Grant's Interest Rate Observer Summer2011

Below please find Grant's Interest Rate Observer summer issue for 2011. For those of you not familiar with this publication I highly reccomend you read it. The summer issue is a collection of past articles, so as you'll not some are from a long time ago and some are more recent.

Enjoy.


Giro29_SUMMER11

JANA Partners presentation to McGraw-Hill

Below please find JANA's presentation to McGraw-Hill. For those of you who haven't followed the situation - JANA is arguing that McGraw-Hill break apart the company into more logical operating divisions. The conglomerate structure actually constrains the value that the divisions could get independently.

Enjoy:

JANA-McGraw-Hill-Presentation-MHP

Marc Faber on CNBC

Marc Faber was on CNBC this morning giving his opinion of the markets and the world in general. Interestingly he reccomends Asian REITS as well as the usuals (gold, commodities, etc). He does mention that he thinks gold is due for a near-term pull back given the recent parabolic upward move.

Enjoy.

The devils in the details

As some of you may or may not know I am a big fan of special situations - specifically risk free profits. I make a point to search PRE-14C filings to identify opportunities (specifically reverse splits or tenders) where I may be able to pick up a few bucks here or there. One such opportunity came across my radar today.

Read the press release here.

Here is the release pasted in case you are reading this via a feed:
"KENT FINANCIAL SERVICES, INC. ("Kent") (NASDAQ: KENT - News) On August 22, 2011, Kent's majority owned subsidiary, Kent International Holdings, Inc. ("Kent International"), filed a Schedule 14C Preliminary Information Statement with the United States Securities and Exchange Commission (the "SEC") in connection with a proposed "going private" transaction. The proposed transaction involves an amendment to Kent International's Articles of Incorporation to effect a one-for-950,000 reverse stock split. If implemented, fractional shares will be redeemed by Kent International for cash consideration of $2.50 per pre-split share."

So people read this got all excited and went out and bought KENT. KENT previously closed at $1.12 and opened today at $1.99 - as "traders" sought to bridge the gap close to the $2.50 tender. So the stock was up nearly 70% as of this writing.

Here is the kicked - and a quick test - what was wrong with this situation?


For those of you with a sharp eye you will notice that Kent Financial KENT is the parent company that happens to own shares in its subsidiary Kent International. Which company is actually doing the reverse merger - Kent International (KNTH). Low and behold people bid up the wrong stock -KENT.

As the market slowly finds this out I wouldn't be surprised if KENT drops down near to where they traded before.

This just goes to show you the devil is in the details and it pays to read closely. I hope people who bought KENT on the hopes of the proceeds paid in the reverse split read this post and realize they bought the wrong security.

I looked at shorting KENT as I think it is a good opportunity to play the snap back as people realize there is no $2.50 coming their way. But at the end of the day I don't really know much about KENT's underlying business so I was a little reluctant. That being said I fully expect it to drop back to near where it was trading - so a 30% - 40% decline.

Phil Falcone the Next Warren Buffett?

Christopher P. Mittleman, the chief investment officer at a small New York money management firm is out with a four page letter that compares Phil Faclone to Warren Buffett. He says that Harbinger Group (Phil's publicly traded shell company) can be the next Berkshire Hathaway. He likens it to Carl Icahn's vehicle that he listed.

Without agreeing or disagreeing with any of these statements, here is the letter for your enjoyment. I would welcome any comments on this topic as I have seen a number of people awarded the crown of "the next Buffett" but few have managed to keep this title (Eddie Lampert, Mohnish Pabrai, and most recently Sardar Biglari).


Christopher P. Mittleman's letter

GMO Capital - Jeremy Grantham Q2 Letter

Jeremy Grantham and GMO Capital are out with their Q2 letter. They come out swinging saying the S&P is worth no more than 950. Reccomend farmland, forrestry, and high quality large caps. The farmland and forrestry are a continuation of the same theme we have been seeing for some time now. They also are suprisingly fairly upbeat on Japan.

Enjoy:

Grantham August

Jim Rogers on CNBC

Jim Rogers was on CNBC to discuss his opinion on the debt downgrade - i.e. the U.S. is bankrupt (read buy China, commodities, and emerging markets). The second video - which is frankly the more interesting of the two, Jim discusses where he is currently long (nothing too surprising but interesting to hear irrespective).


Part 1:


Part 2: