a great deal of), new conservation efforts and a growing economy, China promises to eat up all of this increase. That my friends, is when the sushi hits the fan. I think oil could easily hit $300/barrel by 2020.

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Recently Discovered Video Interview with Seth Klarman

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For those who don’t know Seth Klarman, here’s some brief info from Jacob Wolinsky at Valuewalk:

Seth Klarman is undoubately one of the greatest investors of our time. Klarman manages Baupost Group, the 11th largest Hedge Fund in the US, with over $20 billion in assets.  There is a rumor that Buffett, (a big fan of Klarman) keeps a copy of Klarman’s out of print and super expensive book Margin of Safety, by his bed. Seth Klarman’s Baupost fund has produced returns of approximately 20% annually since inception in 1983. Klarman has produced phenomenal returns despite the fact that he usually holds huge amounts of cash.

According to a lecture given by Bruce Greenwald: Warren Buffett says that when he retires, there are three people he would like to manage his money. First is Seth Klarman of the Baupost Group, who you will hear from later in the course. Next is Greg Alexander. Third is Li Lu.

Below are the videos (6 in total), enjoy:

[youtube=http://www.youtube.com/watch?v=u0aRiDI1wnk&feature=related&w=400&h=300]

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XOIL Tries to Be Spot-On Spot

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  Global X launched a new equity ETF on Tuesday (3/15/11) that attempts to achieve high correlation to crude oil spot prices. Global X Oil Equities ETF (XOIL) provides exposure to pure-play oil companies with significant oil reserves that are typically not involved in other industries such as natural gas or downstream operations.

The underlying Solactive Global Oil Equities Index tracks the performance of 25 equal-weighted companies that have shown a high correlation to the spot price of oil. Constituents are ranked and chosen by their correlation to the spot price of oil in the quarter preceding the selection day. The index has a global mandate, but only North American stocks passed the most recent correlation screen with 80% currently allocated to the U.S. and 20% to Canada.

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Weekend Reading Links

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The weekend is always a great time to catch up on some of the week’s reading you missed… Markets have gotten conditioned to central bankers flooding the market with money every time something goes wrong. [The Psy-Fi Blog] A profile of Jonathan Ive the “design genius” behind the rise of Apple. [I Heart Wall Street] Market bubbles and investor psychology.  [Vanguard Group] Buffett’s worst investment ever (and its not what you think) and7 other unusual things I learned about Warren Buffett. [The Altucher Confidential] Why are some cities happier than others?  [The Atlantic] Sirius is Clearning up its balance sheet. [Sirius Buzz] The frequency … Read more

Best Hedge Against Rising Oil Prices: Part 1

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by: Dr. Osman Gulseven After the UN resolution on no-fly zone in Libya, the coalition forces just launched an almost full-scale operation on Libya. I was watching Euronews to get latest updates on the Libyan crises. Obviously, this is not a single operation that will last for a couple of days. Libya is on fire! We might see a full-scale war in Libya that will last for weeks or months or even years. After learning a smart lesson in Iraq, France is trying to lead the coalition forces with 20 aircraft and a number of warships. Gaddafi’s spokesman said that … Read more

‘s Focus Growth Fund: A Brief Analysis

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by: Dr. Osman Gulseven In a recent article, I discussed the top holdings in Morgan Stanley’s portfolio. According the latest 13F filings, Morgan Stanley’s (MS) year-to-date performance was mediocre and below the S&P 500 (SPY) return. The investment banks mutual funds have been lagging behind the market since the last decade. The mediocre performance of investment banks portfolio shows that they take hard-earned money and invest in under-performing assets. They also charge management fees and hidden costs such as front-end/back-end loads, plus commissions you never heard of. Some companies charge up to 3% in management expenses. I was checking which funds … Read more

Insider Buying: 7 Stocks With CEO Buys of at Least $100,000 in the Past Week

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by: Steven Kiel Each week I highlight large insider purchases made by the CEO. These purchases must not be option grants or exercises. I prefer to track insider buying at the CEO and CFO level, rather than at the Board level, because management should have a better idea of what’s going on in the day-to-day operation of the company. An insider buys company shares because they have confidence in the company and the stock, and occasionally these purchases foreshadow a coming catalyst. At the same time, these insiders are humans and can get caught up in the market and may … Read more

Get Ready for ETF Changes: QQQQ Becomes QQQ Again

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by: Ron Rowland

PowerShares is changing the ticker symbols for 10 of its ETFs starting with tomorrow’s (3/23/2011) opening of trading. Included in the changes are the PowerShares QQQQ Trust along with the nine small cap sector ETFs that were the subject of a lawsuit filed by the Select Sector SPDR Trust.

