We recently discussed the changes that have taken place inside Berkshire Hathaway Inc. (NYSE: BRK-A) as Warren Buffett has gone higher up the food chain.  In his more focused and more opaque approach, it also seems that after a $44 billion deal including debt to buy Burlington Northern Santa Fe Corp. (NYSE: BNI) that Berkshire Hathaway needs to further make some changes.  Buffett has been talking on and off about a whale of a deal, and that is what we got with the BNSF buyout.  Berkshire Hathaway Inc. lists 51 different subsidiary links inside the Berkshire Hathaway umbrella that are wholly owned or dominantly owned subsidiaries.  There are also more than 40 public US-listed stock holdings in there, and that is before you get into his preferred shares, convertible debt instruments, and debt for deal financing in big public companies.

We have taken a review of the Full Buffett Holdings and come up with a geared down version of his holdings here.  Some of these ‘encouraged’ sales are because of fundamental changes, and some are merely because they are too small to be a benefit even if they tripled in price.  Some are also a follow-on for action he has already taken or already hinted at.

ConocoPhillips (NYSE: COP) is an obvious exit in the oil patch.  Buffett wants continued exposure to oil, and there are better ways to get exposure for Mr. Buffett.  He has investigated the Canadian oil sands projects, and he eventually buckled to pressure to sell Chinese oil stocks.  But Buffett targeted ConocoPhillips already all on his own for sale and said he would selectively sell as a tax offset even if it rises. It was also lowered in scope over the last quarter and the recent addition of Exxon Mobil Corp. (NYSE: XOM) was the right call he should have made in the first place.  Conoco is now at a $78 billion market cap, yet Buffett cam much more easily hide Exxon with almost an unlimited amount of funds as it has a market cap north of $359 billion and is the #1 position in the 24/7 Wall St. Real-Time 500.  Buffett could get his hands on almost $3 billion for the share sale at current levels.

Gannett Co., Inc. (NYSE: GCI) is one we cannot figure out why he still has in the portfolio other than being ‘long and wrong.’  He has panned newspapers, and the rest of media is challenged still.  At 3.447 million shares, this is also worth a whopping $35 million today.  The notion that this used to be worth 5-times and 8-times more is largely irrelevant now.  The Washington Post Co. (NYSE: WPO) might actually be hard for Buffett to exit because volume is so light.  He might just be stuck with it, and its education business may offset the newspaper business.  But his 1.72 million share stake could raise $700 million today if it could be unlocked.

Moody’s Corp. (NYSE: MCO) is one that was undergoing a game-changing trend for two years before Buffett decided to start lightening up.  The business is no longer in the same right nor with the same future as it once had.  Buffett wants companies with a “forever timeline” and that is just not in the cards any longer.  Ask this… How does the future of Moody’s compare now to how it was running 5 years ago?  No matter how you cut it, Moody’s has a much less dominant role and one under much more regulation and under more public scrutiny.  We interpreted his recent comments that he’s probably exiting this one anyway…. $900 million is here.

Then there is the train and rail competition.  Buffett has already indicated the sale of competing interests in the rail arena.  That takes the 1.933 million shares of Norfolk Southern Corp. (NYSE: NSC) and the 9.55 million shares of Union Pacific Corp. (NYSE: UNP) off the table.  That was roughly $640 million at the last look.  But there is an interesting take here that has not been discussed.  If Buffett really wants to communicate the value of the rail transportation business, he could also dump his 1.429 million shares of United Parcel Service, Inc. (NYSE: UPS).  That stake is only worth $80 million today, and he could kill two birds with one stone: clean up a small sub-$100 million position and make the effort to further show that rail is the best transport sector to own.

On the healthcare front, Buffett has already decided to lighten up on his health insurance operators. UnitedHealth Group, Inc. (NYSE: UNH) was listed as 3.4 million shares, down from 4.5 million in the prior quarter.  Wellpoint Inc. (NYSE: WLP) was listed as 3.394 million, down slightly from 3.5 million last quarter.  But that Wellpoint stake is also down from 4.7773 million shares in Q1.  Buffett might have been an Obama-backer, but he is lightening up in these health insurance stocks.  The only reason he might not be out entirely is either because of ‘hope’ or for goodwill in D.C.  He would raise about $280 million now by unloading these, and he’d surprisingly be able to do it at close to 52-week highs in these two.

GlaxoSmithKline plc (NYSE: GSK) and Sanofi-Aventis (NYSE: SNY) are technically not Buffett’s picks on his own.  It is unlikely that Buffett needs these as a source of funds.  And we do not anticipate a sale from Buffett here.  These could generate more than $200 million if they are exited.  Again, we do not expect these to be sold even though they do not fit in on the Buffett scale today.

Ingersoll-Rand Plc (NYSE: IR) is one that we think is one already on the way out and is probably already gone. He cut the stake way down, and this is worth about $23 million at today’s price.  This isn’t worth Buffett’s time, so we won’t make worth wasting our time nor your time with anything more.

SunTrust Banks, Inc. (NYSE: STI) is just over 3 million shares, so almost $70 million today.  This may be sentimental or for posterity’s sake, and in all fairness is not one we are picking on.  But with a similarly small Bank of America Corp. (NYSE: BAC) stake, the stake size could be more easily grown in BofA if he chooses.  Buffett’s recently increased stake in Wells Fargo & Co. (NYSE: WFC) being worth close to $8 billion and the other banks and lenders already held make this seem to be an easy stock to relinquish.

There are two positions in public insurance holdings that either need to be added to or need to be elminated.  Frankly, Buffett has more than enough insurance exposure all the way through the private portfolio.  The Torchmark Corp. (NYSE: TMK) is in individual life and supplemental health insurance products and the 2.8 million share stake is worth just under $120 million today.  The Travelers Companies, Inc. (NYSE: TRV) was such a small stake that Buffett may have changed his mind or just got caught having his broker start buying in the last 15 minutes of the last day of the quarter.  This is literally a $1.3 million stake.  But it is now a DJIA component and I think Warren wants to show he wants to hold the better quality public stocks.  Our guess is that this will be a larger stake ahead.  If not, he just needs to sell it so that people covering Buffett can ignore it.

Will Buffett sell all these positions? No, of course not. He holds on to positions in many cases until long after they have stayed their welcome in the Buffett house.  But some he has started selling and many seem unlikely compared to the rest of his portfolio.  Many of these either do no longer fit in size nor in practice for his ‘forever’ model.  After tallying all these stakes up mentioned here, Buffett could also use $6 billion to use for funding that BNSF buyout or that he could use to buy what he has always wanted…. A utility.

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JON C. OGG
NOVEMBER 24, 2009

This was an important week for investment guru and billionaire watchers to see which gurus were holding which stocks.  The full public equity holdings of Warren Buffett via Berkshire Hathaway Inc. (NYSE: BRK-A) were particularly of note, particularly with those B shares under “BRK-B” soon to split and giving a chance for even the less astute ranks of Joe Public to own a piece of the Berkshire dream.  Obviously the huge change is via the Burlington Northern Santa Fe Corp. (NYSE: BNI) buyout.  As part of this deal, Buffett is exiting Union Pacific (NYSE: UNP) and exiting Norfolk Southern (NYSE: NSC) stakes of about $600 million and $100 million, respectively, to avoid duplication and internal competition.  The rail transport play now accounts for about one-quarter of the total Berkshire Hathaway entity upon closing. But the less obvious position in that Warren Buffett in 2009 has made it clear that there will be a simpler and probably less “stock-hound” version of Berkshire Hathaway ahead.

Buffett has gone higher up the food chain and is likely to be a creditor now inside or to large institutions.  We have seen this during the crisis.  Buffett negotiated a better deal for Goldman Sachs Group (NYSE: GS) than the US Government was able to get.  Buffett’s preferred stock in Goldman Sachs has a dividend of 10% and is callable at any time at a 10% premium; but Buffett also got warrants to purchase $5 billion of common stock with a strike price of $115.00 per share, exercisable for a five-year term (4 years now), and Buffett would effectively get to pocket $61 per share if he exercised those all today at the market (and with a $2.6 billion warrant profit alone).

