Wednesday, January 20, 2010

Sold Viterra to Buy 100 Husky at 28.99 Canadian/Bought 50 NWBI at 11.47/Whitney Tilson On Berkshire Shares

1. Bought 50 Northwest Bancshares (NWBI) at $11.47 (see Disclaimer): This one will be placed in Category 2 of my Regional Bank Stocks' stratagem. This bank has recently undergone a significant transformation. Until recently, Northwest Bancorp was a federal mutual holding company that owned 63% of Northwest Bancorp, a federally chartered savings and loan company, that in turned owned all of Northwest Savings Bank, a Pennsylvania charted savings bank with 170 branches in Pennsylvania, western New York, eastern Ohio, Maryland and southern Florida. This is the link to the last quarterly report for this bank so organized: e10vq There was no preferred stock outstanding on the balance sheet as of 9/30/09. I suspect that the bank did not qualify for TARP funds under its old structure as a mutual holding company: Northwest Savings

The bank has just completed a conversion whereby the Northwest Savings Bank is now 100% owned by Northwest Bancshares (NWBI), and NWBI is now 100% owned by public shareholders. In addition to converting the old shareholders to the new shares on a 2.25 for 1 basis, the company sold an additional 68,878,267 shares to the public at $10 per share (so the historical price chart and dividend information needs to be adjusted). I will wait to discuss the bank as currently configured until it reports its 4th quarter results. This bank did appear to be well capitalized before this equity raise, and even more so now. More information can be found at the bank's web site: Northwest Savings Bank

The filings of the new bank can be found at the SEC web site at Search Results The filings for the old bank are located at Search Results

2. Sold 100 Viterra To Raise Enough Canadian Dollars to Buy 100 Husky Energy: Both Transactions on the Toronto Exchange (See Disclaimer): With the rise in the Canadian dollar against the U.S. dollar, coming closer to parity, I do not want to convert any additional U.S. dollars into Canadian Dollars. So, since I wanted to buy Husky yesterday using all of my remaining Canadian dollars sitting idly in my account, I needed to raise several more hundred to buy Husky. That is the only reason that I sold 100 Viterra (VT.TO) at 10.45 Canadian, bought recently at 9.68 Canadian. Husky has been sliding recently, and was down about 50 Canadian cents when I bought 100 yesterday at 28.99 Canadian on the Toronto Exchange: HSE.TO: Summary for HUSKY ENERGY INC COM Husky also trades on the pink sheet exchange in U.S. dollars: Husky Energy Inc. - HUSKF At yesterday's exchange rates, 28.99 Canadian would convert into about 28.09 U.S.: Currency Converter

Husky pays a dividend, currently 30 cents Canadian. Based on a run rate of 1.2 annually, my yield is about 4.13%. Husky Energy Husky is an integrated Canadian energy company, owning production, retail outlets and refineries. The last quarter's earnings declined significantly to 40 cents from 1.5 Canadian in September 2008. _3Q09.pdf The only analyst report that I have on Husky is from Morningstar which rates it 4 stars. Prior to today, I had reviewed Husky's 2010 capital expenditure and production guidance: Husky Energy I prefer owning securities that pay me a good dividend.

3. IBM: I thought that IBM's 4th quarter results were impressive, easily beating the street estimates on both E.P.S. and revenues. The guidance for 2010 was for "at least" $11 per share in earnings. The consensus for 2010 before this report was $10.88.

4. Sears: When I returned from dinner last night, the garage door opener was broke so I immediately headed down to the Sears in Cool Springs to buy a new one. The store was nearly empty. The clerk knew less about garage door openers than me, and I knew only the horsepower of my current one. But that is not what struck me. After signing a form to have it installed, the clerk told me to wait while he faxed the form to the service guy. Fifteen minutes later, he returned saying that he was not sure the one page form was sent. Headknocker, who is admittedly not the most patient human on the planet, inquired as politely as possible for him about the delay and was told that this store had not replaced the fax machine since the 1970s and it just took a long time. In fact, I was informed that just the other day it took three hours to send a fax. Luckily, Headknocker did not have the power of Eddie Lambert at that precise moment in history, for whoever had made the decision to keep an outdated fax machine would have gotten their ass kicked something awful. It does make one wonder about Sears. It is not only the time wasted by their employees but the aggravation of the customer.

Now, in my last dealing with Sears, this is what happened. My mother's dishwasher needed to be replaced. So I took her down to the store, and there was a rebate on one of them which she bought. I filled out the rebate form on the internet. No one heard back from Sears for at least 4 months. Then a card was received in the mail saying that the $50 rebate was denied. Why bother?

