Hottest links for Thursday October 3rd, 2013 the semi late edition again (see yesterday’s edition of hottest links). Check out our free daily newsletter and never miss a single edition here.
Top stories for today include; Herbalife is back, you thought that was over, but its not. Tim Ramey is firing (more shots at Bill Ackman); Carl Icahn is also back (sorta) but this time it has to do with activism in Europe (not Apple or Herbalife); One of our favorite linkfests has launched a new site, check out the manifesto; On value investing in retail especially restaurants; FOMC stands for fairly obvious manipulated committee? see the chart; Why most traders fail, a tale from a hedge fund manager; Dan Loeb strikes back this time against BID; The value anomaly; Man gets arrested for eating birthday cake, but he was not the only one who had a bad day yesterday, meet the Winklevoss twins; That and more below.
Hottest Links: Stories
Assorted Investment Musings
I generally avoid retailers as investments, they’re difficult and take a certain type of investor. Many retailers become legitimately cheap because their general popularity has waned. Retailers sell popularity, popular fashions or popular dining. Once the freshness fades sales often move on, but there are always exceptions, Red Lobster and Olive Garden come to mind. [Nate Tobik, Oddball Stocks]
Mean Regression and the Value Anomaly
Value investors, who are often disciples of Ben Graham, try to buy securities at prices below intrinsic value. Indeed, the so-called “value anomaly” is among the oldest and most firmly established effects in financial markets. [David Foulke, Turnkey Analyst]
Deploying the Full Enforcement Arsenal
The Council is an extremely important voice on behalf of investors and an excellent source of input for the SEC on new rules or guidance that is needed, existing rules that need to be changed and market practices that may be harming investors. [Mary Jo White, Harvard.edu]
Measurement in Financial Reporting: The Need for Concepts
Measurement concepts in financial reporting are sorely needed. A key role of accounting is to depict economic phenomena in numbers, i.e., to develop measurements to report in financial statements. [R. Christopher Small, Harvard.edu]
Why Most Traders Fail
What I like best about the Larry Benedict chapter in Jack Schwager’s Hedge Fund Market Wizards book is that it opens with a story about repeated failure. Before becoming the uber-successful founder of Banyan Capital Management, Benedict failed and failed repeatedly but kept at it, using the proper discipline to assure that failed trades wouldn’t knock him out of the game and never looking for a shortcut to make up for them. Greg has been crushing the S&P 500 (INDEXSP:.INX) [Joshua M Brown, The Reformed Broker]
Fairly Obvious Manipulation Committee
Fascinating chart from Jerry Khachoyan at The Armo Trader blog. Below (click to embiggen), Jerry show’s how almost every market top and bottom has coincided with an action or announcement from the Federal Reserve or its FOMC… [Joshua M. Brown, The Reformed Broker]
Breaking Bad, the Bitcoin Addition
In media reports the past year about the growing popularity of Bitcoin with the Silicon Valley set, Silk Road often emerged as the darker side of digital currencies and websites that permit customers to conduct business in anonymity. [Matthew Goldstein, Reuters]
Third Point’s Letter to Sotheby’s
The restaurant that Dan Loeb said Sothebys (NYSE:BID)’s management wined and dined at to a bill that was in the “multiple hundreds of thousands of dollars,” was the famed Blue Hill, according to people familiar with the matter. [Sara Germano and David Benoit, MoneyBeat]
ETFs Owners Hope the Fed Gets Its Cherished Inflation
Nonetheless, the firm sees specific beneficiaries of the current climate, including the steel, transport and materials sector, and thus for the Market Vectors Steel (ETF) (NYSEARCA:SLX), the iShares Dow Jones Transport. Avg. (ETF) (NYSEARCA:IYT), and the Materials Select Sector SPDR (NYSEARCA:XLB). The report notes that global steel makers have already indicated improvement in demand, while rising input costs for Asian steel makers could be a tailwind for those in the U.S. [Teresa Rivas, Barron’s]
How to Implement Smart Beta Strategies
In a white paper on the adoption and implementation of smart beta strategies—which have become increasingly popular over the past year as investors seek out tax and cost-efficient returns—Towers Watson & Co (NYSE:TW) concluded that smart beta works best when implemented across a broad investment universe. [Charlie Thomas, aiCIO]
This is Your Brain on Stocks (Toronto)
Your brain weighs 3 pounds, and is 100,000 years old. It is a “dynamic, opportunistic, self-organizing system of systems.” MRIs have revealed to Neurologists what our brains looks like when making decisions . [Caitlyn, Ritholtz]
New Dress Code Horrifies Investment Bankers
He might work for Barclays PLC (NYSE:BCS) (LON:BARC). The bank has recently put in place a policy of supercasual Fridays. Jeans, T-shirts and even sneakers are acceptable on Fridays, according to people who work for the bank (and spoke on the condition of anonymity because banks keep everything top secret, even stuff like the rules of permissible footwear). [John Carney, CNBC]
Tim Ramey Responds: Pershing Square ‘Capitulates’ on Herbalife
Bill Ackman is not only battling Herbalife Ltd. (NYSE:HLF) (or Carl Icahn). He has also has been fighting (or at least been on the receiving end of vicious attacks by DA Davidson & Co analyst Timothy S. Ramey). Ackman responded to some comments by Tim Ramey in a letter to investors last night. [ValueWalk]
Mint the Premium Bonds!
The creepy trick that has swept the nation* is the platinum coin option, in which Treasury mints a $1 trillion platinum coin, deposits it at the Fed, and suddenly has an extra $1 trillion of money to spend without incurring any debt (and, thus, without breaching the debt ceiling). This is a good trick as tricks go, and it’s been extensively advocated by Josh Barro, Paul Krugman, Matt Yglesias, Joe Weisenthal, basically every economics blogger really. I am unaware of any good arguments that the platinum coin wouldn’t work, but it does have the problem that it is really really really really obviously a trick. [Matt Levine, Bloomberg]
So you want to build your own ETF?
So with 50, maybe 100, maybe as many as 1,700, stocks in the index, you get the bad stuff with the good. Even if you choose the right segment, it’s hard to outperform the broader market. Most of us amateurs like to cook from recipes, but we might prefer a little more salt, a little more rosemary or thyme, a little less heat. We start with recipes and then modify them to our own tastes. [Jennifer Openshaw, MarketWatch] Via AbnormalReturns
High Quality European Stocks
The valuation case against high quality European stocks. [John Authers, FT]
Rich guys love ETFs
Exchange traded funds have found their way into many investment portfolios as many capitalize on the efficient and easy-to-use passive indexing strategies, especially among the ultra-high-net-worth investors. [Tom Lydon, ETF Trends]
The StreetEYE Manifesto
In the mid-2000s, I was fortunate to fall in love with blogs and find smart people with divergent opinions doing their homework. But it was a hard road for the early adopter, building a blogroll of dozens of blogs in FeedDemon, Google Reader. [StreetEYE]
Carl Icahn-Backed Cevian Capital Terrorizes G4S
We have talked about G4S plc (LON:GFS) (OTCMKTS:GFSZY), the UK-based security solutions company, a couple of times before. The company now has an activist hedge fund, associated with Carl Icahn, on its back, which reports suggest is calling for a break-up. [Tabinda Hussain, ValueWalk]
Company With Over $500 Million in Defaulted Bonds and Unpaid Judgments
How could you pay $282 million for the common stock of a company whose creditors have taken it to court, gotten a judgment, remain unpaid, and whose board members have resigned citing “severe cash flow drain with unclear prospect of securing new capital,” “failure to pay outside legal counsel,” and “potential erosion of internal controls”? [Credit Bubble Stocks]
Just When I Thought They Couldn’t Get Any Better
Datawatch Corporation (NASDAQ:DWCH) was actually a different company less than 5 months ago. But even then the company’s transformation was well on its way. Posting double digit top line growth and closing six figure enterprise deals with large international companies. Now with the future integrated products their software solutions will allow them to compete directly with Tableau Software Inc (NYSE:DATA), Splunk Inc (NASDAQ:SPLK) and many other BI related vendors. [ShadowStock]
Superiority of Estimize Data Set
Rick and his colleagues Ton Kang from Oklahoma University and Michael Wolfe from Virginia Tech had completed their research into our data set and written a paper titled, “Crowdsourcing Forecasts: Competition For Sell Side Analysts?” [Estimize]
Hottest Links: Not The Onion
Washington Man Arrested for Eating Someone Else’s Birthday Cake
If you are looking for odd news, this story out of Kelso, WA literally ‘takes the cake’. On Tuesday afternoon, a woman brought her daughter’s birthday cake with her into the Cowlitz County Hall of Justice because “the dog would get into it and eat it” if she left it in the car. Instead, an uninvited guest started the b-day celebration a bit early. [The Brad, 97rockonline]
