Monthly ArchiveJanuary 2007
The beginning of a new year brings resolutions to change one’s life. It could be losing a few pounds, organizing the house, or saving money for a down payment on a house. You get the picture. The Simple Dollar takes the extreme makeover approach by offering tips on how to quit your job. From determining why you want to quit to preparing for the financial hit Trent gets you organized if you want to act out your own version of Office Space.
Around the Web 19 Jan 2007 07:39 am
- Oil options traders are looking at the $50/barrel mark as a key pivot point. Traders see a further fall leading to a steep decline. Warm weather and new drilling have put pressure on prices.
- GE, Duke Energy, Alcoa, and other companies press President Bush to do something about global warming. [via Blogging Stocks]
- The Chicago Sun Times’ Andy Ihnatko got some hands-on quality time with the iPhone and was enthralled.
- AT&T does a little convergence by letting home phone users call Cingular customers and vice versa for no charge.
Media 19 Jan 2007 04:50 am
Time Inc. cut almost 300 jobs to cut costs and restructure the business for a new age where more and more people are sucking in content via the web. While some of the cuts make sense (People has an Austin, TX bureau?) they might be cutting off their nose to spite their face. Reportedly gone are Time magazine shutting down bureaus in Los Angeles, Chicago, Atlanta. What are they going to do rely on webloggers and CNN for coverage? All the action in the U.S. isn’t happening in New York and Washington. But don’t worry, there will still be plenty for the stringers.
If you’re in the mood Time, Inc. is selling Field & Stream, Parenting, and Popular Science. Get ‘m while they’re hot. No word if any private equity firms are interested. I’m half-way serious. They’re buying everything else.
Mind you, once reported by a cadre of correspondents and written by a staff writer in New York, it was edited (read: rewritten) by a senior editor and edited (yes, rewritten), by an assistant managing editor, and then edited (and, with surprising freqency, rewritten) by the managing editor. And then the research came along to try to correct all the errors this process inserted in the story.
We should be shocked they’ve survived as long as they have.
Food 17 Jan 2007 05:54 pm
McDonald’s (MCD) boosted sales and the stock went up with them:
Brisk customer traffic both in the U.S. and abroad helped McDonald’s Corp. accelerate its robust growth in December as global same-store sales rose 7.2%. The fast-food behemoth also said Wednesday it expects fourth-quarter profit to come in ahead of Wall Street’s expectations.
Oak Brook, Ill.-based McDonald’s said same-store sales — or sales at stores open at least a year — rose by 6.3% for the fourth quarter and by 5.7% for all of 2006.
Snack Wraps (yum!), chicken sandwiches, and breakfast foods accounted for the rise in U.S. sales. Deutsche Bank’s Marc Greenberg also thinks Taco Bell’s e.coli trouble helped.
Jennifer Lopez and her husband (remember him?) had no trouble doing their part in boosting sales. They’re “lovin’ it.”
Oil continued to fall as Saudi Arabia refused to go along with more production cuts. They want to see how the scheduled Feb. 1 cuts pan out. Oil is at its lowest price in 19 months, and has dropped 16% this already this year. We can thank a mild winter that lowered demand for heating oil. The lower price has removed some of the impetus for Congressional Democrats’ energy bill which would tax U.S. oil production to fund investment in alternative energy. Another effect with the lower prices is reduced demand for hybrid automobiles. We might even end up fatter.
Around the Web 15 Jan 2007 11:41 pm
With the markets closed for Martin Luther King’s birthday I had more time to dig through this week’s great Carnival of the Capitalists hosted by the Endless Gibberish Personal Finance Blog:
- Free Money Finance reminds us that saving and living within one’s means is the way to wealth.
- The Boring Made Dull tells us why price controls on prescription drugs are bad.
- The BioHealth Investor show us the biotech sector has been a business bomb.
Investing 13 Jan 2007 08:08 pm
Fortress Investment Group plans to become the first publicly traded hedge fund on an America stock exchange. Will investors buy into the dark, secret world of hedge funds? Judging by the publicly traded funds in the U.K. they’ll bite:
But as public companies, will these businesses generate attractive returns for stock market investors?
One way to measure the industry’s performance is by looking to London and elsewhere in Europe. So far, investors there have been richly rewarded for backing most of these companies.
Shares of Britain’s Man Group, the largest publicly traded hedge fund firm in the world, traded below 30 pence during the mid 1990’s. They now change hands for more than 500 pence.
