Harry Newton's In Search of The Perfect Investment
Newton's In Search Of The Perfect Investment. Technology Investor.
8:30 AM Tuesday, August 16, 2005: Conclusions
from yesterday's reading:
+ Due diligence is time consuming.
+ Due diligence is not rewarding. It leads to lots of saying No. (Which makes
for boring copy.)
+ How you personally feel about the company's ability to innovate and
how much attention they pay to sales and marketing is key. See my Tale
of Two Banks below.
+ This stuff isn't easy, though my LBO (leveraged buyout) fund made a big payout
yesterday and my bank manager was happy.
tale of two banks. My friend runs Independence Community Bank
(ICBC). It had a nice run, warned, then its shares collapsed:
In contrast, another
local bank, Commerce Bancorp (CBH) has been exploding:
The difference? CBH innovates with on-line and other services. ICBC doesn't.
A reader turned me onto CBH and the great deals it offers. He emailed me:
Harry - Do you
bank with Commerce (CBH)? I met with their CEO yesterday and this is truly
an amazing story. Last week they rolled out a credit card for their banking
customer that charges no fees! No late fees for non-payment, nothing. They,
unlike most banks, are happy enough just collecting the massive spread on
the rates that a credit card borrower would pay. If any of your readers live
in CBH's markets (New Jersey, Pennsylvania, Delaware and New York) they should
definitely look into banking with them. The service is phenomenal and they
don't nickel and dime you to death.
Here's a sampling
of CBH's services from their web site. Most of these services ICBC doesn't
provide, despite my constant prodding.
CBH is significantly more profitable. There's a lesson here. A lot of it has
to do with marketing and innovation, and most importantly, how the company uses
the Internet to spoil its customers. CBH does. ICBC doesn't. I made some money
with ICBC and fortunately got out when it started tumbling. I could have made
more with CBH. I'm hoping for a pullback and will buy CBH stock.
made it to Time Magazine: They wrote Jim Cramer up as a media story,
not a stock-picking story. How stupid can you get? As a media story:
+ CNBC's ad revenues
were $140 million in 2004, compared with $383 million in 2001. They need a "star"
+ Overall ratings remain depressed, even though onetime rival CNNfn closed down
+ Cramer gets about 176,000 viewers a night. Not many. But far more than previous
(now cancelled) shows hosted by Dennis Miller, John McEnroe and Tina Brown.
As to Cramer's stock-picking record? Someone called Landmark Associates in Fernandina
Beach, Fl is tracking Cramer's performance. Landmark's chart this morning shows
21 successful picks versus 20 unsuccessful ones. That's a so-so record. The
site is www.booyahboyaudit.net.
floaters. California ones are paying around
2.53% at present. New York ones are paying around 2.6%. If you're
paying 35% in total on your federal, state and city taxes, those rates
are equivalent to 4% before tax -- which is not shabby for complete safety.
fuel economy rules and regulations. From today's New York Times:
corporate average fuel economy regulations - known as C.A.F.E. standards in
the industry - divide each automaker's annual new vehicle production into
two categories: passenger cars and light-duty trucks. New cars
must average 27.5 miles a gallon and light trucks 21.2 miles a gallon
in 2005 models and 22.2 miles by 2007. The figures represent lab-generated
mileage and overstate the numbers that can be achieved on the road. Rules
for cars are not being changed.
When the current
two-category system was created in the 1970's, cars ruled the American road.
Since then, automakers have developed new classes of vehicles that qualify
as trucks, including S.U.V.s, minivans and family-oriented pickup trucks with
two rows of seats. As a result, not only is the number of vehicles on the
road increasing, but the average new vehicle is getting lower mileage than
it did two decades ago because so many more new vehicles are trucks. An
increasing emphasis on horsepower is also a major factor.
utility vehicles and pickup trucks weighing more than 8,500 pounds when loaded,
like many Hummers and Ford Excursions, have been exempt from the regulations.
When the system was created, vehicles of that weight were generally used for
commercial purposes, but now hundreds of thousands sold each year are intended
for family use.
had powerful incentives to produce such vehicles because they are exempt from
fuel regulations, have had rich profit margins, and many consumers can claim
tax breaks for them. The administration had suggested including larger S.U.V.'s
in fuel economy regulations in a first wave of proposals in December 2003,
but domestic automakers objected that such a move would harm their fragile
says computers can't bring people together? During the father of
the bride's toast, he praised the groom's good cheer and helpful nature by recalling
the time he called him for help with his computer which had begun spontaneously
rebooting every few minutes. The groom figured out the problem, then patiently
talked his future father-in-law through removing the Blaster worm. Having
thus properly greased the skids, the groom called back a few minutes later to
ask for his daughter's hand in marriage. -- from The Washington Post.
With an Umbrella
A Western Buddhist woman was in India, studying with her teacher.
She was riding with another woman friend in a rickshaw-like carriage, when they
were attacked by a man on the street. In the end, the attacker only succeeded
in frightening the women, but the Buddhist woman was quite upset by the event
and told her teacher so. She asked him what she should have done - what would
have been the appropriate, Buddhist response?
The teacher said
very simply, "You should have very mindfully and with great compassion
whacked the attacker over the head with your umbrella."
a Haircut, now
known for his lengthy sermons, noticed a man get up and leave during the middle
of his message. The man returned just before the conclusion of the service.
pastor asked the man where he had gone.
"I went to get a haircut," was the reply.
said the pastor, "why didn't you do that before the service started?"
the gentleman said, "I didn't need one then."
+ Manhattan Pharmaceuticals: Click
+ NovaDel Biosciences appeals. Click
+ Hana Biosciences appeals. Click
+ All turned on by biotech. Click
+ Steve Jobs Commencement Address. The text is available:
Click here. The full audio is available. Click
+ The March of the Penguins, an exquisite movie. Click
+ When to sell your stocks. Click
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 .
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