Sunday, March 31, 2013

Review of Barron's -- Dated 1 April 2013

I was sorely tempted to try and pull an April Fool's here, but I sobered up...

Barron's S. Florida distribution may have gotten itself back on track again, as for the last three weekends Barron's has actually arrived on the weekends.  The Cover Story this weekend is about how Michael Dell, and his plot to take back Dell (ticker: DELL) at a cheap price.  Author Andrew Bary notes that this little drama has been going on for a while now, and that many observers have noted that Mr. Dell is trying to get the company for too cheap...  He has two competitors in trying to buy the company:

Carl Icahn (who has long prowled for cheap companies)


Blackstone (Stephen Schwartzman)

Bary thinks that DELL will fetch some $15.00 or more, Michael Dell's offer has been $13.65 per share and it is trading at about $14.33, hinting that Mr. Dell will not get his old company back for ridiculously cheap.


Randall W. Forsyth pitches in again for Alan Abelson.  Forsyth starts off by noting that despite what would appear to be scary stuff (Fiscal Cliff, Sequestration, Cyprus, etc.) the stock market was able to go up to new all-time highs (both the S&P 500 and the Dow Jones up approx. 11% in the first quarter of 2013, on top of about 13% for all of 2012).  The USA did better than most of the rest of the world (and that may help explain US$ strength lately).

Forsyth goes on to write about many other things we do NOT have to worry about:

-- the takeaway of the 2% payroll tax cut
-- Sequestration
-- disintegration in the Eurozone
-- the futility of fighting the Fed

NOTHING to worry about, "Clearly we can print our way to prosperity."

Next sentence: "Happy April 1."

Still for me, his best line on the article (while discussing why Europe id nothing to worry about):  "As for Italy not having a functional government, what else is new?"


Kopin Tan ("Streetwise") writes that some think we are likely to take a pause in the bull market.  Others think perhaps not.

I agree!


"He said":

"We intend to hold a significant investment in Goldman Sachs, a firm I did my first transaction with more than 50 years ago."

Warren Buffett

Hey, who says that we have an American Oligarchy?


Sandra Ward writes a bullish piece on capital goods manufacturer Eaton (ETN).  Eaton bought Cooper Industries recently, and so has diversified itself a bit from the cyclical automotive industry.  ETN now has but 18% of its business in the automotive sectore, its businesses now are more electrical equipment and energy-saving equipment.


Jonathan Buck writes a bullish piece on STMicroelectronics, Europe's largest semiconductor manufacturer.  Apparently the company is narrowing its focus on the faster-growing sectors (sensors and car-entertainment systems) while exiting its wireless chip joint venture with Ericsson (where it lost money).


Jack Hough picks four companies that have bought back stock in a way he approves of (not paying too much, not leaving the company with little cash, yet still allowing each company to pay a good dividend, etc.).  All four have a decent dividend yield.  Here they are:

-- AT&T (T), dividend yield of 4.9%
-- Seagate (STX), 4.2%
-- WellPoint (WLP, the country's largest health insurer by enrollment), 2.3%
-- Western Union (WU). 3.3%


Barron's breaks stories on occasion.  While many may see them as Wall Street's poodle, they do sometimes do break stuff even before Zero Hedge, and they are a weekly paper.

Bill Alpert writes that sleazy Russian operator Vassili Oxenuk has been playing a lot of bogus games with US (and investors from Kazakhstan...) investors...

Las Vegas!  Russian/US reverse mergers!  Guns and death threats!  Offshore hideaways!  Read all about it...

My take?  Too easy...: "Lie down with dogs, you get fleas."


Tiernan Ray ("Technology Week") writes that Google (GOOG) and Facebook (FB) are shaking up the server market.  Servers tend to be simpler than most PCs and can be built with commodity products, which is what Google and Facebook are doing, contracting out the servers they need with Asian manufacturers.

This is likely not good for Dell (DELL) and Hewlett-Packard (HPQ)...

He also writes that Blackberry (BBRY) has an uncertain future..., yes, with Apple (AAPL) and Samsung Electronics (0015930.Korea) dominating the smartphone business.


"Economic Beat" author Gene Epstein notes that both the R-Team and the D-Team have made budget proposals.  In his opinion (and IMO) neither proposal goes far enough.  Epstein suggests that instead of cutting the amounts of money for the various programs, that we ELIMINATE programs all together.

I believe President Reagan suggested killing off programs as well, a long time ago...


Lawrence C. Strauss interviews Carl Weinberg (Chief Economist at High Frequency Economics).  Weinberg believes that Cyprus IS very significant, he believes the contagion will spread and not even Germany is safe.  He is very negative on Europe and Japan (both entering depressions).

He thinks the USA will muddle along at 2% - 3% growth, that Latin America (as a whole) will do a little better, but that Asia (ex. Japan) is the place to be.  He likes China, but concedes there will always be bumps along the way.


PENTA editor Richard Morais writes that many wealthy families are leveraging up...


Editor Thomas Donlan finds problems with both the R-Team and D-Team budget proposals.  He writes that the Democrats are making all of the usual promises that cannot be financed (like they have for the past 80 years), while the Republicans are making assumptions that are unrealistic...

[Ed. Note:  Have I said today that we are freaking doomed?]


In the Market Week section, "Mr. Barron" on the front page observes that the S&P 500 is indeed at a new all-time high, and that these companies have half the debt, pay a higher dividend and have 13% hgiher profits than vs. 2007.  It could be QE...

Jonathan Buck ("European Trader") wonders if anyone's deposits in European banks are safe now.  In particular he notes that Mr. Dijsselbloem (affectionately know as "Diesel-Boom" at Zero Hedge) has advised us that depositors funds ARE at risk in future bank rescues.  Further, the capital controls imposed on the people of Cyprus are very troubling, the European Union was not supposed to be like this...

Assif Shameen ("Asian Trader") writes that Singapore is changing to a slower growth era.  Be selective in your investments there.

Shanthy Nambiar ("Emerging Markets") writes that the macro trends in the Persian (Arabian) Gulf countries are pretty favorable.  While Saudi Arabia is pretty closed, there are mutual funds and ETFs that can give you exposure to Kuwait, the UAE and Qatar (the countries he seems to like the best).  He gives us two ETFs to look at (tickers): GULF and MES.

Michael Aneiro ("Current Yield") writes that LOANS are doing better than bonds.  I believe he is referring to collateralized loan obligations (CDOs), in which loans are pooled, and investors can then buy in.  Ahh, haven't we had enough derivatives?  Taking on extra risk for a very small yield increase?  The adjacent "Bond Center" had one interesting graph this week: that global long-term rates are going down again, close to the Dec 2012 lows.

David Winning ("Commodities Corner")writes an interesting column on mineral sands, sands with zircon and rutile (zircon for ceramics and rutile for TiO2 for making paints more opaque and brighter).  He names two companies that can be had here in the USA: Tronox (TROX, often mentioned by Meryl Witmer) and Australia's Iluka Resources (IKLAF).

Need a job?  Attrico Company is looking for a Corporate Postman (Classifieds)!  $30/task, email Gerg:  Looks like th position is in Delaware.

Three companies had insider sales of stock over $30 million: SSNC, TRLA and AMTD (last is TD Ameritrade).

My reader "Nobody" keeps me honest re the Mighty Peruvian Sol, which barely eked out a gain vs. the US$ last week.

Verdict:  I covered most of the basics, if you want to learn more, buy it!

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