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full-time investing; total portfolio up over 130% in 2009; but 2010 sucks!
stock_peeker
full-time investing; total portfolio up over 130% in 2009; but 2010 sucks!
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full-time investing; total portfolio up over 130% in 2009; but 2010 sucks!
AGT: nelson1234, OK, thanks for the feedback. I've not done proper dd on AGT myself, just riding cl001's coattails with a small position.
Surprised to see them UP today, but I'll take it.
'peeker
Paul Litman: "Avoid panic selling AND avoid overconfident buying."
GORO at low of the yr; not unexpected since AUY and GG are also hitting their low of yr today.
GORO should do very well next yr after getting into production; the unknowns are how long it will take them to become cashflow positive and whether they'll have to hit the market for additional cash for operations before becoming cashflow positive.
Paul Litman: "Avoid panic selling AND avoid overconfident buying."
Forced hedge fund selling knocks some stocks off kilter
10:35p ET October 16, 2008 (MarketWatch)
SAN FRANCISCO (MarketWatch) -- Steel Dynamics Inc. has lost more than half its market value in the past month, despite quarterly results that showed the company in ruddy health.
Late Wednesday, the Fort Wayne, Ind.-based steel company reported a 92% surge in third-quarter net income and revenue that more than doubled. The results fell short of analyst expectations, but that wasn't enough to explain the recent collapse in the company's shares, according to Chief Executive Keith Busse.
"It is simply beyond comprehension why our share price, which is supposed to reflect rational thinking by rational people, is where it is today," Busse said. "Those who have literally dumped their shares into a grossly oversold market have made some very poor investment decisions."
"A lot of that has to do with the hedge funds," he added during a conference call with analysts on Thursday. "They've driven this thing to almost a silly level where I think yesterday we were below our actual book value."
Steel Dynamics may be one of many companies that have seen their share price slump in the past month as the $2 trillion hedge fund industry suffers its worst losses in at least a decade. There are now early signs that such pressure may be easing. See related story.
Steel makers and other commodities companies have been popular holdings for many hedge funds as they bet on a boom in demand from fast-developing countries like China and India.
But hedge fund investors have been asking for their money back in recent weeks. That's forced some managers to unwind positions to raise cash for redemptions at the end of this year. See story on redemptions.
Investors redeemed about $43 billion from hedge funds in September and more withdrawals are expected through the rest of 2008, TrimTabs Investment Research, which tracks flows of investor money, said on Thursday.
A Goldman Sachs index of 50 stocks that are most heavily owned by hedge funds slumped 19% in September, while the Standard & Poor's 500 index dropped 9%. Another Goldman index, which monitors stocks that don't have many hedge fund investors, fell just 2% last month.
"Forced selling to cover redemptions and delevering by hedge funds has put downward pressure on selected stocks," David Kostin and his colleagues at Goldman wrote in a note to clients earlier this month.
"We expect hedge fund selling/deleveraging to continue," they added, while telling investors to bet against stocks heavily held by hedge funds and to buy stocks with the fewest hedge funds as shareholders.
Energy company Calpine Corp. , coal company Alpha Natural Resources and chipmaker Cypress Semiconductor are among companies with the most hedge funds as investors, Goldman noted in its report.
Other well-known companies with lots of hedge fund investors include Google Inc. , MasterCard and Anheuser-Busch .
Nearing an end?
However, there may be early signs that Goldman's suggested trade may be nearing an end. TrimTabs noted on Thursday that many hedge funds may have already raised enough cash to meet expected redemptions.
"They may not be the main source of forced selling anymore," Charles Biderman, founder of TrimTabs, said in an interview.
Indeed, shares of Steel Dynamics surged 23% to $8.99 on Thursday.
At the end of June, the third-largest shareholder of Steel Dynamics was TPG-Axon Capital, a big hedge fund run by former star Goldman Sachs trader Dinakar Singh, according to FactSet Research.
It's not clear whether TPG-Axon still holds shares of the steelmaker, but the hedge fund was down 18% this year through the middle of September, according to Bloomberg News. That's left Singh on course for his first annual loss since he launched the firm in 2005.
Other big investors in Steel Dynamics at the end of June included Jeff Vinik, who left mutual fund giant Fidelity to start his own hedge fund several years ago.
