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September 2008

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    « February 2008 | Main | April 2008 »

    March 31, 2008

    Voting Delays in Zimbabwe

    One of the very worst places to be over the past years is Zimbabwe. Comrade Bob (as Nelson Mandela would sarcastically refer to him) has run the country into the ground, and is responsible for who-knows-how-many deaths.

    As I'm posting this late Monday evening US east coast time, the BBC is reporting delays in reporting election results since the polls have closed Sunday. This suggests Mugabe and his thugs are in the process of stealing yet another election.

    Zimbabwe is perhaps the prime example of frontier investing markets -- places requiring a stronger stomach and greater tolerance for risk than traditional emerging markets.

    Yet Zimbabwe has been drawing interest of such investors recently, as you can see from this Bloomberg report and this one from Reuters. The fact that Comrade Bob is well into his 80s, combined with the country's assets and literate population, undoubtedly plays a leading role in the interest.

    You've read about Lonrho PLC here previously. I don't own it, but I might at a lower price. The linked Reuters story mentions it in connection with Zimbabwe:

    Lonrho's investment arm, LonZim, recently announced plans to raise around $140 million on London's Alternative Investment Market for the purchase of assets in Zimbabwe, hoping to "benefit from any radical future improvement of the economy over the longer term," according to its Web site. It has bought a listed Zimbabwean telecommunications company and a chemicals manufacturer for less than $6 million.

    It will be interesting to see how investors into the country make out -- in both the short and longer term. Right now we have to wonder if voting delays in Zimbabwe will end up delaying the nation once again becoming the "breadbasket of Africa."

    March 30, 2008

    End of the First Quarter

    Monday is the last day of the month, and the last trading day of the first quarter. But this Monday is also the first day of what is a very full week.

    So I still plan to post results of this blog's stock picks -- both "Life of the Blog" and year-to-date. But it might be a couple of days, give or take.

    I suspect the first quarter results are down, with one or two exceptions. Yet this is a long-term game and, for the most part, I remain cautiously optimistic with the portfolio holdings.

    March 28, 2008

    Diller Downs Malone in Court

    Liberty Media and John Malone cannot give Barry Diller the boot from IAC/InterActiveCorp, a Delaware judge ruled, thwarting Malone's effort to gain control of the Internet company.

    This means that Diller will most likely move forward with his plan to split IAC into five parts. Which Malone said violated a proxy agreement giving Diller control of Liberty's majority stake in the company.  The judge ruled today that it didn't.

    Malone had asked the court to terminate the agreement, which would have given Malone control of IAC and ended Diller’s tenure at the company.

    Bloomberg runs a good report on all this -- plus the background on why Malone and Diller have fallen out over time.

    March 27, 2008

    Jim Grant on Bloomberg TV

    If you're like me and missed Jim Grant's appearance on "Taking Stock" on Bloomberg TV this week, you can watch it here.

    Most of his remarks concern the Fed's new role. He says that America may or may not be in recession, but the credit markets are in their worse shape since the early 1930s. And actions being taken now penalize savers. Grant says more, notably about his views on treasuries and gold, so check it out.

    BCE Buyout Approved

    Canadian regulators approved the BCE (BCE/NYSE) buyout today -- on the condition it stays under the control of Canadian interests. Alexandre Deslongchamps files this Bloomberg report from Ottawa.

    This is good news. But don't pop those corks yet, fellow shareholders. The end of the second quarter is a good ways off yet. And there's lots of talk that more carnage is yet to come in the credit markets.

    March 26, 2008

    Ontario Teachers: BCE Buyout Proceeding as Planned

    Ontario Teachers' Pension Plan, Canada's third-biggest pension-fund manager, said it still expects to get financing for its C$51.7 billion ($50.7 billion) buyout of BCE (BCE/NYSE).

    A company spokesperson stated such in a phone interview today (Wednesday), as Clear Channel Communications sank 17% amid concern that its planned $19.5 billion takeover by private-equity firms will fail because of deteriorating credit markets.

    Among the remaining hurdles is one scheduled Thursday after the markets close:

    The Canadian Radio-television and Telecommunications Commission plans to announce tomorrow after 4 p.m. its decision on whether it approves the sale of BCE. The regulator said two weeks ago at a public hearing that its concerns had "by and large'' been addressed by changes Teachers' made in the agreement with its U.S. partners.

