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 Notes from Marin Of Safety (Seth Klarman) by Safalniveshak.com

 The dwindling supply of homes on the market and a surge in million-dollar housing activity sent the Houston-area median home price into record high territory in April, a new report shows.

The median — the figure at which half the homes sold for more and half for less — jumped 14.5 percent to $184,900, according to the Houston Association of Realtors, which tracks properties sold through the Multiple Listing Service. April marked the second  month in a row the median hit a record high.

“The Houston housing market shows absolutely no sign of letting up,” the association’s chairman, Danny Frank, said in a statement. He said more listings and additional home building are needed to meet the growing demand fueled by the healthy job market.

Single-family home sales last month spiked 27.2 percent over April 2012, marking the 23rd straight month of positive year-over-year sales. Townhomes and condominium sales shot up 31 percent.

As the demand continued, so did the constrained inventory, which dwindled to 3.4 months. That was the lowest level since 1999 and far below the six months experts consider a balanced market. Active listings, or the number of available properties, at the end of April declined 23.6 percent from April 2012 to 32,498.

Buyers closed on 6,482 single-family homes, representing the largest one-month sales volume recorded since August 2007, right before the recession took hold. All housing segments experienced gains except for the low end. Here’s the breakdown:

• Up to $79,999: decreased 16.5 percent
• $80,000 – $149,999: increased 14.1 percent
• $150,000 – $249,999: increased 36.0 percent
• $250,000 – $499,999: increased 49.5 percent
• $500,000 – $1 million and above: increased 68.3 percent

http://blog.chron.com/primeproperty/2013/05/median-home-price-hits-all-time-high/

BP BP +0.16% was Baupost’s largest holding at the end of the first quarter, according to regulatory filings and FactSet Research.

Klarman’s fund added more than 6 million shares in the January-to-March quarter. It held more than 17 million shares, worth about $730 million, at the end of the period.

Barrow, Hanley, Mewhinney & Strauss LLC, based in the Dallas-Fort Worth area, added the most BP shares last quarter, buying nearly 10 million, but BP is not among the fund’s top 20 holdings.

Besides BP, Baupost added to positions at AIG AIG +0.16%, Rovi Corp.  ROVI +0.16%, Idenix Pharmaceuticals IDIX , and Guyana Goldfields CA:GUY +2.21% in the first quarter, according to regulatory filings.

Baupost’s biggest sector holdings — nearly 20% — are in health technology, and 17% in energy and minerals. The fund added BP to its holdings in 2011 and has tweaked its stake here and there.

An article in The Economist magazine last year called Klarman “the oracle of Boston,”a manager with “a low profile and big following.” His fund has long been closed to new investors.

Klarman’s book, “Margin of Safety: Risk-Averse Value Investing Strategies for the Thoughtful Investor,” published in 1991, is out of print and sells for more than $2,000 on Amazon, new. Used copies will set you back at least $1,000.

Rumor has it that electronic copies circulate on trading floors, and that the book is one of the most stolen from libraries.

Shares of BP have risen 15% in the past 12 months and 3.2% year-to-date.  That compares with 9.8% so far this year for the energy companies on the S&P 500 Index.

BP is still wrestling with fallout from the 2010 Deepwater Horizon rig explosion and oil spill in the Gulf of Mexico. BP was operator on the well. The explosion killed 11 workers and triggered the worst oil offshore spill in the U.S.

The second phase of a civil trial involving BP, Transocean Ltd RIG , which owned the rig, and Halliburton Co. HAL +0.27%, which did the well’s cement work, is scheduled for September.

 Last year, oil company BP launched its own unit tank train out North Dakota’s Bakken oil fields, and perhaps no one was more surprised by this development than Jeff Foshee, BP’s director of North America Rail Group. Foshee oversees the freight cars and lanes that carry BP’s oil, chemical, gas, asphalt, and other products by rail.

“I keep remembering the question about ethanol. That crude tank train — in the last 18 months, I’m not sure I’d be thinking of crude unit trains. And now we are at that point, and operating and growing,” Foshee told attendees at the January 2013 meeting of the Midwest Association of Rail Shippers.

The two-day meeting provided a chance for railroads and shippers to come together and discuss new developments, business challenges, and emerging trends facing the industry and its customers. Rail traffic has not yet rebounded to the peak year of 2006, but the volume is growing — although the mix of traffic has changed.

“I go back to 2000, and I think about where our economy was. Everybody thought that U.S. manufacturing would never, ever grow again. We were always going to be a consumer and services economy, which quite frankly didn’t have a great outlet for the U.S. railroad network,” Matt Rose, chairman and CEO of BNSF Railway, said. “But industrial products is now our growth engine.” Rose opened the event as its keynote speaker.

Industrial products grew from 16 percent of BNSF’s volume in 2006 to 18 percent in 2012, Rose said. Also up: petroleum (from 1 percent of volume in 2006 to 4 percent in 2012), and domestic intermodal (from 20 percent in 2006 to an impressive 24 percent of volume in 2012).

Commodities that have fallen on BNSF since 2006: international intermodal, coal, and forest products.

With traffic forecast to continue growing, BNSF will spend $4.1 billion this year on capital improvements, the highest amount the railroad has ever spent, Rose said. But he also called on the federal government to focus on improving infrastructure, develop a national freight strategy, streamline the permitting process for building new infrastructure, and refrain from introducing regulations that would hamper the industry’s ability to meet the demand for coal from other countries or curb domestic oil and gas production.

More track infrastructure, locomotives, and cars will help railroads become more flexible — a trait that is becoming more important to rail shippers, said Mark Davis, a senior analyst with Cleveland Research. Since the recession, shippers are keeping inventory levels at a minimum, and want to respond more quickly to changing market demands. The bottom line for transportation, Davis said, is that shipments are smaller, but more frequent.

