Dalio takes hedge crown from Soros

This article from the Financial Times is included here as an example of the size and performance of the Top Funds. The list of names will be used to read the offering memorandums and discussion of the various investment strategies used in detail.  This type of investigation is useful in understanding what goes on with the movers and shakers on Wall Street.  This group of investors move markets.  They employ their own research departments and if Goldman Sachs or any other Wall Street firm wants their business and participation in house deals the funds need access to all the best deals at the best terms in return.  How many retail investors do you think got shares in the Price Club IPO ?


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Ray Dalio has overtaken George Soros as the world’s most successful hedge fund manager after his Bridgewater Pure Alpha fund made $13.8bn for investors last year.

The profits made by the Connecticut-based Pure Alpha – already the world’s biggest hedge fund, with $72bn under management using its trading strategy – beat its own record for the largest one-year dollar gain last year.

However, the ranking by LCH Investments, part of the Edmund de Rothschild group, also showed last year the biggest-ever loss by a hedge fund. John Paulson’s New York-based Paulson & Co lost investors $9.6bn last year, more than was lost in the collapse of Long Term Capital Management in 1998. But Mr Paulson is still ranked third for the best overall returns for investors, at $22.6bn.

LCH, which has been investing in hedge funds since 1969, assesses hedge funds by how much they have made over their lifetimes for investors in dollars. It argues that percentage returns distort performance as fund managers frequently find it hard to maintain big returns as they take in more money. This is important as investors tend to buy funds that have done very well but then those funds often produce mediocre returns on the larger amounts of money. 


Mr Dalio, 62, has shot to prominence in the hedge fund industry after his widely circulated initial analysis of the crisis suggested that the world faced a deleveraging akin to the 1930s. He has built a large organisation catering mainly to pension funds and other institutional investors, investing according to a shared explanation of what he calls the “economic machine”.

This fundamental analysis gave Mr Dalio’s Pure Alpha a gain of 45 per cent in 2010, when it passed Mr Paulson’s $11.9bn record from 2007 for the biggest dollar gain in a year.

Six of the top 10 fund managers in LCH’s list are “macro” investors, focused on moves in interest rates, currencies and economies. This can work very well when the call is correct, as Mr Dalio demonstrated, but can also be painful: Mr Paulson’s funds lost an average of 20 per cent last year after wrongly betting on a recovery.

Rick Sopher, chairman of LCH, said: “Macro investing is notoriously difficult, but the best managers are able to find opportunities, especially in troubled markets.”

Hedge funds taken as a whole lost $123bn last year, LCH calculated. Its rankings exclude computer-driven funds such as Renaissance Technologies, or those with no central investment manager, such as DE Shaw.
Mr Soros’s return has been frozen as he no longer runs other people’s money.

The next six best performing hedge funds are: Brevan Howard, Appaloosa, Caxton Global, Moore Capital Management Partners, Farallon, and SAC.

By net gains (after fees) since inception to December 31 2011	Net gains ($bn)	Strategy assets under management ($bn)	Inception
Bridgewater Pure Alpha (3)	35.8	71.9	1975
Quantum Endowment Fund* (1)	31.2	22.2	1973
Paulson & Co (2)	22.6	22.6	1994
Baupost (4)	16.0	23.0	1983
Brevan Howard Fund (8)	15.7	26.5	2003
Appaloosa (5)	13.7	13.0	1993
Caxton Global* (6)	13.1	6.9	1983
Moore Capital Mgmnt (7)	12.7	14.0	1990
Farallon (9)	12.2	19.5	1987
SAC	12.2	13.2	1992
Source: LCH Investments ests; Manager data and annual reports; internal ests	*Founding manager retired	2010 rankings in brackets

 

Source:

http://www.ft.com/intl/cms/s/0/99cac558-6238-11e1-872e-00144feabdc0.html#axzz1npl9YNIc

Intelligent investing | Marketplace from American Public Media

Intelligent investing | Marketplace from American Public Media

www.marketplace.org/topics/business/economy-40/intelligent-investing

The way the markets have been performing lately, it can seem as though investors would be better off relying on psychic abilities than on genuine financial know-how.