The General Electric Co. (NYSE: GE) stake was listed only as 7.77 million shares of common stock (about $125 million now), the same as it has been for quarters.  Yet last year Buffett came to the rescue with a $3 billion of perpetual preferred stock in a private offering with a dividend of 10% and warrants to purchase $3 billion of common stock.  The preferred is callable after 3-years (2 years now) at a 10% premium; the warrants have a strike price of $22.25 and are exercisable for a five-year term (4 years now).

Two other investments in preferred or note offerings made in the last year during the financial crunch were in Tiffany & Co. (NYSE: TIF) in February via 10% senior notes and in Harley-Davidson, Inc. (NYSE: HOG) with a 15% rate.  Neither of these are in the Buffett equity holdings.

Buffett increased his holdings in Wal-Mart Stores Inc. (NYSE: WMT) to 37.8 million shares versus 19.9 million shares.  This could easily be hiked from about $1.9 billion today to almost infinity with its $208 billion market cap.  With over 10% officially unemployed in the U.S., Wal-Mart has become the shopping destination of millions more of Americans and that value and thrift trend is not likely to end any time soon.

Then there is the ConocoPhillips (NYSE: COP) bet that Buffett got his timing very wrong on.  He cut his stake again here to 57.4 million shares versus almost 62.5 million shares and still has the tax benefit for selling.  He added Exxon Mobil Corp. (NYSE: XOM) with a 1.27 million share stake.  As Exxon is the largest company by market cap at $357 billion, this is much easier for Buffett to invest into rather than $79 billion market cap today in ConocoPhillips.

The Wells Fargo & Company (NYSE: WFC) stake which he grew yet again is worth over $8.7 billion, and Buffett could probably insert more money there through time if it gets cheap again.  Then there is the new Republic Services Inc. (NYSE: RSG) position of 3.625 million shares ($100 million today) where Buffett is just investing alongside buddy Bill Gates now that Gates’ entity has a board seat there and a huge stake.

Then there are the overseas bets, and these are just some:

• $2.5 billion into diversified Swiss Reinsurance Co. Ltd.
• $4 billion to buy control of Iscar Metalworking in Israel
• $230 million for a 10% stake in BYD for electric batteries in China
• $144 million or so stake in Nestle

Buffett lent $4.4 billion to Mars for the Wrigley buyout.  He also lent Dow Chemical (NYSE: DOW) $3 billion for part of the Rohm & Haas deal. As noted earlier, Buffett is going higher up the food chain.  In fact, he is almost becoming the default alternative investment bank.  And he has cut down and exiting equity positions as well.

Eaton Corp. (NYSE: ETN), in power management, and WABCO Holdings (NYSE: WBC), in parts and systems for mostly commercial vehicles, were dropped entirely this last quarter.  It seems as though Buffett is also systematically exiting the Moody’s Corp. (NYSE: MCO) position now that the business model has changed.  He still holds too much there, but maybe better late than never.

Buffett is also not betting against the Obama health care plan as he cut his stakes in both Wellpoint Inc. (NYSE: WLP) and UnitedHealth Group (NYSE: UNH). It will be interesting to see if Buffett hangs on to those drug company stakes in GlaxoSmithKline (NYSE: GSK), at 1.51 million shares, and Sanofi Aventis (NYSE: SNY), of more than 3.9 million shares.

Then when considering Buffett’s comments about the poor future of print media, you have to wonder if the Oracle of Omaha just won’t take his licks in Gannett Co. Inc. (NYSE: GCI) worth only about $39 million today and Washington Post Co. (NYSE: WPO) worth $730 million today.

It still seems obvious that Buffett would like to hold a large utility as a wholly owned subsidiary.  That may be his next ‘whale of a deal’ after he builds his cash back up over $20 billion.  Buffett got burned on his dollar bet before, but he is active internationally.  The BNSF deal is arguably a China-coal bet rather than an “all-in bet on the future of America,” assuming that is not symbiotic.  This now makes Berkshire Hathaway even more of a financial and transport operation, with far less emphasis on public common stock bets.  And he is going higher on the food chain. It will alsways be interesting to see how Buffett invests the Berkshire Hathaway fortune.  But what is obvious is that he is starting to get out of the way of some bets and make more concentrated bets elsewhere.  The new Berkshire Hathaway is more of a financial and transportation operator now… more than ever… that is also acting as private investment banker.  The investment changes over the last year are showing more of a penchant for debt and being higher up the food chain than just common stock in the U.S.

This all acts to make Berkshire Hathaway more predictable in operations and even more of a true conglomerate.  And it makes the passive investments a bit more opaque.

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Again, here is the full list of Buffett & Berkshire Hathaway US public stock holdings.

JON C. OGG
November 19, 2009

Berkshire Hathaway Inc. (NYSE: BRK-A)(BRK-B) has its Q3-2009 public equity holdings as of September 30, 2009.  In our group “A to F” we noted some interim changes in the lot.  Here are Warren Buffett’s holdings and accompanying notes for the group ‘G to O.’

• Gannett Co. (NYSE: GCI) 3.447 million shares, same as before.
• General Electric Corp. (NYSE: GE) 7.777 million shares is the same as before, but does not include the huge preferred investment from late 2008.
• GlaxoSmithKline (NYSE: GSK) 1.51 million shares, same as before.
• Home Depot Inc. (NYSE: HD) 2.757 million, same as last quarter.
• Ingersoll-Rand (NYSE: IR) 636,600 shares; WAY DOWN from the 7.78 million listed last quarter.
• Iron Mountain (NYSE: IRM) 3.3722 million shares, same as before.
• Johnson & Johnson (NYSE: JNJ) was just over 36.91 million shares; Same as last quarter and still well under the 62 million shares at one point in 2008.
• Kraft Foods (NYSE: KFT) over 138 million; same as last quarter.
• Lowe’s Companies (NYSE: LOW) 6.5 million shares, same as last quarter.
• M&T Bank Corp. (NYSE: MTB) 6.71 million shares, same as before.
• Moody’s (NYSE: MCO) was listed as over 39.2 million shares, but that is WAY DOWN from the 48 million last quarter.  Be advised that he has noted sales and hinted at more sales here.
• Nalco Holding (NYSE: NLC) 9.0 million shares, same as last quarter.
• Nike Inc. (NYSE: NKE) 7.641 million shares, same as before.
• Norfolk Southern (NYSE: NSC) 1.933 million shares, same as before, but we already know Buffett has or is selling out of non-BNSF shares in rail companies.
• NRG Energy (NYSE: NRG) 7.2 million, same as before.

BUFFETT HOLDINGS A to F

BUFFETT HOLDINGS P to Z

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JON C. OGG

India ranks 49 among 133 countries in 2009-10 in the global competitiveness index prepared by the World Economic Forum, an improvement of one position from last year. India’s position is a result of mixed performance across 12 categories covered by the GCI.

India has displayed good performance over the past year in business sophistication, innovation and financial market sophistication. However, areas like infrastructure, primary education, health and the fiscal situation dragged India down.

The review also stated that bureaucracy, over-regulation and corruption still affect functioning markets and labour markets in particular. India lags all BRIC nations in the index.

India has suffered in the basic requirements index and ranks 101 in the health and education index. The fiscal deficit situation has dragged India to the 96th position in the macroeconomic stability pillar, while poor infrastructure performance has brought it down to 76th position in the transport and infrastructure index. India has performed well in areas of sound financial system, efficient goods market and innovation sectors and ranks in the range of 16-30 in the respective indices.

A survey by PricewaterhouseCoopers, which took responses from 300 Indian CEOs, revealed that most expect growth to come from better penetration of existing markets, with 58 per cent citing that as their primary opportunity. Most Indian companies said they would be able to achieve growth organically.

Moreover, 42 per cent said the country’s manufacturing sector is becoming more competitive. As many as 74 per cent believed India to have a strong supply of educated and healthy workers and 56 per cent stated a strong entrepreneurial base existed.

Lack of infrastructure, inflation, red tapism and terrorism were cited as risks in our business competitiveness.

The #1 reason GCI has been diminishing in market price is due to GOODWILL. In a business purchase, this represents the excess of amounts paid over the fair value of tangible and other identified intangible assets acquired net of liabilities assumed. It is also the amount of market value items such as brand, reputation, and customer service.

In 2007, before the recession, GCI’s Goodwill was valued at $10 Billion. When the recession happened, everything in the market place lost value; which makes perfect sense considering what is and has happened. When people lose their jobs, they lose value that impacts their wallets. Same goes for Goodwill during a recession. When a person loses his job, however, that doesn’t mean that he’ll never have value as an employee again. Eventually, he’ll have another job and the value of his bank account will grow. Same goes for Goodwill. When the market recovers, and it will, the value of a companies brand, reputation, and customer service will be worth more than what it was worth when it experienced macroeconomic difficulties.

In 2007 and previous to 2007, for many years GCI valued its Goodwill 3.5 times the amount it is currently valued at. A couple points to mention why a company would value its Goodwill in 2007 to be $10 Billion and then in 2009 to be $2.8 Billion is A) GAAP accounting law requires a company to value Goodwill on an annual basis based off of ‘projections’ that directly correlate with current economic conditions. So, #1 they are forced to do it. B) the company receives a substantial tax benefit by depreciating the value and claiming an income tax loss. So, #2 they want to do it because they benefit from it.

Before the recession and for many years previous to the recession, the Goodwill value was between $9 and $10 Billion. If we added that Goodwill back into the assets of the business, here is what the Book Value of the firm would, and in my opinion should, look like:

Full Year ending Dec. 2007: $39.26 per share (before Goodwill was written down).
Full Year ending Dec. 2008: $36.94 per share (after Goodwill was written down 5X less than 2007).
Quarter Report March 2009: $36.59 per share
Quarter Report June 2009: $36.95 per share

The Book Value of GCI reported by the company for the period, June 2009 was: $6.43 per share.

I propose, based off of more information than just this, that the TRUE Book Value of GCI is $36.95. I believe the Intrinsic Value of GCI is much higher; around $65 per share.

By identifying the cause, defining the cause, the reasons for the cause, and the benefits to the company, we can quickly see that indeed we are holding a position in a company that is going to pay off tremendously for us in the future.

These are this Thursday morning’s top 10 analyst upgrades, downgrades, and initiations we have seen in early research calls from Wall Street:

ArcelorMittal (NYSE: MT) Raised to Buy at Societe Generale.
BioMarin Pharmaceutical Inc. (NASDAQ: BMRN) Raised to Outperform at Credit Suisse.
Elan Corp. plc (NYSE: ELN) Cut to Neutral at UBS.
Fifth Third Bancorp Raised To Outperform From Neutral By Baird
First Solar Inc. (NASDAQ: FSLR) Cut to Neutral at BofA/Merrill.
Gannett Co. (NYSE: GCI) Cut to Underperform at Wells Fargo.
Goodyear Tire (NYSE: GT) Cut to Underperform at BofA/Merrill.
Halliburton Co. (NYSE: HAL) Started as Outperform at Wells Fargo.
PrivateBancorp Inc. (NASDAQ: PVTB) Cut to Neutral at JPMorgan.
Urban Outfitters (NASDAQ: URBN) Raised to Overweight at Thomas Weisel.

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JON C. OGG

Not too many years ago, one senior newspaper executive said that there was nothing wrong with cutting costs but that, eventually, a company could cut so much that it would disappear up its own arse. The Audit Bureau of Circulations yesterday reported that the average American newspaper lost 10% of its circulation in the six months ending September 30, based on the 379 papers that filed data with the firm. All of the country’s largest newspapers do so. Some of the most well-known newspapers in the industry reduced their circulations much more than 10%. USA Today, the Gannett (NYSE:GCI) flagship, had a drop of over 17% to 1,900,116. The Boston Globe, which is owned by The New York Times Company (NYSE:NYT), had a fall of more than 18% to 264,105.

Newspapers have sent out copies on which they lose money, based on what subscribers would pay them, for years. Some of the copies were sold at sharply discounted prices, and others were sold to people so far from the printing presses that the distribution costs were relatively enormous. The industry believed, and was right in believing, that advertising sold into those copies would make them profitable. That worked until the Internet ruined the industry.

Newspapers are in the midst of a retrenchment that they cannot avoid and part of that retrenchment is cutting back circulation. The problem with the process is that advertisers want to pay less when they have their advertising running in fewer papers. A reduction in circulation means that advertising rates drop down and the road to profit becomes much less certain.

Newspapers had hoped that putting their brands and content online would bring in enough internet advertising revenue so it would make up for the money being lost on their print editions. They found out this year that it is not that easy. Most large online newspapers had falling advertising revenue during the first three quarters of this year. It is rare to find a newspaper where online revenue is 10% of total company sales. This is simply not enough to make much of a difference.

The industry is experimenting with other ways to solve its problem of falling revenue and rising losses. In Detroit, the daily newspaper is not available daily. A subscriber can only get The Detroit News and The Detroit Free Press on Sunday, Tuesday, and Friday. The program saves a lot of money in printing and distribution and undoubtedly allowed the companies to lay off workers. But, advertisers can no longer buy advertising on the four “paper-less” days, which is a lot of money for the newspapers to give up.

Business executives and scientists, unlike theologians and psychologists, believe that every problem has a solution. Unfortunately, that is not true. The best minds in the media industry have been working on the newspaper puzzle for years. Not a single person has come up with a workable solution to the industry’s problems, probably because there isn’t one.

Newspapers can buy time by cutting circulation and people to save costs. An economic recovery may buy the industry even more time. It has been said far too often, but, with the new September 30 circulation figures in hand, it is worth saying again. For the newspaper industry a huge success on the Internet is all that is left. All the other options are gone.

Douglas A. McIntyre

Daily circulation at the nation’s newspapers dropped 10% for the six months ending September 30 according to industry measurement service Audit Bureau of Circulations.

It is not clear whether newspapers are helping themselves by shrinking both the size of the pages they are printed on and the number of daily subscribers that they have. The industry’s theory is that if it charges more for newsstand copies and home delivery that marginal readers will fall away and profit-per-reader will rise.

The only problem with a shrinking reader base is that advertising rates have to come down as well. Fewer readers, and advertisers want a better deal.

Of course, newspapers hope to bring in money from their online editions to make up for falling print circulation and advertising sales. That has not worked. Online revenue at most large dailies fell last year. Publicly held chains say that online revenue is now 6% to 12% of total sales, and that is not enough to offset a collapse in their traditional businesses.

Most large newspaper are taking the gamble that less is more and letting their paid circulations fall sharply. For the six-month period ending September 30, the average daily circulation of The New York Times (NYSE:NYT) fell 7.3% to 927,851.  The Times Company also owns The Boston Globe where circulation fell 18.5% to 264,105. USA Today, flagship of Gannett (NYSE:GCI), watched 17.2% of its circulation go away dropping it to a daily average of 1,900,116. The circulation of The Washington Post (NYSE:WPO) dropped 6.4% to 582,844.

News Corp’s (NYSE:NWS) two large US newspapers posted very different results. The average daily paid circulation of The Wall Street Journal fell only .6% to 2,024,269. The New York Post dropped 18.8% to 508,042.

Douglas A. McIntyre

CF Industries Holdings Inc (NYSE: CF) rallied over 4% to a yearly high of $95.06 after Agrium Inc. announced that it had extened its offer to acquire CF Industries holding for $40 in cash and a share of Agrium per share of CF Industries Holdings.

Gannett Co. Inc. (NYSE: GCI) hit a yearly high of $14.02 after the company’s earnings beat analyst estimates.

iPCS Inc. (NASDAQ: IPCS) rallied over 30% to a yearly high of $23.95 after Sprint Nextel announced that it had entered into an agreement to acquire the company for roughly $831 million, with the shares valued at $24.

