Friday, April 23, 2010

Microsoft -- Big Cash -- Small Dividend

Microsoft (MSFT) the technology company everybody used to hate released improved results and watched its stock bounce off the 52 week high. The press release was disclosure challenged as it contained next to no substantive management information. When you read the conference call transcript you become a lot smarter about the company. But not smart enough. Analysts asked a few product related questions but really did not turn up anything new.

Microsoft has over 10% of its market cap in cash and equivalents. The dividend yield is under 2%. Who cares if Apple’s (AAPL) market cap exceeds Microsoft. At this stage in the game Microsoft has decided not to send a dividend signal. Its either growth or value. At 1.7% yield and the stock bouncing off the 52 week high it has become neither.

Sure Windows 7 is growing nicely and Office 2010 should do well. But what do the shareholders get? And when will it be?

Disclosure: No position in this stock

Thursday, April 22, 2010

Blackstone -- Just Go Private

Blackstone (BX) released results, declared the world is getting better and watched investors drop kick their stock price. What’s it going to take? The whole dividend thing is very controversial. The yield is stratospheric. Anything over 5% is suspect. The market for some reason does not scrutinize bonuses at Blackstone to the same degree that Goldman Sachs (GS) gets. But this financial engineering firm exists to create wealth for itself first and then its shareholders.

The market cap is some $4.7. Why not take it private and stop this silly public company stuff. Wheeler dealers do best in closed door meetings. The Blackstone model does not play well in transparent glass wall markets.

Disclosure: No position in this stock

Wednesday, April 21, 2010

"Diligent Board Member" Hard to Understand. Why?

Diligent Board Member trades on the New Zealand Stock Exchange NZX under the symbol DIL. They caught my eye with a Business Wire press release announcing their 300th customer.

Congratulations. That sounds really good. I had to hit a few clicks to follow up.

DIL provides services for members of Board of Directors to keep their board books under control. I think. I’m still waiting for the brochure but after reading the web site this sounds right.

DIL provides terrible investor information. Cannot figure out who the board is, who the officers are, who are we getting into bed with? All this is buried in turgid SEC filings. Cannot figure out what their numbers are but they are supposedly publicly traded. The head office seems to be in both New Zealand and NYC. Some venture capital or was it hedge funds invested some money and took some board seats last year.

They are represented by BlissPR. BlissPR has a web site with a guy sitting in a chair floating and defying gravity. BlissPR claims a large list of clients in financial services. Hmmm

OK so to deal with this company you have strategic inside information and the DIL background information comes up in the “I find it hard to accept department”. But hey if you are the lawyer reading this calm down. I am not saying that you are a bad guy. But you sure do not present very well either. Hope to get my brochure and see what’s going on. Wonder what the liability insurance is for these guy’s?

Disclosure: No position in this stock

Paulson Screams Not Guilty

John Paulson screams not guilty in the latest fiasco with Goldman Sachs (GS). Well what else was he going to say?

In law there is the concept of “guiding mind”.

The guiding mind orchestrates and constructs the alleged malfeasance. Given that he has made billions on an idea that he generated; given that other i-banks turned him down and Goldman Sachs went for it, strengthens his role as the guiding mind. He did pound the pavements looking for the correct partner in this one.

Legally Paulson wants to shake this one off. Economically if you believe in creative destruction and the value of short sellers in capital markets you have to thank Paulson for declaring “Emperor wears no clothes” Paulson did the job the SEC failed to do. He regulated the market and took his bounty.

Of course he cannot argue the point in this fashion. The system is on trial.

Disclosure: No position in this stock or with Paulson & Company

Tuesday, April 20, 2010

JNJ Investors Fly Blind on FX Guidance

Johnson & Johnson (JNJ) which deservedly has an excellent reputation with investors adjusted 2010 guidance citing foreign exchange fluctuations.

JNJ is a huge global company operating in hundreds of jurisdictions around the world. For investors to follow the foreign exchange driven earnings guidance it would be better if JNJ actually explained what the adjustments actually were.

JNJ reports geographical market share, product groupings and we can get information on margins and pricing. But this time FX moved the guidance not the traditional business inputs. Global companies need to be understood in global terms. That means foreign exchange. Right now JNJ investors are flying blind.

Disclosure: No position in this stock

Monday, April 19, 2010

Warren Buffett Embarassed By Goldman Sachs?

Berkshire Hathaway (BRK.A, BRK.B) the Warren Buffett wealth machine cannot be happy with Goldman Sachs.(GS) It’s $5 Billion investment earning 10% dividends just lost $1 Billion in value. Ron Olsen a director of Berkshire and supposedly speaking with Warren Buffett’s acquiescence just days before the SEC filed civil charges, put his foot in his mouth in defending integrity.

The 10% dividend is problematic. This is a superior return which other investors could not negotiate. Warren Buffett got a really big piece of pie from Goldman Sachs. Goldman Sachs is generating huge returns and huge personal bonuses over the dead financial bodies of sophisticated yet seemingly stupid investors. Warren Buffett was paid for risk. He took what he thought was a big fat pitch.

Goldman is in the fight of its life. As more comes to light many clients will curtail if not stop using Goldman Sachs. No one will want to be tainted by association. No one will trust. Everyone will second guess. The competition cannot believe the luck of this Black Swan as they try to pick away at Goldman and steal some damn good business.

Did Warren Buffett make the worst investment of his life? Is the $5 Billion at risk? Remeber the market is a manic depressive entity.

Disclosure: No position in this stock