Davis also said U.S. railroads will benefit in the next few years as more companies shift manufacturing from China, where wages are rising, to places like Mexico.

Flexibility will be the key to keeping crude oil shipments moving by rail, rather than pipelines, in the future, Davis said. The ability to divert trains to different destination points provides an advantage. Class I railroads have gone from originating 10,840 carloads of crude oil in 2009 to more than 203,000 carloads in the first 9 months of 2012 alone.

Drilling activity will continue, which will also benefit U.S. railroads. The depletion rates of wells in places like North Dakota are much quicker than established oil fields in locations like Saudi Arabia, Davis said, meaning producers will have to keep drilling more wells. And each drilling rig needs 40 freight cars of inbound material.

Meanwhile, high fuel costs and new regulations will continue shifting truck traffic onto rails. Whereas the focus for truckers at one time was on growing their franchise, now the focus is on profitability, Davis said. The result has been a shift away from national moves to shorter regional moves where backhaul opportunities will be more plentiful.

That trend has helped Florida East Coast increase its domestic intermodal business. The railroad gets about half its intermodal volume from CSX and Norfolk Southern at Jacksonville, but competes with truckers for the other half on a railroad that’s just 351 miles long, said Florida East Coast President James Hertwig.

Little backhaul potential exists in South Florida’s consumer market. Hertwig said for every four loaded containers going south, only one load moves north. Combine that imbalance with traffic congestion and driver shortages, and Hertwig says domestic truckers have become more inclined to give the railroad their Miami-bound loads at Jacksonville, rather than send their rigs and drivers further south. And with Florida East Coast’s multiple daily departures and terminals, containers don’t sit very long in Jacksonville waiting for the next train.

Railroad customers still say there are still challenges to shipping by rail, but the service is improving. “Our intermodal on-time service is 98.5 percent — that’s better than our over-the-road truck service,” said Shelli Austin, vice president of transportation at the shipping and warehousing firm of IDS Inc., where 75 percent of its traffic goes by rail. “I was a skeptic at first after seeing trucking. Now it’s the one thing I sell.”

“We’re finding people are accepting a longer transit time for the lower price,” adds Nancy Newbourne, director of logistics for Batory Foods, which uses intermodal to ship food ingredients from the Midwest to the West Coast.

Financial analyst Tony Hatch said railroads will not only see growth in shale oil-related moves (which is offsetting traffic declines in coal), but also a rebound in chemical shipments, which he considers “the most important” rebound. Hatch said the American Chemical Council estimates chemical companies are putting $30 billion of capital expansion in plants and terminals between New Orleans and Houston, which will provide huge opportunities for rail. “It’s basically already on the books, and we’re just waiting for railcars to roll on this.”

Not every emerging trend had a clear solution. Opinions differed as to which railroads or areas would see the most benefit from the Panama Canal’s widening in 2015. “Nobody knows where it’s going,” said Florida East Coast’s Hertwig, “but if you you’re not prepared for it, you’re not going to handle that business.”

Those words could have summarized the meeting in a nutshell. Opportunities for rail abound. But they’ll require flexible product offerings, reliable service, and better communication with customers to make sure their immediate needs and future demands are being met.

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Maverick, run by Lee Ainslie, added 23.6 million shares of MGIC Investment Corp. (MTG) in the first quarter as the stock almost doubled, according to regulatory filings. Billionaire John Paulson’s $18 billion hedge-fund firm acquired 17 million shares of MGIC and 8 million of rival Radian Group Inc. (RDN) 

Perry Capital, George Soros’s family office, and Blue Ridge Capital LLC also added stakes as some of the world’s largest hedge funds wager that companies seen as recently as last year to be on the verge of default, and whose debt is still junk-rated, will benefit from rising home prices and the government’s retreat from insuring home loans. Operating income before taxes for the industry more than doubled in the first quarter from the prior year, according to Moody’s Investors Service, as loan delinquencies declined to the lowest since 2008. 

“The mortgage insurance sector is a very good business right now,” said Bose George, an analyst at Keefe Bruyette & Woods in New York. “You’re getting returns in the high teens on new capital and there are barriers to entry.” 

Mortgage insurers cover losses when homeowners default and foreclosures fail to recoup costs. The coverage is typically required when homeowners make a down payment of less than 20 percent. Firms such as Philadelphia-based Radian and MGIC, in Milwaukee, received waivers from regulators to continue selling coverage after the housing bubble burst in 2007 and millions of homeowners defaulted. Losses pushed PMI Group Inc., Triad Guaranty Inc. (TGIC) and Old Republic International Corp. from the market. 

Survivors Thrive 
The survivors are now attracting capital as the housing market rebounds from the worst plunge in eight decades. Home prices jumped 10.5 percent in March from a year earlier, the fastest pace in seven years, according to CoreLogic Inc. Home sales probably rose in April to the highest level in more than three years, according to the median forecast of economists surveyed by Bloomberg ahead of figures from the National Association of Realtors and the Commerce Department. The proportion of home loans at least 90 days late or in foreclosure was 6.39 percent as of March 31, the lowest since the end of 2008, according to Mortgage Bankers Association data. 

MGIC rose 86 percent in the first quarter after losing 29 percent in 2012. Radian surged 75 percent, and nearly tripled last year. The companies’ prospects were bolstered when they sold shares and debt in the first quarter to replenish capital that was drained amid the financial crisis, said George. 

Recovery Exposure 
“People are looking for names that are still very exposed to improvements in home prices and improvements in mortgage credit over the next few years,” he said. “If you believe in a very strong recovery, the insurers remain the best way” to invest. 

Radian fell 0.5 percent to $13.62 at 4:15 p.m. in New York, paring its gain this month to 14 percent. MGIC added 1.5 percent to $6.16 and has climbed 14 percent since April. 

