• Barron’s Punches Hole in Green Mountain Coffee (GMCR)
    Posted by on May 30th, 2009 at 3:30 pm

    Bill Alpert looks at one of the hottest stocks around, Green Mountain Coffee Roasters (GMCR), and isn’t impressed:

    At almost 60-times the earnings forecast for the current fiscal year ending Sept. 2009, Green Mountain’s valuation warrants a closer examination of the business. That’s more than it seems to have gotten from sell-side bulls — none of whom said much about why March earnings beat analysts’ forecasts by 40% when sales beat forecasts by only 8%. Powering those earnings was an 85% jump in the royalties Green Mountain gets from other companies selling coffee in its K-Cup single-serve pods. As it turns out, a significant portion of those royalty generating sales were to Green Mountain itself, which sells both its own coffee pods, and those of other brands. By boosting its wholesale purchases from K-Cup licensees, Green Mountain can trigger royalty payments that directly boost its profits. Indeed, Green Mountain nearly tripled its March-quarter purchases from one licensee — the publicly-held Diedrich Coffee (DDRX) — thereby generating royalties that we estimate were almost 10% of the $21 million in pre-tax profits that Green Mountain reported in the quarter. As the bottom-right chart shows, Green Mountain has benefited from these transactions for many quarters; Diedrich is just one of a number of K-Cup licensees from whom it has made royalty-triggering purchases. In March, Green Mountain bought the wholesale business of a struggling licensee — the Tully’s unit of TC Global — whose sales to Green Mountain had been rising like Diedrich’s.

  • Western Civilization Peaks
    Posted by on May 30th, 2009 at 3:04 pm

  • First Sanjaya, Now This
    Posted by on May 30th, 2009 at 2:31 pm

    Here are seven portfolios larger than yours. Oh, did I mention they’re cats and dogs.
    I’m serious.

    1. Gunther IV, the German Shepherd: This dog actually received his inheritance from his father, Gunther III, a German Shepherd who received an inheritance from Karlotta Liebenstein, a German countess. Gunther IV has bought a Miami villa from Madonna and won a rare white truffle in an auction. Learn more about Gunther IV on a Web site devoted to him and those he hangs out with. He’s worth about $372 million right now, thanks to his growing trust fund.
    2. Oprah’s dogs: Oprah Winfrey has several animals, including some dogs. She wants to make sure that her dogs are cared for when she is gone. Her will specifies that that her dogs receive $30 million for their care. (Just a drop in the bucket when you look at the billions Oprah is worth.) True, that money will be split amongst all dogs that she has, but even so, each and every one is probably richer than you are. They’re definitely richer than I am.

    Read the rest here.

  • Harvard MBAs Promise to Be Ethical
    Posted by on May 30th, 2009 at 12:11 am

    The New York Times reports that 20% of the graduating MBA class at Harvard has signed a pledge to be ethical. Oh boy. Have far have we fallen that you sign a pledge to be a decent human being?
    Here’s the MBA Oath (the short version).

    As a manager, my purpose is to serve the greater good by bringing people and resources together to create value that no single individual can create alone. Therefore I will seek a course that enhances the value my enterprise can create for society over the long term. I recognize my decisions can have far-reaching consequences that affect the well-being of individuals inside and outside my enterprise, today and in the future. As I reconcile the interests of different constituencies, I will face choices that are not easy for me and others.
    Therefore I promise:
    * I will act with utmost integrity and pursue my work in an ethical manner.
    * I will safeguard the interests of my shareholders, co-workers, customers and the society in which we operate.
    * I will manage my enterprise in good faith, guarding against decisions and behavior that advance my own narrow ambitions but harm the enterprise and the societies it serves.
    * I will understand and uphold, both in letter and in spirit, the laws and contracts governing my own conduct and that of my enterprise.
    * I will take responsibility for my actions, and I will represent the performance and risks of my enterprise accurately and honestly.
    * I will develop both myself and other managers under my supervision so that the profession continues to grow and contribute to the well-being of society.
    * I will strive to create sustainable economic, social, and environmental prosperity worldwide.
    * I will be accountable to my peers and they will be accountable to me for living by this oath.
    This oath I make freely, and upon my honor.