Garrett W. McIntyre

There is no need to be a great strategist to know that in the war waged by the weak against their jailers, only attack by the former can lead to victory. Clausewitz points out, and this seems rather trivial than redundant, that only offensive can win the war. Now the enemy, State-commodity-information, uses attack as a means of its defence, it does not try to win the war, it tries to make it eternal, it does not try to eradicate us since it needs us. One of its propaganda’s weapon is to propagate the cult of defence, and the interdiction of attack. In this world, everybody is defending, according to this propaganda, and to defend is good. We say: in this world, our party is attacking and the enemy is defending ; the enemy is the one defending this world. Unlike it, we are trying to eradicate it.

Defence thus is the enemy attitude, enemy of our project. All and reach of us, though, are defending ourselves, including among those who have nothing to lose, or so they claim. They defend their skin, or their money, or an idea. Some even defend, as groups, unions, organisations whose aim is revolution, militias, charities, what they think they have in common. But we argue that when we are reduced to defending, the enemy has already won. Defending is never fun, except for shopkeepers and bureaucrats, unlike attacking. Defence always is the preservation, the conservation of what is defended. And when the enemy forces us to conserve, may it even be our existence or that of our project, it brings us to adopt its pattern, which it owns and masters, as typically demonstrated by unionism throughout the 20th century. In short, whenever we defend ourselves, we usually do so, badly and without pleasure, as we do so without perspective.

So the project of a Riots’ Library [Bibliothèque des Emeutes] is to support the offensive by revealing it. We do not think of riot as the ultimate, on the contrary. Riot is the sine qua non, a necessary condition. Any modern riot is a start of an offensive. Any modern offensive starts with a riot, like flame with a spark. We regret that today’s greatest flame is only the one of Iraq, but we get light from the remarkable number of sparks that are ready to set this world on fire. Riot, as we said, is always insufficient ; but it is the only current ground that contain the whole perspective. You speak of other “struggles”. But you do not name any. If this allusion does not refer to the old forms of defence of the wage workers, like strikes, if you are thinking of offensive “struggles”, let us know which ones, because, unfortunately, outside those articulated around riot, we cannot distinguish any, in these eventful times, although we are actually looking out closely, apparently more than anyone else, for each of their jolts.

(Excerpt from ‘Correspondance avec le GCI’ (‘Correspondance with the ICG’ [International Communist Group]), 1992.)

www.teleologie.org/OT/textes/txtGCI5.html

Excerpted & translated in 2009 by a third party – historyhereandnow@gmail.com

You distrust the new, and you do well. Go on, and you will be as circumspect about it as we are, we who start with it. However, you do not seem to distrust much “what was new, acquired in the communist movement”. What is acquired, granted? We definitely distrust those who defend their little acquisitions, like little landlords with their suburban house, while we have never acquired anything, except things we immediately staked back into the game. Thus, you want to know what is so new in the modern riots! Precisely that: nothing, in them, is ever granted or acquired. There isn’t any organisation, and rarely organisations, which undergo disorganization.. We also think that the lack of organisation, in riots, is a great weakness, which generally makes it run out of steam and subside (we do not share your speculation according to which organised revolts are less bloody than those that are only spontaneous: from the Makhnovtchina to the Iraqi shoras, must we remind you that the embryos of organisation have obviously led repression to expand its sphere of activity, in space and in time? By the way, should blood, according to your goals, be saved up or liberally risked?); but we also think that it is a great strength, the only way to embrace all the possible. If preexisting organisations could have been imposed on the 1905 insurgents, there would never had been Councils. The modern rioters in action must find their organisation, not be imposed one on by the centralising interventionnist wanabee leaders. Whatever your “struggles” may be, which you will allow us to find quite obscure, aimed at defending the acquired in the communist movement, those revolting today are the modern rioters. And they also revolt against the past of failure of their proletarian ancesters. Time reveals this world, and subverts its presuppositions. The barricade moves. The modern rioters criticize its acquired location, and we take for granted the fact that they criticize any acquired location. It is weak, but promising. It is new.

What is also new in the modern riots is their quantity and their similarity, in forms and targets. For the first time, as far as we know, the poor are revolting on all the continents at the same time, in the same manner, for the same reasons, without premeditation. Their only unity is in action, so as a result, for the first time, the party of future universally begins its practice before having the slightest theory.

For the first time, the age of the revolted, which are so ill-assorted, so ignorant from each other, is that uniform and that low. Deprived of the memory of the past fights, these teenagers’ excellent memories carry over their unique predispositions into imagination, which those previous fights lacked so much; and this too is new.

(Excerpt from ‘Correspondance avec le GCI’ (‘Correspondance with the ICG’ [International Communist Group]), 1992.)

www.teleologie.org/OT/textes/txtGCI5.html

Excerpted & translated in 2009 by a third party – historyhereandnow@gmail.com

Reuters:   Goldman Sachs (NYSE:GS) is having trouble justifying its huge bonuses.

Reuters:   Bruce Wasserstein, M&A giant and head of Lazard (NYSE:LAZ), died.

Reuters:   Congress will probe compensation at AIG (NYSE:AIG).

Reuters:   US foreclosures fell for a second month but stayed high.

Reuters:   The Fed discussed rasing its asset purchases at the last FOMC.

Reuters:   Roche’s results were helped by Tamiflu sales.

Reuters:   JPMorga (NYSE:JPM) had a $3.6 billion profit setting a high bar for rivals.

Reuters:   RIM (NASDAQ:RIMM) launched a touchscreen version of the Blackberry.

WSJ:   “Calpers said a former board member had reaped $50 million in fees for arranging investments that could saddle state taxpayers with hundreds of millions of dollars in losses.”

WSJ:   AT&T (NYSE:T) slammed Google (NASDAQ:GOOG) over call blocking by its Voice application

WSJ:   Sumner Redstone will cut his stakes in CBS (NYSE:CBS) and Viacom (NYSE:VIA).

WSJ:   Overseas Chinese Banking Corp bought certain assets of ING.

WSJ:   BHP Billiton (NYSE:BHP) and Rio Tinto (NYSE:RTP) dropped a plan to co-market some of their products.

WSJ:   Sour mortgages could hurt GE (NYSE:GE) earnings.

WSJ:   Microsoft (NASDAQ:MSFT) is opening its first retail stores.

WSJ:   Wal-Mart (NYSE:WMT) is expanding its wireless programs.

WSJ:   Google’s (NASDAQ:GOOG) results are likely to show that the recession is passing.

WSJ:   China’s foreign currency reserves hit $2.273 billion.

WSJ:   Obama is proposing at $250 payment to 57 million seniors, veterans and people with disabilities next year.

WSJ:   Congress is concerned about the usefulness of first time homebuyer credits.

WSJ:   Options traders are favoring IBM’s (NYSE:IBM) earnings prospects.

WSJ:   China faces a big retrenchment of its factories as exports remain slow.

WSJ:   GM predicted big growth in China.

WSJ:   Oracle (NASDAQ:ORCL) is targeting IBM with some of its new products.

WSJ:   Skype’s founders are trying to get an injunction against a sale of the company by eBay (NASDAQ:EBAY)

WSJ:   The Wall Street Journal (NYSE:NWS) is likely to pass USA Today (NYSE:GCI) in paid circulation.

NYT:   Electronic markets are threatening The New York Stock Exchange (NYSE:NYX).

NYT:   Treasury officials want more banks to pay back bailout money.

NYT:   A suit filed against the SEC claims it did not detect the Madoff scheme.

NYT:   Thomson Reuters (NYSE:TRI) will buy Breakingviews.

NYT:   The head of EADS said the aircraft industry will do better than expected.

NYT:   Crédit Agricole will repay bailout money.

NYT:   About 7,300 people gave offshore tax data to the IRS.

FT:   The dollar was hit on signs from the Fed that rates will stay low.

