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portefeuille (98.32)




September 25, 2009 – Comments (71)


September 18, 2009


Dear Pershing Square Investor:

The Pershing Square funds underperformed most major market indexes for the second quarter of
2009 while substantially outperforming most major market indexes for the year to date and since
inception as set forth below:

Based on the timing of our most recent quarterly letters, we have developed a deserved
reputation for tardiness in our quarterly communications. The previous sentence should have
been written with an “I” rather than “We” as I am the cause for these late communications. The
operations, finance, and IR teams deserve full credit for the timely distribution of performance
and capital account statements, which has given me cover for somewhat tardy quarterly letters.
Unlike every other function at Pershing Square, whether it is investment analysis, accounting/
finance, IR, technology, legal/compliance, or administration – all of which are team-driven – I
insist on personally writing our quarterly letters. Some firms outsource this important function,
but as the portfolio manager, I believe that you deserve to hear from me directly with no filter, at
least four times a year. Three of these communications historically have been quarterly letters
with the fourth being our annual dinner presentation.

The challenge with this approach is that I am always willing to defer the writing of the quarterly
letter in favor of spending the time required for an existing investment in the portfolio or for the
analysis of a promising new investment. I also don’t like to write unless I have something
significant to say and/or there have been material developments in the portfolio that we are
prepared to share in light of competitive or other considerations. As a result, these letters
occasionally get delayed, particularly, one might expect, in a year as interesting as this one. That
said, I am extremely sensitive to making sure that any material negative news is delivered
What you can glean from these considerations is that in the future if your letter has not yet
arrived, in all likelihood it means that we are making progress with existing investments and/or
have identified a potential new situation(s) that is consuming our time and investment resources.
The good news is that the foregoing description reflects the current state of affairs. We like what
we own and we are carefully studying a number of potential opportunities that have
extraordinary potential.
Portfolio Update
During the quarter, most of our portfolio companies made significant operating and business
progress that contributed to stock price appreciation.

Portfolio Update

During the quarter, most of our portfolio companies made significant operating and business
progress that contributed to stock price appreciation.

EMC Corporation

Our second largest investment is our stake in EMC. We invested in EMC because of the high
quality nature of the company’s two principal business lines – the Information Infrastructure and
Virtual Infrastructure businesses – and our ability to acquire a position at a substantial discount
to our estimate of fair value.
Each of EMC’s Information Infrastructure’s three segments – Information Storage, Content
Management and Archiving, and RSA Information Security – leads the market in which it
competes. Because of the extremely high compound growth rate in data globally – estimated by
industry experts at 60+% per annum; (think saved YouTube videos and regulatory requirements
to preserve documents and data), we believe that demand for data storage over the long-term is
largely insensitive to the economy. As a result, we expect that EMC’s dominant market position
in Information Infrastructure will continue to allow it to generate growing, and predictable free
cash flow from new product sales, recurring maintenance and warranty revenues, and the sale of
consumables. The company also benefits because of its substantial operating leverage from
economies of scale, large barriers to entry, and economies of scope, where the breadth of the
company’s product offering is a significant competitive advantage.
EMC’s customers are diverse by industry and geography and enjoy efficiencies from
concentrating their infrastructure spending on a small number of market leading vendors such as
EMC. Its customers are also highly risk averse, as data storage is a critically important function
for regulatory and competitive reasons, and customers face significant costs if they switch to an
alternative vendor.
Information Infrastructure enjoys the benefits of both the inherent operating leverage of the
software business with the high switching costs of the hardware business. Because EMC’s
Information Infrastructure hardware is built from the assembly of components manufactured by
multiple, highly competitive, third-party suppliers, EMC does not suffer the inventory risk,
capital intensity, and supplier negotiating power of traditional hardware businesses.
EMC’s off-balance sheet assets include a large base of satisfied customers that are receptive to
additional offerings from EMC, and a sales force that is considered by many to be the best in the
information technology industry. Combined, these assets facilitate EMC’s expansion into
adjacent markets.
The rapid adoption of virtualization and cloud computing led by EMC’s 84% owned, publicly
traded VMware subsidiary – we are rapidly moving to a world in which you will simply rent
your computing power and storage from third parties and you will no longer have that noisy,
heat-generating, power-consuming box under your desk – increases the demand for EMC’s
offerings, while improving EMC’s opportunity to differentiate its offerings and maintain its
VMware is driving a transformation of the information technology industry, and in that process
we expect it will capture large profits over time. We believe that the VMware can ultimately
enjoy a market position and economics similar to that enjoyed by Microsoft’s Windows x86
server and desktop operating system.
We attribute EMC’s substantial stock price appreciation in recent weeks to the market’s
recognition of a recently completed strategic acquisition, better-than-expected second quarter
operating performance, and the continued business progress of VMware.
We believe that EMC is undervalued on a sum-of-the-parts basis, and that the value of its two
core operating segments will continue to increase at an attractive rate.

General Growth Properties Inc.