But as much as the money game can seem like one of luck, economist Robert Shiller writes in the New York Times that intelligent investors do consistently outperform their peers. The result comes from a paper researched by economists in the U.S. and in Finland, which found that investors with high IQs tend to build solid financial portfolios and experience good returns on their risk.

These smarties haven’t discovered some brilliant new strategy to beat the market. Instead, they simply follow the time-honored tenets of investing: diversify your assets, skewing towards the stock market, and take advantage of the humble small-cap stocks that tend to outperform the market as a whole.

Apparently, the majority of us manage to muddle these basic rules, partly because we just don’t trust the them -- trust being an element of intelligence itself. We don’t trust anyone, in fact, and that’s our downfall. A different economic study in 2008 showed that knowing who to trust -- and how -- freed investors to follow good advice, put their money in the stock market, and enjoy the fruits of their labor (Or, more aptly, the fruits of their faith).

Investors who believe either in the fundamental soundness of investment instruments or in the capable hands of a financial planner tend to participate in the markets in a way that enriches themselves and stimulates the economy. Perhaps as our country rebuilds and reinforces a financial system that has betrayed so many, it will implement the type of safeguards necessary to foster a wider and deeper sense of trust among investors.

Copper dips on China woes - The Metal with a degree in Economics

Copper dips on China woes, US data caps losses - The Economic Times

SINGAPORE:  London copper edged lower on Tuesday as slow demand from top consumer China spurred caution among investors, although more signs of a mending U.S. economy are helping to limit losses.

Copper has gained nearly 12 percent this year, but has been struggling to trade higher, given slack Chinese demand since after the Lunar New Year break in January.


"I believe Chinese demand is recovering but at a very, very slow pace," said Judy Zhu, commodity analyst at Standard Chartered in Shanghai, citing a drop, though modest, in Shanghai copper stockpiles last week.

"Chinese demand is going to improve in the weeks ahead on seasonal factors but the recovery should be slow because some copper consumers, like home appliance makers, are dealing with huge stockpiles due to weak order books from both domestic and overseas markets."


Copper inventories in Shanghai warehouses dropped by around 1,000 tonnes to 216,086 tonnes last week from a near 10-year high above 217,000 tonnes the previous week.



With China consuming around 40 percent of global copper, market players say unless the country's demand picks up strongly, copper's rally this year could soon lose steam.
As such, China's official purchasing managers' index, due out on Thursday, will be keenly watched. A Reuters poll suggests the number, which measures activities in China's manufacturing sector, edged up to 50.7 in February from 50.5 in January.

HSBC flash PMI -- a sister survey and also the earliest indicator of China's industrial activity -- hit a fourth-month high of 49.7 in February, but new export orders shrank the most in eight months as global demand weakens.
Continuously positive economic data out of the United States is helping shield copper from a sell-off.

There was further evidence of a recovering U.S. housing market on Tuesday, with data showing that contracts to purchase previously owned U.S. homes neared a two-year high in January. That data, along with oil's fall, helped the S&P 500 close at its highest since June 2008.

"With many industrial metals still being undervalued...we think the sector is likely to see further gains as long as economic data continues to signal stabilization of growth," Credit Suisse said in a note.

With increased liquidity across the world as central banks ease credit conditions to boost growth, StanChart's Zhu said this should lift copper to an average $9,000 a tonne during the third quarter.
Fromthree-month copper on the London Metal Exchange slipped 0.4 percent to $8,505.25 a tonne by 0317 GMT, and is now 3 percent off a five-month high of $8,765 reached on Feb. 9.
-- a rise 5.5% or so...