FT:   Geithner aides made million on Wall St.

Bloomberg:   Xstrada dropped its $49 billion bid for Anglo American.

Bloomberg:   Consumer prices will probably show that inflation is not a risk.

You can join our open email distribution list to get updates each morning on analyst upgrades and downgrades, top day trader alerts, IPO’s and secondary offerings, Warren Buffett and other guru activity, M&A and more

Douglas A. McIntyre

The newspaper industry must be looking up. Recently, Gannett (NYSE:GCI) said its last quarter was better than expected. Today, The New York Times Company (NYSE:NYT) said it would keep The Boston Globe which has been for sale for several months.

The Times said earlier this year that The Globe would loss $85 million in 2009, but was able to get Globe unions to knuckle under and agree to large cuts in staff and compensation. A former publisher of the Globe, Stephen Taylor, and Platinum Equity both submitted bids which a New York Times reporter says were for about $35 million in cash and pension obligations.

Investors clearly think that newspaper companies are in the midst of at least a modest revival. Shares in the Times dropped to $3.51 in February. They trade at $8.67 now.

The sale of the Globe took a long and winding road and ended back where it had started.

Douglas A. McIntyre

Aocording to Volume Spike Investor, several stocks are making significant moves before the open.

Including in the list are Gannett (GCI) (details), BSD Medical (BSDM) (details), Walgreen (WAG) (details), Sequenom (SQMN) (details), and MBIA (MBI) (details).

Douglas A. McIntyre

Indice de compétitivité global 2009–2010 (Global Competitiveness Index, GCI):

France #16 (#16 en 2008-2009) / Republique tcheque #31 (#33 en 2008-2009, premier pays de la region)

[voir classement complet / Forum Economique Mondial - World Economic Forum]

It may not be clear how Twitterwill ever make money, but its growth is not in doubt. The microblogging website is now among the 50 largest internet properties in the US according to new data from comScore covering August web traffic.

Twitter took the N0. 46 place with an extraordinary audience of 20.8 million unique visitors. That makes it roughly the same size as all the sites of Gannett (GCI), the country’s largest newspaper chain, combined.

Twitter is growing fast enough that it may only be a matter of time, and perhaps a very short time, until it is the size of News Corp’s (NWS) MySpace. Total Fox Interactive unique visitors in August were 77.5 million. Some of these visitors were to the Fox websites. Fox is a unit of News Corp. But, most of the Fox traffic was to its MySpace operation which is, by most accounts, is no longer growing. MySpace rival Facebook had unique visitors of 92.2 million putting it in the N0. 5 spot among all US sites.

There is still a very legitimate question about how Twitter will make money. It is considering putting ads into the messages that its members send to one another. This may cause a revolt among users which could cut the traffic to the service. All social networks face a similar problem. Their members believe that they should control the rules of how the services are used. The lunatics run the asylum and that is hard on the jailers.

Douglas A. McIntyre

The subject area is based on Global Competitiveness report 2008-2009. The document is released by The World Economic Forum – an independent international organization committed to improving the state of the world by engaging leaders in partnerships to shape global, regional and industry agendas. It contains a detailed country/economy profile for each of the 134 economies, providing a comprehensive summary of the overall position in the rankings as well as the most prominent competitive advantages and disadvantages of each country/economy. Data tables with global rankings cover over 110 indicators grouped into 12 categories or pillars of competitiveness:

1. Institutions: property rights, judicial independence, burden of government regulation, efficiency of legal framework, business costs of crime and violence, strength of auditing and reporting standards, etc.
2. Infrastructure: quality of overall infrastructure, quality of roads, railroads, ports, air transport, electricity supply, telephone lines, etc.
3. Macroeconomic stability: government surplus/deficit, national savings, inflation, interest rate spread, government debt.
4. Health and primary education: business impact of malaria, tuberculosis, HIV/AIDS, incidences of malaria, tuberculosis, HIV, infant mortality, life expectancy, quality of primary education, primary enrollment, education expenditure.
5. Higher education and training: secondary, tertiary enrollment, quality of educational system, math and science education, management schools, internet access in schools, etc.
6. Goods market efficiency: intensity of local competition, market dominance, effectiveness of anti-monopoly policy, extent and effect of taxation, No. of procedures and time required to start a business, prevalence of trade barriers, buyer sophistication, etc.
7. Labor market efficiency: Cooperation in labor-employer relations, non-wage labor costs, rigidity of employment, hiring and firing practices, pay and productivity, brain drain, female participation in labor force, etc.
8. Financial market sophistication: local equity market, ease of access to loans, venture capital availability, strength of investor protection, soundness of banks, regulation of securities exchanges, legal rights index, etc.
9. Technological readiness: availability of latest technologies, firm-level technology absorption, laws relating to ICT, FDI and technology transfer, mobile telephone subscribers, Internet users, personal computers, broadband Internet subscribers.
10. Market size: domestic market size, foreign market size.
11. Business sophistication: local supplier quantity and quality, cluster development, nature of competitive advantage, value chain breadth, production process sophistication, extent of marketing, etc.
12. Innovation: capacity for innovation, quality of scientific research institutions, company spending on R&D, university-industry research collaboration, availability of scientists and engineers, etc.

How this information can be handled via MindDecider program tools?

• download “Countries:CGI” subject area to your MindDecider\Areas folder.
• open it in a context menu “Select area” –> Countries.
• open a context menu and click +Countries option to select a country.
• open a Criteria editor (F9). In a context menu click +Countries to select a criteria. Assign significances for them if you consider some criteria more important than others.
• select an Estimation mode (F6) to view the estimates for the given countries.
• choose a processing method to find a country with the best/worst performance by the selected criteria or to calculate total/average meanings for the defined estimates.
• view a comparison statistics in a Report mode (F8).

Thus, you may select any country and any criteria needed for your tailored analysis which is much easier and more illustrative than traditional spreadsheets. Moreover, finding the best choice is just one mouse click away and takes no more than a second!

Berkshire Hathaway Inc. (NYSE: BRK-A)(BRK-B) has released its Q2-2009  public equity holdings as of June 30, 2009.  There are some portfolio changes that have been seen here from the end of Q1 and we have broken these down into 3 groups of ‘A to F’ and  ‘G to O’ and ‘P to Z’ so these are easier to see on one page.  Here are Warren Buffett’s holdings and accompanying notes for the group ‘G to O.’

• Gannett Co. (NYSE: GCI) 3.447 million shares, same as before.
• General Electric Corp. (NYSE: GE) 7.777 million shares is the same as before, but does not include the preferred investment from late 2008.
• GlaxoSmithkline (NYSE: GSK) 1.51 million shares, same as before.
• Home Depot Inc. (NYSE: HD) 2.757 million, actually less than the 3.7 million shares in Q1.
• Ingersoll-Rand (NYSE: IR) 7.78 million, same as last quarter.
• Iron Mountain (NYSE: IRM) 3.3722 million shares, same as before.
• Johnson & Johnson (NYSE: JNJ) was just over 36.91 million shares; ABOVE the 32.5 million last quarter and above the 28.6 million in Q4.  This is still well under the huge 62 million shares last year.
• Kraft Foods (NYSE: KFT) over 138 million; looks roughly the same as before.
• Lowe’s Companies (NYSE: LOW) 6.5 million shares, same as before unlike at Home Depot.
• M&T Bank Corp. (NYSE: MTB) 6.71 million shares, same as before.
• Moody’s (NYSE: MCO) 48 million shares are listed as the same as before, however we already know that Buffett CUT THIS SINCE JUNE 30 and may cut it further.
• Nalco Holding (NYSE: NLC) 9.0 million shares, same as Q1 after the Q1 position had been raised.
• Nike Inc. (NYSE: NKE) 7.641 million shares, same as before.
• Norfolk Southern (NYSE: NSC) 1.933 million shares, same as before.
• NRG Energy (NYSE: NRG) 7.2 million, same as before.

