Contango Oil & Gas Company has announced plans to spin off shares of its wholly-owned subsidiary, Contango ORE (CORE) to shareholders in December. CORE was set up to explore for gold and rare earth minerals and currently controls 750,000 acres in Alaska. The purpose of the spin off is to separate a speculative venture from Contango’s established oil and natural gas business. Read this article for more details.
Value Investors Find Fertile Ground in Indian Equities
India’s widely followed SENSEX index is approaching record high territory and many investors are once again looking at this rapidly growing emerging market as a potential source of future profits. With nearly 1.2 billion people, India is home to over seventeen percent of the world’s population and is expected to overtake China’s population in the coming decades. With a vibrant democracy, India’s growth is often less organized when compared to China’s authoritarian system. A recent article in The Economist characterized the rivalry as the “contest of the century” both because of border disputes and the race for economic dominance in Asia. Read this article for more details and a video with a prominent Indian value investor.
Buffett Affirms Continued Support for BYD
As we suspected last week, reports that Berkshire Hathaway is planning to sell its 10 percent stake in BYD have proven unfounded. Warren Buffett, Charlie Munger, and David Sokol are in China this week and reaffirmed Berkshire’s support for BYD. CNBC’s Becky Quick is traveling with the Berkshire executives and reported on the events taking place today. View this article to see the video report.
Reports of Buffett Dumping Stake in BYD Lack Credibility
Several media reports have appeared today suggesting that Warren Buffett’s visit to China next week may be due to concerns regarding Berkshire Hathaway’s investment in BYD. Most of the reports cite a Reuters article which seems quite unconvincing. While BYD
Can Apple’s iPad Make Laptops Unnecessary?
One of the key questions that will determine the future success of many companies involves whether tablet computers such as the iPad can really threaten laptops. Are tablet computers a complementary device or a true substitute for the traditional laptop computer? Read this article for a video and more commentary.
Furor Grows Over Munger’s ‘Suck It Up and Cope’ Comment
There probably is no other prominent American who is less suited to the sound bite than Berkshire Hathaway Vice Chairman Charlie Munger. In any particular appearance, specific comments made by Mr. Munger can be collected in a manner that leads to a highly unflattering overall portrait. Charlie Munger does not need any defenders, and we do not necessarily agree with or endorse all of his views. Regardless, it is interesting to make a few observations regarding the reaction to his recent lengthy appearance at the University of Michigan. Read this article for more details.
Federal Stimulus Missed Key Infrastructure Opportunities
The National Bureau of Economic Statistics has declared that the recession ended in June 2009, eighteen months after the downturn began in December 2007. The recession was the most severe since the Great Depression of the 1930s both in terms of duration and contraction in GDP. Fifteen months after the recession ended, GDP has yet to achieve the peak levels of the prior expansion and unemployment remains elevated. The Wall Street Journal’s article covering this topic includes relevant statistics and graphs that put the recession in historical context. Read this article for additional commentary and analysis.
Better Place Rolls Out Electric Car Battery Switching Concept in Israel
One of the major obstacles standing in the way of widespread adoption of electric vehicles is the limited range offered by current battery technology. Shai Agassi, CEO of Better Place, has an approach that may be gaining some traction. Better Place is promoting the concept of automated battery swapping where drivers will pull into a service station and exchange their depleted battery for a fully charged unit. The concept is similar to conventional refueling and reportedly takes less than one minute. However, the capital required to build this infrastructure will be massive and battery ranges must still improve in order to make the process viable for long road trips. Read this article for more details.
PCI Releases First Half 2010 Property/Casualty Industry Results
The Property Casualty Insurers Association of America has released a study of first half 2010 industry results. The report provides some useful data and benchmarks to evaluate overall trends in the industry. Private U.S. property/casualty insurers’ net income after taxes increased to $16.5 billion in the first half of 2010 compared to $6 billion in the first half of 2009. Policyholder surplus rose 3.7 percent to $530.5 billion at June 30, 2010. The industry posted a combined ratio of 101.7 for the first half of 2010, a deterioration from the combined ratio of 100.8 posted for the first half of 2009. Read this article for further details.