    Two quick points:
    When reading an ethical oath, should it be perfectly obvious how the authors voted?
    Isn’t pride also a sin?

  • Right-Wing Comment of the Day
    Posted by on May 29th, 2009 at 7:24 pm

    Guess who spouted this?

    It must be said, that like the breaking of a great dam, the American decent into Marxism is happening with breath taking speed, against the back drop of a passive, hapless sheeple, excuse me dear reader, I meant people.

    Give up? Here’s you answer:

    Read more…

  • Canadian Euro Has Best Month in 60 Years
    Posted by on May 29th, 2009 at 4:28 pm

    The loonie is making us look like a bunch of hosers:

    Canada’s currency headed for the biggest monthly gain since the Korean War as commodities surged, global stocks rallied and the U.S. dollar tumbled.
    The Canadian dollar rose 9.2 percent since April 30, the most since at least October 1950, according to data from the Bank of Canada and Bloomberg.
    “This does seem like a historic move,” said David Watt, a senior currency strategist in Toronto at RBC Capital Markets. “The biggest driver has been the decline in general fear, compounded by an increase in specific fear for the U.S. dollar, which might or might not be appropriate.”
    The Canadian currency appreciated as much as 2.1 percent to C$1.0898 per U.S. dollar, the strongest level since Oct. 6, and traded at C$1.0908 at 2:15 p.m. in Toronto, from C$1.1133 yesterday. One Canadian dollar buys 91.68 U.S. cents.

    fredgraph052909.png
    The Onion notes: U.S. Dollar Slips Against Canadian Acorn

  • Best Name of a Penny Stock You’ll See Today
    Posted by on May 29th, 2009 at 4:19 pm

    Ladies and gentleman, I give you Jedi Mind, Inc. (JEDM).
    The company just announced a share buyback, but I have to add, these aren’t the shares you’re looking for.

  • Arianna Huffington: Only subsription that works is selling “weird porn.” With video (of the quote, not of porn weird or otherwise)
    Posted by on May 29th, 2009 at 10:25 am

    HuffPo:

    The Huffington Post will not be seeking subscription revenues anytime soon, Arianna Huffington told Kara Swisher on stage yesterday at the All Things D Conference.
    “Unless you’re selling porn — especially weird porn — I would not go the subscription route,” Arianna told the crowd.
    It’s advice we think the woman sitting next to Arianna on stage, Katharine Weymouth of the Washington Post, will probably have to eventually ignore.
    But then, Katharine’s media company has a different cost base than the HuffPo, spending $1 million dollars a year on a Baghdad bureau, for example.

  • Schumpeter’s Moment
    Posted by on May 29th, 2009 at 9:16 am

    Carl Schramm has a good article on Joseph Schumpeter in today’s WSJ. Here’s a taste:

    From Schumpeter’s vantage point, capitalism’s very success allows rich societies to use government to relax the impersonal rules that govern markets, creating new rules that buffer citizens from the rigors of risk-taking and failure. In that sense, government invents for itself the task of mediating market outcomes. Schumpeter had seen the dangers of this play out in Bismarck’s conception of Prussia’s welfare state. In the face of the Marxist threat, the elite secured its position by causing government to dispense social benefits. Political entrenchment, not charity, had motivated Bismarck. When distorted in such a way, free-market capitalism is seen to suppress — rather than to encourage — social and economic mobility.
    Since the New Deal, Americans have come to see government as somehow the ultimate protector of their financial welfare. In reality, though, the evidence of the U.S. government behaving in this way during the New Deal is thin to say the least. Although it is largely forgotten now, much of the government’s action during the Depression actually had a marginal impact on individual lives. Monetary expansion and technological innovation boosted the economy, while the “second” depression of 1937-1938 is widely understood as having been induced by Roosevelt’s attempt to manipulate credit markets.

  • Ted Tuner: AOL/TWX Meger “Better than Sex”
    Posted by on May 29th, 2009 at 8:41 am

    Mark Hulbert writes on the dissolution of AOL and Time Warner’s nine-year marriage. I had never heard this quote before but Ted Turner said that the deal was “better than sex.” He was married to Jane Fonda at the time.