    The BCE deal is expected to close by June 30.

    Fake Free Marketers at the Top

    In his excellent book, A Time for Truth, former treasury secretary William E. Simon mentioned top executives at big corporations who publicly praised the virtues of free market capitalism. But would then lobby the federal government to impose anti-free market regulations. Why? Because regulation would often be a hassle to huge corporate interests -- but kill-off small business.

    Simon's book was published in 1978 and Simon himself is no longer with us.

    But I bet he'd nod his head in agreement reading Jeff Randall in the Daily Telegraph:

    Remarkable, isn't it, just how quickly champions of laissez-faire solutions can become advocates for state intervention. All it takes is for their gravy-train to break down. When freedom to play with barely any restrictions was making them rich beyond imagination, big-shot financiers applauded "light-touch" regulation. The looser the rules, the louder they cheered.

    Now, however, as credit is crunched, losses mount and prospects for lucrative employment come under threat, many titans of unfettered enterprise are suddenly crying out for nanny.

    Nanny = government = our wallets.

    What They Don't Know They Don't Know

    In his letter to investors in Chou Associates Fund, Francis Chou wrote: "We would be careful about buying any financial stock. It is virtually impossible to find out what toxic brew the financial companies may hold in their balance sheets (either because they may not want you to know the truth or because even they don't know the truth themselves)."

    Chou's letter is dated March 12, before the Bear Stearns blowup 48 hours later. (Actually, the blowup had been going on for some time, but you get the idea.)

    I reflected on Chou's letter when reading Michael Lewis' Bloomberg column today. Titled, "What Wall Street's CEOs Don't Know Can Kill You," it starts by pointing out that Bear Stearns shares traded for $30 each on Friday, March 14:

    Say what you will about Bear Stearns on that day, you can't say that it was flying below the radar. It was as intently scrutinized as a public corporation can be, by some of the shrewdest people on our planet, and perhaps some smarter people from distant planets, too.

    For nine months it had been in obvious distress; in just the previous three days its shares had fallen $30. A billionaire from outside the place -- the sort of investor who has the power to know as much as it is possible for an investor to know about a Wall Street firm -- was long the stock at $107 a share.

    Fine, fine Lewis piece, as usual. Well worth reading the entire text if you haven't already.

    March 24, 2008

    3i in "Better Shape" for "Brave New World"

    If you're interested in 3i Group (III/LN) and subscribe to FT.com, you'll want to read this article by Martin Arnold:

    Mr Yea presents his politically-sensitive decision to stop making new venture capital investments, gradually winding down the activity that once was 3i’s bedrock, as just another small part of a more fundamental shift. “The firm continues to evolve and change,” he says. “We are revolving our resources and rotating them to the advantageous areas.”

    The silver-haired 3i boss says he is only part of the way towards achieving his vision, namely making the company an investor of choice for mid-sized companies and entrepreneurs of all types across the world – from Asia to the US.

    “We are clearly amongst an emerging select group of global firms able to operate across the three major continents and that is not that easy for others to replicate if they haven’t taken those steps already,” he says. “Amongst those global firms we are the sole mid-market player and I think that is one of the interesting thing about our strategic positioning.”

    A scaled-down version of Blackstone for small and mid-sized companies seems to be his template.

    This company is going for less than its net asset value. You may recall Meryl Witmer recommended it in the last Barron's Roundtable. 3i has a great management team, focused on shareholders. Anyone with a long-term horizon could do much worse than put 4% to 5% of his or her portfolio's assets in this name.

    I would if I didn't already own it. But that's me -- do you own due diligence before buying.

    March 23, 2008

    New Book: Investing the Templeton Way

    Investing the Templeton Way is referenced in The Globe and Mail story linked to in the previous post. The book is written by Sir John Templeton's great niece, Lauren Templeton. And apparently is a work approved by Sir John, since he wrote the book's introduction.

    What's more, from Amazon I see that Mason Hawkins and Marty Whitman are among those endorsing the book on its back cover.

    Next time I swing by Barnes & Noble I'll look this up -- sounds like it might be worth reading.

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