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Stingy News Quarterly
2010: Q1 Q2
2009: Q1 Q2 Q3 Q4
2008: Q1 Q2 Q3 Q4
2007: Q1 Q2 Q3 Q4
2006: Q1 Q2 Q3 Q4
2005: Q1 Q2 Q3 Q4
2004: Q1 Q2 Q3 Q4
2003: Q1 Q2 Q3 Q4
2002: Q1 Q2 Q3 Q4
2001: Q1 Q2 Q3 Q4
Stingy News Weekly
2010
06: 06 13
05: 02 09 16 23 30
04: 04 11 18 25
03: 07 14 21 28
02: 07 14 21 28
01: 03 10 17 24 31
2009
12: 06 13 20 27
11: 01 08 15 22 29
10: 04 11 18 25
09: 06 13 20 27
08: 09 16 23 30
07: 05 12 19 26 31
06: 07 14 21 28
05: 03 10 17 24 31
04: 05 12 19 26
03: 01 08 15 22 29
02: 01 08 15 22
01: 04 11 18 25
2008
12: 07 14 21 28
11: 02 09 16 23 30
10: 05 12 19 26
09: 07 14 21 28
08: 01 10 17 24 31
07: 06 13 20 27
06: 01 08 15 22 29
05: 04 11 18 25
04: 06 13 20 27
03: 02 09 16 23 30
02: 03 10 17 24
01: 06 13 20 27
Dan's Reports
Perspective on the bear
Dilution excessive
Fund fees revisited
T class funds
Bonds vs. bond funds
Bear market protectors
Investing in bonds
Ignore bonds at your peril
Coping with change
Future of trust funds
Dilution trumps
Are fees excessive?
Performance anxiety
Top advisory model?
81-106 a step back
Poor fund classifications
Pension shortfall
A longer-term report card
Information overload
About Dan
Privacy Policy
"I've seen more people fail because of liquor and leverage - leverage being borrowed money. You really don't need leverage in this world much. If you're smart, you're going to make a lot of money without borrowing." - Warren Buffett Stingy Links http://www.stingyinvestor.com/SI/articles/articlearchive.shtml Wall Street winner: buy now http://network.nationalpost.com/np/blogs/francis/archive/2008/11/28/wall-street-s-only-winner-buy-now.aspx "With the S&P drop year-to-date of 50% -- not seen since 1931 -- and how worried the investment community is, it just seemed to us a lot of fear may already be discounted in the stock markets. You can't say this is the bottom, markets are a discounting mechanism and certainly still can go down some; however, we thought it was an appropriate time to close our equity index hedges." The reluctant CEO of the year http://www.reportonbusiness.com/servlet/story/RTGAM.20081124.rmCEO1124/BNStory/specialROBmagazine/home "Only a handful of financial companies worldwide are in better shape now than before this crisis started. Fairfax Financial is one of them. CEO Prem Watsa managed to make $2 billion and thumb his nose at his opponents at the same time" Corporate jets and congress http://online.wsj.com/article/SB122765989966158373.html "This is the age-old story of those in sin throwing the first stones. And they do so without shame because they assume we are so ignorant we will not see them as the hypocrites they are. So what is going on here? Once again we of the public are being played for fools. Our politicians who are in total disarray on the economy are taking cheap shots at those who are helpless and hopeless." Third Avenue Q4 2008 http://www.thirdave.com/ta/documents/sl/shareholderletters084Q.pdf "In other words, deep value and high quality alone are not sufficient conditions for investing in common stocks. Deep value pricing and high quality assets must be accompanied by creditworthiness, and it's super hard to be credit worthy today if a corporation has to access credit markets for loan instruments other than demand deposits." Montier has 'never been more bullish" http://www.bloomberg.com/apps/news?pid=email_en&refer=home&sid=aUZdvU7elPDY "Societe Generale SA strategist James Montier said he's never been so bullish after the financial crisis dragged down prices for stocks, corporate bonds and inflation-protected government debt." BCE fails key test https://secure.globeadvisor.com/servlet/ArticleNews/story/gam/20081127/RBCETICTOCK27 "Shortly after markets closed on Tuesday, a team of auditors in KPMG's Toronto offices ushered a trio of BCE Inc. executives into a meeting room to advise them that the world's largest leveraged takeover had effectively been killed. The culprit? A