Congratulations

A big, hearty congratulations to all the winners of IR Magazine’s 2009 U.S. investor relations awards.  The awards are based on commentary received from more than 3,500 buy-side and sell-side analysts and portfolio managers.
 
Winners for best overall investor relations programs include Wells Fargo (mega cap), Texas Instruments (large cap), Humana (mid cap) and First Horizon National Corporation (small cap).
 
For a complete list of all award winners, check out the awards web site here.

 

Laurie Berman, lberman@pondel.com
 
 

Recessionary Cocktails

Honestly, we’re not big drinkers at PondelWilkinson, but who can resist a good cocktail recipe to take the edge off the recession? The following are suggestions from The New Yorker.
 
Long Island Iced 401(k) – Put hopes in shaker. Add dreams. Shake until dashed, then drink all the vodka, gin, tequila, and rum left in liquor cabinet.
 
Broke & Tan – Fall asleep in yard on weekday, wake up sunburned and so dehydrated that anything tastes good.
 
Nasdaiquiri – Add a dozen I.P.O.’s to portfolio, wait until bubble bursts, drink all day every day.
 
Blackberry Sling - Discover that your BlackBerry doesn’t work because you haven’t paid the bill. Sling it against the wall, then buy a prepaid phone and make some rum in your toilet.
 
Please feel free to submit other suggestions and they will magically appear on this blog. Cheers.

 

Evan Pondel, epondel@pondel.com
 
 

Margaritaville

It has yet to be determined whether Warren Buffet and Jimmy Buffet are related.  The two certainly have taken divergent paths in life, and yet they share one similarity that is undisputable:  Both have amassed wealth far beyond what the average American can fathom.
 
The two Buffets also share another characteristic:  humility.  Whether it’s Jimmy crooning about “Wastin’ away in Margaritaville,” or the self-deprecating, folksy tone of Warren’s shareholder letters, the Buffets have their way with words.
 
And so, as Jimmy says, “if you’re living on sponge cake … and there’s booze in your blender,” why not take a little time to consider the following key message points from Warren Buffet’s most recent musings in his 2008 shareholder letter for Berkshire Hathaway.
 
“By year end, investors of all stripes were bloodied and confused, much as if they were small birds that had strayed into a badminton game.”
 
“The watchword throughout the country became the creed I saw on restaurant walls when I was young: ‘In God we trust; all others pay cash.’”
 
“The U.S. – and much of the world – became trapped in a vicious negative-feedback cycle. Fear led to business contraction, and that in turn led to even greater fear.”
 
“In poker terms, the Treasury and the Fed have gone ‘all in.’”
 
“Economic medicine that was previously meted out by the cupful has recently been dispensed by the barrel.”
 
“Weaning these entities from the public teat will be a political challenge. They won’t leave willingly.”
 
“Like it or not, the inhabitants of Wall Street, Main Street and the various Side Streets of America were all in the same boat.”
 
“During 2008 I did some dumb things in investments.”
 
“Furthermore, I made some errors of omission, sucking my thumb when new facts came in that should have caused me to re-examine my thinking and promptly take action.”
 
“Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down.”
 
“We like buying underpriced securities, but we like buying fairly-priced operating businesses even more.”
 
“Home purchases should involve an honest-to-God down payment of at least 10% and monthly payments that can be comfortably handled by the borrower’s income.”
 
“Putting people into homes, though a desirable goal, shouldn’t be our country’s primary objective. Keeping them in their homes should be the ambition.”
 
“Beware of geeks bearing formulas.”
 
“We never want to count on the kindness of strangers in order to meet tomorrow’s obligations.”
 
“Beware of the investment activity that produces applause; the great moves are usually greeted by yawns.”
 
“Derivatives are dangerous.”
 
“Participants seeking to dodge troubles face the same problem as someone seeking to avoid venereal disease: It’s not just whom you sleep with, but also whom they are sleeping with.”

 

Evan Pondel, epondel@pondel.com
 
 

Time to Plan Your Annual Meeting

If your company follows a calendar year end, your annual meeting is fast approaching.  Make sure you’ll be ready (and in compliance) by assembling a comprehensive schedule of what needs to be done, when it needs to be done, and by whom it needs to be done.
 
This handy guide by Bowne, available by download or in hard copy by filling out a form on their website, will provide you with all of the information you need from the legal framework of the annual meeting to electronic delivery of your proxy statement to how to set a record date.
 
It’s never too late to start planning, so start now.

 

Laurie Berman, lberman@pondel.com
 
 

Reading Between the Lines

When I was a kid, one of my father’s many recurring jokes was: “If it’s raining and you want to stay dry, just walk between the drops.”  Sorry Dad, it wasn’t that funny, and, of course, it wasn’t even possible.
 
It is possible, however, at least interpretively, to read between the lines of some of the negative economic news these days and find something favorable.
 
For example, take comments published in the Wall Street Journal from London Business School finance professor Elroy Dimson on long-term investment returns:
 

  • “Stocks may face a long road back.”
     

  • “There’s no guarantee of a quick rebound.”
     

  • “We’ll have to wait nine more years before the Dow Jones average has a 50% chance of hitting its 2007 highs.”
     

  • “It may be a long time before investors are again willing to value stocks at much higher than the long-term average of 15 times earnings.”

 
U N C L E!  Enough already!  OK, so here’s the silver lining between the professorial comments: 
 

First, if, as the good professor professes, the Dow Jones average will double in nine years, that will signify a total return of 7.5% per year. Try to get even close to that by stashing your money in a bank account.
 

Second, for more than 100 years through 2008, U.S. stocks have averaged an annual 6% return after inflation. Not bad either.
 

And third, there are many stocks of solid companies these days that are trading well under 15 times earnings, leaving plenty of room for appreciation.

 
So be careful, but jump in already. The water’s not that bad.  Just don’t try walking in between the raindrops.

 

Roger Pondel, rpondel@pondel.com