I never understood why PowerShares changed the ticker symbol on the Nasdaq 100 ETF from QQQ to QQQQ while simultaneously making QQQ part of its name back in 2004. Perhaps it had something to do with it becoming a Nasdaq listing when the Nasdaq wasn’t allowed to have three letter ticker symbols. Anyway, apparently enough time has passed (or the letter count restrictions were relaxed enough) to allow it to revert to the former ticker – the one with just three letters that matches its name.

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George Soros: China will be the NEW world currency

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[youtube=http://www.youtube.com/watch?v=JJVZ8sf6uBI&feature=player_embedded&w=450&h=350] The US Dollar has been the king of currencies for some time now. According to Soros, there was a flight from all currencies, which is why the price of commodities, especially gold and oil, were generally rising. He also stated that an orderly decline of the dollar was desirable and that the entire system needed to be reconstituted towards a global currency. When commodities, notably oil, is bought and sold in the futures markets it is done in U.S. Dollar denominations. This is why we see such a strong negative correlation between the price of crude oil and the … Read more

What to Buy in Rebuilding Japan

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   Japan has been hit by a triple calamity – monster quake, killer tsunamis’ and nuclear disaster– that only a Hollywood disaster film director could imagine. The damages wrought by this catastrophe in terms of human life and suffering as well as economic damage will be remembered as one of the worst in history. From our standpoint on the ground in Tokyo, it was (and is) hard to be an objective observer given the ongoing Fukushima nuclear crisis, daily earthquake aftershocks, checking radiation levels, gas lines and empty shelves in neighborhood convenience stores and supermarkets. But Japanfs stock and financial markets, being the amoral animals they are, have largely or completely discounted the worst in losing 12.6% or 1,305 points on the Nikkei 225 from a mid-session high on Friday March 11, 2011 to a mid-session low on Friday March 18, 2011; the caveat being that the Fukushima nuclear crisis does not deteriorate into a level 7 Chernobyl-like nuclear disaster.

  • Historically, monster quakes (in 1855, 1923 and 1995) have marked or

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Some insiders step up. You should too.

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We have written a couple of times about our morbid pre-occupation with DELL Computer.  While the world has been hiding under its desk and hunkering down under the twin spectres of nuclear meltdown and democracy contagion in the oil patch, Michael Dell has been buying $150 million more of his stock.  And it’s not like he needs anymore of it to diversify.  According to our friends at the Washington Service, he now owns 273.39 million shares.  So what does Michael see that Wall Street is missing.    While the world, me included, awaits every tidbit of news and product announcement from Apple … Read more

12 Technology Stocks Hedge Funds Are Insanely Bullish About

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By Insider Monkey

  Insider Monkey, your source for free insider trading data, has started publishing some of its content on Seeking Alpha. Here is the latest article we published about    the most popular stocks among hedge fund managers:

  Based on the transactions of nearly 700 hedge funds, we compiled the list of the top 12 technology stocks hedge funds were buying like crazy during the most recent fourth quarter:

1. Apple Inc (AAPL): Nearly 200 hundred hedge funds own 4% of the outstanding shares. Hedge fund stars like David Einhorn, John Griffin, Stephen Mandel, Chase Coleman and John Burbank all own AAPL in their portfolio.

2. Microsoft Co (MSFT): Microsoft was owned by 161 hedge funds at the end of last year. Barry Rosenstein’s Jana Partners, David Einhorn’s Greenlight Capital, Craig Effron’s Scoggin Capital, and Brevan Howard are some of other hedge funds bullish about Microsoft. Whitney Tilson was extremely bulish about Microsoft too. He predicted that Microsoft will reach $35 by the end of 2011.

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UN: Radiation to Hit U.S. By Friday

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     A United Nations forecast of the potential path of the radioactive plume coming from crippled Japanese reactors shows it churning across the Pacific and touching the Aleutian Islands on Thursday before hitting Southern California late Friday.

     However, the weather (more importantly the wind) has been just as volatile and inconsistent as the markets themselves.  Over the next few days wind will be one of the most important variables being factored into the markets.                 