Sales of private mortgage insurance jumped 78 percent in the first quarter from a year earlier, according to Inside Mortgage Finance, as the U.S. scaled back its role in the market and home sales rose. Radian was the top seller, followed by American International Group Inc. (AIG)’s United Guaranty, MGIC, and Genworth Financial Inc. (GNW) 

The Federal Housing Administration has raised premiums to back mortgages, and some lawmakers have pressed the U.S. to further reduce its role in the real estate market. FHA and other U.S. programs accounted for 67 percent of the mortgage insurance market in the first three months of this year, down from 74 percent in the same period of 2012, Inside Mortgage Finance figures show. 

Regain Share 
“Our strengthened financial condition puts us in a position to regain market share,” MGIC Chief Executive Officer Curt Culver said on an April 30 conference call with analysts. “Returns on the new business are very strong and should continue to be so given the outstanding credit quality of the business.” 

Some funds are scaling back after the rally. Saba Capital Management LP, run by Boaz Weinstein, cut its MGIC stake by 87 percent from three months earlier to 1.2 million shares as of March 31. Jonathan Gasthalter, a spokesman for the New York-based firm, declined to comment. 

The companies also have debt ratings that indicate very high credit risk. MGIC, which lost its investment grade status in 2009, is ranked Caa3 by Moody’s, while Radian is two levels higher at Caa1. 

Too Optimistic 
Investors may be too optimistic about the prospects for a quick shift of the housing market from government backing to private capital, Jason Stewart, an analyst at Compass Point Research & Trading LLC., wrote in a May 1 note. 

“Assigning a value greater than $5 to MTG shares today is akin to making a wager on the government’s propensity and ability to transform the U.S. housing finance market,” he wrote, using the ticker symbol for MGIC. “Historically, this wager has been met with outcomes most private MI common equity holders would classify as massively disappointing.” 

Previous mortgage insurer rallies in 2009 and 2010 evaporated as losses from policies sold before the crisis persisted. Radian closed above $18 in 2010 and MGIC above $13. 

Leon Cooperman’s Omega Advisors Inc. disclosed a stake of more than 5 percent in mortgage-guarantor PMI Group Inc. that year. At the time, Cooperman said the company was a “survivor.” PMI filed for bankruptcy protection in 2011. 

Housing Recovery 
This time the housing market’s strength will support the shares. The insurers are operating in a housing recovery that’s strengthening as the job market improves and the Federal Reserve pushes borrowing costs for mortgages to near record lows. The unemployment rate fell to a four-year low of 7.5 percent in April, according to Labor Department data. 

“Mortgage insurers are all experiencing improving fundamentals, as their performance is tied to the housing recovery, and should offer considerable upside if recent positive housing trends continue,” Paulson & Co. said in a letter to clients obtained by Bloomberg News in April. “Certain types of insurance companies are currently trading at low relative valuations and should offer considerable upside.” 

Paulson said Radian can reach $20 per share by 2015. The fund also has stakes in MGIC and Richmond, Virginia-based Genworth, which backs mortgages and sells life insurance and long-term care coverage. 

Soros Buying 
Soros Fund Management LLC took a 2.8 million share stake in Radian as of March 31. Perry took a stake of about 9 million shares of MGIC, and Blue Ridge added 5 million, bringing its holding to 14.9 million shares. 

Spokespeople for Paulson, Maverick and Blue Ridge, which is run by John Griffin, declined to comment on the share purchases. Blue Ridge, which manages $7 billion, and Maverick, are so-called Tiger Cubs that trace their roots to Julian Robertson, founder of Tiger Management LLC. 

Michael Vachon, a Soros spokesman, and Mike Neus, general counsel at Perry, didn’t respond to messages seeking comment. 

Investors are “looking at the credit quality of the business, the improved housing market, and the expected return to profitability of the business,” said Emily Riley, a spokeswoman for Radian. Radian has forecast a marginal operating profit for the mortgage insurance business this year, excluding some compensation expenses tied to the rising share price. 

Genworth’s mortgage unit reported its first profit since 2007 in the first quarter. At AIG’s United Guaranty, operating profit rose to $41 million from $8 million a year earlier. Excluding some one-time and unusual costs, Radian also posted a profit in the first quarter, according to a May 2 note from Mark DeVries at Barclays Plc. 

Improving Profitability 
Paulson’s fund also holds debt from Radian and MGIC, according to data compiled by Bloomberg. Improving profitability helps bolster the credit ratings of MGIC and Radian, Moody’s said in a May 15 report. The insurance the companies have sold since the crisis backs higher quality mortgages than the loans they backed before the crisis, Moody’s said. 

Radian raised about $689 million selling stock and senior notes in February after commissions and expenses, and MGIC raised about $1.15 billion in debt and equity offerings the following month. The cash helped replenish capital that was drained during the housing crash and showed investor confidence in the firms. 

“When you leverage the new capital and cure the older books, there is a turbo-effect to the earnings of these companies,” said Jack Micenko, an analyst at Susquehanna International Group LLP. “These are fairly higher earners in a normalized environment. We are moving from a very difficult environment to an environment that is much more positive for them.” 

To contact the reporter on this story: Zachary Tracer in New York at ztracer1@bloomberg.net 

 STOCKTON - There are roughly $2 billion in passenger rail construction and improvement projects coming in the next year, including at least $300 million of spending earmarked for small businesses, for the Bay Area and Central Valley.

And those are opportunities area companies shouldn't pass up, said Michael Ammann, chief executive of the San Joaquin Partnership.

The partnership hosted a forum Tuesday morning in Stockton to detail the region's railroad resources and expansion plans - including those of California's high-speed rail, Altamont Commuter Express and private freight hauling.

Ben Tripousis, regional director of the California High-Speed Rail Authority, said construction of the rail system's initial leg from Merced to Fresno is slated to begin this summer.

