Our Roots For Sale
CLICK HERE to download Cove Street Capital’s November Strategy Letter, Number 9, “Idiosyncratic Risk…and the Other Kind”
While we prefer not to opine in a macro-economic sense on most occasions, THIS PIECE sourced from Grant’s, nicely sums up thoughts expressed in a number of our strategy letters. Artificially depressed interest rates are killing us.
Jefferies: Possible Postscript
Funny things often happen on the way to the bank. It is also fair to say that sometimes you never reach the bank, or you end up taking a cab when you thought you were walking.
Where this fits with our investment in Jefferies (JEF) remains somewhat unclear, but it may be helpful for the new reader to refer to our previous writing to get up to speed.
Now that you are with us, here are some questions to be pondered: Is JEF merging with Leucadia (LUK) a good idea for JEF shareholders? Is the price fair? Does it suggest something about the company’s “model” and the world in which we live that implies more than is evident in a simple deal? And just how long can a small cap portfolio continue to own the stock given the pro forma $8 billion-ish market cap?
Here are answers to (some of) those questions in bullet-point form: read more…
Well Worn and Well Worth Re-reading
We have embarked on a longer term project to digitize about 6 yards and 28 years of collected investment “literature.” Because this is the age of social media, we will share the more timeless pieces. Pardon their appearance. Click here to download the first.
Click HERE to download.
Please read this and try not to weep.
Let me see if I understand this correctly.
The President of the United States gathers together a task force of government lawyers in order to coordinate the ability to sue private companies?
Their first effort is to sue JP Morgan for alleged issues at Bear Stearns, whose takeover by JPM was aided, abetted and approved by the same government?
And all this is jammed into a process to try to run ahead of a statute of limitations just two months before the election?
The continuing attempt to blame “someone” for a collective awful display of bad judgment in an encouraging and blind regulatory environment isn’t helping 8.5% stated unemployment.
As someone who does not watch CNBC unless I’m away from the office and utterly trapped in a small hotel room that only offers 5 stations and is located in a remote region of the country, I wasn’t aware that Jim Bianco was such a talking head. Despite this handicap, Bianco Research is one of the few third party subscriptions maintained by Cove Street Capital for its thoughtful macro comments combined with data research that does a nice job of supporting or rebuking the idiocies of the day. What follows is a few paragraphs that continue a major theme from comments he made over a year ago. In regard to yet another “surprising” rally in the stock market, Bianco notes:
Many assume this is a hated rally because so many managers have underperformed, as shown below. As we noted last January, 2011 was an unchanged year for the S&P (no price change with a total return of 2.1 percent thanks to dividends). However, it was a terrible year for money managers beating this benchmark. 84 percent of managers did not beat the S&P 500.
This underperformance by most managers is nothing new. It is a continuation of a trend that started in 2010. As we wrote last January:
When told of the bad performance detailed above, market pros instinctively assume these managers made a bad market call. They were too bearish as the market rallied or too bullish as it declined. However, the data does not support this theory. First, there was no market call to miss this year. The stock market is essentially unchanged, so neither the market bears nor bulls made a bad call. Second, in looking at the data day by day, there is no relationship between the direction of the market and these funds’ performance. Quite simply, they performed poorly in both rallying and declining markets. Finally, this poor performance extends beyond equity managers. As a group, macro managers, fixed-income managers, commodity managers and international managers also had a sub-par year. Not everyone can be right, but it is unusual to see so many be wrong.
CLICK HERE to download Cove Street Capital’s September Strategy Letter, Number 8, “You Didn’t Build This Rally”