RAB Capital shares have almost quadrupled since the London-based hedge-fund manager went public in early 2004.
Shares of Partners Group (CH:002460882: news, chart, profile) , a Swiss private-equity and hedge fund firm, are up 78% since they began trading on Switzerland’s stock exchange in March 2006.
BlueBay Asset Management, which has almost $3 billion in fixed-income hedge fund assets, is up more than 15% since its London IPO in November.
Absolute Capital Management and Ashmore Group, two other London-listed hedge fund business, are up roughly 65% and 30% respectively since their debuts in 2006.
Fortress isn’t a pure hedge fund play. Their website lists their work in private equity funds and “Publicly Traded Alternative Investment Vehicles” along with their hedge funds.
Publicly traded stock is a currency to tempt current and future employees. Going public also is a way for the founders to cash out of their enterprise without having to shut down. These masters of the universe with their strong egos would love to see their companies outlast them showing future investors how smart they really were. But to really last they need a business plan that is more durable than the trading talent of a few. Secrets eventually come out, and the market learns about new ways of making money which pushes down exorbitant returns. Fortress having other avenues of making money might understand this.
For those who lust at hedge fund’s big returns but don’t have the wealth to join the club, shy at the high fees they charge and their lack of liquidity buying their stock just might solve their problem.
Around the Web 12 Jan 2007 07:40 am
- Who knew the home-party business was a $30 billion industry?
- The luster of private equity may not shine so bright in 2007.
- The Xbox 360, Nintento’s Wii, and Sony’s Playstation 3 were one, two, and three in the Christmas video game wars. The surprise was the old Playstation 2 which had a bump in sales.
Ebay bought online ticket reseller StubHub.com for $310 million. This purchase of this tech company should accomplish more for eBay than buying Skype for $2.6 billion in 2005. An S&P analyst says eBay bought StubHub.com for a good price, three times its 2006 revenues. (Michael Arrington pushes a rumor that the price was 30-times EBITDA and describes the “dirty but lucrative” business of ticket reselling.) And unlike Skype to use the service a customer has to shell out some cash.
Jim Goodman, the founder of Ticketmaster.com wonders,
The other thing that really comes into question for me is how long these businesses are going to last (the electronic secondary market that is)? I am obviously very familiar with a Ticketmaster contract, having negotiated a few in my day . Basically what it says is that Ticketmaster is the exclusive computerized ticketing source. Not to mention the rules printed on the back of a season ticket (which are often sold in the secondary market), which often states that it can’t be resold.
One of these days, contracts/rules, etc. are going to be enforced and there are going to be a lot of invalidated tickets out there. There are going to be a lot of very angry customers. And legitimate businesses that were doing hundreds of millions of dollars in revenue will be left with very little. The secondary market is a very, very fine line!!!
We’ll soon see a day where tickets have RFID tags to prove they’re legit and to prevent reselling. When that happens fans will have a cow and politicians will hold hearings.
Investing 11 Jan 2007 09:50 pm
For you good Catholic investors check out the Ave Maria Growth Fund (AVEGX). James Bashaw, manager of the socially responsible mutual fund, combs through the numbers of companies that don’t do business in contraceptives and pornography and has turned above-market returns:
Avoiding companies that don’t comport with church teachings, he says, provides a foundation. “But it doesn’t tell you which non-offending companies to choose.”
Accordingly, Bashaw likes companies with the potential to provide promising returns over a three-year period, based on factors including historical earnings growth, return on equity and price to earnings ratio. He chooses attractive securities from a 200-stock pool, with 37 stocks now in the portfolio.
Started in May 2003, the no-load fund gained 15.1% in the 12 months through Dec. 29, versus 12.8% average return for peers in its Multi-Cap Core category, according to fund tracker Lipper Inc. Its 12.2% annualized three-year return also compares favorably to its category’s 10.3% gain.
Professor Stephen Bainbridge, a Catholic, isn’t a big fan of these investments:
As an investor, I’m skeptical. In the first place, actively managed funds tend to underperform the market over time. One reason for that performance gap is that high fees actively managed funds tend to charge. Another is that even star active managers make investment mistakes. In faith-based investing, you’re adding additional expenses – to pay for the screening of investments to ensure consistency with your values – and you’re blocking off whole industry sectors (e.g., defense or tobacco), which means your portfolio inherently will be less well-balanced and less well-diversified than a broad market index fund. Taken together, there’s reason to think faith-based funds likely will underperform the market over time.