BUFFETT HOLDINGS ‘A to F’

BUFFETT HOLDINGS ‘P to Z’

JON C. OGG
AUGUST 14, 2009

We recently gave a list of companies which we thought Warren Buffett might want to consider selling or lightening up on after Berkshire Hathaway Inc. (NYSE: BRK-A) disclosed that it had finally decided to lighten up on its giant stake in Moody’s Corp. (NYSE: MCO).  But an interesting question was brought up as a result of this.  Whether Buffett decides to unload stocks or not…. Which Buffett holdings have actually managed to bounce the most from their lows?  With today being month-end, we wanted to run some numbers here.  We already noted yesterday that if and when we see a 1,000 close on the S&P 500 Index it marks a 50% gain from the market lows in March.  There has been a huge bounce in his banking stocks, with Bank of America Corp. (NYSE: BAC) bouncing some 466% from the lows and a 214% bounce in Wells Fargo & Company (NYSE: WFC).

The banks were the worst performing sector out there.  That means they have also bounced the most from his other  (and everyone else’s too) holdings.   So we wanted to look outside of his bank holdings and look to see which of the Buffett holdings have bounced the most from lows.  We kept out the other financial and insurance stocks as well since everything financial was tarred and feathered earlier this year.  But elsewhere, there have been significant bounces in some of his holdings by more than 100%.  That is doubly the case on some of his recent holdings from this year where Buffett has invested higher up in the capital structure.

Carmax Inc. (NYSE: KMX) is a position of 12 million shares and it has seen two straight quarters of decline in his holdings.  Yet the used-car auto seller is now up a whopping 180% from its yearly lows now that the stock is over $16.00.

General Electric Co. (NYSE: GE) scored Buffett as an investor as we covered back on October 1, 2008.  It did a big raise, but sold $3 billion of preferred stock to Warren Buffett’s Berkshire Hathaway Inc. (NYSE: BRK-A).  That was looking like a loser bet in March and it is still way down.  We cannot calculate the 10% preferred rate value of preferred shares with an exact figure because those are private securities, but there has been a 50% bounce in some of the related securities.  Buffett does own GE some 7.77 million shares of common stock as well,  and GE is this afternoon up over 120% from the year lows.

Gannett Inc. (NYSE: GCI) is one of these smaller Buffett positions he owns that we think he could just unload.  But this one has recovered handily despite its troubles.  This stock has recovered over 270% from its year lows.

Ingersoll-Rand (NYSE: IR) is one of the sleeper stocks which Berkshire owns in industrial and commercial products and they hold almost 7.8 million shares of the common stock.  With shares back over $29.00 it has now recovered by a sharp 150% from its yearly lows.

USG Corp. (NYSE: USG) is one you might guess is up huge from the lows because of its sheet rock and home building exposure.   Buffett has plenty of this stock and higher in the capital structure, but we have just over 17 million shares as of its last report date.  With this one up over $14.00 today, this is up a whopping 235% from its yearly lows.

Many of these other Buffett and Berkshire stakes are up 80% and 90%.  You can always see the full list of holdings HERE.   As always, you can join our open email distribution list we send several times per week with new Buffett changes, secondary offerings, IPO’s, mergers, key analyst calls, and other special situations.

JON C. OGG
JULY 31, 2009

How frequently has Warren Buffett  been bashed by the media over Berkshire Hathaway Inc.’s  (NYSE: BRK-A) lackluster performance ?  What was interesting to see is his stake being lowered in Moody’s Corp. (NYSE: MCO).  The only thing that was surprising to us was that it took the Oracle of Omaha this long to begin selling these shares.  Because Buffett is such a large stakeholder, we do expect that he’ll always hold some shares.  Conversely, we think he’ll continue to lighten up his stake in Moody’s.  Along those lines, we reviewed Buffett’s holdings and found several more stocks that he might want to consider selling some or all of his stake.

Some of these positions could include ConocoPhillips (NYSE: COP), Constellation Energy Group, Inc. (NYSE: CEG), Gannett Co. Inc. (NYSE: GCI), Washington Post Co. (NYSE: WPO), M&T Bank Corp. (NYSE: MTB) and WABCO Holdings (NYSE: WBC).  There are others, such as his stakes in drug and health care sectors that could have been mentioned, but those big directional bets may have to wait until after health care reform is enacted.   As you will see, we listed the reasons that Buffett should or could cut the stakes.

On the Moody’s (NYSE: MCO) model, the new regulation is going to create a crippling impact on its business.  Being paid by a company or a municipality to analyze and rate that same entity is a conflict of interest.  That is what penny stocks have gotten in trouble for time and again. New regulation is going to keep these firms from doing some of the added consulting business, and that is going to bite down on these ratings agencies.  And missing the whole mortgage blow-up?  Moody’s can’t exactly call a do-over and it cannot claim they were misled by every aspect of the chain when they handed out all those Triple-A ratings for some of the junkiest classes of CDO’s and other securitizations.  Frankly, the only positive development here is that Moody’s and the other ratings agencies were not abolished.  They still have relevance, but they arguably have a much smaller revenue stream on the surface.  So we wanted to apply some of the significant changes in industries and companies that Buffett holds inside Berkshire Hathaway to see which companies Buffett should clip down.  The writing was on the wall for so long that shares fell by more than two-thirds in less than 18 months.  We think Buffett will be taking this stake down considerably.

Based upon the market of late, share prices alone cannot be the only yardstick used to measure these.  Particularly since Buffett believes you want to be greedy when everyone is fearful.  These stake sales could even raise capital if Berkshire needs it.  With all the calls for a second stimulus package, we took this as a signal that Buffett was guiding down operational forecasts for what to expect inside his operating companies and in many of his holdings.

The first and most likely position Buffett could cut is ConocoPhillips (NYSE: COP).  We already noted in his last report of full holdings that Conoco is really lower than the 71.228 million reported.  Buffett even came out and said he made a huge mistake and this stock was going to be used for cutting taxes.  To us, the only question comes down to whether the Oracle of Omaha cuts the stake down to under 20 million shares or if he pulls the plug on the entire lot.  Frankly, this one does offer significant upside if and when energy prices return to loftier levels and we think Buffett should hold on to the stake.  The issue is that he’s already said he’ll probably more of these shares even if they rise.  Buffett could still capture another $2 billion in capital here if he just took his stake down to right under 20 million shares.

Constellation Energy Group, Inc. (NYSE: CEG) has been a fluke of a stock for Berkshire.  Buffett won this as a poker game collateral pledge after Berkshire Hathaway’s MidAmerican Energy tried to buy Constellation.  It received about 20 million shares in the break-up as a deal termination fee after Constellation went with a rival deal from EDF from France in a joint venture instead.  Buffett has already cut this, and we saw filings showing this was a smaller stake of about 12.4 million shares rather than the 14.8+ million as of the last filing date.  In the Constellation stake, Buffett could bring in roughly $365 million in new cash.

Gannett Co. Inc. (NYSE: GCI) and Washington Post (NYSE: WPO) are in the same boat.  Buffett made a media bet and he has been riding a horse than cannot or has not been able to fight the tide.  He has even panned newspapers and some traditional media in an interview as having a model that is on a race to zero.  If this is true then the only question is why Buffett has stuck with these.  It is not as though Buffett needs them to stay friendly to Berkshire Hathaway.  On the Gannett stake, that is 3.447 million shares that would fetch some $20.3 million today.  Frankly, that small of a stake is not worth his time even if he thinks media is coming back.  The Washington Post stake is more interesting because it has held up better than most in media because it has education sales rather than just pure media. Berkshire entities hold over 1.72 million shares, so this could raise almost $700 million.  While we list this here as ones that Buffett could sell, the old guy might have a change of heart and buy more while these are at basement prices.  With Buffett owning Business Wire, does he need the content side when he owns the premiere distribution side?  The estimated intake from these two today would bring in $720-ish million in cash.

