Greetings from VIC West

I'm in Pasadena this week for the West Coast edition of the Value Investing Congress, held every spring at the Langham Huntington.

This is by far the No. 1 investment conference in the country, possibly in the world. For two and a half days, you get some of the best investors in the world spelling out their best ideas in great detail.

Yesterday, I attended the pre-congress workshop: An Advanced Seminar in Value Investing. Whitney Tilson and Glenn Tongue, who run the T2 Partners fund management company, head up the seminar. Whitney and Glenn are the go-to guys on Berkshire Hathaway, the housing/mortgage crisis, and General Growth Properties (the bankrupt mall REIT that went from less than $1 a share to more than $18 a share in about a year). If you want to learn about these investment situations, T2 should be your first stop.

At their seminar, the T2 guys made the case for owning American Express, Berkshire Hathaway, Borders Group, Delia's, Microsoft, General Growth Properties, and Iridium. They also made the case for shorting MBIA, homebuilders, InterOil, Netflix, Lululemon Athletica, and Palm.

S&A readers are familiar with InterOil. In fact, T2, in its desire to present all sides of the story, included our own Matt Badiali's research on InterOil. Matt trekked halfway around the world to Papua New Guinea. He marveled as InterOil tested a natural gas well, producing a 70-foot blowtorch-like flame. He concluded the company is sitting on a valuable store of gas.

So far, Matt's been right. Being short InterOil has been a bad idea. The stock is relatively flat since Matt recommended it, trading lately in the high $60s per share. If Matt is right, it could hit $100 a share. To keep up with Matt's coverage of this controversial and potentially highly profitable natural gas play, click here.

You never know what you're going to learn at an event like this. Just a few minutes ago, the Fairholme Fund's Bruce Berkowitz, Morningstar's "Manager of the Decade," told a packed house he's got a huge position in Goldman Sachs. Berkowitz said he doesn't understand the SEC's case against Goldman. Goldman didn't do anything everybody else wasn't doing, he said. It's a great firm with great people, and he thinks the price is right, too.

Like many successful value investors, Berkowitz is full of wisdom. Shortly after taking the podium, he said, "There's nothing like a little success to create a whole lot of failure down the road."

Berkowitz says he's impressed with the way the government handled the financial crisis, and he loves being in business with the government. He owns positions in several large financials that have benefitted from taxpayer assistance, like AIG, CIT Group, Regions Financial, Citigroup, and Bank of America.

Berkowitz also said Fairholme is "a major owner of the pref," meaning AIG preferred stock. He immediately caught himself and said he wasn't sure he'd ever said that in public before. Fairholme is the largest AIG shareholder outside the government (which owns 80% of it).

Fairholme has about $18 billion under management, about one-third of which is in cash and short-term, highly liquid debt instruments. Berkowitz says as long as you have plenty of cash and know what you're doing, you'll be alright in this world.

The folks back at S&A headquarters are telling me tomorrow is the last day you can take advantage of our reduced-price offer on Extreme Value. We normally charge $1,000 a year for it. Right now, we're offering it for $750. So if you ever wanted to read it, now's a great time to give it a try.

For the May issue of Extreme Value, which comes out Friday, I've found an unusual situation. Investors stand to make 25%-50% by the end of this year. A little company that recently sold its main business is paying out massive "tax deferred dividends." It paid out 17% on March 1, 2010, and it will pay out another 25% or so by the end of this year.

Management has made it clear that creating shareholder value by making these special payments is a high priority. If you want to learn more about this opportunity (and not pay $1,000 a year for Extreme Value), click here and sign up within the next 24 hours.

We wrote it, did you buy it?

Gerald Ford is one of the most experienced bank and thrift investors in America, and he's going to be making investments on the tails of the worst banking crisis in 80 years.

I don't think a monkey throwing darts could lose money in this situation. But with a guy like Gerald Ford? I think it's a virtual certainty he'll make a fortune from the crisis if he can find the right assets to buy. – Tom Dyson, 12% Letter, June 2009

After waiting for nearly two years, Gerald Ford struck on Thursday, purchasing a teetering California bank, Pacific Capital Bancorp, for $500 million. Pacific Capital operates 46 branches and has $7 billion in assets.