Buffett: Stocks still cheap, best investment choice – USATODAY.com

Scattered Comments From:

Buffett: Stocks still cheap, best investment choice – USATODAY.com
By JEFF BUNDY, AP

OMAHA, Neb. – Billionaire Warren Buffett says stocks remain relatively cheap compared to other investments right now, and the economy continues to improve slowly.



Buffett says he believes stocks will perform better than bonds, gold or any other investment option over time. He says stocks still appear relatively cheap even after prices have improved.

Buffett was 'dead wrong' on housing; Berkshire profit drops

He says single-family homes are also really cheap. He says if he were handy and could easily buy large numbers of homes, he might invest in them.


Newspapers should charge for digital content

Buffett also says newspapers need to stop giving away their product for free online, but they will have a decent future if they continue delivering information that can't be found elsewhere.

Buffett talked about the news business because Berkshire Hathaway (BRK.A)(BRK.B), of which he is the primary shareholder, chairman and CEO, owns two newspapers and has a sizeable investment in the Washington Post (WPO).

Buffett says newspapers face challenges because of competition from Internet news sources and the rising cost of newsprint. He says newspapers need to make sure they remain the primary source of information about subjects readers are interested in.

He was being interviewed in front of the Omaha World-Herald's printing presses. Buffett's Berkshire bought the World-Herald late last year.

Buffett continues to call for tax reforms and a higher tax rate for wealthy... the current tax code is unfair and favors the ultra-rich.

Neither Democrats nor Republicans want to talk about reforms now because it is an election year.

Buffett says the nation's $1.2 trillion deficit won't be fixed by contributions from individuals. The country is simply spending too much and bringing in too little revenue.

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In his annual letter to shareholders, Warren Buffett identifies but does not name successor as Berkshire Hathaway CEO

In his annual letter to shareholders, Warren Buffett identifies but does not name successor as Berkshire Hathaway CEO

Billionaire investor Warren Buffett reassured Berkshire Hathaway shareholders in his annual letter that the company has someone in mind to replace him eventually, but did not name the successor. He emphasized that he has no plans to leave.

Glenn Tongue, a managing partner at T2Partners investment firm, said he was struck by the fact that Buffett chose to deal with the succession topic as one of the first items in his letter.

"I think this was a forceful and stronger attempt to put this issue to bed," Tongue said.

Buffett offered a couple of details about Berkshire's succession planning in this year's letter. Investors have long worried about who will replace Buffett as Berkshire chairman and CEO.

BERKSHIRE HATHAWAY REPORTS 2011 EARNINGS

READ BUFFETT'S FULL LETTER TO SHAREHOLDERS (PDF)

Buffett said the Berkshire board is enthusiastic about the executive it has picked and said there are two good back-up candidates.

"When a transfer of responsibility is required, it will be seamless, and Berkshire's prospects will remain bright," Buffett said.

Previously, Buffett had said only that the board had three internal candidates for the CEO job. Berkshire plans to split Buffett's jobs into three parts to replace him with a CEO, a chairman and several investment managers.

Even though the successor wasn't named, stockbroker and author Andy Kilpatrick said the way Buffett described the person makes him more confident that the leading candidate is Ajit Jain, who runs Berkshire's reinsurance division.

"The more I think about it, the more I think we have a successor," said Kilpatrick, who wrote "Of Permanent Value: The Story of Warren Buffett."

Besides Jain, the other Berkshire managers believed to be possible successors as CEO are Greg Abel, president and CEO of MidAmerican; Tony Nicely, chief executive of Geico; and Burlington Northern Santa Fe CEO Matt Rose.

Berkshire has also cleared up some succession questions over the past two years by hiring two hedge fund managers, Todd Combs and Ted Weschler. Buffett said those two have the "brains, judgment and character" to manage Berkshire's entire portfolio eventually.

Buffett said Combs built a $1.75 billion portfolio last year and Weschler is in the process of doing the same.

Buffett may have also indicated that neither Combs nor Weschler would be replacing him as CEO, as Clusterstock found in its reading of his letter:

"Both Ted and Todd will be helpful to the next CEO of Berkshire in making acquisitions," Buffett wrote.