The nearly $1 billion project is expected to generate 20,000 short-term construction jobs a year for the next five years. The authority has set a goal of giving 30 percent of the work to small businesses, with special incentives for minority-, woman- or disabled-veteran-owned firms.

While the objective is to provide high-speed-rail connections between Northern and Southern California, Tripousis said, "It's really a land-use and economic development project."

The high-speed-rail system, to be build in different segments, by 2029 is projected to run from San Francisco to Los Angeles, with travelers making the trip in less than three hours at speeds of more than 200 mph.

It will also be built to coordinate with and complement other existing and future regional rail systems, such as the ACE commuter service between Stockton and San Jose and Amtrak's San Joaquin system.

Stacey Mortensen, ACE's executive director, said while the rail agencies don't necessarily agree on everything, "We are committed to working together."

The High-Speed Rail Authority is giving ACE the lead role in making improvements to its existing Altamont line, including making connections to BART in the East Bay.

And ACE is also looking to extend its commuter service to downtown Modesto and, eventually, beyond to Merced to connect with the high-speed service.

"We think the stars are aligning," Mortensen said about developing those connections.

By April to June of next year, she expects to begin environmental studies and preliminary engineering on the Modesto extension, which very initial projections say may cost $181 million.

Stockton's history is its blueprint for the future, said Andrew Chesley, executive director of the San Joaquin Council of Governments. Founded as a transit and trade center between San Francisco and the gold mines of the Mother Lode, it remains a major transportation hub between the San Joaquin Valley and the rest of the world.

He highlighted the county's two intermodal facilities - Burlington Northern Santa Fe in Stockton and Union Pacific in Lathrop - where steel shipping containers are transferred between rail and truck. There are other intermodal facilities in Northern California, there are two more intermodal operations in Alameda, near the major container port in Oakland, and one in Fresno.

"We have some of the best locations and the best capacity on the West Coast of the United States," he said.

Perhaps, bring your railway relatives from janakpur and other areas on H1B?

http://www.recordnet.com/apps/pbcs.dll/article?AID=/20130522/A_BIZ/305220310/-1/A_NEWS05

 Sandy was the second-costliest hurricane in U.S. history, yet it didn't sink insurance stocks. In fact, since the end of October when the storm cleared Ace Limited (ticker: ACE) is up 13%, Travelers (TRV) 19% and Allstate (ALL) 23%, versus 10% for the Standard & Poor's 500 index.

And more gains may be on the way: The three are poised to climb another 12% to 18%, according to Credit Suisse analyst Michael Zaremski.

The industry is benefiting from a new pricing mindset that has more to do with interest rates than Sandy. As Warren Buffett pointed out in his recent letter to Berkshire Hathaway shareholders, price competition in the insurance industry is such that firms tend to operate at an underwriting loss in most years. Many companies end up with a "combined ratio," or losses and expenses as a percentage of premiums collected, of over 100%. That doesn't mean they lose money; they can make up the difference in returns on their vast investment portfolios.

But as savers know well, healthy, predictable investment returns have become difficult to find. The 10-year Treasury bond yields 1.9%, less than one-third its historic average and below the latest yearly reading on inflation. If that were a short-term condition, insurers would be able to ignore it. But the Federal Reserve has kept its core Fed funds rate near zero for more than four years in an effort to spur economic growth and hiring. It shows little sign of relenting.

Mutual insurers have begun raising prices to acknowledge that investment returns can no longer be counted on to offset underwriting losses. That has cleared the way for publicly traded insurers to do the same. Mutual insurers are owned by their policyholders, so they're not under shareholder pressure to earn profits. That gives them a pricing advantage and usually puts them in the role of spoiler for publicly traded firms that wish to raise rates. No longer.

The group is benefitting from some other shifts, too. Some firms are trimming risky geographic exposure or changing policy terms to protect profitability. Strong recent stock returns have bolstered insurer assets. And while Sandy brought steep losses, it gave companies cover to raise rates, at least in the affected areas. Plus, the current quarter has been unusually benign. U.S. catastrophe costs are trending 45% below the historical average, according to Zaremski.

Insurance price hikes from last year will carry through to this year's profit statements. Allstate, for example, wrote policies last year with a gross average premium of $1,104 – up 7.1% from the prior year, according to Deutsche Bank analyst Joshua Shanker. Three months ago, Wall Street predicted the company would earn $4.52 this year, up from $4.36 last year. Since then, the forecast has been raised to $4.66. That puts Allstate stock at just 10 times earnings. Shanker predicts the company will buy back a "minimum" of $2 billion worth of its shares this year. That's 9% of its stock market value. Shares also carry a dividend yield of 2.1%.

Ace and Travelers go for 11 and 12 times earnings, respectively. Both yield 2.2%.

 

 Any lament that U.S. executives are sitting on a record $1.73 trillion at their companies instead of investing in plants and equipment may be about to get louder.

The buildup of cash and marketable securities accelerated in the first quarter on a year-over-year basis after slowing in early 2012. At the same time, capital spending in the most recent quarter rose by the least since March 2010, when the U.S. was still emerging from a financial crisis.

The trends, based on data from about 2,300 U.S. companies compiled by Bloomberg, suggest executives’ lack of need or confidence to invest deepened with threats of federal spending cuts and the economic slowdowns at home, in Europe and China. Without a pickup in spending, the U.S. economy loses a driver of job creation and risks staying locked in below-average growth, giving even more cause to hold tight.

“What concerns me is that companies have all of this excess cash and they are not deploying it into their long-term operations,” said Nick Raich, chief executive officer of the Earnings Scout, an independent economic research firm based in Cleveland. “Public outcry will erupt if companies do not spend and create jobs.”

