Peter Schiff’s Interview From The Panic of 2008 Film

FSA REPORTS: “abnormal pre-announcement price movements” in 21.2% of 2010 UK deals

Via Bloomberg:

“Unusual share price movements in the two days before takeovers announced by U.K. companies last year fell 9.4 percent, in a sign that insider trading may be decreasing.

There were ‘abnormal pre-announcement price movements’ before 21.2 percent of the 118 deal notices in the U.K. in 2010, the Financial Services Authority said in its annual report, published yesterday. That was down from 30.6 percent in 2009, and the lowest rate since 2003.

Factors other than insider trading, such as speculation by analysts or the press about an upcoming deal, or information leaks, could be the cause of the share price movements, the regulator said. The FSA has made market abuse and insider trading by top bankers a focus of its enforcement efforts.”

TOP 10 RESEARCH IN MOTION (RIMM) HOLDERS

3 MAJOR EM CONCERNS: food, energy and water insecurity

Via Asia News Network:

“Indonesian President Susilo Bambang Yudhoyono is calling on Asian countries to work together as the ‘moment has come’ to make the region “the continent of the future.

‘I notice that this newfound confidence is not particular to Indonesia. You can see it throughout Asia. In my heart I do believe that Asia’s moment has come, and that a much brighter future lies ahead. But we cannot take this for granted,’ Yudhoyono said in the opening remarks of the WEF at the Shangri-La Hotel in Jakarta on Sunday (June 12).

Second, he said, Asia must address growing pressures from food, energy and water insecurity, as 60 percent of the world’s 7 billion people live in Asia.”

BBC’s Iconic Television Centre up for sale

Things are starting to shape up in the UK. The government have stepped up to manoeuvre the BBC in beginning the process of weaning itself off of government and taxpayer handouts. The explicit requirement for UK residents to pay a TV license restricts their personal freedoms. The BBC are intending to move its headquarters to a new development in Salford, Manchester. As a result, the taxpayer-funded institution are likely to capture significant cost savings albeit compromising programme quality due to a restricted talent pool at their new base.

The Telegraph reports:

Richard Deverell, W12 programme director, said:

“Television Centre has played an extraordinary and central role 
in the history of the BBC, which will not be forgotten. Our primary aim of the sale is to maximise the value to the BBC and licence fee-payer whilst ensuring the teams and operations based there are successfully relocated.” 

Tourism is booming in Singapore

Via Business Wire India:

“Singapore’s tourism sector’s strong performance in Q1 2011 as well as the
uptrend in business travel and the MICE industry signal that there is strong
potential for the city-state to emerge as a top tourist destination for 2011,
forecasts Singapore business incorporation portal, http://www.SingaporeSetup.com.

Latest data from the Singapore Tourism Board reveals that Singapore has
experienced an all-time high of 990,000 in international visitorship during the month of February 2011. This number represents a 15.4% growth in visitorship compared to a year ago and brings with it a 19.1% year-on-year growth in gazetted hotel revenue, estimated at S$159 million. 

On the back of this announcement, Singapore aims to draw 12-13 million visitors and earn S$22-S$24 billion in tourism receipts this year.

As businesses and entrepreneurs look East to establish their presence in the
region, many flock to Singapore due to its reputation as a financial and
commercial hub in the heart of Asia, sound business practices, efficient and stable governance and proximity to the emerging markets that surround it. Last year alone, Singapore has hosted a strong calendar of international conferences and trade exhibitions including ITB Asia, the Singapore Airshow and Food&HotelAsia. Many of these events have picked Singapore as their choice destination year after year.”

Bloomberg Chinese Reverse Mergers Index down 44% in 2011

The Bloomberg Chinese Reverse Mergers Index consisting of 78 companies listed in the U.S. is down 44% in 2011.

Bloomberg

UP 26.6% Year-To-Date 2011

I made a clear decision to get out of the market on the 5 April 2011 and the market is down almost 5% since:

http://thecognitivedissonance.com/2011/04/05/up-33-5-ytd-sold-out-everything-except-slv-agq-su/

This is my current position: oil and silver. The only other position that I added was to short Monster Worldwide (currently up 21%) which I detailed here:

http://thecognitivedissonance.com/2011/04/17/established-a-small-short-position-in-monster-worldwide-mww/

Overall my market position is very defensive. The below holdings in silver and oil are long term holdings which I would be comfortable owning for at least the next 18 – 24 months at least.  I believe the market will continue to weaken and remain subdued until the debt ceiling issue is resolved. To the extent that this is resolved, this will give market participants a false confidence to re-enter the market with vigour. Of course the US debt position remains precarious regardless of whether the debt ceiling is raised or not. Eventually the debt ceiling will be raised and that will be the greenlight to position yourself back into the market.

However, volatility is still likely to continue even after the debt ceiling raise passes. Remember back to when the Euro crisis was in full swing, concern permeated the Street. The ECB announced a $1.0 trillion Euro-wide bailout package to calm the market and investors. Initially it was received positively, but that reaction slowly reversed to one of concern and economic fragility.

