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September 23, 2010
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Timely and provocative commentary, transcripts, research and analysis for
serious investors, compiled by the Editors of Value Investor Insight …
Hemlines and Investment Styles
(Link to http://bit.ly/cc6GUX)
Oaktree Capital Chairman Howard Marks in his latest investment letter looks to
history for insight into today’s relative pricing between bonds and stocks. One
conclusion: “I’m impressed today by the ability to assemble a portfolio of iconic,
high quality, large-cap U.S. growth stocks that will provide appreciation in a
strong environment, a measure of protection in a weak environment, and a
meaningful dividend yield regardless. To me … these stocks’ potential over a
range of possible scenarios is more attractive than bonds.”
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Credit Recovery On Track At Synovus
(Link to
http://www.bankstocks.com/ArticleViewer.aspx?ArticleID=6182&ArticleTypeID=2)
Thomas Brown of Second Curve Capital (VII, October 28, 2005) details in this
report his updated investment thesis for Synovus Financial, which he calls “a
publicly traded embodiment of what I expect to happen to bank stocks generally.”
Read Now
The “CalPERS Effect” on Targeted Company Share Prices
(Link to http://www.calpers.ca.gov/eip-docs/about/board-calagenda/agendas/invest/201008/item05a-2-02-01.pdf)
Wilshire Associates in this report analyzes the stock performance of companies
targeted by the California Public Employees’ Retirement System as needing
improvement in corporate governance. Its conclusion: “CalPERS’ approach to
improving portfolio returns by engaging management of poorly performing
companies to rethink governance and strategy continues to work.”
Read Now
What Determines Investor Behavior?
(Link to http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1467088)
This study of the investing behavior of identical and fraternal twins attempts to
determine the extent to which one’s investment style is attributable to nature vs.
nurture.
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Other Recommended Reading
Thought-provoking investment-related articles from both the mainstream and
less-than-mainstream press.
 “Uncovering a World of Cheap Stocks”
(Link to http://www.forbes.com/forbes/2010/0809/international-investing“Beat the market by five points for a few years and you may just be
enjoying a lucky streak. Do that for a sixth of a century and you're
probably earning your keep as a money manager,” writes Forbes in this
profile of the managers of Tweedy, Browne’s Global Value Fund (VII,
September 29, 2006).
Read Now
 “Where Have You Gone, Joe Dimaggio?”
(Link to http://www.iveybusinessjournal.com/article.asp?intArticle_ID=830)
After studying the literature on “great” companies, the authors of this Ivey
Business Journal article take issue with some of the conclusions drawn:
“The key insight is that luck can hide the “true nature” of any company:
companies that are behaviorally entirely average can have what appears
to be remarkable performance, while great firms might be buried under
adversity. Our analysis doesn’t say that the companies identified by others
as great are merely lucky; it implies that we can’t say with any confidence
that they aren’t merely lucky.”
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 “Shrinking ‘Quant’ Funds Struggle to Revive Boom”
(Link to http://www.nytimes.com/2010/08/20/business/20quant.html)
In what it calls a “stinging comedown for the wizards of high finance,” The
New York Times details how quant-fund money managers have fallen out
of favor since the onset of the financial crisis in 2007.
Read Now
 “Sokol Threatens to Shut Down NetJets”
(Link to http://aliceschroeder.com/blog/sokol-threatens-shut-down-netjets)
Buffett biographer Alice Shroeder has been following closely the difficult
challenge Berkshire Hathaway is facing at subsidiary NetJets, now run by
David Sokol. In case anyone needed a reminder about how difficult
running a company can be …
Read Now
 “Banks’ Self-Dealing Super-Charged Financial Crisis”
(Link to http://www.propublica.org/article/banks-self-dealing-supercharged-financial-crisis)
Investigative journalists Jesse Eisinger and Jake Bernstein in this article
for ProPublica assert that by creating demand for mortgage-backed
securities during the last two years of the housing bubble, “Wall Street
bankers perpetrated one of the greatest episodes of self-dealing in
financial history.”
Read Now
 “Bill Gates’ Favorite Teacher”
(Link to
http://money.cnn.com/2010/08/23/technology/sal_khan_academy.fortune/i
ndex.htm)
Working out of a converted walk-in closet in his Silicon Valley home, Sal
Kahn is at “the epicenter of the educational earthquake that has captivated
[Bill] Gates and others,” writes Fortune in this recent profile.
Read Now