Saturday, November 7, 2009

Bruce Berkowitz interview

How to be Multi-Millionaire?

If your income is $3,000 per month and starting capital is $100k, then what happen to you after 20 years with 20% compound return from your good investment strategy?
-Answer -> FIRE YOUR STUPID BOSS! Your total net worth is $7m after 20 years if you achieve 20% compound return every year! Job's increment is not enough for you to have $7,000,000 !!! Yahoo!Financial Freedom!

Don't follow news/comments from Expert

Try to be different from the perceived majority view. The current rally on the NYSE and elsewhere is one good example. So many were saying on March 2009 that the market and economic outlook is poor. By May, rally, driven only liquidity ( in fact, Dr Doom from NYU is still saying this). A few months later, they have cahnged their tune and are saying that the market rally is "too much, too soon, too fast." Yet, the rally is still intact. And now Warren Buffet is making his biggest bet by acquiring Burlington Northern.

Picture: SUSU
"If you follow pretty girl's command, then you always make mistakes" - Stockaholic

Warren Buffet Speaks about Railway

Berkshire Hathaway says 3Q profit triples to $3.2B

OMAHA,Neb. - Paper gains on derivative contracts helped Beriskire Hathaway Inc tripple its third-quarter profit as its insurance business did well, but Warren Buffet's company said Friday that many of its other operating businesses struggled.

Friday, November 6, 2009

Unemployment rate hits 10.2% in October - Payrolls fall by 190,000, 22nd straight decline

WASHINGTON (MarketWatch) - The U.S. unemployment rate climbed to 10.2% in October, topping the 10% mark for the first time in 26 years, the Labor Department reported Friday.

Nonfarm payrolls dropped by a seasonally adjusted 190,000 in October, bringing to total number of jobs lost in the recession to 7.3 million. It was the 22nd straight decline in payrolls. Large losses were seen in manufacturing, construction and retail. Health care and temporary-help agencies added jobs. Read the full government report.
The report was worse than expected. Economists surveyed by MarketWatch were forecasting a rise in the unemployment rate to 10%, with 150,000 lost payroll jobs. See Economic Calendar.
The seasonally adjusted unemployment rate of 10.2% was the highest since April 1983.
Unemployment rose by 558,000 to 15.7 million, the government said. Of those, 5.6 million had been out of work longer than six months, representing a record 35.6% of the unemployed.
The employment-population ratio fell to 58.5% from 58.8%. The employment-participation rate fell to 65.1% from 65.2%.
An alternative gauge of unemployment, which includes discouraged workers and those forced to work part-time, rose to 17.5%, the highest on record dating to 1995.
Total hours worked in the economy fell 0.2%. The average workweek was steady at a record-low 33 hours. Average hourly earnings rose 5 cents or 0.3%, to $18.72. Average hourly earnings are up 2.4% in the past year.
In September, payrolls fell by a revised 219,000, compared with the previous estimate of a 263,000 loss. The unemployment rate was 9.8% in September.
Payrolls in August and September were revised higher by a total of 91,000.
In its survey of 400,000 business establishments, the government found that private-sector employment fell by 190,000 to 130.8 million in October. Government employment was unchanged.
Employment in the goods-producing sector fell by 129,000, including 62,000 in construction and 61,000 in manufacturing. The average workweek in manufacturing rose to 40 hours from 39.9, the highest in 11 months.
Service-producing jobs fell by 61,000, including 40,000 in retail.
The only major sectors adding jobs were health care and education (up 45,000) and professional and business services (up 18,000). Temp-help agencies - a key leading indicator - added 34,000 jobs, the first significant increase since the recession began 22 months ago.
Of 271 industries, 33.8% were hiring in October, down from 37.5% in September.
In its survey of 60,000 households, the government found that employment fell by 589,000. The jobless rate for men rose to 10.7%, and it rose to 8.1% for adult women. The jobless rate for blacks rose to 15.7%, compared with 9.5% for whites and 13.1% for Hispanics.
The jobless rate for those with a college degree fell to 4.7% from 4.9%. For those without a high school diploma, the jobless rate rose to 15.5% from 15%. For those with a high school degree, but no college, the rate rose to 11.2%.