D.E. Shaw, one of the world's largest hedge fund firms, Tudor Investment Corp., headed by Paul Tudor Jones, and AQR Capital Management were also among Steel Dynamic's top 20 investors on June 30, according to FactSet.
'Speculation bust'
Other commodities companies have suffered recently from having hedge funds as large investors.
Shares of Mosaic Co. , a leading fertilizer maker, has slumped 62% in the past month. The company counted D.E. Shaw, Renaissance Technologies and Citadel Investment Group, three of the largest hedge fund firms, among its top 20 investors at the end of June, according to FactSet.
Citadel told investors this week that it lost 26% to 30% this year, through Oct. 10. See full story.
Mosaic is also a favorite stock of Passport Capital, a $4.3 billion hedge fund firm run by John Burbank.
Passport generated big returns last year betting against subprime mortgages. The fund has also been investing in energy and basic materials companies in a bet on global economic growth and rising demand from countries like India.
Other hedge funds took similar positions based on this fundamental idea, betting against financials in the U.S. and against the U.S. dollar while going long energy and other commodities.
But as oil prices soared, Burbank said in a recent speech that there was "massive intervention" by central banks to get crude back down and to boost the U.S. dollar.
"They helped create a huge speculation bust" as hedge funds have had to unwind bets against financial companies and long positions in commodities, he explained.
Shares of Freeport-McMoran , one of the world's biggest copper producers, have slumped more than 50% in the past month. The company counts leading activist hedge funds Harbinger Capital and Atticus Capital among its top investors.
The Harbinger Capital Partners Offshore Fund I, run by Philip Falcone, lost almost 18% in September, leaving it down more than 5% during the first nine months of 2008, according to investors.
A European fund run by Atticus slumped 15.8% in September, according to investors.
Freeport-McMoran isn't the only company to be hit by trouble at large activist hedge funds.
Railroad giant CSX Corp. lost a bitter proxy battle earlier this year with The Children's Investment Fund, or TCI, a top activist hedge fund run by Christopher Hohn.
TCI won several seats on CSX's board, but the hedge fund lost more than 15% in September, leaving it down more than 26% in the first nine months of 2008. Meanwhile, CSX shares have slumped 25% in the past month.
Merger arbs unwound
The shares of some companies involved in high-profile mergers and acquisitions have also been disrupted in recent weeks by trouble in the hedge fund industry.
Some hedge funds focus on merger arbitrage, a strategy in which managers bet on the outcome of deals by shorting the stock of the acquiring company and buying shares of the target company. As mergers move closer to completion, the spread between the two shares narrows, generating profit.
As some hedge funds have had to unwind these positions, merger arbitrage spreads have widened.
Anheuser-Busch shares have dropped almost 10% during the past month and now trade below $60. That's despite an agreement the beer maker has signed to be acquired by InBev for $70 a share.
Rohm & Haas shares have slipped 4% in the past month, leaving them trading at $70.26 on Thursday. Dow Chemical agreed to buy the chemicals company for $78 a share in July.
Paul Litman: "Avoid panic selling AND avoid overconfident buying."
Potash producers (POT, MOS, and my icky little KCLOF.pk) have been utterly decimated, schnockered, battered, and generally had their d#cks knocked in the dirt over the last 2-3 months. Now that hedge fund redemptions are mostly out of the way, fundamentals will begin pushing them back up. My guess is they will rebound steadily during 1Q09, so I'll continue to hold my icky KCLOF.pk for now.
It's been a tough year for anyone overweight in commodities this year, including me and many others who frequent this board, due primarily to hedge fund redemptions.
After tax selling season, I expect we'll see a significant rebound in potash producers. If the stock market truly does look six months ahead, it could start in the next few weeks, assuming hedge funds complete their unwinding.
Good luck, all!
'peeker
Paul Litman: "Avoid panic selling AND avoid overconfident buying."
OIL.to: I agree; chart below indicates excessive carnage:
Paul Litman: "Avoid panic selling AND avoid overconfident buying."
Wow! What a handsome bug! Uh Oh ... U F'ing Betcha
Paul Litman: "Avoid panic selling AND avoid overconfident buying."
GORO: I called them today; didn't learn much though:
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=32906896
Unbelievable that it's on sale at 2.12x2.22 ... I added a smidge at 2.10 earlier.