**  CLICK TO SEE VIDEO OF FORECASTED RADIATION PATH   **

     According to the New York Times, A forecast by the Comprehensive Nuclear Test Ban Treaty Organization shows how weather patterns this

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Escalating Radiation Concerns

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The comments stemming from the EU Energy Commissioner sent the market into a frenzy this morning. Now, the U.S.’s turn, the US Nuclear Chief that is recommending a much larger evacuation radius than Japan has called for. The US Chief has said the three troubled reactors “suffered some degree of core damage.”  Having said that, Japan is keeping a significant amount of intel from the public with regards to the vulnerability of the reactors as well as the current and future radiation concerns.  –For an unbaised live feed from Japan Broadcasting Corp:  NHK Live Video Feed

5 Stocks with Substantial Insider Buying

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By Insider Monkey

Insider trading is most profitable when several insiders buy around the same time. Academic studies have shown that insider purchases beat index funds by more than 7 % per year  when there are several insiders purchasing. Insider Monkey, your source for free insider trading data, compiled the list of stocks where at least two insiders made recent purchases. Here are the stocks with substantial insider purchases:

General Motors (GM): As GM’s stock price fell below its IPO price, several insiders stepped in and purchased modest amounts of shares. Daniel F. Akerson, CEO, purchased 5,000 shares at $31.81. Hedge funds snatched 6% of GM’s outstanding shares and amassed a $3.4 Billion position during the last three months of 2010. There were 112 hedge funds with GM positions at the end of December. John Griffin’s Blue Rigde, William Ackman’s Pershing Square, George Soros, David Tepper’s Appaloosa, Roberto Mignone’s Bridger Management,  Richard Perry’s Perry Capital, and Leon Cooperman’s Omega Advisors are among the several high profile hedge funds with GM positions.

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Japan…The new Black Swan.

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Before the discovery of Australia, people in the Old World were convinced that all swans were white, an unassailable belief as it seemed completely confirmed by empirical evidence. The sighting of the first black swan might have been an interesting surprise for a few ornithologists (and others extremely concerned with the coloring of birds), but that is not where the significance of the story lies. It illustrates a severe limitation to our learning from observations or experience and the fragility of our knowledge. One single observation can invalidate a general statement derived from millennia of confirmatory sightings of millions of white swans. All you need is one single (and, I am told, quite ugly) black bird.   — Nassim Taleb, The Black Swan: The Impact of the Highly Improbable

 The earthquake, tsunami and current nuclear crisis in Japan, as well as the current geopolitical unrest in the Middle East challenge the concept of market stability. Black Swan events have tested the limits of the financial markets and banking systems for decades (some might recall the “Tulip Mania” bubble in the early 1600’s).  Reflect on the following list, via Doug Kass of those once in a lifetime events that have occured over the past decade:

  • the Sept. 11, 2001, attacks on the World Trade Center and Pentagon;
  • a 75% decline in the Nasdaq;

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We shorted a large amount of S & P ETF

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We shorted a large amount of SPY after hours when we learned of the deteriorating nuclear meltdown problems in Japan.  Unfortunately we didn’t short more.    I’m sorry to say we did this as insurance and really don’t want to make money on this as we are still far more weighted to the long side.  We listened to Robert Kelley on Bloomberg TV who is an intelligent nuclear engineer and he seemed confident that this would be nothing  like Chernobyl. This reassured me but it doesn’t appear to be reassuring the market.  This futures are down 31.7 pts, the largest drop since the Gulf oil spill.  In … Read more

GM and the Japan earthquake disaster present a compelling opportunity

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GM reawakened from the dead and bankrupt went public again at the end of 2010.  It was a heavily subscribed gigantic IPO and the stock did well peaking at around $39 during the first of the year 2011.  It began its descent and recently plunged below 32 on the news of its CFO, Chris Liddell would be leaing the company.  Barron’s reported, ”

Fourteen months after becoming CFO of General Motors (GM), Chris Liddell is leaving the company. He will be replaced on April 1 by Dan Ammann, the company’s senior vice president for finance and treasurer. The company gave no reason for the transition. Shares fell 3.3% in early trading.

Liddell joined GM in January 2010. He had previously been the CFO at Microsoft (MSFT). At GM, he was instrumental in engineering its IPO. He was also praised for strengthening the company’s accounting methods — when it was emerging from bankruptcy, GM acknowledged “material weakness” in some of its statements, but the company’s audit committee said this year that weakness had been fixed, CNNMoney noted.

The company’s statement indicated Ammann had been groomed for this position. Ammann, who is 38, helped Liddell prepare the company’s IPO and has helped set the company’s financial strategy. Prior to joining GM, Ammann was managing director and head of industrials investment banking at Morgan Stanley (MS).

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‘m very curious about this one- Earnings tomorrow

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CEO Brown bought 100,000 shares of this mortage insurer in Nov 2010 at 10.  The media has had lots of play about mortage irregularities and the potential of claims MBI and others might have against the offending banks that created these deficient mortgages.  MBI has also made progress in splitting itself into two businesses, the good one that insures municipal bonds, and the bad one, you know your home, etc. Single family housing has reached levels that don’t support further price destruction as the cost of building is now substantially higher  than the existing housing stock.  On the other hand, the  municipal … Read more