On August 11th, Judge Gropper, the judge overseeing GGP’s bankruptcy, denied various motions
by secured creditors to dismiss the individual bankruptcy cases of the GGP property-owning
subsidiaries (the SPEs). The SPEs filed for bankruptcy along with GGP’s parent company so
that GGP could reorganize the entire enterprise in an efficient and cost effective manner.
Numerous secured creditors objected, arguing that the SPE bankruptcies were not in good faith
as the SPEs were supposed to be “bankruptcy remote,” and because their properties were
performing strongly, generating substantial cash flow and covering debt service with no evidence
of financial distress.
GGP argued that the directors of the SPEs had acted in good faith in putting the SPEs in
bankruptcy. They did so because they could not be confident, in light of the current state of the
real estate capital markets, that the SPEs could refinance their debt maturities as they come due
over the next several years, creating the risk of a future GGP bankruptcy.
Ruling in favor of GGP, Judge Gropper dismissed the creditors’ motions deciding that the
directors of each of the SPEs had acted in good faith. In his decision, the judge encouraged GGP
and its secured creditors to promptly negotiate an extension of maturities. The upshot of the
judge’s decision is that GGP should be able to successfully reorganize by extending the
maturities of its short-term debt.
Once maturity extensions of GGP’s mortgage debt are achieved, either consensually or through
litigation and court resolution, the company will work with its advisors to determine an
appropriate capital structure for the newly reorganized company. During the process, (1) the
enterprise value of the company will be determined by the court or by negotiation among the
unsecured creditors and equity holders, (2) the proportion of the company owned by current
common holders and unsecured creditors will be finalized, and (3) the company will thereafter
emerge from bankruptcy. Under the bankruptcy code, GGP’s unsecured creditors are entitled to
receive no more than the face amount of their claims plus accrued interest (although accrued
interest is often waived as part of a negotiation when unsecured creditors achieve par recoveries).
The balance of GGP’s value should inure to the benefit of the company’s shareholders. As a
result, the company’s valuation will likely play an important role in determining recoveries for
We believe the best comparable for GGP is Simon Properties, the largest U.S. shopping mall
REIT. While Simon is comparable to GGP in many ways, we believe that Simon stock may
currently trade at a discount to its intrinsic value because of the overhang of potential future
equity issuances that may be required to refund maturing debt obligations. At today’s stock price
of approximately $74, Simon trades a cap rate of approximately 7% using trailing 12-month net
operating income, a widely used measure of real estate value. If one were to apply Simon’s
current cap rate to GGP, it would give the company an enterprise value of $40 billion, implying a
stock price of $40 for GGP.
GGP stock has risen more than12-fold since we first began acquiring our position at 34 cents per
share on November 13th, and the unsecured debt we own has increased in value more than three
times over the same period. Over the same period, the risks to GGP bondholders and
shareholders have been reduced substantially, in our opinion, as the bankruptcy has progressed
and as the economy has shown signs that it may be exiting the recession. Despite this progress,
GGP is a highly leveraged company and there continues to be substantial uncertainty about the
potential outcomes for GGP security holders.



(from here: Pershing Square Q2 2009 Investor Letter (pdf)) 


71 Comments – Post Your Own

#1) On September 25, 2009 at 7:14 PM, portefeuille (98.32) wrote:

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#2) On September 25, 2009 at 7:20 PM, portefeuille (98.32) wrote:

Who’s Holding the Bag? (pdf)

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#3) On September 25, 2009 at 7:25 PM, portefeuille (98.32) wrote:


Ackman Devoured 140,000 Pages Challenging MBIA Rating

By Christine Richard and Katherine Burton

Jan. 31 (Bloomberg) -- It was the $109,000 photocopying bill that hedge fund manager William Ackman says made him realize how much he'd read and underlined before betting against bond insurer MBIA Inc. in 2002.
His law firm charged him for copying 725,000 pages of financial statements and other documents, 140,000 of them about MBIA, to comply with a subpoena. Following New York and U.S. probes of his trading and reports, Ackman persisted in challenging MBIA's AAA credit rating for more than five years, based on his own research.
Ackman may soon be proved right. MBIA, the largest provider of insurance against defaults in the global credit market, today reported a fourth-quarter net loss of $2.3 billion because of the declining value of mortgage-related securities it guaranteed. The independent research firm CreditSights Inc. this week said MBIA's credit rating may be downgraded. Ackman had warned that MBIA was magnifying its risks by backing instruments such as those based on loans to the least creditworthy homebuyers.
``It's in the nature of a shareholder activist to be persistent,'' says Ackman, now 41. ``I've been persistent because it's an important issue. People are obsessive about stupid things. They are persistent about important things.''
In the MBIA documents, Ackman says he saw that the insurer was guaranteeing untested asset-backed securities. He also found a reinsurance transaction that allowed the company to downplay a loss. MBIA agreed in January 2007 to pay $75 million to settle U.S. regulators' inquiries into that deal.



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#4) On September 25, 2009 at 7:29 PM, portefeuille (98.32) wrote:

Bill Ackman, Up 22% in 2007, Boosts Bet Against MBIA

Short-Seller Fires Torpedo at Biggest Bond Insurer: Joe Mysak

Bill Ackman Was Right: MBIA, Ambac on `Ratings Cliff'


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#5) On September 25, 2009 at 7:48 PM, portefeuille (98.32) wrote:

WTF is going on in the ABX Markets?

