THE S&A DIGEST: Slim Phones Don't Matter

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(Top 10 highest-returning open positions across all S&A portfolios)

As of 07/05/2013

Our phones go out on one of the busiest days of the year… Ford's down to its last $18 billion… BusinessWeak touts one of our picks… Condo crazy in Nashville… Don Quixote on the loose in Cali... Where to buy stocks now, Thailand?

It’s been an unusual first day back in the office… The phones are out. Our centralized IT department, which is managed by our parent company, Agora Inc., says: "It’s a problem with the phone server…" Last week, they said the same thing about our e-mail system.

Thus… we’re expected to conduct business without phones… and without e-mail. Brilliant. There’s nothing worse than counting on a team of people for critical business functions when you have no control over their careers or their budgets.

I apologize if you’ve been trying to reach us. I promise to let you know as soon as we’ve resolved the problem. No one is more frustrated by all of this than I am.

I can’t blame all of our problems today on the centralized operations people… some of my own staff didn’t show up for work. For example, our "resident" quant, Ian, is brilliant with numbers… but apparently not with calendars. He’s on a plane right now, flying back from his cousin’s wedding. Alas, I have no market anomaly to present to you.

But… here are a few other observations worth noting…

Ford is down to its last $18 billion, says MarketWatch. It has borrowed the money from Wall Street, pledging essentially all of the company’s assets as collateral. "The debt will be secured by… domestic manufacturing facilities and all of the company’s other domestic automotive assets, intellectual property, real property, stock of subsidiaries including Ford Motor Credit Co. and Volvo, etc."

China’s stock exchange is now the world’s biggest source of capital for new listings. The record-setting $21.9 billion IPO of Industrial and Commercial Bank of China fueled the rise to the top. The Chinese exchanges have raised a combined $43.1 billion year-to-date.

Think there’s a relationship between the growth of China, our surging current account deficits, and the collapse of Ford Motor Co.? Nah. Civil war in Iraq? Nah. And Social Security is solvent, too…

BusinessWeak has stumbled onto the scent of Rob’s May 2006 Phase I pick. Quoting a Rodman & Renshaw analyst, the magazine predicts the company will soon be a takeover target… and says the stock will hit $17 per share. We hope that’s right. Rob recommended it at $5.00… long before BusinessWeak had ever heard of the company or its new, industry-leading technology.

Graham Summers has gone condo crazy… in Nashville, Tennessee. "You can get a condo in [the] Encore building for roughly $330 per square foot, with condos in Signature Tower selling for just over $500 per square foot… So you can get a condo in Nashville for one-third to one-half of what it would cost you to buy in Manhattan." Graham makes a good argument… "The discrepancy between the cost of living on the coasts and Nashville has contributed to this massive influx of young, smart professionals. Another draw is [the] absence of a state income tax."

Dan Ferris sent over an interesting report by Merrill Lynch, noting: "Google’s market cap is bigger than all of Indonesia’s equity or Thailand’s. And Google is selling at 59 times earnings, while Indonesia is 17 times and Thailand is 9 times."

If I had $1 million to put to work right now… I’d get on a plane to Thailand. Sure, there’s a crisis, but Thailand has survived worse… and as my friend Chris Weber points out, it’s the only country in Southeast Asia that was never colonized, giving it a much more homogeneous and stable culture. Unfortunately, the Thai Fund (TTF) is trading at an 8% premium right now… so you’ll have to "do it yourself" if you want to get in at a fair price.

Goldsmith joined us out in Cockeysville for our Thanksgiving feast, presenting us with a lovely bottle of André Pink "Champagne." He appeared to expect us to open it… and to drink it… We pretended to be too busy with the brisket and the turkeys to notice.

Fortunately it was just a gag. He had a nice bottle of Nicolas Feuillatte waiting in the car.

The highlight of our meal was the brisket. It was a big, 12-pound whole brisket… handpicked and lightly trimmed for me by my butcher, Henry, at the Cross Street Market. Using a recipe from the Greenbrier in West Virginia, we sprinkled on a dozen seasonings and let it marinate for a day. Then… at about 9 p.m. on Wednesday, we lit our Traeger pellet smoker and put the brisket on. It smoked for 14 hours at 200 degrees. When it was finished, we wrapped it in foil and a few towels and put it inside a Dutch oven, to let it rest. When we were ready to eat, I sliced it to order. It melted in our mouths. We also had turkey, of course. We roasted one on our Weber grill and we deep-fried the other. Both of the birds were pretty good… but they didn’t compare to the brisket.

My favorite line from last week: "Apparently, Don Quixote was elected to the legislature there…" That was Matt Badiali on Anaheim’s and Pasadena’s decisions to not renew contracts with the coal-fired power plants that supply the cities with electricity. Instead, the cities have announced plans to replace the "dirty" energy of the coal plants with "green" energy by 2027.

Nothing beats the mailbag over a long holiday weekend… Here’s a sampling. And we’ll have more tomorrow… (Send us your thoughts here: feedback@stansberryresearch.com.)

Paid-up subscriber Bernie Krantz poses a wonderfully insulting question, in reference to last week’s note about my neighbor, ol’ Mr. Becker:

"Is money all you think about? Your life must be totally miserable. I agree a person should have the right to do anything he wants to do with his property, but to lower yourself to telling some to go to "h" is kind of demeaning. I would think with all your power, money, and clout, you help the old man out by buying his property for $40 million and then turning around and reselling it for $50 million or so… Keep up the entertaining work but please without the cursing. You are too highly educated for that.

Porter comment: I thought Hell (capital H) was a place, not a curse. And I certainly meant it.

Alliance subscriber Rich Russell was clearly enjoying Thanksgiving… and must have been deep in his cups when he wrote: "You keep asking for feedback, so here goes. I became an Alliance member this past year, and so have had several months to evaluate your service. How shall I put it? I think I have passed through all of Kubler-Ross stages by now and have come to Acceptance LOL! Seriously, I am very happy with my investment in the Alliance, and have become a much better manager of my net worth…"

Regards,

Porter Stansberry

Baltimore, Maryland

November 28, 2006

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