The cash hoard reached a record in part because of rising corporate profits, aided by cost savings imposed during the financial crisis in 2008 and 2009. Europe’s recession, China’s slowing economy and a 35 percent tax awaiting companies when they bring money earned overseas back to the U.S. all provide little incentive to invest, economists and money managers said.

Apple Hearing

“If the economy were growing rapidly and more consistently, companies would be investing like crazy,” said Diane Swonk, chief economist at Mesirow Financial Holdings Inc. in Chicago. “We’re just not there yet.”

The buildup, one point of contention in last year’s U.S. presidential contest, remains an interest of Congress.

U.S. Senator Carl Levin, a Michigan Democrat, took Apple Inc. (AAPL) to task at a May 21 hearing for practices that he said allowed it to avoid $9 billion in U.S. taxes last year, in part by keeping money overseas. Chief Executive Officer Tim Cook said the U.S. should change tax policies to make it less costly for companies to repatriate overseas profit to put to use at home.

The cash is piling up at home in part as companies such as General Electric Co. (GE) and chemical maker PPG Industries Inc. (PPG) sell assets and Caterpillar Inc. (CAT) cuts capital spending.

Cash Accumulation

“When uncertainty is rearing its head, you want to preserve cash,” said Walter “Bucky” Hellwig, who helps manage $17 billion at BB&T Asset Management in Birmingham, Alabama. Among his wealthy clients who own businesses, he said, “it’s all about cost management and a reluctance to invest. They’re not laying people off, but when somebody quits they don’t replace them. That goes into building cash.”

Among 2,267 non-financial members of the Russell 3000 Index, corporate cash increased about 13 percent in the latest quarter from a year earlier, according to the data compiled by Bloomberg. The increase to a record $1.73 trillion was the most since a 16 percent gain in the second quarter of 2011.

As for capital expenditures, the most recent quarter’s year-over-year gain of about 3.1 percent was the smallest increase since March 2010. The spending declined 21 percent when compared with the final three months of 2012, marking the biggest quarter-to-quarter drop since the depth of the financial crisis in March 2009.

Buildup Resumes

For a while it looked as though companies were starting to slow the buildup in cash, beginning in 2011 as the U.S. economic recovery and job growth strengthened. The year-over-year gains fell below 10 percent for five straight quarters, to as low as 5 percent in the second quarter of 2012.

That changed in last year’s second half, with the U.S. presidential election under way and Congress struggling to reach a compromise on the federal debt as automatic budget cuts loomed. Most of the past year’s growth in cash occurred in the final six months of 2012. Cash rose about 3 percent in the most recent quarter from the end of 2012.

One other reason companies aren’t tapping cash is that they can easily borrow from lenders or go to the bond market when a need arises because Federal Reserve monetary policies are keeping interest rates at near-record lows.

“So long as borrowing costs remain low, it’s hard to see why companies would feel compelled to drive down their cash balances in any meaningful way,” said Neil Dutta, head of U.S. economics at Renaissance Macro Research LLC in New York.

Apple Testimony

While borrowing does happen on a case-by-case basis, the capital-spending decline suggests companies haven’t simply turned to that method as an alternate to cash. There can be other reasons to borrow, such as avoiding U.S. tax consequences.

Apple, which holds $102 billion of cash and investments outside the U.S., opted to borrow to help finance a plan unveiled last month to return $100 billion to shareholders. The decision saved the Cupertino, California-based iPhone maker as much as $9.2 billion in taxes, Moody’s Investors Service said.

Cook, in this week’s prepared Senate testimony, said that lowering corporate income taxes and imposing a “reasonable” tax on foreign earnings brought back to the U.S. would “stimulate the creation of American jobs, increase domestic investment and promote economic growth.”

While Apple’s accumulation draws attention, the practice is widespread across multiple industries and company sizes.

Corporate Cash

Cash and marketable securities more than doubled from a year ago to at least $1 billion at 28 companies in the Russell 3000. They include Yahoo! Inc. (YHOO), Dish Network Corp. (DISH)and Fairfield, Connecticut-based GE, which boosted cash almost threefold to $22.1 billion including proceeds of $16.7 billion from the sale of its remaining interest in NBC Universal toComcast Corp. (CMCSA) in February.

PPG, a producer of specialty chemicals and protective coatings, boosted cash and short-term investments to $2.38 billion in the most recent quarter, an increase of $1 billion from a year earlier, said Jeremy Neuhart, a spokesman.

The sale of the Pittsburgh-based company’s commodity chemicals business generated more than $900 million in cash, he said, adding that PPG is evaluating acquisitions, share buybacks and capital spending in emerging markets.

Caterpillar, the world’s largest maker of construction and mining equipment, more than doubled cash to $3.59 billion in the most recent quarter after reducing inventories by $2.5 billion and curtailing factory operations in the previous six months.

Earnings Results

The Peoria, Illinois-based company reduced its full-year revenue and profit outlooks last month, citing sinking demand for bulldozers, loaders, trucks and other mining equipment. It also cut projected capital spending to less than $3 billion from about $3.4 billion, Michael DeWalt, director of investor relations, told analysts on an April 22 conference call.

“Companies aren’t investing because their demand backdrop is weak,” said Dutta, of Renaissance Macro Research. “If they were to invest cash and the investment wasn’t profitable, that’s just going to hurt their margins.”

About 71 percent of companies in the Standard & Poor’s 500 Index beat analysts’ earnings estimates in the most recent quarter, according to data compiled by Bloomberg. Still, fewer than half exceeded sales projections, leaving little incentive to spend to expand production, said Matt McCormick, who helps oversee $9.1 billion as a money manager at Cincinnati-based Bahl & Gaynor Inc.

Risk Averse

“If you are a CEO or a CFO, you aren’t going to get fired or criticized by your board for keeping a little bit more cash,” McCormick said in a telephone interview. “They are not going to take a lot of risk in this environment.”