"This is another sign of full recovery will happen soon" - Tun Dr Ir. Sultan Lee

Introduction to Fundamental Analysis

This is a very brief introduction to the very vast subject of fundamental analysis. To understand and make productive use of fundamental analysis, familiarity with accountancy and economics are essential. However, one need not be an accounting or economics expert for this purpose.

From a shorter - term perspective, one could argue that fundamental analysis does not apply to the Kuala Lumpur Stock Exchange (KLSE)/Singapore Stock Exchange/Hong Kong Stock Exchange/Jakarta Stock Exchange/Thai Stock Exchange/Vietnam Stock Exchange. From a longer - term perspective, however, it is very difficult to invest successfully even on the KLSE/SGX/HKex without incorporating fundamental analysis into one's methodology. While the general perception is that the KLSE is still an inefficient market where rumours, tips, poor corporate governance, etc. rule, the smart investor would realize that applying sound fundamental analysis in such a stock market can be rewarding. But just like any other investment methods, fundamental analysis has its strength and weakness.



A. Earnings Per Share (EPS)

The Formula for calculating net EPS is:

Net Attributable Profit divided by Number of Shares Outstanding

EPS is generally used as an indicator of the performance of a company over a long period of time. For example, while a company's earnings may be rising over a period of time, its EPS may not be. There are various ways in calculating a company's EPS, depending on what the objective of the investor or analyst is. Most use net attributable earnings, that is, earnings after tax and minority interests.

EPS can also be based on historical or prospective earnings. Projected EPS is important because it can significantly influence the company's share price. A company's EPS can also be calculated on a diluted or non-diluted basis. Where a company has warrants outstanding, it is common practice to calculate the EPS assuming that all the warrants are exercised. The number of shares outstanding may also be affected by rights and bonus issues. In such cases, the number of shares outstanding could be an average figure.



Durable Competitive Business is able to grow 20-25% consistently over 10 years. But, high growth company doesn’t mean it is a good share to own. What if the growth stop and company has huge debt/long term debt?















Oct Non-manufacturing business activity index

China’s non-manufacturing business activity index rose to 62.1% in Oct. This is the second highest reading since the index was developed and is consistent with a robust domestic economy. Going forward, while the index for business activitiy expectations moderated to 64.2%, it remained at a high level, indicating continued stable economic expansion.


SINGAPORE, 6 November 2009 – DBS Group Holdings recorded net earnings of SGD 563 million for third quarter 2009, rising 40% from a year ago and 2% from the previous quarter as operating trends continued to be healthy. Net interest income reached a record while fee income was the highest in seven quarters. Cost discipline was maintained. Asset quality stabilised, resulting in lower allowance charges and increased allowance coverage of non-performing assets from the previous quarter.
Net interest income grew 3% from the previous quarter to a record SGD 1.14 billion. Interest margins were stable while loans rose slightly to SGD 128.3 billion due to housing loan growth. Deposits increased 1% to SGD 180.2 billion, with the mix shifting towards current and savings accounts.

More positive signs on the global economy‏


· Overnight US data was upbeat, led by strong job data. Jobless claims dropped more than forecasted by 20k to 512k WOW adding to sign the job market is improving as the economy begins to gain pace. Further, worker productivity surged as labor costs fell and unemployment claims were lower, driving hopes that it will boost corporate profits.
· BOE and ECB continued to keep key rates at a record low on concerns that economies remain too fragile to remove stimulus measures. However, BOE raised asset purchases by GBP25b to GBP200b, GBP25b less than predicted, as the UK economy continued to contract through Oct, signaling recovery may be put on hold.
· Economic indicators showed that UK manufacturing output and IPI rebounded more than expected in Sep as rising confidence combined with sterling weakness appears to be supporting the recovery. However, European retail sales declined more than expected in Sep as consumers cut spending amid rising unemployment, suggesting the weak consumer sentiments are unlikely to head the recovery.

· Meanwhile, economic optimism in Australia were boosted by a statement by RBA saying that the economy will expand at more than three times the pace forecast in Aug, and signaled it will continue to lead the world in raising interest rates. Overnight data showed that building industry rose 0.1 pts to 50.9 in Oct, supporting views of strengthening economy.

How to be Super Rich Investor?