'peeker ??????
Paul Litman: "Avoid panic selling AND avoid overconfident buying."
Manufacturing DOWN!!!
10:00 ECONX October Philadelphia Fed (New Orders) -37.5 vs -10.0 consensus, prior 3.8
09:53 YHOO Yahoo! pops 30 cents over the past few min... Hearing chatter is circulating again that YHOO could come back to the table to negotiate a deal with MSFT (11.74 -0.01)
Paul Litman: "Avoid panic selling AND avoid overconfident buying."
ATPG's news the other day indicating they would drastically reduce their future development budget was wise in this low-priced crude oil env'ment. On the other hand ... it reminds me that the former CEO of XOM also kept exploration budget down (with the effect that his departure package was astronomical).
Paul Litman: "Avoid panic selling AND avoid overconfident buying."
GORO at 2.50 ????????????????
I guess it's all about P E R M I T S ??????????????
(on the bright side, it's low volume)
Paul Litman: "Avoid panic selling AND avoid overconfident buying."
19:13 U.S. set to buy preferred stock in nine top banks - WSJ
The U.S. government is set to buy preferred equity stakes in nine top financial institutions as part of its new comprehensive plan to tackle the credit crisis, according to people familiar with the situation. It's unclear how much would be invested in each institution. The move is designed to remove any stigma that might come with a government investment. Not all of the banks involved are happy with the move but agreed under pressure from the government. The dramatic moves are part of a new wide-ranging effort to restore confidence to the battered banking system, following similar moves by European governments that sent global stock markets soaring. The U.S. initiatives will likely supersede many of the government's previous efforts. They are being formulated jointly by the Treasury Department, Federal Reserve and Federal Deposit Insurance Corp., and ensure that the U.S. banking sector will be tied to the federal government for years to come. One central plank of these new efforts is a plan for the Treasury to take ~$250 bln in equity stakes in potentially thousands of banks, according to people familiar with the matter, using funds approved by Congress through the $700 billion bailout bill. In addition, the FDIC is expected to temporarily extend its backstop from bank deposits to new funds raised by banks and thrifts for three years. That would be an aid to companies that have had a hard time raising capital without government assistance. The FDIC is also expected to temporarily lift the insurance limits for non-interest bearing bank deposit accounts. This would extend beyond the $250,000 limit per depositor that lawmakers agreed on two weeks ago. The shift brings U.S. policy more in line with other countries that have offered blanket deposit insurance to try and prevent customers from withdrawing large sums of money from financial institutions.
19:04 U.S. to announce "comprehensive actions" of bank rescue plan tomorrow at 8:30ET; President Bush to speak at 8:05ET
17:38 Treasury to roll out new approach to credit crisis - WSJ
The Bush administration is expected Tuesday to roll out a wide-ranging effort to restore confidence to the battered banking system, following similar moves by European governments that sent global stock markets soaring, according to people familiar with the matter. The initiatives will likely supersede many of the government's previous efforts. They are being formulated jointly by the Treasury Department, Federal Reserve and Federal Deposit Insurance Corp., and ensure that the U.S. banking sector will be tied to the federal government for years to come. One central plank of these new efforts is a plan for the Treasury to take ~$250 bln in equity stakes in potentially thousands of banks, according to people familiar with the matter, using funds approved by Congress through the $700 bln bailout bill. In addition, the FDIC is expected to temporarily extend its backstop from bank deposits to new senior preferred debt issued by banks and thrifts for three years. That would be an aid to companies that have had a hard time raising capital without government assistance. The FDIC is also expected to temporarily lift the insurance limits for non-interest bearing bank deposit accounts. This would extend beyond the $250,000 limit per depositor that lawmakers agreed on two weeks ago. The shift brings U.S. policy more in line with other countries that have offered blanket deposit insurance to try and prevent customers from withdrawing large sums of money from financial institutions. Other moves could include temporary loan guarantees aimed at helping banks borrow the money they need to do business. Officials are still working through how such a plan would work. All told, such a program would put the guarantee of the government behind much of the plumbing behind financial markets, a step that would have appeared inconceivable a few months ago. But the seizure in credit markets and last week's plunging stock markets forced policymakers around the world to shift gears.
Paul Litman: "Avoid panic selling AND avoid overconfident buying."
AI