The U.S. economy may cool to a 1.6 percent pace in the second quarter, after growing at a 2.5 percent rate in the first three months of 2013, according to a Bloomberg survey of economists from May 3 to May 8. The projected slowdown reflects the lagged effect from a two percentage-point rise in the payroll tax at the start of 2013 and $85 billion in automatic budget cuts that began on March 1.

Economic growth has averaged 2.1 percent year-over-year since the recovery began in June 2009, trailing the 2.7 percent average in the previous expansion.

The forecast so far hasn’t dimmed investors’ view of equities. The S&P 500 (SPX) and Dow Jones Industrial Average (INDU) have each gained at least 16 percent this year and are trading near record levels.

“Some companies don’t think they need to invest as much because they don’t see demand rising,” said Paul Zemsky, the New York-based head of asset allocation for ING Investment Management, which oversees about $180 billion. “They feel comfortable they can meet the demand of their customers with the capacity they have.”

 

http://www.bloomberg.com/news/2013-05-23/cash-piles-up-as-u-s-ceos-play-safe-with-slow-growth-economy.html

 Here are some things going on this morning in your world of tech:

Shares of Hewlett-Packard (HPQ) are up $2.48, or almost 12%, at $23.71, continuing gains of the after-hours session, following a better-than-expected fiscal Q2 profit report.

CEO Meg Whitman said parts of the business were seeing growth, such as its networking equipment. But she was frank about challenges ahead, such as making up for lost services revenue next year.

The stock got one upgrade this morning, that I can see, from Underperform to Hold, by Peter Misek with Jefferies & Co. Misek writes that “despite our skepticism” HP’s strategy for its printer business is “not dead on arrival,” as print supplies sales rose 1.5%.

“Printing accounts for 35% of HP’s total profit and due to the lower margin profile of hardware, supplies likely account for 40% of HP’s total profits,” he writes. “Managing the ink profits may be the key to HP’s success.”

Following HP’s report last night, Lenovo (0992HK) reported fiscal Q4 revenue of $7.8 billion, up 4%, year over year, missing consensus of $7.93 billion, but met the average expectation for a 1-cent profit per share. The shares rose 18 cents, or 2.5%, to close at $7.36 in Hong Kong trading.

CEO Yang Yuanqing called the results strong, and remarked that “Not only were we the fastest growing among all major PC players, with record market share, revenue and profitability, more importantly, our smartphone and tablet businesses saw dramatic growth.”

“In fact, smartphone shipments were 3.7 times greater than last year globally and we are now number two in the China smartphone market.”

The Financial Times’ s Kathrin Hille this morning writes that Yuanqing expects the next couple of quarters to be difficult, as the PC market continues to struggle, but things should get better after that as use of Microsoft‘s (MSFT)Windows 8 picks up.

Shares of ChannelAdvisor (ECOM), a maker of hosted software that lets company sell products through multiple online marketplaces, including eBay(EBAY) and Amazon.com (AMZN), are just beginning trading, under ticker “ECOM.” The stock is up $5.14, or 37%, at $19.14 after pricing at $14, the high end of a $12 to $14 range.

ChannelAdvisor made $54 million in revenue last year, according to its S1 filing,and had a net loss of $4.23 per share. It made $15 million in the first quarter, and delivered a net loss of $2.10 per share.

Shares of Cisco Systems (CSCO) get a thumbs up this morning fromCitigroup’s Kevin Dennean, who reiterates a Buy rating and a $26 price target, writing that he sees a case to be made for $30, based on upside in the venerable routing and switching business, writing that “Taking a detailed look at Cisco’s router and switch businesses, the direct relationship between revenue growth and OECD growth is clear with both segments exhibiting correlation >0.75. An improving macro backdrop bodes well for revenue acceleration in Cisco’s router and switch segments.”

Cisco stock is up 5 cents at $23.49.

Seabreeze Partners’s Doug Kass this morning tells followers in a missive he sent out that “Apple (AAPL) is ripe for a buy,” noting that while the stock “remains a trading sardine not an eating (or investing) sardine,” nevertheless, over the next six to 12 months, “downside is $400 to $410 a share and upside is likely $500 to $525 a share — though depending on the timing and context of new product release, this could be higher.”

“While still elevated vis-à-vis my expectations, consensus sales and earnings expectations have been reduced dramatically and have now grown more realistic.”

Apple shares are up $1.64, or 0.4%, at $442.99.

http://blogs.barrons.com/techtraderdaily/?mod=BOL_hpp_blog_tt

 http://www.cnbc.com/id/100758883
Starz

One of Berkshire's two new positions last quarter was Starz. Buffett picked up 5.62 million shares of the media and entertainment company, a $129 million stake that amounts to more than 4.6 percent of Starz's outstanding shares. The new position came onto Berkshire's portfolio thanks to the firm's spin-off from Liberty Mediaback in January; it's the fund managers' decision to keep Starz that's telling.

Starz was originally launched as a premium cable channel, broadcasting feature films and a smaller set of original TV series. Today, the firm's umbrella also includes the Encore and MoviePlex brands, with 17 cable channels of various flavors in all. The biggest feather in Starz's cap is its ability to secure home distribution agreements with content producers. Those agreements ensure that substantial content flows to the 57 million combined subscribers who pay monthly fees to receive the channel.

Original content creation offers some big opportunities for Starz—if the company can pull it off correctly. Series such as Spartacus and Da Vinci's Demons have been well-received by viewers, but they still lag significantly behind the original content put out by rivals like HBO and Showtime. With the largest pay-TV subscriber base in the country, Starz has the audience in place already; it just needs to push its content harder to increase the stickiness of that subscriber base.

Growth has been somewhat slow at Starz in recent years, and Berkshire's focus on cash-generating investments makes Starz an interesting hold for the firm. It'll be worth keeping an eye on how this position gets managed.

