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Hottest Links: Twitter OverKill, Tesla Burns, Crazy Lawsuit, EM Value

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Hottest links for Thursday November 7th, 2013 the becoming sorta the regular time edition (see Wednesday’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. Twitter is in the news but we tried to avoid over-kill and focus on stories about companies trading at less than ~500X 2015 EBITDARP, but a new great chart from ChartGirl; Tesla has another fire and we were the first to report it; As I have argued (I am not a registered investment advisor neither is VALUEWALK LLC see our disclaimer for more info) EM are much more attractive than US stocks, Meb Faber makes the case in a few sentences; A shocking new study shows that asset managers who have a PHD outperform the market; A new great distressed write up from the best writer on the topic; A man sues his wife for ugly children and the court rules? Check out Not The Onion for that answer.

Hottest Links: Stories

Value Investing

Investing in Lego

The near-zero interest rates of the past few years have thrown up plenty of frothy asset classes: emerging markets, gold, and junk bonds have all had a turn in the sun. But few are as surprising as the craze for investing in Lego bricks. [The Investor, Monevator]

Lego portfolio tool Hottest Links

What Would You Rather Own?

Emerging markets have > 30% world GDP, but only 12% of world market cap. A Shiller CAPE of about 15.  55% of global population. The US is about 25% of world GDP, but 45% of world market cap. And a Shiller CAPE of about 24. 5% of global population. [Mebane Faber]

The Incredible Untold Story about How the Financial World Almost Ended

Everybody has heard the stories of the blowup of super hedge fund LTCM in the late 1990s, but as far as I know, no one has ever talked publicly about what it was like inside the fund as it was blowing up — until now. [Sverre Rørvik Nilsen aka finansakrobat, CFA Institute]

Asset Managers with a PhD Outperform…

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. [Wesley R. Gray, Turnkey Analyst]

What Were They Thinking?

In our view investing is similar to a manufacturing business. First gather raw materials—information. Next process the materials—intensive study and analysis. Finally create the finished product—investment valuations and ultimately decisions. [John Heldman, BeyondProxy]

Advanced Distressed Debt: Recharacterization

A recent decision issued by the Ninth Circuit Court of Appeals underscores a risk that a presumptive creditor faces when a bankruptcy court is authorized to review a loan transaction and recharacterize the purported debt as equity in a bankruptcy proceeding. [Hunter, Distressed Debt Investing]

A Few Words About Valuation: Ritholtz Chart

CAPE looks at the prior 10 years of trailing earnings. It smooths out any given quarters’ ups and downs, and theoretically includes a full business cycle. [Barry L Ritholtz, Bloomberg]

Hottest Links


Lifestyle ETFs and investment products

Just for fun, launch an ETF with the ticker symbol $AYN built around an index of companies with objectivist cultures like Lululemon Athletica inc. (NASDAQ:LULU) and see how much money comes in after doing some targeted media on the concept. [Joshua M Brown, The Reformed Broker]

P/E, EV/EBITDA, EV/EBIT, P/FCF – When to use what ?

Interestingly, a few weeks ago (??), one would get EV/EBITDA instead of EV/EBIT. I am not sure why they changed it, but it is a good starter in order to think about the differences between P/E, EV/EBITDA and EV/EBIT. We can see this easily if we look at the DAX companies, sorted by EV/EBITDA: [Memyselfandi, ValueAndOppurtunity]

Deutsche Lufthansa AG 3.26
RWE AG 3.51
K+S AG 4.33
Continental AG 4.78
E.ON SE 4.80
Deutsche Telekom AG 5.85
ThyssenKrupp AG 6.27
HeidelbergCement AG 6.82
Volkswagen AG 6.93
Bayerische Motoren Werke AG 7.26
Deutsche Post AG 8.19
Infineon Technologies AG 8.19
Fresenius SE & Co KGaA 8.74
BASF SE 8.82
Bayer AG 8.97
Linde AG 9.10
Merck KGaA 9.12
Fresenius Medical Care AG & Co KGaA 10.33
Siemens AG 11.05
Henkel AG & Co KGaA 11.46
Adidas AG 11.85
Daimler AG 11.86
Deutsche Boerse AG 13.64
SAP AG 13.93
Beiersdorf AG 15.59