The 6.71 million shares of M&T Bank Corp. (NYSE: MTB) listed under Berkshire Hathaway’s holdings is one that M&T’s management probably does not appreciate us calling out as a sell-candidate for Mr. Buffett.  In fact, we have no call against M&T personally nor do we have anything against it today even as a stock on a standalone basis.  The problem here is that Buffett’s circa-$390 million value in this holding is dwarfed by a $7.25 billion stake in Wells Fargo.  With his other banking and financial holdings, Buffett’s need for this one is not apparent.  We have heard Buffett talk about Wells Fargo over and over as a great bank but have not heard a peep about M&T in any recent years.  Add in his recent deal with Goldman Sachs, and that will leave you with Buffett’s new model in investing in financial institutions.  The sale of this stake would allow Buffett to bring in close to $390 million.

WABCO Holdings (NYSE: WBC) is still a 2.7 million share stake.  The company is tied to autos, but not entirely tied to the US-auto sector.  It is primarily in safety and control systems for commercial vehicles,  particularly on breaking systems.  The market cap is a mere $1.3 billion, so the question to ask is just how much Buffett and friends can pocket here even if this is the Holy Grail in the commercial auto parts sector.  This “Berkshire Sell” notion is not tied to the auto sector, but we just don’t see how this stake is worth Mr. Buffett’s time or effort.  If he wants to have exposure in various aspects of the auto sector, he could go into one of the larger government-backed or one of the other players and invest higher in the capital structure.  If Buffett were to cut this one out of his portfolio, he’d bring in roughly $54 million in cash.

Let’s pretend Buffett unloaded all of these positions.  The tally in just these positions would raise close to $3.5 billion in cash.  Some of these positions are essentially legacy positions.  Buffett has also been going higher up into the capital structure in many of his recent investments so he is above the common stock holders.  He could immediately use the funds to buy more of some other smaller holdings he would like to add to.  Or he could add it into the till for that “whale of a deal” he had previously telegraphed that he would like to pursue.

You can always join our open email distribution list to get reminders about Buffett, IPO’s, mergers, secondary offerings, daily analyst calls and more.  As always, here is the full list of Buffett holdings.  We expect that to change in roughly three weeks.

Jon C. Ogg
July 27, 2009

Reuters:   Airline on-board entertainment systems face competition from handheld devices like the Apple (AAPL) iPod.

Reuters:   Bernanke will be on PBS to take his message about Fed plans to a broader audience.

Reuters:   Some Democrats oppose the current healthcare plan.

Reuters:   More foreign executives are heading to China as its economy expands.

Reuters:   Aetna (AET) would like to get out of the business of selling drug benefits.

Reuters:   Apple (AAPL) and record labels are working on a plan to increase album sales.

Reuters:   Barron’s says Citigroup (C) shares could double by 2012.

Reuters:   Ericsson (ERIC) bought Nortel’s wireless assets for $1.13 billion.

WSJ:   Lending by large banks slowed in Q2 as concerns about risk remained.

WSJ:   The new “pay czar” will attempt to renegotiate deals with high paid employees at companies with federal aid.

WSJ:   Insurance companies may be taxed on their most expensive policies.

WSJ:   Corporate bond sales are surging as the market improves.

WSJ:   TV networks are giving lower ad rates.

WSJ:   Video game makers are being hit hard by the recession.

WSJ:   Earnings results could spur IPOs.

WSJ:   GDP data may indicate an upturn.

WSJ:   Microsoft (MSFT) may offer rival browsers in Europe to settle disputes with EU regulators.

WSJ:   US guarantees of bank debt issues will save the firms $24 billion in borrowing costs over three years.

NYT:   Researchers are trying to learn why some people do not look at Internet ads.

NYT:   Lawmakers are trying to curb drug commercials saying they cause patients to pressure doctors.

NYT:   Gannett (GCI) is cutting severance pay.

FT:   Europe lenders are bracing for US style credit card defaults.

FT:   Emerging markets are rushing to buy back their debt.

Bloomberg:   Real yields are the highest they have been since 1994.

Douglas A. McIntyre

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Gannett Co. (NYSE: GCI) topped expectations for its second-quarter earnings Wednesday as it reversed a loss from a year ago.

Gannett, the largest U.S. newspaper publisher, showed a significant profit in the second quarter despite a continuing decrease in advertising revenue. Its shares jumped 19 percent in premarket trading.

Gannett, which publishes USA Today and other daily newspapers, reported a profit of $70.5 million, or 30 cents per share. A year ago, the company suffered a loss of $2.29 billion, or $10.03 per share, when the company took a hefty write-down on its declining market value.

Excluding special items, Gannett posted adjusted earnings of 46 cents per share, exceeding the average analyst forecast of 36 cents per share, according to Thomson Reuters.

Revenue in the latest quarter fell 18 percent to $1.41 billion, below analysts’ projection for sales of $1.46 billion.

Ad revenue in Gannett’s publishing division, which includes more than 80 U.S. daily newspapers, dropped 32 percent. That was slightly better than in the first quarter, when the unit posted a 34 percent decline.

Gannett’s stock shot up 67 cents, or 19 percent, to $4.16 ahead of regular trading. The shares remain near the low end of their 52-week range of $1.85 to $21.68.

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There is still some conversation about the federal government restricting short-selling activity in certain stocks. The counterargument to these restrictions is that short selling plays an important role in the valuation of securities by efficiently allowing investors to bet that a stock will fall as readily as they can bet that it will rise. Short sellers have the reputation, whether deserved or not, for trying to manipulate information about public companies with the hope of driving their prices down. That may be true.

24/7 Wall St. has come up with a list of the best short-selling opportunities between now and the end of the year. The list was chosen based on: 1) trading volume, 2) the total short position in the stock over the first half of the year, 3) a history of the short position in these stocks rising or falling rapidly, and 4) stocks in companies that tend to move on news throughout the year and not just on earnings information.

Barron’s published a list of five companies “to bet against now.” The firms came from recommendations from Short Alert, a research firm. The reasons for each company being a candidate for shorting are compelling, but the firms have small floats and modest market caps, meaning that once the readers of the financial weekly have taken short positions and the story has driven the stock prices of the companies down, the opportunity to make money will be gone. Many of the firms on the 24/7 Wall St. list trade over 10 million shares a day, and several average over 25 billion. Most of the companies on the 24/7 list also have market caps in the tens of billions of dollars and there are corporations on the list that have stock market values over one hundred billion.

1. Citigroup (C) is a nearly perfect proxy for trading the trouble in large financial institutions and its short interest shows that. As of June 15 according to NYSE data, there were 1.244 billion shares sold short in Citigroup, the largest short position in any public company, and it had an average daily trading volume of 220 million shares a day. The bank’s price volatility makes it even more attractive. The stock dropped from over $7 at the beginning of the year to below $1 in March and then rebounded to more than $4 in April. The shares now trade just below $3. The constant rumors about the fate of Citi’s CEO, the banks potential losses, and sales of its assets can cause the stock to take huge swings in a matter of a day.

2. Ford (F), the only publicly traded US car company stock, is the single way for investors to play the domestic automotive sector. The shares have recently run up sharply as Ford has improved its market share, but the short position in the stock is still over 135 million shares and the stock trades almost 95 million shares a day. The short interest in Ford is so active that shares sold short moved up 17% in the latest period. News about consumer confidence, consumer credit, and car sales trends all move the stock which traded at $1.58 in February and has moved above $6 in the last several days.

3. Home Depot (HD) is a way for investors to play both the housing and retail sectors. Short interest in the stock was more than 58 million shares as of June 15 and Home Depot trades an average of 16.6 million shares a day. The stock has been through a series of significant swings this year from more than $25 in January to $18 in March. Home Deport moved up to $26 in May as the market believed housing was at the very early stages of a recovery. The stock moved back to $22 as those hopes slipped away. The constant barrage of data on housing starts and prices and trends in consumer spending will keep Home Depot shares subject to daily swings of 3% or 4%.