Similarly, US debt ceiling dynamics are likely to be similar so getting into the markets immediately after the debt ceiling upsize would be unwise. It would be better placed to wait a couple of weeks at least to allow the market to stabilise and then to establish positions which have a highly disproportionate possibility of upside relative to the risk profile.

Current portfolio holdings:

I have detailed exactly my investment thesis and the justifications for my stock selections across the website. Here is a summary:

Summary of winners: (This has essentially been the core holdings of my portfolio >80%)

BIDU – UP 40% – Growing Chinese consumer base, and at a purchase point valuing the business at $34 billion the bottom line was that this was low relative to existing revenues and growth metrics. BIDU is the premier web franchise in China, it has high barriers of entry, a wide moat, and the company is able to leverage existing ideas into services that generate strong and consistent earnings. BIDU has a high growth trajectory and seemingly has central government support and assistance.

CLNE – UP 34% – T Boone Pickens is the largest shareholder and the US is the Saudi Arabia of natural gas. I have personally used natural gas-powered vehicles so it has passed the tried and tested element. CLNE was attractive on a value metric basis combined with growth and product uptake by AT&T, UPS and Wal-Mart. Reasonable correlations to high oil prices also made it attractive.

AGQ – UP 33% – Silver as an inflation hedge, an inverse of confidence in central bank policy and a high correlation to the performance of gold (gold being a store of value in a highly inflationary environment). Precious metals have been seen as a store of value for more than 3000 years, that perception will not change in our lifetime.

NDN – UP 31% – Another value play, food discounters intrinsically linked to the state of the economy both in prosperity and difficulty. High inclusion of premier brands and even organic. High growth, good management and growing within a bullish sector.

2498 – UP 27% – HTC is the Taiwan-based manufacturer of Android driven smartphones. The thesis was based on the global secular growth of information and its dissemination. Valuations were also attractive and growth metrics were phenomenal. Product margins were healthy and HTC innovations were technically superior to most competitors. Their choice to fully embrace the Google Android platform enhanced their focus on devices unlike other competitors who were muddled in competing and offsetting strategies. I recall observing two ladies on a train journey in their late 40s, early 50s in deep conversation about their HTC Android devices and apps. That one conversation crystallised my thoughts and highlighted the broad reach that new mobile technologies had now penetrated. This basically reinforced my thesis.

DO – UP 25% – Headwinds over the Gulf of Mexico were overdone and misplaced, clear misprice and one of the biggest market laggards in 2010. Purchased in January 2011 at a heavy discount to core value and future growth prospects. Highly correlated to the price of oil which I had a bullish stance on. Goldman Sachs gave DO a double upgrade, a rare occurrence. Not that GS ratings matter, but it was just a validation of the increasing acknowledgement of the misprice crossing Wall Street.

SLV – UP 25% – Silver as an inflation hedge, an inverse of confidence in central bank policy and a high correlation to the performance of gold (gold being a store of value in a highly inflationary environment). Precious metals have been seen as a store of value for more than 3000 years, that perception will not change in our lifetime.

PLCE – UP 23% – Strong value play,  a very strong balance sheet with little debt and strong recurring revenues.  PLCE is a premier franchise in children’s apparel/clothing; children’s clothing is price elastic and better able to weather price increases; parents seeing their child in adorable clothing are less likely to be as price sensitive relative to other apparel markets. PLCE therefore can better able manage margin compression with rising cotton and input prices. Children’s clothing is less sensitive to market trends.   At that valuation takeover/private equity etc. would also seem to be a viable possibility with an appropriate premium.

BRCD – UP 14% – Strong recurring revenue flows, value + growth within a secular bull market, good cost control and management.

GENZ – UP 9% – Merger-arbitrage position with an expectation of a takeover. The risk-reward skew was disproportionately high, essentially there was a high probability of a successful takeover. Overall there was a high degree of consolidation within the biopharmaceutical sector aiding the possibility of a takeover.

SHORT MWW – UP 21% – Horrible fundamentals, legacy financial reporting issues and option settlement charges. Strong competition from Indeed.com and SimplyHired.com. Poor search functionality and weak integration into the social cloud. Heavy and continuous discounting lowering margins and more advertising dollars chasing a diminishing market share. Misunderstood correlation on the Street that an improved job outlook translated into a better performance by MWW. This link was arbitrary and the transmission mechanism was weak. 

Summary of losers:

CCJ – DOWN 19% – Was up fairly significantly, events in Japan hammered nuclear power stocks indiscriminately. I still believe the long-term profile of nuclear remains positive and that it still needs to represent part of the total energy mix. Exited the investment as part of a broader concern with the market.

Portuguese 10-Year Bond Yield Reaches Record 10.70%

Bloomberg

Apple Inc. CEO Steve Jobs presents his proposal for a new Apple Campus