Harry Newton's In Search of The Perfect Investment
Technology Investor. Auction Rate Securities. Auction Rate Preferreds.
8:30 AM EST Wednesday, June 18, 2008: The
summer is shaping up gruesomely. I ran some lines on a chart of the Dow. See
below. The trends don't look exactly positive. Remember the old adage, "Sell
in May and go away." I wrote about this phenomenon on May
It's coming true this summer.
The economy is
being hit hard by higher fuel costs, lower housing values and defaulting credit
lines (like credit cards and mortgages). The big "hit" will be on
the financials, like Capital One, Merrill Lynch, Bank of America, Wells Fargo
and of course, my unfavorite, Lehman Brothers. I can't find anything cockroachy
to say about them today. Shucks. The only good news on Lehman was it fell $2.06
Bloomberg this morning:
3.0 is released. It's new. It's faster. It's more stable. And it has
the same old neat features, like allowing you to customize it with a huge raft
of "add-ons." (My favorite add-on is Showcase.)
Firefox 3.0 leaves Microsoft's Internet Explorer in the dust. Get yourself a free
copy of Firefox
3.0 in your language and your operating system (Windows, Mac OS X or Linux).
Use it it instead of Internet Explorer.
June 18 (Bloomberg)
-- John Paulson, founder of hedge fund Paulson & Co., said global writedowns
and losses from the credit crisis may reach $1.3 trillion, exceeding
the International Monetary Fund's $945 billion estimate.
only about a third of the way through the writedowns,'' Paulson said, speaking
at a hedge fund conference in Monaco today. "There are a lot of problems
out there and it will continue to be felt through the year. We don't see any
signs of stabilizing.''
whose company Paulson & Co. manages about $33 billion, returned 12 percent
in his Advantage Plus Fund through May, according to investors. Last year,
Paulson's Credit Opportunities Fund climbed almost sixfold. He has
been betting on an increase in corporate defaults and a slowdown in the U.S.
economy as home prices and consumer-spending to decline.
4.0 Beta for Windows is out: Everyone uses
Skype for cheap international phone calls. But the cognoscenti use it for great
video calls, especially to their family and their grandchildren. There's nothing
more exciting for the kids than crowding around the web cam and talking to grandma
and grandpa in Timbuktu, or wherever. Download the free Skype 4.0 on Skype.com.
is a true miracle. My tennis partner cricked
his back. He said he could only play on Monday night because of these things.
My son and wife have various and sundry aches and pains. They tried these things
last night and reported success. The patches stay on and work for up to eight
hours. They're about $8 a box.
to say No. I receive several proposals a week for ventures to invest
in. Most are awful on two grounds. First, the entrepreneur is far too greedy,
wanting too much of the deal for himself. One even told me that he would pay
his investors a gigantic 8%. The investors would be happy since that was more
than they were earning on the bank CDs.
Second, the assumptions
of future sales are way too high. I checked the comparables (aka comps) on one
real estate deal. The entrepreneur was guessing he'd rent the place at more
than twice what others were getting.
Over the years
I've learned if you say "No," the entrepreneur will ask you "Why?"
If you answer, you'll be sucked into an endless discussion -- which you will
lose. Simplest is this email, which works.
tapped out at present as regards new investments.
I don't even want to think about the opportunities I'm missing.
stupid we all are. But how greedy Wall Street is.: A reader of my
www.AuctionRatePreferreds.org site emails his story:
I went to Bank
of America 1-23-08 to pay off my home loan. Instead I ended up with $ 1,000,000
worth of Student loans. Ten days later in February the problems surfaced.
My Premier banker from BOA as well as Banc of America investment advisor recommended
the Student bonds. they said I would make more than my mortgage payment and
could liquidate it at any time "very safe". I should have never
listened to a couple of young kid bankers. They now have me upside down in
my mortgage payment.
to use your stock screener. My
friend Gene Towba turns up this on his stockscreener.
Industries (NYSE: NPK) is a small company with sales of $400 million and a
market capitalization of $450 million. National Presto, founded in 1905 in
Eau Claire, Wisconsin, manufactures a wide range of household cooking appliances
including pressure cookers, deep fryers and roasting pots.
National Presto produces fondue pots, woks and hamburger cookers-all with
NPK's removable heat control devices. The company also sells ammunition and
cartridge cases to the U.S. military and sells disposable diapers for babies
and adults. The ammunition and diaper businesses are ancillary but quite profitable.
sales and earnings increased dramatically in 2007, buoyed by higher sales
and profits from its ammunition business. Sales in the first quarter of 2008
slowed because of delayed payments from the military, a temporary setback.
But EPS jumped 25% thanks to a highly successful cost reduction program. We
forecast 15% EPS growth for 2008 as defense payments normalize and new appliances
are introduced. The balance sheet is very strong with no debt and a whopping
$21 per share cash balance.
price has increased noticeably during the past few weeks, and I believe the
price will rise further as more investors discover this little-known company.
The dividend yield of 6.4% is extraordinary. NPK shares will likely climb
to my minimum sell target price within one to two years.
I email back:
"You can't be serious?" He emails back:
With aging boomers,
adult diapers are the future! With China in pursuit of more oil, ammo is the
future. With Gay weddings now legal in California, fondue pots are the future.
It is a wonder
why some hedge fund does not scoop me up as an analyst.
It has a high
yield, a lot of cash on hand, no debt and growing ammo business. I think demand
for the fondue pots will decrease, but they can keep afloat on their ammo
and diapers which are growing.
If you wish,
I can call you up, say I am a broker and you can short it.
+ Police were called to a day care where a
three year-old was resisting a rest.
To write with a broken pencil is pointless.
A thief fell into wet cement. He became a hardened criminal.
Dead batteries are given out free of charge.
+ If you don't pay your exorcist you can get repossessed.
+ A boiled egg is hard to beat.
+ When you've seen one shopping center, you've seen a mall.
+ Bakers trade bread recipes on a knead to know basis.
+ Acupuncture: a jab well done
2:30. When it's time for Chinese people to go to the dentist.
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
click on my email address. You have to re-type it . This protects me from software
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