4. Las Vegas Sands (LVS) is a way for investors to play the US gambling industry. It is also a way to trade the movement of gambling into Macau. The casino company may spin off its Macau assets in an IPO. Las Vegas Sands has been used as a proxy for part of the junk debt markets. The company has $10 billion of high risk obligations on its balance sheet. Billionaire Sheldon Adelson is CEO of LVS, which gives the company a well-known face. A huge 19% of the shares in Las Vegas Sands are sold short and the total short interest is 60 million shares. The stock is subject to remarkable fluctuations, a short-seller’s dream. It traded early in year at $8.48, dropped to $1.42 in mid-March and recovered to more than $11 in May and now trades just above $7.

5. Gannett (GCI) is the largest newspaper chain in America and shorts use it to make investments in the faltering industry.  Gannett traded at almost $9 at the beginning of the year. Bad results from the industry and a sell-off in the market pushed it below $3 at the beginning of the second quarter. Gannett’s price was also hurt when the company cut its dividend. Gannett shares shot to $4 when Ariel Investments doubled its investment in the newspaper company in early April. The stock continued to rally for a month and pushed above $5. Recent news of layoffs and weak earnings has knocked the stock back to $3.30. Seventeen percent of Gannett’s shares are sold short and the total short interest in the stock is 40.4 million shares.

6. Sirius XM (SIRI) continues to be one of the most active shorts, leading all Nasdaq stocks in shares sold short with at total short position of 165 million shares on June 15. Average daily trading volume is 22 million. Sirius is still a penny stock, trading at $.44 up from a 52-week low of a nickel. After nearly going bankrupt early in the year. The satellite radio company recently raised $525 million at an 11.25% interest rate making it a good way to trade the junk debt market. Subscriber growth, the key to the company’s future, has slowed. The price charged to customers recently went up because of an increase in the U.S. Music Royalty Fee. Sirius shares are affected by monthly car sales numbers because new vehicles are Sirius’s largest source of customers.

7. Merck‘s (MRK) shares can be moved by patent expirations, generic competition, FDA announcements of drug side-effects, and its acquisition of Schering-Plough. Its stock is also subject to trading based on news from the Big Pharma and biotech industries and the Administration’s new healthcare plans. Merck is the sixth most shorted stock among all companies listed on the NYSE. There are 164 million shares short in the company and daily trading volume is almost 20 million shares. Merck’s stock has been as high as $31 this year and as low as $20.

8. Nokia (NOK) is the best way to trade the global handset business and to some extent the cellular industry in general. The firm sells 38% of all handsets purchased worldwide. It has relationship with virtually every carrier in the world. The stock dropped from a 52-week high of over $28 to $8.47 as worldwide consumer spending collapsed and cell phone sales contracted for the first time in years. Nokia sells extremely inexpensive handsets in emerging markets and expensive smart phones like its new N97 which retails for almost $700 which makes it a play in emerging and developed cellular markets. Short interest in Nokia is 49.3 million shares up a considerable 31% in the most recent period. The stock trades over 19 million shares a day.

9. JetBlue (JBLU), like the rest of the airline industry has gone from being in awful shape a year ago when oil moved about $140 a barrel to reasonably good shape as oil fell at the beginning of 2009 and then back into trouble as the recessions has decimated demand for airline seats. JetBlue’s shares dropped to close to $3 a year ago and recovered to almost $8 at the beginning of this year. Recently, they have traded below $4 and news from the industry about fuel prices and passenger demand could push the stock even lower. The short interest in JetBlue rose almost 60% in the most recent period and there are now over 31 million shares sold short in the company. Average daily volume is 17 million shares.

10. Microsoft’s (MSFT) stock is the broadest proxy for hardware sales, software sales, and Internet revenue among any shares traded on any exchange in the world. Short interest in Microsoft was almost 71 million shares in the latest measurement period, up a substantial 24%. Trading volume averages 55.8 million shares. A year ago, MSFT shares traded over $28, but a combination of poor earnings, weak sales of its Vista operating system, and layoffs pushed the stock down to $15 in the spring. The stock is currently back above $23. Microsoft’s shares are likely to move up or down very substantially in the next few months. Its new Bing search engine appears to be taking market share from Google (GOOG) and Yahoo! (YHOO) after the world’s largest software company struggled for years to get a foothold in the sector. Any permanent improvement in Bing’s market share would be a breakthrough. The early effects of Bing’s launch could sputter and Microsoft’s efforts would be seen as another expensive failure. The company’s new Window 7 operating system will be widely release in October and the market will be making its bets about whether the product will be a success or a modest failure like its predecessor Vista. Any recovery of global PC sales would also help Microsoft.

11. Starbucks (SBUX) is a cult stock and its market following is not justified by the size of its sales. Shares short in the most recent period were almost 39 million shares, an increase of 18%. The Sisyphean efforts of CEO and founder Howard Schultz to get the company back to its glory days also attracts investors that might otherwise find the company uninteresting. It is hard to imagine that Starbucks traded over $40 in late 2006 and then fell to just above $7 earlier this year. The stock trades over $13 today. The market watches Starbucks pricing, its product decisions, and its competition such as McDonald’s (MCD) extremely closely. The shares are quite volatile.

12. Dell (DELL) has a large short interest because so many traders think it will do badly. So far the company has not disappointed them. Shares sold short in Dell are 52.5 million up 31% in the most recent period. Average daily volume in the stock is more than 26 million. Dell is not only traded on the basis of global PC and servers sales; it is also pushed down by its dwindling market share. The company has gotten increased scrutiny lately because of plans to enter the handheld electronic device business, probably two years too late to make any difference. Dell’s shares have rebounded, based on a belief that PC sales will improve later this year, but its 30% rise makes it a logical target for short sellers.

13. Citigroup may be a good proxy for troubled money center banks Fifth Third (FITB) is an equally solid one for large regional banks that took TARP money. Fitch recently downgraded the firm’s long-term issuer default rating to “A-“ from “A.” The bank operates in the Midwest where business failures tend to be high and real estate values are falling. FITB is the 10th most shorted stock among companies listed on Nasdaq despite its diminutive size. It has 51.3 million shares outstanding and which is 9% of its float. The stock trades 39 million shares a day, an extraordinarily high number for a modest-sized financial firm. Traders looking for wild prices swings will find them trading FITB shares. The stock was over $8 at the start of the year, dropped to $1.01 in February and has recovered to $6.88. It is not unusual for the stock to trade over 100 million shares in a day.

14. Palm (PALM) has gone from being the most reviled company in the smart phone business to becoming the industry’s “comeback kid.”  Along the way it has burdened itself with a poor balance sheet and launched its much-anticipated Pre, a competitor, either worthy to stand up against the Apple (AAPL) iPhone or not, depending on your point of view. Palm’s market cap is only $2.2 billion but the short interest in the company’s shares is 38.3 million shares, which is a high 30% of the float. It is no wonder. The stock trades at $15.75, near its 52-week high and up from a 52-week low of $1.14. Palm has done a good job of promoting the Pre’s prospects and American sales though Sprint (S) got off to a good state. Recent comments from Pali Capital are that Pre’s sales have started to fall apart.

15. GE (GE) is the fourth most shorted stock among companies traded on the NYSE. It is no surprise. GE is a one-firm basket of infrastructure, industrial, manufacturing, medical devices, and financial services assets. Investors interested in the market success of “green” initiatives can also look at GE as a way to track environmental improvement products and services. GE’s earnings have been lackluster over the last year. It hit a wall on Wall St. over concerns about the potential of huge losses at its financial services operations. GE has said that this is not a significant or disastrous problem, but the firm’s stock price indicates that investors have not become comfortable with that. There were 151.3 million shares sold short in GE as of the last measurement date. GE trades 68 million shares on an average day and has one of the highest market caps of any company in the world at $121 billion. GE traded above $42 in late 2007 and dropped to $5.87 earlier this year due to panic about its financial services operations. A drop in stock price of a mega-cap company which was both that large and that fast is unprecedented. The shares have not recovered much and trade at $11.46.

Douglas A. McIntyre