Rockefeller vs. Railroads: Regulatory Debate Heats Up in Washington
A debate over regulatory oversight of American railroads is heating up in Washington. A study report from the Senate’s Committee on Commerce, Science, and Transportation has found that major railroads are now financially stable and enjoy substantial pricing power. In light of improved conditions since the enactment of railroad deregulation in 1980, the report suggests that railroads should be under greater scrutiny in terms of pricing particularly as it relates to practices such as charging captive shippers higher rates than other shippers. The study has drawn a sharp rebuke from the Association of American Railroads. Read this article for more information and an interesting piece of trivia.
Rosenfeld Defends ‘Transformational’ Cadbury Acquisition
In an exclusive interview today on Bloomberg Television, Irene Rosenfeld, CEO of Kraft Foods, strongly defended the company’s acquisition of Cadbury which closed earlier this year. Ms. Rosenfeld believes that investors who remain skeptical regarding the acquisition will eventually be won over as projected synergies appear in financial results. Skeptical investors include Warren Buffett who opposed the acquisition and “felt poorer” based on the terms of the deal. Mr. Buffett has reduced Berkshire Hathaway’s stake in Kraft in the months since the Cadbury acquisition closed. Read this article for excepts and to view the video.
Coca-Cola Tops Interbrand’s Global Brand Survey for 11th Consecutive Year
Branded products often suffer impairments during times of economic stress as consumers search for cheaper alternatives. However, the combination of attractive products and intelligent marketing can sustain brands even in a poor economic climate. Interbrand’s report covering the best global brands of 2010 suggests that the most entrenched brands have retained their position reasonably well while up-and-coming brands managed to make significant advances.
Charlie Munger Speaks to University of Michigan Law Students
In a rare appearance at the University of Michigan, Berkshire Hathaway Vice Chairman Charlie Munger participated in an extended discussion with CNBC anchor Becky Quick. Read this article for a brief quote and a link to the video.
Noble CEO Forecasts Continued Gulf of Mexico Uncertainty Ahead
Noble Corporation Chairman and CEO David Williams believes that uncertainty in the Gulf of Mexico will continue to impact the offshore drilling industry for some time to come. Mr. Williams, speaking today at the Barclays Capital Energy and Power Conference in New York, updated investors regarding the company’s operations and future prospects in light of continued regulatory uncertainty in the Gulf of Mexico in the aftermath of the Deepwater Horizon disaster involving the blow out of the Macondo well. Read this article for a summary of the presentation.
HP Faces Criticism for Shortchanging Research and Development
Hewlett-Packard is facing sharp criticism from one of its rivals regarding the company’s strategy for investing in research and development. In a very candid interview with The Wall Street Journal, IBM Chief Executive Samuel Palmisano claimed that HP has little choice but to spend significant sums on acquisitions because former CEO Mark Hurd “cut out all the research and development.” Mr. Palmisano also criticized HP’s Board of Directors for providing Mr. Hurd with a generous severance package saying that this was not a good use of shareholder money. Read this article for our views on whether Mr. Palmisano makes a valid point.
Munich Re Plans to Introduce Offshore Drilling Insurance Policies
Munich Re has announced plans to introduce insurance products designed to address the large losses that can arise from major events such as the Deepwater Horizon disaster. The insurer hopes to introduce coverage levels of about $10 billion to $20 billion per drilling operation. In order to make such coverage viable, a large number of drilling operations will need to be insured. Read this article for more details.
Buffett Sees Broad Based Economic Recovery Ahead
Warren Buffett is not buying into projections of an imminent “double dip” recession and sees a broad based economic recovery ahead. Berkshire Hathaway’s diverse collection of operating companies gives Mr. Buffett a unique view into the health of the overall economy and he has frequently commented on overall economic conditions over the past few years. Read this article for more details.
Microsoft Plans Debt Sale to Fund Dividends and Buybacks
Microsoft shares were sharply higher in late trading today after Bloomberg reported that the company is planning to sell debt this year to pay for dividends and share repurchases. Why would a company with nearly $37 billion in cash on the balance sheet need to issue debt in order to pay dividends or fund repurchases? The answer is that much of Microsoft’s cash hoard is held overseas and the company would have to pay taxes on earnings that are repatriated to the United States. Read this article for more details.