five-line clause that virtually no one had noticed in the company's much-scrutinized $35-billion sale agreement. Over the course of more than two hours, the solemn auditors explained to BCE's stunned chief executive officer George Cope and two of his senior executives that the communications company had not passed a so-called solvency test, one of the last hurdles standing in the way of a Dec. 11 deadline to close the sale of the company to a group lead by the Ontario Teachers' Pension Fund. Now, baring a financial miracle, there is little hope that the deal will survive." Landmark BCE takeover in doubt https://secure.globeadvisor.com/servlet/ArticleNews/story/RTGAM/20081126/wbce1126 "The massive planned privatization of telecommunications giant BCE Inc. is in jeopardy after the company failed a preliminary solvency test conducted for the would-be purchasers, led by the Ontario Teachers' Pension Plan Board. BCE said Wednesday it received a 'preliminary view' from auditing firm KPMG that 'based on current market conditions, its analysis to date and the amount of indebtedness involved,' it does not expect to be able to deliver an opinion on the closing date of Dec. 11 that BCE 'would meet the solvency tests as defined in the definitive agreement.'" The myths of market underperformance http://www.theglobeandmail.com/partners/free/globeinvestor/investment/nov08/online/justfacts.html "Most members of the media strive for accuracy in their reporting and work very hard to get the facts right. The problem - many of the assertions that get the highest profile are based on flawed analysis of past stock market performance by pundits who distort history to get media coverage for their alarmist claims or by well meaning commentators who quite simply get the facts wrong. Among the common cautionary claims about investing in the stock market: 1. Investors made no money in the market from the mid 60s to early 80s. 2. It took 25 years for the market to recover to the level reached in 1929. 3. When inflation is taken into account, investors have lost money for long periods of time." The wealth effect in reverse http://www.realclearmarkets.com/articles/2008/11/the_wealth_effect_in_reverse.html "The hyper-anxiety is not irrational pessimism, though it may prove unfounded. Every major episode of this crisis -- from Bear Stearns's failure to General Motors' possible bankruptcy -- has come as a surprise. Similarly, the crisis's three main causes have repeatedly been underestimated: the burst housing "bubble"; fragile financial institutions; and a reversal of the "wealth effect." Of these, the last is least recognized." Fed commits $800 billion more to unfreeze lending http://www.bloomberg.com/apps/news?pid=20601087&sid=aEGL76HEwHls "The Federal Reserve took two new steps to unfreeze credit for homebuyers, consumers and small businesses, committing up to $800 billion. The central bank will purchase as much as $600 billion in debt issued or backed by government-chartered housing-finance companies. It will also set up a $200 billion program to support consumer and small-business loans, the Fed said in statements today in Washington." Home prices in record decline http://money.cnn.com/2008/11/25/real_estate/third_quarter_case_shiller/index.htm?postversion=2008112509 "The S&P Case-Shiller Home Price national index recorded a 16.6% decline in the third quarter compared with the same period a year ago. That eclipsed the previous record of 15.1% set during the second quarter. Prices in Case-Shiller's separate index of 10 major cities fell a record 18.6%, while its 20-city index dropped a record 17.4%" James Grant pops Greenspan's bubbles http://www.bloomberg.com/apps/news?pid=20601088&sid=af_24_5.ITsU&refer=home "Such proofs of Grant's foresight -- the power of mind over mania -- fill his new anthology, 'Mr. Market Miscalculates,' a bracing tonic as U.S. equities suffer what may prove their worst year since 1931. We've all met