That helped Berkshire as a whole to generate $10.3 billion in net income, or $6,215 per Class A share, last year, down from nearly $13 billion, or $7,928 per share, in 2010.

A Class A share of Berkshire stock, which has never been split by the company, traded for $120,000 on Friday. Its more affordable Class B shares traded for about $80.

Buffett said he spent $67 million last fall buying back Berkshire stock for the first time since taking over the firm in 1965 because he believed it was undervalued. He said he regrets buying out shareholders at prices less than what the stock is worth.

Buffett has authorization to buy back stock anytime it is selling for less than 110 percent of its book value.

Read more: http://www.nypost.com/p/blogs/thespread/warren_buffett_shareholder_letter_TS1slDraDEzBV119kpW9OK#ixzz1nednx6IY

Combs and Wechsler had been both been considered likely candidates to replace the "Oracle of Omaha," but if they'll be "helpful to the next CEO," that seems to suggest that neither will be the next CEO, Clusterstock notes.

In addition, Buffett said Saturday that he was "dead wrong" with a prediction that the U.S. housing market would begin to recover by now, but he remains optimistic about the nation's economy.

In the letter, Buffett said he is sure housing will recover eventually and help bring down the nation's unemployment rate. But he did not predict when that will happen.

Investors eagerly await the letter from Buffett, 81, the so-called Oracle of Omaha, who built a roughly $44 billion fortune by following a steadfast, no-nonsense investing strategy.

Buffett said housing "remains in a depression of its own," but he predicted, in typical plainspoken style, that the housing market will come back because some human factors can't be denied forever.

"People may postpone hitching up during uncertain times, but eventually hormones take over," he wrote. "And while 'doubling-up' may be the initial reaction of some during a recession, living with in-laws can quickly lose its allure."

The housing prediction proved painful for Berkshire Hathaway. It owns more than 80 subsidiaries, including the Geico insurance company and See's Candy, and five of them rely heavily on construction activity.

Those businesses, which include Acme Brick, Clayton Homes and Shaw carpet, generated pre-tax profits of $513 million last year. That's well off the $1.8 billion those companies added to Berkshire in 2006.

Berkshire's insurance companies took $1.7 billion in catastrophe losses last year, including from the earthquake and tsunami in Japan. Berkshire reported only $154 million in underwriting profit, down from $1.3 billion the previous year.

But several of Berkshire's larger non-insurance businesses — Burlington Northern Santa Fe railroad, MidAmerican Energy, Marmon Group, Lubrizol and Iscar — all generated record earnings in 2011.

Read more: http://www.nypost.com/p/blogs/thespread/warren_buffett_shareholder_letter_TS1slDraDEzBV119kpW9OK#ixzz1nedVUuY8

S&P Lowers Greece's Rating

CNBC Videos - Yahoo!

CNBC's Sue Herera reports that

S&P has lowered Greece's rating to "selective default."

Natural Gas Renaissance

HEARD ON THE STREET: Natural Gas Renaissance Sparks Favorable Chemical Reaction - WSJ.com

BY LIAM DENNING 

Meet the latest market to be upended by North America's energy revival: ethane. Just as with natural gas and crude oil, there are winners and losers from this disruption, ranging from U.S. pipeline operators to industrial giants like Dow Chemical.

Ethane is a natural-gas liquid, or NGL, that is produced alongside natural gas. It is used primarily to make ethylene, which is used in turn to make plastics and other chemical products. Having jumped in 2011, its price has plummeted 39% so far this year.

When natural gas surged in late 2005 following catastrophic hurricanes, ethane leapt, too, and chemical ...

Berkshire Report

Symbol	Price	Change
BRK-A	120,350.00	+350.00
XOM	87.23	-0.11

On Saturday, Warren Buffet released his annual letter to Berkshire Hathaway Inc. shareholders in which the he announced that he had found a CEO successor for his company, but the billionaire and current head of Berkshire Hathaway wouldn’t name names, and doesn’t appear to be retiring any time soon.
 .

