Video of Annual Whitman Day: Breakfast Panel with Martin J. Whitman

http://whitman.syr.edu/Videoarchive/video.aspx?vid=e01174f2-0ae7-4fde-9869-082ff068e6f7

Title: 5th Annual Whitman Day: Breakfast Panel with Martin J. Whitman and Richard Haydon
Duration: 0 hours, 51 minutes, 41 seconds
Description: Collectively, Martin J. Whitman ’49 BS and Richard Haydon ’66 BA (A&S) have a century of Wall Street experience—and that fact is evident in the wisdom and insight revealed in this wide-ranging panel discussion. Whitman, founder and co-chief investment officer of Third Avenue Management, and Haydon, a managing director with Neuberger Berman, treat members of the Central New York financial community to a no-holds-barred conversation on investing and current economic developments, including the housing/mortgage crisis, the concerted raid on Bear Stearns, and green investments. The discussion was moderated by J. Daniel Pluff, host of WCNY’s “Financial Fitness." The breakfast panel was part of the 5th annual Whitman Day celebration in the Whitman School of Management.Date Produced: 4/2/2008
Genre: Panel discussion
Keywords: Martin J. Whitman, Richard Haydon, Whitman Day, Financial Fitness, Third Avenue Management, Neuberger Berman, Wall Street
Copyright: Syracuse University Whitman School of Management

Canadian Natural Resources

I want to recommend CNQ.

A Canadian based senior independent energy company engaged in the acquisition, exploration, development, production, marketing and sale of crude oil, NGLs, natural gas and bitumen production.

One of Canada's largest natural-gas producers, the company also produces conventional crude oil in Canada, the U.K. North Sea, and West Africa. These assets have the potential to expand from today's production levels of approximately 1,650 mmcf/day of natural gas and 330 mbbl/day of conventional crude oil and natural gas liquids (NGL).
Growth on the HorizonPhase 1 of the Horizon project is set to start producing synthetic crude oil (SCO) from the tar sands in Northern Alberta. Once fully up to speed, phase 1 is expected to produce around 230,000 barrels/day. Initially, the cost of production will be close to $30/barrel, but over the lifetime of the Horizon project, the company estimates that the costs will fall closer to $20/barrel. Over the years, the company intends to expand its production to 500,000 barrels/day. At today's oil price of over $90 per barrel, the economic opportunity is simply staggering.

Lessons from Bear Stearns

We should take a careful look at story of 85-yr old investment firm Bear Stearns (BSC) to learn great portfolio management lesson.
BSC 1-year share price history:

04/25/07 - $159.36 per share
03/17/08 - $2.00 per share (sold off to competitor)
In particular, for us in Tyumen value investors group, we need to better understand bank stock valuations, allocation and securitizations of balance sheet assets before adding positions in financials. We also need to take second look at capital ratios, derivatives trading activity, off-balance sheet deals and corporate greed aspects all of which accentuate the need to adopt down-to-earth attitude towards downside risk management.
Quotable Quotes:
i. Buffett commenting on derivatives trading in 2003
1." complex financial instruments are time bombs and "financial weapons of mass destruction" that
could harm not only their buyers and sellers, but the whole economic system" ///2.."The derivatives business is like hell - easy to enter and almost impossible to exit"
ii. Alan Greenspan writing in Financial Times, 2008:
1. "Comtemporary risk management models are inadequate and cannot be relied upon to predict the systemic risk"///2.. "The full extent of hidden bank losses remain unclear as long as the US housing sector continues to deteriorate, further erosion of the valuation of asset-backed securities are possible"

GE CEO Jeff Immelt buys $2million of stock with own money

GE's Immelt buys $2 mln in shares on open market
Reuters - March 11, 2008 2:51 PM ET

NEW YORK, March 11 (Reuters) - The chairman and chief executive of General Electric Co (GE) reported on Tuesday that he bought about $2 million worth of the conglomerate's common stock on the open market.
The CEO, Jeffrey Immelt, bought the 62,000 shares earlier Tuesday at prices between $32.74 and $33, according to a filing with the U.S. Securities and Exchange Commission.
The transactions increased Immelt's direct holdings by 4.5 percent to 1.36 million shares. Last month, Immelt bought 90,000 shares at about $33.42 each.
GE shares set a 52-week low of $31.65 on Monday. They were up $1.46 to $33.16 Tuesday on the New York Stock Exchange. (Reporting by Nick Zieminski; editing by Jeffrey Benkoe)

Investors must remain patient and calm

I want to remind our members again that we have to remain steadfast, calm and patient.
Patience in the face of risk, volatitilty and temporary impairment to portfolio values.
In fact we have just seen some screaming buys in the last 3 weeks. For example GE selling at around $33.00, SLB briefly below $75. These are companies with very wide competitive moats in their respective fields, and are poised to give long-term investors very exciting returns.
In investing, the physchology quotient is as important as the intelligence quotient and patience is a key attribute of the physchology for successful investing.
I deliberately have not written for a while on this blog. Sometimes we just have to relax and let time do its part of the work - Kunle

The Market Falls – So What “The Essays of Warren Buffett”

Dear Fellows Value Investors,

All of us are looking how the finance stocks continue falling and everyone is wondering how deep the dust might be… Reading “The Essays of Warren Buffett” (Chapter II, Corporate Finance and Investing), you will feel free to overview the falling rates, but recover fast when panicking.

As you already know, Buffett learned a lot about Mr. Market from Ben Graham. His definitions are full of humors and that makes it easier for us to keep in our mind the main moods of the stock market (I cannot say it better J):…“the poor fellow has incurable emotional problems” (as per “The Essays of Warren Buffett”, by Lawrence Cunningham, p.68).

It feels:

- EUPHORIC = getting too optimistic and sees just those changes, possibilities, etc. of business and environment, which are suitable to his strategy => very high price

- DEPRESSED = getting too pessimistic, percepts just risks and problems of the environment => very low price)

- DOES NOT MIND BEING IGNORED: more balanced mood, waiting of you to accept his conditions (prices), as there is a seller and buyer at any rate, and both live on this kind of cooperation.

-

The rates, that Mr Market is offering us are challenging, but our perception shall be as of “interesting information”. We shall stay focused on analyzing first, so that we recognize the good business and good margin of safety, whenever Mr Market is offering us a “good price”.

“So smile when you read a headline that says, “investors lose as market falls”. Edit it in your mind to, “Disinfectors lose as market falls – but investors gain.” (p.71).

“When we own portions of outstanding businesses with outstanding managements, out favorite holding period is forever. We are just the opposite of those who hurry to sell and book profits when companies perform well but who tenaciously hand on to businesses that disappoint. Peter Lynch aptly likens such behavior to cutting the flowers and watering the weeds” (as per “The Essays of Warren Buffett”, by Lawrence Cunningham, p.80).

* All citations are from the book “The Essays of Warren Buffett”, by Lawrence Cunningham