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Hottest Links: Market Cap To GDP, Katy Perry Aussie Bio-Hazard

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Hottest links for Wednesday November 6th, 2013 the very early edition (see Tuesday’s edition of hottest links). Get our free daily newsletter (which HAS BEEN RECENTLY UPDATED) and never miss a single linkfest.

Top stories for today are included below. Brooklyn Investor has a great post about what to do in this market, which is filled with lots of valuable information; It has become the in thing to seed former analysts who start their own hedge funds, but what is their track record?; Really good value write up on a small cap, PD-Rx Pharmaceutical; Guess which famous actress (or whatever she does) has been declared a bio hazard in Australia?

Hottest Links

(Several links found via AbnormalReturns)

Value Investing

What To Do In This Market

Warren Buffett says that International Business Machines Corp. (NYSE:IBM) is buying back a lot of stock so a low stock price is actually good for him as IBM can buy back more stock.  This is something that people have a hard time understanding.  If he owns a bunch of Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B) stock, how could he be happy to see the stock market go down?  [KK, The Brooklyn Investor]

The Protégés

Ferguson is described as a “protégé of Pershing Square Capital Management’s William Ackman,” for whom he served as an analyst. [Tom Brakke, Research Puzzle Pieces]

PD-Rx Pharmaceuticals: Obvious Cheap

PD-Rx Pharmaceutical (OTCMKTS:PDRX) has ~75% of it’s market cap in cash and when the P/E ratio is 7.5x you get an even lower number when you switch to a metric that does account for the cash on the balance sheet. [David, Alpha Vulture]

PD-Rx historical financials

Buffet’s Market Timing Signal: Expensive

Buffett highlights the inextricable tie between GDP growth and corporate profits. GDP growth is the limiting factor (interest rates and margins are the other factors). [Wesley R. Gray, Turnkey Analyst]

Behavior Patterns Help and Hurt

Investment professionals and seasoned investors prize numbers that include repetitive patterns. With these abstractions of reality we can build nice neat statistical formulas that give us a good chance to be correct most of the time. [A. Michael Lipper, CFA Institute]

The Dividend Challenge

Beginning in the 1980s PepsiCo, Inc. (NYSE:PEP) started running the Pepsi Challenge — television commercials featuring taste tests that would pit their soda versus The Coca-Cola Company (NYSE:KO). Tasters would take sips of each unmarked beverage, and were asked to declare which soda they preferred. [Mebane Faber]

Hedge Fund Investment Conferences in 2013: Links to All Our Notes

Sohn London Conference Notes 2013:  Chris Hohn, Nikolai Tangen, John Armitage, Mala Gaonkar, Julian Sinclair, Eashwar Krishnan, Ross Turner, Mas Siddiqui, Bruno Rocha, Andrew Weiss. Invest For Kids Chicago Notes 2013: Marc Lasry, Steve Eisman, Lee Cooperman, Nelson Peltz, Dinakar Singh, Sam Zell, Jeff Gundlach, Mark Kingdon, Steve Kuhn, Rick Rieder, Stephen White, Peter Zaldivar. Great Investors’ Best Ideas Dallas Notes 2013: Michael Price, Chuck Akre, T. Boone Pickens, Karen Finerman, Tom Russo, Caroline Cooley, Tom Gayner. [Market Folly] Related; Buttonwood Conference: Bubbles, TBTF, Japan, EM, CBs. [ValueWalk]

How To Discount Backtests Due To Data Mining

When evaluating a trading strategy, it is routine to discount the Sharpe ratio from a historical backtest. The reason is simple: there is inevitable data mining by both the researcher and by other researchers in the past. [Yan Liu, SSRN via @quantivity]

Do You Want A PhD Managing Your Money?

The gross performance of domestic equity investment products managed by individuals with a Ph.D. (Ph.D. products) is superior to the performance of non-Ph.D. products matched by objective, size, and past performance for one-year returns, Sharpe Ratios, alphas, information ratios, and the manipulation-proof measure MPPM. [Ranadeb Chaudhuri, Zoran Ivkovich, Joshua Matthew Pollet and Charles Trzcinka, SSRN via CXOAG]


Cooper Tire CEO Says Problems With China JV Flagged to Apollo Tyres

Apollo Tyres Ltd (BOM:500877) knew what it was getting into when it agreed in June to buy Cooper Tire & Rubber Co (NYSE:CTB), Cooper’s chief executive said Tuesday, lobbing the opening volley in Cooper’s lawsuit seeking to force Apollo to close its $2.2 billion deal to buy Cooper Tire. [Liz Hoffman, MoneyBeat]

Nigeria Blames Fed For Pulled Bond Sale

Nigerian lender Diamond Bank has suspended the launch of its seven-year $550 million bond? It appears it’s the Fed’s fault! as the bond’s marketers noted “pricing turbulence in the international debt market,” in a presentation seen by Reuters on Tuesday. [Tyler Durden, Zero Hedge]

Hottest links

Here Comes a Korean Currency-Hedged ETF

WisdomTree Korea Hedged Equity Fund (DXKW), launching Thursday on the Nasdaq, gives investors South Korea’s stocks minus the won’s fluctuations. The fund looks much like the one WisdomTree built for Japan-without-the-yen, the WisdomTree Japan Hedged Equity Fund (NYSEARCA:DXJ). [Brendan Conway, Focus on Funds]


Banks offering mortgages with only 5% down payments

After the housing bubble burst, buyers needed to come to the table with as much as 20% down or they had to turn to the Federal Housing Administration for a low down-payment loan. But now banks like TD Bank, Bank of America Corp (NYSE:BAC), and Wells Fargo & Co (NYSE:WFC) are loosening the purse strings, offering loans with down payments that are as low as 5%. [Les Christie, CNNMoney]

Fired Deutsche Bank Rates Traders Said to Return to Work

Regulators around the world are investigating whether more than a dozen firms, including Deutsche Bank AG (NYSE:DB) (ETR:DBK), colluded to rig benchmark interest rates. Barclays PLC (NYSE:BCS) (LON:BARC), UBS AG (NYSE:UBS) and Royal Bank of Scotland Group plc (NYSE:RBS) (LON:RBS) (AMS:RBS) are among companies that have been fined about $3.7 billion for rigging the London interbank offered rate, or Libor, the benchmark for more than $300 trillion of securities worldwide. [Karin Matussek and Nicholas Comfort, Bloomberg]

Twitter IPO Reminder For U.S. Congress Members

As Twitter gets set for one of the hottest initial public offerings of the year, the U.S. House of Representatives ethics committee has a reminder for lawmakers and their staff: You can’t join. [Benjamin Pimentel, The Tell]

Hottest Links: Not The Onion

Katy Perry album declared a bio-hazard by Australia

Bio-security officers in Australia have been ordered to inspect any copies of Katy Perry’s new album arriving into the country from overseas. [BBC News]

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