For investors who don’t own a share of the high-priced Berkshire Hathaway, there’s still plenty to glean from Buffet’s 22-page letter. Here’s a few Buffet takeaways, according to Forbes, followed by some key excerpts from Buffet’s letter:

• Buffett says No! to bonds and gold for long-term investors.
• He was “dead wrong” in forecasting a 2011 housing recovery, but he is still optimistic one will be here “probably before long.”
• He explains his test for stock buybacks: when to do so and when it may not be such a good idea.

Bonds

• “Investing is often described as the process of laying out money now in the expectation of receiving more money in the future. At Berkshire we take a more demanding approach, defining investing as the transfer to others of purchasing power now with the reasoned expectation of receiving more purchasing power – after taxes have been paid on nominal gains – in the future. More succinctly, investing is forgoing consumption now in order to have the ability to consume more at a later date.”
• “High interest rates, of course, can compensate purchasers for the inflation risk they face with currency-based investments – and indeed, rates in the early 1980s did that job nicely. Current rates, however, do not come close to offsetting the purchasing-power risk that investors assume. Right now bonds should come with a warning label…”
• “Today, a wry comment that Wall Streeter Shelby Cullom Davis made long ago seems apt: ‘Bonds promoted as offering risk-free returns are now priced to deliver return-free risk.’”

Gold Not a not a fan of gold, Buffett includes it in a group of investments “that will never produce anything” and says they are “purchased in the buyer’s hope that someone else – who also knows that the assets will be forever unproductive – will pay more for them in the future.” Other highlights include:

• “What motivates most gold purchasers is their belief that the ranks of the fearful will grow. During the past decade that belief has proved correct. Beyond that, the rising price has on its own generated additional buying enthusiasm, attracting purchasers who see the rise as validating an investment thesis.”
• “As ‘bandwagon’ investors join any party, they create their own truth – for a while.”
• “A century from now the 400 million acres of farmland will have produced staggering amounts of corn, wheat, cotton, and other crops – and will continue to produce that valuable bounty, whatever the currency may be. Exxon Mobil will probably have delivered trillions of dollars in dividends to its owners and will also hold assets worth many more trillions.” The 170,000 tons of gold in the world, if melded together, would form a cube of about 68 feet per side. In a century, that cube will be “unchanged in size and still incapable of producing anything. You can fondle the cube, but it will not respond.”
  

Stock buybacks Even though he repurchased stock for Berkshire Hathaway last September, Buffet still says he’s not a fan of buybacks and believes, along with Berkhire’s Vice Chairman Charles Munger, they only make sense under two conditions: “First, a company has ample funds to take care of the operational and liquidity needs of its business; second, its stock is selling at a material discount to the company’s intrinsic business value, conservatively calculated.” Here’s some additional buyback commentary from his annual letter:

• “We have witnessed many bouts of repurchasing that failed our second test. Sometimes, of course, infractions – even serious ones – are innocent; many CEOs never stop believing their stock is cheap. In other instances, a less benign conclusion seems warranted. It doesn’t suffice to say that repurchases are being made to offset the dilution from stock issuances or simply because a company has excess cash. Continuing shareholders are hurt unless shares are purchased below intrinsic value. The first law of capital allocation – whether the money is slated for acquisitions or share repurchases – is that what is smart at one price is dumb at another. (One CEO who always stresses the price/value factor in repurchase decisions is Jamie Dimon at J.P. Morgan; I recommend that you read his annual letter.)”
• “Charlie and I have mixed emotions when Berkshire shares sell well below intrinsic value. We like making money for continuing shareholders, and there is no surer way to do that than by buying an asset – our own stock – that we know to be worth at least x for less than that – for .9x, .8x or even lower. (As one of our directors says, it’s like shooting fish in a barrel, after the barrel has been drained and the fish have quit flopping.) Nevertheless, we don’t enjoy cashing out partners at a discount, even though our doing so may give the selling shareholders a slightly higher price than they would receive if our bid was absent. When we are buying, therefore, we want those exiting partners to be fully informed about the value of the assets they are selling.”

http://finance.yahoo.com/video/cnbc-22844419/analyst-685-price-target-on-priceline-28442202.html

Warren Buffett: Betting on JP Morgan and Jamie Dimon in his own account.