Mr. Market. He's the manic-depressive business partner invented by value investor Benjamin Graham. When the sun is shining, he urges you to sell him your share of the business. When night falls, he begs you to buy him out. Price is no object. Grant's omnibus offers a blow-by-blow account of one man's battle with this crank, from dot-com binge to mortgage meltdown." Housing market gets even weaker http://money.cnn.com/2008/11/24/news/economy/existing_home_sales/index.htm?postversion=2008112410 "The national median existing-home price in October was $183,300, down 11.3% from a year ago when the median was $206,700." Treasury traders paid to borrow http://www.bloomberg.com/apps/news?pid=20601087&sid=aNDjtnxdi0Eg "Owners of Treasuries may soon get paid to borrow as the U.S. tries to break a logjam in the $7 trillion-a-day repurchase market. Treasuries are in such high demand that investors are lending cash for next to nothing to obtain the securities as collateral through so-called repos, which dealers use to finance their holdings. The problem is many parties involved in repos aren't delivering the bonds because there is no penalty for not doing so, causing 'fails' to exceed $5 trillion, according to the Federal Reserve Bank of New York." Buffett will give more info on derivatives http://www.bloomberg.com/apps/news?pid=20601087&sid=aD0w4TPcxWrE "Billionaire investor Warren Buffett will provide more information to investors on how he calculates losses on his Berkshire Hathaway Inc.'s derivative bets in the firm's annual report early next year. The report will disclose 'all aspects of valuation' and cover 'deficiencies in the formula' for pricing the derivatives, 'which we nevertheless use,' Buffett said in an e- mail" Does extreme stress signal a snapback? http://online.barrons.com/article/SB122732177515750213.html "Another encouraging sign is the shrinking value of U.S. stocks relative to nominal U.S. gross domestic product. At the market peak in 2000, stocks were valued at twice the size of the economy, but the relationship has adjusted this year to an estimated 59%, well below the long-term average of 79%. To get back to 79%, the S&P 500 would have to rise 36%, to 1,090. The relationship got as low as 40% in the late 1940s, when investors feared another depression, and in the inflationary 1970s." And you thought 1931 was bad http://www.nytimes.com/2008/11/22/business/22charts.html?_r=1 "Even after Friday's large stock market rally, only 10 of the stocks in the Standard & Poor's 500, the premier American stock index, are higher than they were at the end of 2007, and the index itself is down almost as far as it was in the worst year it ever experienced, at the height of the Great Depression." The most volatile market ever http://bespokeinvest.typepad.com/bespoke/2008/11/the-most-volatile-market-ever.html "Over the last 50 trading days, the average absolute daily percentage change of the S&P 500 has been...wait for it...3.82%! That means the S&P 500 is averaging a daily move of up or down nearly 4%." Citigroup gets guarantees http://www.bloomberg.com/apps/news?pid=20601087&sid=aYXG9i3RJRRk "Citigroup Inc., facing the threat of a breakup or sale, received $306 billion of U.S. government guarantees for troubled mortgages and toxic assets to stabilize the bank after its stock fell 60 percent last week. Citigroup also will get a $20 billion cash injection from the Treasury Department, adding to the $25 billion the company received last month under the Troubled Asset Relief Program. In return for the cash and guarantees, the government will get $27 billion of preferred shares paying an 8 percent dividend." Tip Sheet http://www.stingyinvestor.com/SI/strategy/tipsheet.shtml Debt Ratios http://www.ndir.com/SI/strategy/tipsheet/11-25-2008-Debt-Ratios.shtml I use leverage ratios in several articles but many online stock screeners only provide debt-to-equity ratios. The two are linked and either can be used in some