The S&A Digest: Insiders are loading up

Insiders are loading up... So is Mason Hawkins... Debunking the magazine-cover indicator... Goldman's latest snafu... Getting the black card...

Goldsmith comment: Porter's in meetings all day. I'm taking The Digest. He did have time for one comment. Look for it in today's mailbag...

 I'm sure some of you are familiar with the elusive American Express Centurion credit card, popularly known as the "black card." You must charge $250,000 in a calendar year in order to be invited to sign up. Then you pay a $5,000 initiation fee and $2,500 a year. In return, you get a 24-hour concierge, a high spending limit, and a shiny black card that proves you're better than the commoner.

Commoners rejoice... American Express is opening up the black card to anyone willing to pay the exorbitant fees. This is just what America needs to get the economy back on track. Anyone who's currently maxed out on credit can get the black card, get that speed boat, some expensive suits, and the mortgage they couldn't afford.

Does anyone have a black card? Are the fees worth the benefits?

 Currency traders are betting Bernanke's rate cuts will spur the U.S. economy as Europe slows, and they're going long the dollar. Of the 31 analysts surveyed by Bloomberg, the median estimate is that the dollar will gain 5.4% against the euro by the end of this year and another 6% in 2009. The dollar fell 10.6% and 11.4% in 2007 and 2006, respectively.

 According to today's SEC filing, billionaire Carl Icahn bought 1.5 million shares of freight-car manufacturer Greenbrier Companies (GBX), or 9.45% of the company, between January 8 and 25.

 Value-fund managers often hold around 30% of their funds in cash because they cannot find enough attractive investments. Value legend Seth Klarman regularly holds 50% of his Baupost Group hedge fund in cash. Amazingly, these guys regularly trounce the S&P investing only a portion of their assets. We read today that Mason Hawkins, famed manager of the Longleaf mutual funds, is almost fully invested. He's found so many good investments that he's actually seeking new money. Hawkins reopened the $11.2 billion Longleaf Partners Fund (LLPFX) on January 18. He's looking to raise $1.5 billion for "new investments and existing holdings that are significantly discounted."

 After Goldman Sachs' flagship Global Alpha hedge fund lost 38% last year, the bank decided to launch an old-school stock-picking hedge fund – Goldman's first. Goldman Sachs Investment Partners fund, launched with a record $7 billion, had a tough first month. The fund is down 6% in January.

 Signs of a market bottom... Insiders are buying more stock than they're selling for the first time since 1995. August Busch III, an AT&T board member since 1980, recently purchased $2.27 million in stock – his largest purchase on record. Monsanto director William Parfet added to his holdings for the first time in eight years. The last seven times insiders bought more than they sold, between 1988 and 1995, the S&P 500 rallied an average 21% in the following 12 months.

 New highs: International Coal (ICO), Raytheon (RTN).

 We're nostalgic for the days of venom in the mailbag. Even in these turbulent times, it seems all you can muster is praise. Tell us how you really feel at feedback@stansberryresearch.com.

 "As for Business Week printing a cover with recession on it; the latest NEWSWEEK also had the same ominous cover. In regards to the 'MAGAZINE COVER INDICATOR' - saying if an idea is popular enough to make a cover of a national magazine it's either over or it's not going to happen – might have some merit, if not for a little thing called consumer confidence." – Paid-up subscriber Matt R.

Goldsmith comment: You go ahead and invest alongside consumer confidence. We'll take the contrary position.

 "Why do you charge five hundred dollars and more for some of your newsletters and ninety-nine or less for others? One would think each guy would spend as much as the other on travel and research! If you weren't already rich, I'd think you guys were trying to get rich overnight. Seems you're catering to the rich but they don't need any more money. You may get more readers if your rates were more sensible. Anyway, I'd hate to pay five thousand dollars or more for a newsletter that made a 'F' last year!! I doubt if you'll print this letter!!!" – Paid-up subscriber Kelso

Porter comment: We charge what the market will bear and what the market will support. Certain niche publications simply don't attract very many readers. As such, we must charge more in order to cover our overheads and return a fair amount on the capital we employ in the marketing.

 "I have been a subscriber for only a few months but I want to say 'Thank You' for your advise and recommendations. I am 71 years old and I continue to look for ways to improve my income. Thank you for all the good advise since my portfolio is UP more then $2,000 in this shaky market. I have decided that buying shares in stock that pay dividends has been extremely beneficial and it is all your fault that my balances continue to increase." – Paid-up subscriber M. Spalding

 "I have bought and sold bullion coins from Burt Blumert at Camino Company on your recommendation. I received detailed attention from Burt, personally. He has even talked with me on the phone using his cell. Of course, he pulled over while we talked. I have spoken with Van Simmons but I have not yet done business with him. As a longtime coin collector, I can tell you that not all coins of the same grade are considered equal by dealers and collectors. When you buy an expensive graded coin, it pays to use an extremely reputable dealer such as Van. Regarding return phone calls from dealers attending coin shows, these shows are large scale and very intense. Some shows last for days. It is unrealistic for anyone to expect a quick return call from a dealer who is attending a coin show. Both patience and perspective is necessary, given the circumstances." – Paid-up subscriber Mike Reiter

Regards,

Sean Goldsmith

Baltimore, Maryland

February 4, 2008

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