Genting, a gaming and power group, said the bulk of the RM1.5bn raised from the sale of medium-term notes will be used for strategic investments globally. "We are looking at a few investment deals but can't disclose them now. Some of the proceeds will go towards the Genting Singapore rights offer," said group head of strategic investments and corporate affairs, Datuk Justin Leong Ming Loong. Genting's unit, Genting Singapore Ltd (GSL), plans to raise SG$1.63 bn (RM3.99bn) from a cash call. Leong was speaking at the launch of the medium-term notes (MTN) programme in Kuala Lumpur yesterday. Genting via its unit GB Services, a special purpose vehicle, priced its inaugural issue of RM1.5bn nominal amount of 10-year MTN under its RM1.6bn MTN programme. (BT)

Professional Investors : IMS Health

IMS Health is being stolen It was announced Thursday that IMS Health was to be stolen from its shareholders for $4 billion or about $22 share; a private equity firm will buy them out. IMS Health should have free cash flows this year over $340 million (the actual number should be higher than $400 million, but is benefited by a $60 million onetime tax benefit). So this company, which has virtually no competition, has barriers to entry impossible for a new entrant to overcome, and a cash printing machine will be sold for about 12 times free cash flows. Over the past year we've seen much lower quality companies being sold for much higher valuations than this. Most recently, Burlington Northern Santa Fe, which has a significant competitive advantage but has far inferior return on capital and free cash flow generation than IMS, is to be purchased by Mr. Buffett for about 20 times earnings and 30 or more times free cash flows. IMS Health’s management and board have a history of making dumb capital allocation decisions, but this one may go down in history as their dumbest. We own these shares and will probably hold on to them in the hope that shareholders will refuse this offer.

(Source- Vitality N Katsenelson)

Vitaliy N. Katsenelson, CFA, is a portfolio manager/director of research at Investment Management Associates in Denver, Colo. He is the author of "Active Value Investing: Making Money in Range-Bound Markets" (Wiley 2007). For more information click here.

Thursday, November 5, 2009

Global - Oil rises above USD80 after unexpected decline in US supplies -> Hyperinflation coming?

Crude oil closed above USD80 a barrel after a government report showed that US inventories unexpectedly dropped as imports declined to a two-month low. Stockpiles of crude fell 3.94m barrels to 335.9m last week. A 1.5m-barrel increase was forecast. Oil also advanced as equities gained and a weaker US dollar bolstered the appeal of commodities as an alternative investment. Crude oil for December delivery rose 80 cents (1%) to settle at USD80.40 a barrel at 3:04 pm on the NYME. It was the highest close since 23 Oct. Prices are up 80% this year. (Bloomberg)

China’s biggest bank to get Malaysia license

Industrial and Commercial Bank of China, the country’s biggest lender, will get a licence to open in Malaysia when Chinese President Hu Jintao visits from Nov 10-11 and a raft of commercial deals will be signed. ICBC will get an operating licence and be allowed to open 4 branches. (Malaysian Reserve)

Genting staff to get 12pc pay increase

Genting Malaysia has given its employees a 12% salary increase under its 10th collective agreement signed between the company and Resorts World Employees Union. "Employees will receive overall salary adjustment ranging between RM60 and RM210, subject to positions and added responsibilities," said Genting Malaysia president and chief operating officer Datuk Lee Choong Yan. Some 6,500 staff will benefit from the increment. At the signing ceremony in Kuala Lumpur yesterday, Resorts World Employees Union was represented by its president Robert Vijendren and witnessed by Human Resources Minister Datuk S. Subramaniam. Employees will also enjoy additional income for split allowance, food and beverage counter crew allowance and cashier allowance. Genting also agreed to a RM1,000 increase under hospitalisation benefits, which was previously RM4,500 to RM5,500 annually. (BT)

Insider Trading : D&O

D&O --> LIM THIAN SOO (80,000 Shares Acquired)
D&O --> LIM THIAN SOO (80,000 Shares Acquired)
D&O --> Lim Yam Poh (80,000 Shares Acquired)
D&O --> Lim Thiam Cheok (80,000 Shares Acquired)

Insider Trade : Etitech

ETITECH --> Lee Kah Kheng (2,550,000 Shares Disposed)
ETITECH --> Yeoh Li Hua (2,550,000 Shares Disposed)
ETITECH --> Dennis Chuah (10,090,600 Shares Transacted)
ETITECH --> Lee Kah Kheng (2,550,000 Shares Disposed)
ETITECH --> Dennis Chuah (10,090,600 Shares Transacted)

The Contrarian : Is Recession Normal? No

Wednesday, November 4, 2009



The beauty of a company with long term competitive advantage is that it makes so much money, it doesn't have to mislead anyone to look good.