5. Will Massachusetts's Be A Wake Up Call for the Beanpole?: Maybe the Democrats will need to be demolished during the midterm elections before Obama starts to realize that his Presidency is in serious danger of failing right now. George Bush probably does not realize to this day that his Presidency failed, and failed miserably.

I am not surprised that independents abandoned the Democrat Coakley in droves. I would have voted for the GOP candidate in protest of Obama's first year in office as well as what I perceived to be a very weak Democratic candidate. The number one priority of the Obama administration had to be jobs and the economy, and this simply has not been the case. I read a bunch of newspapers everyday, watch all kinds of news programs, read numerous magazines, and I have been left with the impression that the President is one cerebral, cool person who is just not connecting to the American public about their concerns. And, more importantly, he does not appear to be that concerned about matters considered to be more important to most independents than providing health insurance to the uninsured. Even on that issue, I was left with the impression that the President and virtually all Democrats were not that concerned about controlling costs in their health "reform" legislation, except in occasional perfunctory rhetoric. And the opponents have been far more effective in selling their opposition to this legislation than the President has been in advocating why it is needed by the vast majority of legal American citizens who already have insurance.

I read this morning that Virginia's Democratic Senator Jim Webb requested that no votes be scheduled on the health care legislation until after Brown was sworn into office. He views the upset as a referendum on both the health care bill and the integrity of the government process that led to its adoption in the Senate, which was appalling to many independents. NYT

While my memory of long ago events may be hazy at times, I thought that Reagan did a better political job reminding the public that he inherited a mess, and that mess was caused by the Democrats. Obama has been far less effective in that regard, and I doubt that most Americans even now have much of a clue of how the nation got into the mess inherited by the new administration. One thing is certain in my view, the GOP has learned nothing about the origins of the Near Depression, and will do nothing to make it more difficult for a similar financial crisis to occur again.

Obama is also coming under increasing fire from liberal intellectuals. I have been following the criticisms leveled by Paul Krugman and Joseph Stiglitz, both of whom have won nobel prizes in economics. Stiglitz has a new book out that is critical of Obama's policies to date. Skepticism NYT Stiglitz does not believe that the U.S has a true capitalist system, more of a "ersatz capitalism", where risks are socialized and benefits privatized. CNBC

6. Whitney Tilson on Berkshire Shares (own BRK/B): I mentioned in an earlier post that Tilson viewed Berkshire shares to be undervalued: Item # 4 Whitney Tilson on YHOO and Berkshire In that prior post, I referenced Tilson's column in Forbes where he maintained Berkshire was at least 25% undervalued. He made what I consider to be a stronger case in an interview on Fast Money last night: I had repurchased the Berkshire shares prior to hearing Tilson's views based on the same kind of analysis that he did in the CNBC interview. I added one share last Friday, Bought 1 BRK/B at $3244 , after buying back the shares previously sold on 12/14/09. Berkshire is part of the new 2010 Speculative Strategy. I am liberal in assigning the word "speculation" to include virtually all non-income producing securities.

7. China: The markets will be under pressure today as China ordered several banks to stop lending for the remainder of the month after exceeding their credit limits. The chairman of the China Banking Regulatory Commission also said that he expected bank lending to fall about 22% in 2010 compared to 2009. NYT


  1. I'm not an American and obviously not an American politics expert but it sounds to me that Obama needs to bust some heads. It's incomprehensible that he's unable to pass the public option with such a majority. He needs to go to the hold outs and tell them the administration is going to destroy them in the coming reelection unless they support him. After 8 years of Bush Obama seems the opposite: super soft.

  2. The U.S. Senate has cloture rules that requires 60 votes to stop debate on any bill. Without 60 votes, legislation will not be put to a final vote. So it takes more than a majority in Senate to pass legislation, and that is the problem for those who favor the public option. Prior to yesterday, there were 58 Democrats and 2 independent Senators who were allied with the Democrats. One of the two independents clearly said he would not support a public option, and that was Joe Lieberman. Also, there were several centrist Democrat senators who would have never voted for the public option. The Democrats never had 60 votes in favor of the public option in the Senate. Now, they do not have enough votes to even pass the watered down bill that was recently passed in the Senate with just 60 votes which did not include the public option. That bill is now in a conference committee trying to reconcile the differences between the house and senate bills. Then, both the House and the Senate will have to vote on it again after the two pieces are melded together. The republicans have dug in and refuse to cooperate on anything in my view, and will not support any bill even one without a public option. They now have 41 votes in the Senate. And there are probably enough Democrats in the house who would join all of the Republicans in refusing to pass the Senate bill for a variety of reasons, which would be one way to bypass another vote on the legislation in the Senate.