Chicago Bridge & Iron

The only truly new position in Berkshire Hathaway's portfolio last quarter wasChicago Bridge & Iron, a $6.8 billion construction and engineering firm that, despite its Windy City name, is actually domiciled in the Netherlands. Buffett and company took on a 6.51 million share position in CBI last quarter, which works out to a $404 million grubstake at current price levels. That ownership represents 6.03 percent of CBI's total market value—a substantial position indeed.

CBI is a worldwide engineering and construction firm. The firm's specialty comes in constructing energy facilities around the globe—but it's got a particular niche in building facilities that handle liquefied natural gas. Around 20 percent of CB&I's sales come from building steel plate structures that industrial customers use to store material. That hefty energy sector and industrial exposure has some consequences, both good and bad; most importantly, it means that the firm benefits when commodity prices are high and energy firms are investing heavily in infrastructure projects.

In recent years, CB&I has begun reaching away from its core construction and engineering business, adding on new ways to service its existing petrochemical customers. The Lummus Technology unit, for instance, sells gas processing and refining technology. While it's still a small chunk of CBI's revenues, it's a lucrative one. The recently closed $3 billion acquisition of Shaw Group adds considerable nuclear building expertise to CBI's offerings. That's attractive positioning to own as power companies invest in low-cost power generation.

DirecTV

While DirecTV isn't a newly initiated position for Berkshire Hathaway, it was a major conviction buy last quarter. The firm added 3.24 million shares of DTV to its portfolio, raising its holdings in the firm by almost 10 percent to $2.1 billion. That increase gives Buffett's firm 6.5 percent ownership in the satellite TV carrier.

DirecTV operates the biggest satellite television network in the U.S., with close to 20 million subscribers. DirecTV also owns stakes in Latin American satellite TV providers that serve more than 11 million subscribers. There's a Starz connection here, too. Both firms once fell under the Liberty Media umbrella until they were respectively spun off (LMCA, incidentally, remains a Berkshire position).

DirecTV has managed to churn out some impressive performance over the last few years. The company targets bigger spenders who spend more per household for TV services than the average. As a result, DTV gets access to ample cross-selling opportunities that dramatically widen margins. Because the firm is a satellite firm, it's also able to grow its subscriber base without having to pay the massive capital expenditures that similar fixed-line services have to shell out.

While new customer acquisitions are pricey (the firm subsidizes equipment), the road to profitability is far shorter than at rival services like Verizon's FiOS. With impressive relative strength in play at DTV, this stock's outperformance looks likely to reverse in the near-term.

DaVita HealthCare Partners

DaVita HealthCare Partners remains one of Ted Weschler's favorite stocks in 2013. The portfolio manager added 1.37 million shares of the dialysis center operator to Berkshire Hathaway's portfolio in the first quarter, adding onto his existing stake by 10%. That brings Berkshire's total position in DVA to 14% of outstanding shares.

There's a limit on how much Weschler can buy. Earlier this month, he agreed to limit Berkshire's stake in DaVita to 25%, and limit his shareholder activism in the firm. That news quelled rumors that DVA could be a buyout target for Berkshire, but this quarter's position increase shows that Berkshire's investment team is still bullish on this business.

(Read More: Health-Care Industry Game-Changers)

DaVita runs more than 1,800 clinics and in-patient hospital dialysis units across the U.S. The firm's clinics are unique in that they serve patients who suffer from chronic long-term kidney issues. Typically, the only way around dialysis is a kidney transplant, and demand vastly outstrips supply of transplant organs in this country. That means that DVA's nearly 140,000 patients are likely to stick with its facilities for the long term. Health care tends to be a sticky business—barring a major bad experience, patients are likely to stay with their providers—which makes DVA's revenues consistent and predictable in large part.

The 2012 merger with HealthCare Partners changes DaVita's concentration slightly. The new physician management arm now makes up around a quarter of DaVita's revenues. That increased scale justifies the increased share price that investors are paying for DaVita. I'd expect Berkshire's buying of DaVita to keep on going in 2013.

VeriSign

It's been a strong year for shareholders in VeriSign— Berkshire Hathaway included. Berkshire added 3.69 million shares of VeriSign to its portfolio as a new position last quarter, and it more than doubled its stake in the most recent quarter, piling on another 4.49 million shares. That gives Buffett and company a 5.35 percent ownership stake in VeriSign's outstanding shares.

In a nutshell, VeriSign's business is the Internet.

VeriSign is one of the biggest Internet infrastructure firms in the world, maintaining a central directory of all domains and many of the systems that run them. The company is essentially the gatekeeper to owning a .com Web address, and as a result, VeriSign is able to collect a fee for each of the more than 110 million domains that fall under its purview.

While the introduction of a new category of "top level domains" (such as .aero for aviation businesses or .mobi for mobile websites) does increase the competition faced by VeriSign, the new naming options aren't likely to steal share from the dot-com domains. Instead, firms are likely to just register both names. VeriSign's exclusive contracts with ICANN offer an attractive economic moat for the firm. Because increases in registration fees are built into those contracts, VeriSign will be able to generate attractive growth over the course of the next several years without needing to work for it.

Question:  When would Jim Rogers buy more Gold ?

 One guy named Asif Suria from California runs and updates this website everday. This has an updated info on "insider transaction". It can be very helpful. For the last several months, most of the insider accumlation has been done by people in the banking industry and especially the smaller banks that were beaten to life support during the recession. here's an update that i received in email. Its been profitable using this free service that gives you an idea about what's goiing on around the business world. I'm sure there must be a lot many websites that provide infos like this or even more detailed info. 