With the Fed manipulating the yield curve to line bankers' pockets and the government's support of the real estate markets, it's likely Gerald Ford will quickly transform this failed bank into a valuable franchise, just like he's done with dozens of other dilapidated banks over the past 40 years.

To invest alongside Gerald Ford, Tom recommended readers buy preferred stock in Gerald Ford's investment vehicle, Hilltop Holdings, a year ago. Readers are up 42% in the investment so far, and they're earning an 11% dividend yield.

Recently, Tom found an even better way to invest in broken banks. It has $90 million in spare cash, and it's vying for a piece of the FDIC's toxic-asset auctions. This stock pays a 12% dividend. Click here for access to Tom's newest way to take advantage of the financial crisis fallout. 

New highs: Dorchester Minerals (DMLP), PowerShares Dynamic Biotech Fund (PBE), ConocoPhillips (COP), San Juan Basin (SJT), Amerigas Partners (APU), Walter Investment Mgmt (WAC), Prestige Brands (PBH), Akamai (AKAM), Dana Holding (DAN), A. Schulman (SHLM), Entegris (ENTG), Applied Micro Circuits (AMCC), AuEx Ventures (XAU.TO), Rainey River (RR.V), SAVVIS (SVVS), Silvercorp Metals (SVM), Silver Wheaton (SLW), Eldorado Gold (EGO), Westmoreland Coal (WLB).

 In the mailbag, readers looking for old research... for all kinds of reasons. Send your e-mail to feedback@stansberryresearch.com.

"I'm interested in launching out into the Nevada Gold Royalties as discussed by Matt Badiali. Is this report downloadable? I'm really OLD and so make much use of all the information I can get in the shortest amount of time! Thanks for your service." – Paid-up subscriber Walt Rice.  

Ferris comment: It's posted under "special reports" on the Resource Report page of the S&A website. If you're an Alliance member or subscriber to Matt's Resource Report, the report is free and you can click here to read it. Otherwise, you can subscribe to Matt's Resource Report by clicking here.

"There seems to be a lesson we refuse to learn: Once credibility is lost, it is only regained when there is real change to justify it. The Greek bailout will end up being good money being thrown out after bad. Turnaround won't happen before Greece can show a balanced fiscal budget. All the rest is nonsense." – Paid-up subscriber Steve Rosberg

"'We wrote it... did you buy it?' This is your famous intro. to a great trade of yours. But what about General Electric? You published BK this year, and it is at a new high. And you seem to have forgotten your stand. The same for CAL and SPG. When you try to sell your $10,000. Alliance, I remember. You should, also, because your integrity is thus questionable and meltable when you do not recall your errors. And that makes me (and others) question your ability as analysts and your honesty in your business practices. In the great decline of recent years, your staff came out with 'safe' mortgage companies... everyone of you picked a loser. Remember? Safe banks? Remeber. Jeff's shorts go down in an up market, and my accounts go dowm.

"My pointis clear. When you make a predictin or a reccomendation and the market moves against you, SAY SO. Do not hide behind a TS attachment to the recco... that is insufficient and cowardly. Now, a for GE?" – Paid-up subscriber Jim Kornfeld

Ferris comment: It's hard to find a group that admits its mistakes as quickly and thoroughly as we do. For example, take a look at the Report Card Porter publishes each year. I challenge you to find a financial publisher who produces a more candid evaluation of his company's work.

Or consider the model portfolios each editor publishes at the end of his newsletter. The performance of every open position is there for anyone who cares to read it.

"Hey Porter, According to executive order 11005,... government seizure of all storage facilities... you might want to rethink part of your crisis strategy, just a thought. Read it for yourself at http://www.sweetliberty.org/issues/eo/eo/11005.htm." – Paid-up subscriber Joesph Turpin

Regards,

Dan Ferris
Pasadena, California
May 4, 2010Greetings from VIC West... The IOC controversy... Berkowitz' new position in Goldman... Extreme Value bargain expires tomorrow... Tom Dyson's 'Ford' connection...