Enterprising Investor Forum

From the 2005 letter to shareholders:

*******

“The attitude of our managers vividly contrasts with that of the young man who married a tycoon’s only child, a decidedly homely and dull lass. Relieved, the father called in his new son-in-law after the wedding and began to discuss the future:

• “Son, you’re the boy I always wanted and never had. Here’s a stock certificate for 50% of the company. You’re my equal partner from now on.”

• “Thanks, dad.”

• “Now, what would you like to run? How about sales?”

• “I’m afraid I couldn’t sell water to a man crawling in the Sahara.”

• “Well then, how about heading human relations?”

• “I really don’t care for people.”

• “No problem, we have lots of other spots in the business. What would you like to do?”

• “Actually, nothing appeals to me. Why don’t you just buy me out?”

*******

Excellent!

We thought that readers would find this interesting. This is the link to a really good article on DealBook about Sovereign Wealth funds and the myths surrounding them - definitely worth reading:

What you didn’t know about Sovereign Wealth Funds: link.

Enjoy!

Did anyone notice that Robert A. Day has decided to go on a buying spree? The billionaire and founder of The Trust Company of the West has recently bought 15,296,834 USD worth of McMoRan Exploration Co. (MMR) stock! We decided to go on InsiderCow.com and the list of filings is truly impressive - we suggest you have a look, just type MMR: link.

On the Financials side, Mr. Medina-Mora, Chairman and CEO Citigroup Latin America and Mexico, bought 185,000 shares for 5 million USD. What is interesting is that 2 days before the purchase he received over 240,000 shares at no cost through his stock incentive plan - to say he is bullish about Citi is an understatement!

It looks like there are greedy/irresponsible investors outside of the US too!

A small town in Norway - Narvik - announced that it has lost 64 million dollars (!) on investment products from Citigroup and could stand to lose even more:

• New York Times article: link.

This news come as more and more municipalities and SMEs in Europe are starting to report that they were ’strongly advised’ by their bankers to invest in C.D.O.s and other risky investments….

Despite the fact that markets have picked up in the last days, no one knows what is going to happen as the current climate remains very tense. We are currently facing a huge international crises as recent economic growth throughout all spectrums has been driven by ‘borrowed money’…

Come back next Monday for more investing humor!

Some of this video is a bit pessimistic, to say the least but it’s still worth watching.

Enjoy!

Despite the fact that investors should still be very cautious, some analysts and so called ‘experts’ are starting to call a bottom. The main reason behind this is that the huge drop we experienced yesterday was followed by a big rally during the same session and this is considered a ‘text-book’ bottom pattern.

Furthermore, Europe seems to be rallying despite very serious concerns for the banking sector (especially the SocGen scandal) and the suspicion that the economy still has to catch up to the US down-turn.

Could this simply be short covering mixed with investors trying to book some profits/save losses in preparation for next week?

As you know, we are not in the business of calling the market but we do feel that it might be time to add a second third to our previous positions in Precision Drilling Trust (link), Safety Insurance Group (link) and Citigroup (link).

Please read our disclaimer.

Things are pretty crazy:

• Investors are DEMANDING for another 50 point cut - essentially already factored in
• Europe is refusing to cut and maintains that inflation is still the main concern
• European banks are getting ready for huge write-offs
• Financial and Retail sector Spiders/ETFs are spiking - basically, investors trying to catch the bottom
• Commodities are moving lower
• Large Hedge Funds are selling most of their positive positions…
• …

Unless you have a crystal ball, we would hold back an avoid any rushed decisions. If we break current resistance levels, things could get really bad…. and next week will be key when the Fed speaks up again!

Patience.

We already wrote about Lampert (link), that he has an amazing track record and that we should give him the benefit of the doubt and look back on his investment results in a couple of years time.

It looks like things have started to move in the right direction yesterday and Sears shares spiked 12% following an announcement that they were restructuring into 5 separate business units to help them focus and increase accountability.

A lot of people are still betting against Sears and only time will tell…

Just a small note to highlight that some CEOs are willing to put their money to work and fully back their commitments.

Geoffrey Hertel, Tetra Technologies (TTI) President and CEO bought 70.000 shares for a total of 998.000 USD.

When asked about the investment, he simply stated “I just decided that the stock was so cheap I had to buy it.”