Hottest links for Wednesday November 20th, 2013 the very late edition (see Tuesday’s edition of hottest links). Get our free daily newsletter (which HAS BEEN RECENTLY UPDATED) and never miss a single linkfest. Also, now if you sign up you will get our new e-book on value investing.
Top stories for today are included below.
Hottest Links: Stories
Value Investing
Exxon Mobil (XOM) Valuation
That’s kind of like first-level thinking; determining investment merits of Exxon Mobil Corporation (NYSE:XOM) based on crude oil price assumptions. Sure, prices are very important for XOM. But there is more to it than that as we will see. [KK, The Brooklyn Investor]
Predicting Stock Returns with Investor Sentiment
The authors introduce an econometric technique that enhances the predictability of sentiment. The table below shows how adding their enhanced sentiment indicator can improve the predictability associated with other variables thought to predict returns. [Wesley R. Gray, Turnkey Analyst]
Value In The Eye Of The Storm: Why You Should Welcome Uncertainty!
I concede that point, but that is exactly why I would try to value them! I know that statement makes little sense, but to solidify my argument, take a look at the following list of five assets/entities and rank them on the basis of the confidence you will feel in valuing each one (I have provided my rankings and the reasons in the table). [Aswath Damodaran]
| Valuation Setting | Your precision ranking | My precision ranking | My reasons |
| $20 in an envelope | (1) Absolute | Nothing to forecast & no risk to adjust for. | |
| A mature, money making company in a stable macroeconomic environment | (2) Very high | You can use both company & macroeconomic history in making forecasts. | |
| A mature, money making company in an unpredictable macroeconomic environment | (3) Average | While company is stable, macroeconomic shifts can cause earnings/cash flows to change. | |
| A young, money losing company in a stable macroeconomic environment | (4) Low | You have no history and know little about market. Lots of unknowns, at least at the company level. | |
| A young, money losing company in an unpredictable macroeconomic environment | (5) Very little | The uncertainties you face at the company level are multiplied by uncertainties about interest rates and economic growth. |
Funds
A Lonely Short-Seller Still Plies His Trade
Dave Davidson said he is short 36 different stocks at the moment across a range of sectors, including consumer discretionary, financials, REITs, cyclicals, transports and tech. The list includes names like Coach, Inc. (NYSE:COH) (down 2.8% this year), Lululemon Athletica inc. (NASDAQ:LULU) (TSE:LLL) (down 12%), Whole Foods Market, Inc. (NASDAQ:WFM) (up 25%), McDonald’s Corporation (NYSE:MCD) (up 11%), Chevron Corporation (NYSE:CVX) (up 11%), and Caterpillar Inc. (NYSE:CAT) (down 6.2%). [Paul Vigna, MoneyBeat]
Who Knows Best About Hedging?
The answer, at least from investors responding to a survey by liability-driven investing (LDI) and outsourcing group SEI, is that many think someone else might do a better job than those who have fiduciary responsibility for the fund. [Elizabeth Pfeuti, aiCIO]
23 Days
The “Furious Five” 3D stocks have gone absolutely ballistic this fall. Below, the unbelievable performance for each over the last 23 days: [Joshua M Brown, The Reformed Broker]
Libremax’s Lippmann Likes Student Loan Debt, Mortgage Bonds
Hedge fund manager Greg Lippmann, the former Deutsche Bank AG (NYSE:DB) (ETR:DBK) trader who rose to Wall Street fame after a hefty and lucrative bet against subprime mortgages before the housing market collapsed, said he is still a fan of residential and commercial mortgage bonds going into 2014 and also likes student loan debt. [Katya Wachtel, Reuters]
Why You Should (NOT) Invest in Hedge Funds through 13Fs
Mark Yusko has a great observation in the below video, namely, the largest holdings are the WORST to follow. However, there are a lot of people and funds that track the largest holdings. Why? Who knows, but likely they haven’t done the research. [Mebane Faber]
Bitcoin Likely Users Venn Diagram
Brutal… [Joshua M Brown, The Reformed Broker]
Closure of FactorShares Removes an ETF Industry Blight
Factor Capital Management, the managing owner of the FactorShares family of ETFs, recently announced the closure and liquidation of its five ETFs. [Ron Rowland, Invest With An Edge]
As Gold Prices Retrace to the June Lows Mine Output to Reach Record High
Output from the world’s gold mines is set to hit record highs this year, disappointing bulls who are impatiently waiting for production cuts following this year’s 24 percent plunge in prices. [Climateer Investing]
Hedge Funds Down on Gold?
SPDR Gold Trust (ETF) (NYSEARCA:GLD), the ETF where Paulson and others from George Soros to Louis Moore Bacon’s Moore Capital Management cut their holdings earlier this year, clocks in as #2 on the list of ETFs most frequently reported on hedge funds’ third-quarter portfolio disclosure. [Brendan Conway, Focus on Funds]
Short Sellers See Once In A Lifetime Opportunity—if They Can Survive
With the Dow Jones Industrial Average (INDEXDJX:.DJI) flirting with 16,000, hedge fund managers that focus on betting against stocks see a once-in-a-lifetime opportunity to make money on what they see as an epic equity bubble. [Lawrence Delevingne, Net Net]
Mordy: DSUM Bucks Bond Trend
This time, the venue is not Dubuque County, Iowa, but rather, China’s offshore bond market. This other building project will lead us to an already-existing ETF, the PowerShares Chinese Yuan Dim Sum Bond Portfolio (NYSEARCA:DSUM), which cultivates a different field of dreams in the Middle Kingdom. [Tyler Mordy, IndewxUniverse]
Misc
A Cheat Sheet on European High Frequency Trading Firms
Blamed for using algorithms that can wreak havoc in the market, gaining early peeks into market-moving data, for trading on news faster than news can be disseminated, they’ve nevertheless found support from some unlikely quarters, such as traditional exchanges, and even this working paper on the European Central Bank’s website. [Tim Cave, MoneyBeat]
Carl Icahn In His Own Words
We held an hour-long discussion with Carl Icahn on Monday as part of our Reuters Global Investment Outlook Summit, going over everything from his spectacular year of performance to his thoughts on the excessive media coverage of activists like himself who push and prod corporate managers to return cash to investors. We also talked about the legacy he wants to leave. [Jennifer Ablan, Reuters]
Find Your Favorite Analyst By Following Fowl?
Might Twitter Inc (NYSE:TWTR) – which went public earlier this month – ultimately do for Wall Street analysts what YouTube did for undicovered music artists, by disintermediating analysts and clients through a weakening of the grip of large investment banks. [Daniel Nadler, Institutional Investor]
Bill Stiritz Wants To Tell Herbalife How To Deal With Bill Ackman
William Stiritz, the chief executive of cereals company Post Holdings Inc (NYSE:POST), has increased his investment in Herbalife Ltd. (NYSE:HLF) and is moving toward personally getting involved in the company’s brutal fight against hedge fund billionaire William Ackman. [Nathan Vardi, Forbes]
Hottest Links: Not The Onion
Sledgehammer-Wielding State Rep. Bashes Homeless People’s Shopping Carts
Tom Brower, a Democrat serving his fifth term in office, decided a couple of weeks ago to crack down on the vagrant problem in the city he represents, Waikiki, by walking around with a sledgehammer and an Armani hat and either bashing up shopping carts that he can’t identify as being affiliated with a store, or returning the carts to the stores they originated from. [Progressive Populist]