cases. Let's take a closer look. Still number 1 http://www.ndir.com/SI/strategy/tipsheet/11-24-2008-Still-number-1.shtml A quick look at the market carnage. A Lost Decade http://www.ndir.com/SI/strategy/tipsheet/11-20-2008-A-Lost-Decade.shtml Fully two thirds of the stocks in the Dow Jones Industrial Average are now trading below prices first seen more than a decade ago. DOW 30 Value Screens http://www.stingyinvestor.com/SI/strategy.shtml High Dividend Yield Stocks P/E P/B P/S P/D Yield ============================================ === === === === ===== Bank of America (BAC) 2 5 2 5 5 Pfizer (PFE) 3 4 1 5 5 Citigroup (C) 0 5 2 5 5 General Electric (GE) 4 4 3 5 5 EI DuPont (DD) 5 4 4 5 5 Alcoa (AA) 5 5 5 4 4 Merck (MRK) 2 2 1 4 4 Verizon (VZ) 1 4 3 4 4 AT&T (T) 2 4 3 4 4 JP Morgan Chase (JPM) 1 5 2 4 4 More Info: http://www.stingyinvestor.com/SI/strategy/dogs.shtml Value Ratio Stocks P/E P/B P/S P/D VR ============================================ === === === === ===== Alcoa (AA) 5 5 5 4 0.8 EI DuPont (DD) 5 4 4 5 1.1 General Electric (GE) 4 4 3 5 1.1 Pfizer (PFE) 3 4 1 5 1.3 Caterpillar (CAT) 5 2 5 3 1.6 Bank of America (BAC) 2 5 2 5 1.7 Boeing (BA) 5 2 5 3 2.1 AT&T (T) 2 4 3 4 2.2 Merck (MRK) 2 2 1 4 2.2 Chevron (CVX) 4 3 4 3 2.5 More Info: http://www.stingyinvestor.com/SI/strategy/valueratio.shtml Graham Stocks P/E P/B P/D G$ dG$(%) ======================================== === === === ====== ====== Alcoa (AA) 5 5 4 29.94 178.24 Bank of America (BAC) 2 5 5 28.69 76.53 JP Morgan Chase (JPM) 1 5 4 44.43 40.34 Walt Disney (DIS) 4 5 1 30.54 35.63 General Electric (GE) 4 4 5 22.87 33.18 EI DuPont (DD) 5 4 5 32.95 31.47 American Express (AXP) 5 3 2 27.38 17.46 Chevron (CVX) 4 3 3 92.51 17.09 Caterpillar (CAT) 5 2 3 47.12 14.97 Pfizer (PFE) 3 4 5 18.54 12.87 Kraft (KFT) 2 4 4 29.68 9.08 AT&T (T) 2 4 4 31.01 8.58 United Technologies (UTX) 3 3 2 49.29 1.56 Intel (INTC) 3 3 3 13.94 1.00 More Info: http://www.stingyinvestor.com/SI/strategy/graham.shtml S&P/TSX60 Value Screens http://www.stingyinvestor.com/SI/strategy.shtml High Dividend Yield Stocks P/E P/B P/S P/C P/D Yield* ======================================= === === === === === ====== Biovail (BVF) 1 4 2 4 5 5 Teck Cominco Limited (TCK.B) 5 5 5 5 5 5 Bank of Montreal (BMO) 3 4 2 1 5 5 CIBC (CM) 0 2 1 4 5 5 Husky Energy (HSE) 4 2 3 3 5 5 National Bank of Canada (NA) 2 3 3 4 5 5 Toronto Dominion Bank (TD) 4 4 2 2 5 5 Bank of Nova Scotia (BNS) 3 2 2 1 5 5 Sun Life (SLF) 2 4 4 1 5 5 Telus (T) 3 2 3 4 4 4 More Info: http://www.stingyinvestor.com/SI/strategy/dogs.shtml Value Ratio Stocks P/E P/B P/S P/C P/D VR ======================================== === === === === === ===== Teck Cominco Limited (TCK.B) 5 5 5 5 5 0.1 First Quantum Minerals Ltd. (FM) 5 5 4 5 3 0.5 Nova (NCX) 5 5 5 5 4 0.5 Husky Energy (HSE) 4 2 3 3 5 0.9 Bank of Montreal (BMO) 3 4 2 1 5 1.4 Biovail (BVF) 1 4 2 4 5 1.5 Petro Canada (PCA) 5 5 4 3 3 1.5 Toronto Dominion Bank (TD) 4 4 2 2 5 1.6 Encana (ECA) 5 3 3 3 3 1.7 Bank of Nova Scotia (BNS) 3 2 2 1 5 1.8 More Info: http://www.stingyinvestor.com/SI/strategy/valueratio.shtml Graham Stocks P/E P/B P/D G$ dG$(%) ======================================== === === === ====== ====== Teck Cominco Limited (TCK.B) 5 5 5 39.62 560.34 First Quantum Minerals Ltd. (FM) 5 5 3 98.78 439.79 Nova (NCX) 5 5 4 43.08 320.71 Inmet Mining (IMN) 5 5 1 72.06 274.56 Agrium (AGU) 5 4 1 94.66 142.72 Petro Canada (PCA) 5 5 3 81.70 142.21 Magna Cl.A (MG.A) 2 5 3 75.62 111.53 Talisman Energy (TLM) 5 4 2 25.54 105.80 BCE (BCE) 4 4 0 40.99 64.30 Encana (ECA) 5 3 3 98.22 63.71 Yamana Gold Inc. (YRI) 2 5 2 12.13 62.22 Canadian Pacific Rail (CP) 4 4 3 64.79 59.20 Canadian Tire (CTC.A) 4 4 2 67.33 49.63 Toronto Dominion Bank (TD) 4 4 5 65.60 42.61 Husky Energy (HSE) 4 2 5 45.18 41.18 Nexen Inc. (NXY) 4 2 1 35.23 38.17 Canadian Natural Resources (CNQ) 4 3 1 71.50 37.50 MDS Inc. (MDS) 1 5 0 11.80 31.11 Bank of Montreal (BMO) 3 4 5 49.49 30.22 Sun Life (SLF) 2 4 5 35.95 30.03 Suncor Energy (SU) 4 2 1 35.24 23.22 Manulife (MFC) 3 3 4 29.41 22.56 Bombardier Cl.B (BBD.B) 4 2 2 5.15 18.72 Brookfield A.M. (BAM.A) 3 3 4 22.36 17.15 Telus (T) 3 2 4 43.93 12.01 National Bank of Canada (NA) 2 3 5 45.92 11.32 TransCanada (TRP) 3 3 4 35.76 9.35 Bank of Nova Scotia (BNS) 3 2 5 39.96 8.01 CN Railway (CNR) 3 2 2 47.03 4.35 Potash Corporation (POT) 4 1 1 82.08 2.35 Weston George (WN) 2 3 3 55.87 1.31 Barrick Gold (ABX) 2 3 2 37.95 0.61 More Info: http://www.stingyinvestor.com/SI/strategy/graham.shtml *Notes: http://www.stingyinvestor.com/SI/strategy/notes.shtml Switch to the HTML version if the tables aren't formatted properly. http://www.stingyinvestor.com/cgi-bin/email.cgi Books for Stingy Investors Contrarian Investment Strategies: The Next Generation by David Dreman David Dreman has provided perhaps the best modern book on value investing and the markets. He goes from the basics through to advanced topics and the sheer amount of useful information in his book is remarkable. As an added bonus, Dreman's writing is clear and approachable - a feat rarely seen in investing books. All but the most grizzled market veteran will pick up a few good ideas from Contrarian Investment Strategies: The Next Generation. Amazon Link: http://www.amazon.ca/exec/obidos/ASIN/0684813505/ Stock Research From Dan Hallett & Associates The Rothery Report http://www.rotheryreport.com/ The Rothery Report provides research on select deep-value stocks in North America. Discover overlooked and undervalued stocks in quarterly investment reports which provide detailed analysis of Canadian and U.S. stocks. Weekly email news and additional updates keep subscribers informed about new opportunities and developments. Rothery Report Performance (03/31/2001 to 09/30/2008) Average Capital Gain Average Holding Period 36.2% 2.4 Years Learn More http://www.rotheryreport.com/store/store.shtml Subscribe Today http://www.rotheryreport.com/store/order.shtml If you'd like to suggest The Stingy News to a friend, please point them to: http://www.stingyinvestor.com/cgi-bin/email.cgi Please visit the StingyInvestor website at http://www.stingyinvestor.com To (un)subscribe please use our email centre at http://www.stingyinvestor.com/cgi-bin/email.cgi Email comments or questions to info@stingyinvestor.com Refer to legal & conflict of interest disclaimers at http://www.stingyinvestor.com/SI/legal.shtml Privacy Policy http://www.ndir.com/SI/legal/privacy.shtml We do not rent or sell our email list to third parties. ISSN 1499-2795 Copyright Dan Hallett and Associates Inc., 2008. All rights reserved. The securities mentioned in this report are not appropriate for all investors. Consult your professional investment advisor before making any investment decision. While all reasonable effort is made to ensure the accuracy of information and data contained herein, accuracy can not be guaranteed. Past performance is not a good predictor of future performance. Results are not guaranteed and we assume no liability whatsoever for any material losses that may occur. No compensation for suggesting particular securities or financial advisors is solicited or accepted. The information in this newsletter, and in its related website, is not intended to be, nor does it constitute, financial advice or recommendations. Investing in stocks can be risky and may result in substantial losses. A Dan Hallett and Associates Inc.(DH&A) publication. DH&A is registered as Investment Counsel in the province of Ontario. DH&A, or related-parties may have an interest in the securities mentioned.
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A Dan Hallett and Associates Inc. publication. Norm Rothery, Ph.D., CFA, is the Chief Investment Strategist at Dan Hallett and Associates Inc. (DH&A) and the founder of StingyInvestor.com. DH&A is registered as Investment Counsel in the province of Ontario. Norm, DH&A, or related-parties may have an interest in the securities mentioned. More...