Final Call : SELL !!!

Remove it from watchlist forever !!!

What's Preferred Share?

Preferred Stock is a second class of equity. Preferred shareholders don't have voting rights, but they do have a right to a fixed or adjustable dividend that must be paid before the common stock owners receive dividend. Preferred shareholders also have priority over common shareholders in the event that the company falls into bankruptcy.

Preferred Stock is Functions like debt in that dividends have to be paid out, but unlike the interest paid on debt,which is deductible from pretax income, the dividends paid on preferred stock are not deductible which tends to make issuing preferred share very expensive money.

UK - House prices rise twice as much as forecast

UK house prices increased twice as much as economists forecast in October as record-low interest rates and a limited supply of homes buoyed the property market. Home values climbed 1.2% to an average of GBP165,528 (USD270,000) after rising 1.5% in September. The median forecasts were for a 0.6% increase. Prices are now down 17% from the peak in August 2007. (Bloomberg)

Monday, November 2, 2009

UNICO.KL : Will Come Back Soon !

IPO Strategy : MAXIS

Maxis is worth a punt. Advise you take up the offer. I am bidding at 5.20 and should the final settlement be less will get a rebate.

For example if the settlement is RM 5.00, we will get back 20 sen.

The institutional money who have committed to purchase should drive the price higher in the short term. These Insiders will push the price higher in the short term so they can off load their purchases at a higher price. We can take advantage of this and sell with them locking in a 10 to 15 % gain.

If this scenario doesn't pan out, we cut our losses.

One fundamental I like is that there has been a lot of negative news by local analists on Maxis in the last week. Bad news is the friend of the buyer as Warren Buffet would say. If there was lots of good news I would be wary.

GoldenAgri - Top Pick Plantation Stock in ASEAN

Golden Agri Resources’ Jakarta-listed subsidiary, PT Sinar Mas Agro Resources & Technology (PT SMART), reported a 9-month net profit of IDR536.6bn. In 3Q alone, PT SMART made IDR327.7bn compared to IDR208.9bn for 1H.

Trading buy: S$0.40-0.43
Target   Price : S$0.50 (min)

Golden Agri is trading at forward PE of 14.5x and 13.0x, which is undemanding compared with its large cap Malaysian peers, which are trading at PEs in the high teens.  There is a trading opportunity with Golden Agri given that it provides a better exposure than Malaysia-listed palm oil companies due to its cheaper valuation.


Subprime-Lending Crisis -The problem with leverage and the tricks it can play on you -

Leverage is the use of debt to increase the earnings of the company. The company borrows 100million at 7% and puts that money to work, where it earns 12%. This means that it is earning 5% in excess of its capital costs. The result is that $5million is brought to the bottom line, which increases earnings and return on equity.

The problem with leverage is that it can make the company appear to have some kind of competitive advantage, when it in fact is just using large amounts of debt. Wall Street investment banks are notorious for the use of very large amounts of leverage to generate earnings. In their case, they borrow $100Billion at, let us say, 6%, and then loan it out for 7%,which means that they're earning 1% on the $100Billion,which equales to $1 billion. If that $1 billion shos up year after year, it create the apperance of some kind of durable competitve advantage,even if there isn't one.

The problem is that while it appears that the investment bank has consistency in its income stream, the actual source that is sending it the interest payments, may not able to maintain the payments. This happened in subprime lending crisis that cost the banks hundreds of billions of dollards. They borrowed bilions at, say , 6%, and loaned it out at 8%. to subprime home buyers, which made them a ton of money. But when the economy started to slip, the subprime homebuyers started to default on their mortgages, which meant they stopped making interest payments. These subprime borrowers did not have a durable source of income, which ultimately meant that the investment bank didn't either.

In short run, they appear to be the goost that lays the golden eggs, but at the end of the day, they're not.