Warren Buffett: I'm Personally Betting on JP Morgan and Jamie Dimon

Warren Buffett: analysts have long wondered why there’s a complete absence of JP Morgan (NYSE:JPM) shares in Berkshire Hathaway’s (NYSE:BRKA) portfolio.

Berkshire is a big investor in banks with investments in Wells Fargo (NYSE:WFC) steadily growing, and a large preferred holding in Bank of America (NYSE:BAC).

JP Morgan’s CEO Jamie Dimon is one of the most highly reputed bank executives and its clients rank among the industry’s best.

Berkshire holds no shares in J P Morgan, Warren Buffett himself has a holding in his personal account making it awkward to own in BRK.


Buffett revealed his bet during an interview with CNBC. He added the annual letter issued by Dimon to be very well thought out and well worth reading.


Bank stocks:
JPMorgan Chase & Co. (NYSE:JPM): JPM shares  have traded in a 52-week range of $27.85 to $47.80. The company’s trailing P/E is 8.53, while trailing earnings are $4.48 per share.

Wells Fargo & Company (NYSE:WFC): WFC have traded in a 52-week range of $22.58 to $32.97.
The company’s trailing P/E is 10.77, while trailing earnings are $2.82 per share.

Bank of America Corporation (NYSE:BAC): BAC shares recently traded at $7.78, down $0.1, or 1.27%. They have traded in a 52-week range of $4.92 to $14.70. The company’s trailing P/E is 778.90, while trailing earnings are $0.01 per share.

Berkshire Hathaway Inc. (NYSE:BRKA): BRKA shares recently traded at $120,210.00,. They have traded in a 52-week range of $98,952.00 to $131,463.00. The company’s trailing P/E is 17.06, while trailing earnings are $7,023.27 per share.


 http://wallstcheatsheet.com/trading/warren-buffett-im-personally-betting-on-jp-morgan-and-jamie-dimon.html/

Zorba is a Greek philosopher

Can you imagine Greeks being managed by Germans?  Two very different cultures clashing over Greek Debt imploding and Greece becoming a Bankrupt nation.  If we are to assume that the words of Zorba represent the general psyche of the Greeks, God forbid athat they are forced to me more like the hard working and frugal Germans.  But this oil and water mix is being attempted with the re-financing of Greek debts...

“This is true happiness: to have no ambition and to work like a horse as if you had every ambition. To live far from men, not to need them and yet to love them. To have the stars above, the land to your left and the sea to your right and to realize of a sudden that in your heart, life has accomplished its final miracle: it has become a fairy tale.”
― Nikos Kazantzakis, Zorba the Greek

 

 

 

Berkshire Sets Plan on Buffett Succession - WSJ.com

Berkshire Sets Plan on Buffett Succession - WSJ.com

BY SERENA NG

Warren Buffett, in his annual letter to Berkshire Hathaway Inc. shareholders on Saturday, said the company's board has identified an individual to succeed him as chief executive. He promised a "seamless" leadership transition when the time comes.

The would-be successor wasn't named, but it is likely a person who works for the Omaha, Neb., company. The 81-year-old Mr. Buffett has run Berkshire Hathaway for nearly half a century, transforming it from a struggling textile maker into a conglomerate with interests in railroads, retail and insurance as well as a giant portfolio of publicly traded stocks.

Near the start of a ...

Fed Policy Implications

Debt Financed Wars are Hell on currencies.