In recent weeks, there has been some speculation that Li Lu may be a potential candidate for Chief Investment Officer at Berkshire Hathaway (BRK.A) once Warren Buffett retires. Berkshire Hathaway’s succession plans call for Warren Buffett’s job to be split into two roles. The new CEO will have ultimate responsibility for Berkshire Hathaway and one or more investment officers will have oversight responsibility for investment operations and will report to the CEO. Who is Li Lu? Acc
Lost in the wake of recent weeks’ market excitement was this article in the Wall Street Journal [$] detailing the REIT industry’s effort to persuade investors to allocate more real estate investment dollars in the public market via REITs. REIT supporters lament the possibility of losing capital to private equity firms under false assumptions that private equity generate better returns. In addition, they also decry the pension-fund advisers for putting fees above their clients’ interest.
Real estate, private equity and institutional advisory services were prominent topics of David Swensen’s seminal book, Pioneering Portfolio Management (see my review of this book). David Swensen, the influential architect of Yale University’s endowment fund investment strategy, de-emphasizes liquid stock and bond investments in favor of illiquid areas such as real estate, private equity and commodities.
Warren Buffett was highly critical of Kraft’s (KFT) acquisition of Cadbury (CDSCY.PK) throughout the takeover process. It is therefore not entirely surprising to learn that Berkshire Hathaway cut its stake in Kraft by nearly 23 percent during the first quarter. It is not common for Mr. Buffett to openly criticize managers so it was all the more notable to hear him say that the deal made him feel poorer, particularly due to the “dumb transaction” involving the sale of Kraft’s pizza business to fund part of the acquisition.
In a 13F Filing with the Securities and Exchange Commission Monday afternoon, Berkshire reported holding 106.7 million shares of Kraft as of March 31, 2010 compared to nearly 138.3 million shares on December 31, 2009. In addition to the sale of Kraft shares, Berkshire liquidated shares in several other companies and added to positions in three companies. No new
Yesterday, I added to my position in PowerShares Financial Preferred Portfolio ETF (PGF).
Financials are getting priced for another Armageddon. Some predict complete breakdown of eurozone, some even think that end of EU is nigh. Ain’t gonna happen. EU and eurozone will be here tomorrow, a month later and a year later. With all its problems, with all the trade unions pressure and riots and other problems, the 
majority of the population in EU countries understand that without the EU their countries are in much worse shape. They will keep it whole.
I’m holding PGF as a way of cash management. With an 8% yield, paid monthly, it’s a great tool to hold your cash. The price of PGF shares in normal times is close to $25, which is a usual buyout price of preferred shares of banks. So when I have some extra cash and have no idea what to do with it, I buy PGF or something similar.
American Express Company (AXP) and UK-based private equity house Permira are jointly bidding for Royal Bank of Scotland’s (RBS) payment processing division, the Financial Times reported yesterday. If closed, the deal could raise around $3.6 billion.
The experience of AmEx in processing payments for millions of customers could help the RBS division to expand in emerging markets.
AmEx’s cash position showed a balance of $21.0 billion as on March 31, 2010, amply demonstrating the financial capability of the company to participate in the bid.
AmEx made the significant acquisition of Internet-based payment service provider Revolution Money in January 2010. This deal is expected to provide AmEx an innovative technology platform to extend its leadership beyond the traditional payment fields. During the first quarter of 2010, the company also returned $216.0 million in dividends to shareholders.
The company’s liquidity plan helps it overcome financial obligations. Its f
Improved NAHB Housing Market Index, but the reading remains depressed. TARP Dividend Payments were due on Monday, May 17th. Risk Aversion continues but was giggled by a euro rebound.
The National Association of Home Builders Housing Market Index increased three points in May to 22, but the index needs to be above 50 to be considered a game changer. The reading is the highest since August 2007, but the homebuyer tax credits expired at the end of April so sustaining this improving trend will be difficult in the months ahead.
As you might expect homebuilders experienced a trading bounce on the better than expected NAHB data, but it was subdued as shown by the daily chart of the Housing Sector Index (HGX). HGX is trending below its 50-day simple moving average at $116.34 with risk to the 200-day simple moving average at $106.37.
“Collateral Damaged: The Marketing of Consumer Debt to America” by Charles R. Geisst is a detailed and captivating examination of the history and growth of consumer debt in America. The book scrutinizes the political, cultural, social, and financial forces that converged to inflate America’s tremendous bubble in consumer credit. Geisst reaches all the way back to the debt problems of King Edward III and beyond to begin his historical review. Every step of the way forward, Geisst describes the various innovations lenders have created to bypass usury laws, to create credit and expand debt levels, and to extract profits even from borrowers least capable of servicing their debt. This process transformed America’s treatment of debt from an onerous burden to a necessary evil to a miraculous treasure chest of opportunity to live beyond one’s means.
The book starts off slowly and a bit choppy given the large expanse of history that Geisst flashes across the pages. Geisst is
In an investors’ conference last week, Wells Fargo & Co. (WFC) disclosed that it is aiming for a 10% growth in revenues per annum. The investors’ conference of Wells Fargo which happened for the first time in the last 12 years saw the management detailing the company’s past performances and future opportunities.
Wells Fargo’s 10% per annum revenue growth expectation is based on its cross-selling strategy. The company plans to achieve this growth by applying its legacy Wells Fargo cross-selling model to the Wachovia customer base.
Wells Fargo’s wealth business also aims to increase its share in the company’s total revenue. This division, which now accounts for around 14% of the company’s total revenue, plans to boost the contribution to the range of around 20% to 25%, with an increase in client assets by 20% to $1.5 trillion in the next three years.
The integration of merged Wachovia remained on track and is expected to realize $5 billion of annual merger-related savings upon completion of the integration process in 2011. The company h