Currently I'm also interested in insider buys done by people in the "lab or enviornment" industry. This industry will be responsible  for regulating oil men and oil women and from not screwing up the environment and so the oil men and women will happily do all kinds of tests or follow procedures directed by enviornmental industry. For example, water testing, oil waster removal etc etc. Going forward, this industry looks promising.
http://www.filing4.com/

 've long had a theory about people and houses. Some people are movers and some people are stayers. Just look atWarren Buffett. He's a multi-billionaire businessman, and yet Buffett still lives in the exact same house he bought way back in 1958 in Omaha, Nebraska for a measly $31,500!

Yes, I'm talking about THE Warren Buffett, the guy Wikipedia calls the most successful investor of the 20th century. And he's a "stayer"! Could it be that he's one of those romantics too?

Let me back up here and explain this movers and stayers theory, OK?

My parents have lived in the same house I grew up in, the same house they bought several years before I was born. And then I met my husband who had moved five times before he was a teenager. I'd always known these people existed, but I thought they were anomalies. I thought the Buffetts of the world, the people who stay tied to one place regardless of their financial state, were the norm.

Turns out the average American moves 11.7 times in their life. And every time the lottery jackpot climbs into the gazillion-dollar range, people start talking about how they want to win millions of dollars so they can move into a fantastic mansion.

I have dabbled in fantasy myself. I have lost hours on Pinterest gazing at houses that have room for all the stuff that we've collected in the 10 years since we moved into a house that has so little space!

But then I look around my house and my yard. There is the tree where we hung my daughter's first swing. There's the spot where we huddled in the freezing cold as a family to say goodbye to our cat.

I would love to have a second bathroom, and a bedroom that actually fit our furniture, and, and, and ... but I'm an old softie and a bit of a romantic. I look at my tiny house, and I see beyond the one bathroom and strange shaped rooms. I see our life. I see memories. I see things that money can't replace.

So Warren Buffett has millions of dollars? So he's stuck with a house that he paid $31,500 for (that's $250,000 by today's standards) when he could have moved on up and moved on out? Some people would call him a cheapskate. I'll call him a guy who gets what's really important in life; who knows that money can't buy everything.

What about you? Could you stay in the same house for the rest of your life?

http://thestir.cafemom.com/home_garden/149934/billionaire_warren_buffetts_home_is

 http://www.nasdaq.com/article/weekly-cfo-buys-highlight-ensv-dkl-pxlw-gnw-vrx-cm188922

 The University of Mary is building two new apartment buildings north of campus for upperclass and graduate students to meet student housing demands.

The two buildings, one for women and one for men, will hold a total of 92 students. They will have a number of amenities, like air conditioning, a kitchen and in-apartment laundry. They are scheduled to be finished by the time school starts in August.

Greg Vetter, the executive vice president for the university, said the student population has been growing steadily in recent years. For the upcoming year, the school saw about a 3 percent increase in incoming students.

The increase in the student population has led to a need for more residential housing. This has been particularly evident in the past couple of years with affordable housing becoming harder to find in Bismarck, said Lynn Geary, University of Mary’s director of student life.

The extra space was obviously needed. The two buildings had more applications than could be filled by the housing deadline in March. There are close to 35 students on the waiting lists — mostly women, since the campus has a larger female population.

The apartments were given out in order of seniority: graduate students first, then seniors and finally juniors. Only a few juniors managed to get a spot in the apartments, Geary said.

Vetter said he thought the apartments were so popular because they offered a sort of “in-town living” while still on the U-Mary campus.

“It’s a more attractive living arrangement than a residence hall,” he said.

With more students needing or wanting on-campus housing in recent years, the school has worked with Expressway Inn to book extra rooms, if needed.

Within the next three years, U-Mary also is planning to build a new campus center — the “campus living room,” as Vetter calls it.

The university’s increasing population is exciting, Vetter said.

“How cool is this?” he said. “We’ve got growth, our students are excited about it.”

“There’s good things happening up here,” he added.
http://bismarcktribune.com/news/local/education/u-mary-building-new-on-campus-housing/article_cd77ac22-c32b-11e2-b97a-001a4bcf887a.html

 Its been a great summer. YRCW went up from 5 dollars to 35 dollars today. BNCC now at 13 dollars per share. Next stop will be a while. Hold the stock for a year and only pay 10 per cent tax instead of 30 per cent or more. Just giving the range. Hold your stock for 10 years and let it grow and only pay the tax 1 time. 

My current holding.

BNCC
YRCW
BDCO
NCT


NCT- Recently added. Nothing new with this company other than its a spin off. Its a health care provider to baby boomers. Old people are becoming old faster than they thought. Read the investors presentation. Still a good price. July 31 is the time when I'll receive the so-called divident.

BDCO- Its a refinary in Texas. Few months ago I mentioned about oil boom in the US. Well now, you all know that. BDCO- belongs to a stanford university educated Mr Carroll. Its a refinary that he bought back in 2006 out of bankruptcy. Back in those days, fracking was not as popular as it is today. Hence, he bought this refinary in the obsecure Nixon area of texas. Now the neighborhood boy and girls don't have to pipe their oil to Baytown or other coastal refinary locations. BDCO has something like a "mill" of the neighborhood. They'll not go broke. A stanford guy in the heat of Texas makes you wanna buy. Remember, T Boone Pickens says, in the stock market of oil industry, if the CEO does not hold the majority of the company or the stock, he/she will treat their shareholders like some monkey in Nepal. 

whats yrcw and bncc?

whats yrcw and bncc? 

YRCW is the short cut name of the company named YRC World wide, a trucking company. You may have seen them on the street.

BNCC is the short cut name of a bank named BNC Bancorp. It has several location in several states but mainly making money from the braches in North Dakota, where oil boom is happening today and also North Dakota ranks #1 among all states in terms of growth. Still a cheap price at 13 dollars per share. In a couple of weeks the earnings (Result of operation) for prior 3 months will be out. And there'll be anogher upside to the stock price. You can google these things and if you wanna learn use investopedia.com.