Harry Newton's In Search of The Perfect Investment
Newton's In Search Of The Perfect Investment. Technology Investor.
8:30 AM EST Thursday, February 28, 2008: The
commodity boom continues, with silver, gold and oil skyrocketing. I suspect
that the boom is a reflection of the flight away from stocks, money market funds
and muni bond auction rate securities. The way to play this (as I've written
Best way to play
the oil price hike is to buy options on futures. Jim Kingsdale, my energy guru
(check out his web site, Energy
Investment Strategies) tells me his initial positions on oil options
futures from a couple of months ago are up over 50% so far. Jim reports
that the market is starting to value long dated futures more realistically,
"but there is a very long way to go."
Despite the over
$100 a barrel high price for oil, there hasn't been a resurgence in alternative
energy stocks. The big muffahi (spelling?) of the bunch is First Solar. It's
bounced back from its lows earlier this year, but now seems flat. I suspect
a tiny investment at these prices might be profitable. At some point soon, these
things will get hot again.
And finally, there's
the old uranium standby, which bounces around as nukes get talked about:
Rate Preferreds (ARPS) revisited: I'm
last conversation with a fellow unlucky owner of these things was close to midnight
last night. Still, I encourage you to email me -- .
We'll exchange phone numbers and we'll chat about our joint strategy. I really
want to talk to you. Everybody I've spoken with is smarter than I am. And everyone
adds a new element to our joint goal of ultimately getting our hands on our
sum up: There is still no announced solution. We are all stuck unable to sell,
but receiving our penalty interest (check your brokerage statements). (In case
you're wondering what I'm talking about, read yesterday's
Everyone is following
my Make Maximum Noise, Bring Maximum Pressure Strategy. That Strategy
is what I see as a pre-legal "sue their arses" strategy, which may
or may not come next, although at least one law firm is sniffing around. Click
Right now we should
all be in the collecting evidence, applying pressure mode. To wit:
1. You need
to collect all the brochures that say these ARPS are cash or cash equivalents.
These brochures were issued by your local broker or your local ARPS issuer.
You need to do this ultra-quickly, since brokers and issuers are hastily removing
this evidence from their web sites. As an example, this one is excerpted from
a Morgan Stanley brochure called "Fixed Income Cash Management Investing."
This one came
from a Nuveen brochure called "Nuveen FundPreferred -- AAA-rated investments
offering attractive short-term inome."
2. You need to make your position known to those responsible. Your primary
bitch is with your broker (e.g. Morgan Stanley), but your key bitch is with
the issuer of these securities (e.g. Nuveen). You need to explain in no uncertain
words that not having access to your money is a major disaster for you, that
you were sold a security that was misrepresented as short-term sellable, and
that you wil never ever deal with the broker or the issuer again if this is
not resolved quickly and, finally, you will have no hesitancy to sue their arses
off, irrespective of what it costs. The more people who receive our pressure,
the better; the more of us who apply the pressure, the better. Apply it at all
levels. I hear brokers are telling their managers, "Please fix this.
My customers refuse to do business with me until this is solved. I'm starving
You can get creative.
I learned yesterday that a very respectable and very successful private equity
firm called Madison Dearborn had bought Nuveen for $5.75 billion. Bingo, I emailed
John Canning, their chairman asking him to intervene and solve this -- for,
without solving it, his $5.75 billion would be worth zilch. In my email, I wrote,
"Nuveen management is frozen, fearful of doing anything, fearful of lawyers
peddling fear. The world needs John Canning to break the logjam, to take charge
of Nuveen and to solve our problem."
I'd received a phone call from a partner in the firm called Tim Hurd, Managing
Director - B.A., University of Michigan; M.B.A., Harvard Graduate School of
His bio on Madison Dearborn's web site reads, "Prior to joining MDP, Mr.
Hurd was with Goldman, Sachs & Co. Mr. Hurd concentrates on investments
in the financial services sector and currently serves on the Boards of Directors
of CapitalSource Inc., Nuveen Investments, Inc. and Children's Memorial
I had a lovely
30-minute chat with him. He had no solution, but he said they (he and Nuveen)
were working "around the clock" to find a solution; they were researching
"multiple directions." He was proud of the fact that Nuveen was the
first issuer who had held a conference call for its ARPS investors (see yesterday's
column.). No matter how hard I pushed, I couldn't get an estimated date
for "the solution." I did get some sense that he understood the urgency.
If you wish his email address to add your concern, send me an email. I don't
want to put Tim Hurd's email on a public web site, since that would only expose
him to spam.
In case you missed
it, you can listen to a replay of Tuesday's conference call by Nuveen management.
Call 1-888-266-2081 and enter conference access code 1207768. The call replay
will be available through March 4, 2008.
Today at 11:00
AM EST, Nuveen is having an earnings conference call. Access to the call will
be available via www.nuveen.com
or by dialing (866) 814-8482 or (703) 639-1372 and referencing conference ID
3. Write letters
to your local attorney-general and governor. Some are already investigating.
Some need to be prodded. But these people need to know that our April 15 tax
monies are tied up in these ARPS.
Johnny strikes again.
A grade school teacher in Kentucky asked her students to use the
word 'fascinate' in a sentence.
Molly put up her
hand and said, 'My family went to my granddad's farm, and we all saw his pet
sheep it was fascinating.'
The teacher said, 'That was good, but I wanted you to use the word 'fascinate',
Sally raised her hand. She said, 'My family went to see Rock City and I was
The teacher said,
'Well, that was good Sally, but I wanted you to use the word 'fascinate', not
raised his hand.
The teacher hesitated
because she had been burned by Little Johnny before. She finally decided there
was no way he could damage the word 'fascinate', so she called on him. Johnny
said, 'My aunt Gina has a sweater with ten buttons, but her tits are so big
she can only fasten eight.'
The teacher sat down and cried.
This column is about my personal search for the perfect
investment. I don't give investment advice. For that you have to be registered
with regulatory authorities, which I am not. I am a reporter and an investor.
I make my daily column -- Monday through Friday -- freely available for three
reasons: Writing is good for sorting things out in my brain. Second, the column
is research for a book I'm writing called "In Search of the Perfect
Investment." Third, I encourage my readers to send me their ideas,
concerns and experiences. That way we can all learn together. My email address
is . You can't
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