Six Tips For Transforming A Hedge Fund Into A Family Office

Regardless of the travails facing Steve Cohen at SAC Capital or the relative success of the Soros and Ichan family offices, there are some recommendations which are worth pointing out to any hedge fund GPs that may be considering a move to a family office model. [Bijesh Amin, FINalternatives]

Momentum, Meet Wall

The boring old Utilities SPDR (ETF) (NYSEARCA:XLU) is near the top of the heap. Bonds are back in demand. You might chalk some of the risk aversion up to the slowing of traders’ favorite momentum stock, Tesla Motors Inc (NASDAQ:TSLA). Shares are down 15% as investors go sour on the company’s earnings report. [Brendan Conway, Focus on Funds]

Goldman Sachs Group Inc (NYSE:GS) Spells Out New “Saturday Rule” For Junior Employees

Please let your BUL/BUM know if you have staffing needs that require your junior banker(s) to be in the office from Friday 9PM through Sunday 9AM. Going forward, please make sure you notify the BUL/BUM by 9AM on Friday mornings. [Bess Levin, DealBreaker]

Hedge Funds 2007-2009: A Bubble In People

Today, JPMorgan Chase & Co. (NYSE:JPM) closed a $13 billion settlement with the government, putting an end to federal investigations into their questionable mortgage practices. [Climateer Investing]


Another Win for the Nerds!

Twitter Inc (NYSE:TWTR) is set to go public on November 7th with an initial share price of $26. A lot of people are about to make a boatload of money. [ChartGirl]

TWITTER_900 Hottest Links

Why One Woman Is Eager to Buy Twitter Shares

On her Tuesday lunch break, Deborah Watkins walked through gray drizzle from her office to the TD Ameritrade Holding Corp. (NYSE:AMTD) in the downtown Loop here to ask about buying some shares of Twitter at the IPO. [Ben Kesling, MoneyBeat] Related; When Twitter Inc (NYSE:TWTR) unveiled its IPO registration last month, a lot of folks were stunned to learn that the company’s two largest institutional owners weren’t any of the venture capital firms known to have invested in the company. [Dan Primack, CNNMoney]

How I Spent My Night Before the Twitter IPO

I decided to pen a series of fictional (and hopefully funny) tweets to CEO Dick Costolo, with whom I have had many entertaining interviews, hysterical emails and enjoyable conversations over the years, because he likes a good joke. [Kara Swisher, AllThingsD]


Third Tesla Model S Catches Fire In Tennessee

Another Tesla Motors Inc (NASDAQ:TSLA) Model S caught on fire, according to a person with username tommolog who posted a picture of the incident on the Tesla Motors Club forum. [Marie Cabural, ValueWalk]

Ray Kelly In The Running Jor JPMorgan job

NYPD Commissioner Ray Kelly, unwanted by Mayor-elect Bill de Blasio, is in the running for a top security job at JPMorgan Chase & Co. (NYSE:JPM), sources at the financial giant told The Post. [Mark DeCambre and Beth DeFalco, New York Post]

Ballmer Will Not Be Selling His Microsoft Shares

The board bomb was much more interesting, given the worries among some that the next CEO of Microsoft Corporation (NASDAQ:MSFT) might not have as much freedom to change with both Ballmer and Gates on the board. [Kara Swisher, AllThingsD]

CFTC Sues Firm That Sued CFTC to Stop CFTC From Suing It

Today the CFTC sued DRW for market manipulation. One lesson here might be, don’t sue your regulator to stop them from suing you, they are not fond of that sort of thing. [Matt Levine, Bloomberg]

Why Fannie and Freddie Are Paying Back Uncle Sam

The government in 2008 agreed to inject massive sums of aid so that Fannie Mae / Federal National Mortgage Association (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) would stay solvent, allowing mortgage markets to operate smoothly. [Nick Timiraos, MoneyBeat]

Steven Cohen Stumble Over Insider Trading Rules

In a never-before-published video, hedge fund titan Steven A. Cohen, whose firm this week agreed to plead guilty to securities fraud, describes federal securities laws as “vague,” and asks for an explanation of the basic Securities and Exchange Commission rule that prohibits insider trading. [Nick Verbitsky Martin Smith and Dan Sugarman, PBS]

Hottest Links: Not The Onion

Man Successfully Sues Wife

Feng sued his wife on grounds of false pretenses, for not telling him the truth about the plastic surgery, and duping him into believing that she was beautiful. A judge agreed with Feng’s argument and ordered his wife to fork over $120,000. [Kineda]

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