(don't panic, that was in 2007 ...)

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#6) On September 25, 2009 at 7:50 PM, portefeuille (98.32) wrote:

Markit ABX.HE index

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#7) On September 25, 2009 at 7:55 PM, portefeuille (98.32) wrote:

Portfolio Update
During the quarter, most of our portfolio companies made significant operating and business
progress that contributed to stock price appreciation.

Portfolio Update

During the quarter, most of our portfolio companies made significant operating and business
progress that contributed to stock price appreciation.

sorry for screwing that up. when do we get an edit fuction?

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#8) On September 25, 2009 at 8:14 PM, dragonLZ (70.08) wrote:

Thank you, porte.

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#9) On September 25, 2009 at 10:28 PM, portefeuille (98.32) wrote:



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#10) On September 25, 2009 at 11:49 PM, portefeuille (98.32) wrote:

GGP Presentation 05.27.2009

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#11) On September 25, 2009 at 11:51 PM, portefeuille (98.32) wrote:


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#12) On September 25, 2009 at 11:51 PM, portefeuille (98.32) wrote:

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#13) On September 25, 2009 at 11:58 PM, portefeuille (98.32) wrote:


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#14) On September 25, 2009 at 11:59 PM, fmahnke (70.66) wrote:


Thanks for the post.  It's great to see I outperformed Ackman so far this year.  Of course if your caps picks are indicative of your personal holdings, you've blown both of us away.

I've been follwing EMC/VMW for awhile and know your a  fan of VM. My problem is that I can clearly see the benefits of the technology, but have worried that ORCL/MSFT could eventually jump in and ruin the party.  Wondering what you think about this risk and whether you would agree that, on a relative to each other basis, EMC looks a bit cheaper here.

Also, am thinking about buying CRME not that its dropped into the bottom of the auction price range,  Curious whether you own it and still believe,  Thanks

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#15) On September 26, 2009 at 12:20 AM, portefeuille (98.32) wrote:

I've been follwing EMC/VMW for awhile and know your a  fan of VM.

actually just an EMC fan for the reason Ackman stated here.


We believe that EMC is undervalued on a sum-of-the-parts basis, and that the value of its two
core operating segments will continue to increase at an attractive rate.


Curious whether you own it and still believe, ...

Yes, I still believe, hehe!



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#16) On September 26, 2009 at 12:24 AM, fmahnke (70.66) wrote:


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#17) On September 26, 2009 at 12:41 AM, portefeuille (98.32) wrote:


In 2003, as the New York attorney general's probe was under way, Ackman fired off a memo to MBIA posing 146 questions he says the company never answered. The first was, ``Why did you have me investigated?''


(from here)

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#18) On September 26, 2009 at 12:44 AM, portefeuille (98.32) wrote:

Ackman on MBIA and Ambac (MBI, ABK)

Below is a letter written by activist investor William Ackman to Moody’s ratings agency in response to their AAA rating on the companies despite substantial losses. It is an interesting read that sheds a lot of light on the whole bond insurance situation…

 January 18, 2008

Mr. Raymond McDaniel Mr. Stephen Joynt
Executive Chairman and CEO CEO and President Moody’s Corp. Fitch Ratings
99 Church St. One State Street Plaza
New York, NY 10007 New York, NY 10004

Mr. Deven Sharma
Standard & Poor’s
55 Water Street
New York, NY 10041

Re: Bond Insurer Ratings

Ladies and Gentlemen:

As a Nationally Recognized Statistical Rating Organization, Moody’s, S&P, and Fitch have been granted a level of authority that capital market participants and Federal and State regulators have historically relied upon in evaluating the safety and soundness of corporations, regulated financial institutions, and structured finance securities. To state the obvious, because of your critical role in the capital markets, it is essential that the ratings you publish are the result of comprehensive and accurate analysis.

As you well know, we have privately, in meetings and correspondence with you, and publicly in various presentations that we have made, called into question your ratings of the bond insurance industry, in particular, the ratings for MBIA Insurance Corp. and Ambac Assurance Corp. and their holding companies.

Each of you, according to your recent public statements, is in various stages of updating your ratings of the bond insurers. Unfortunately, however, your previous ratings assessments have erred materially in their omission of certain critical analysis and the inclusion of outright errors in your work. As you conduct your most recent revisions of your analysis on the bond insurers, it is vital that you conduct a thorough assessment of all aspects of the bond insurers’ business lines, their reinsurers, and investment portfolios so that the rating decisions that you ultimately publish can be relied upon by capital markets participants.

Below we highlight a number of factors that you have failed to consider in your prior assessments of the bond insurers’ capital adequacy:

1) Impact of Losses Should be Measured on a Pre-tax Basis

We believe that each of you overstates the bond insurers capital cushion due to tax benefits you include in calculating the impact of RMBS and CDO losses. For instance, in S&P’s recent press release update published yesterday, MBIA’s losses on RMBS and CDOs are expressed as “after-tax” losses. In order, therefore, to determine the actual cash losses implied by S&P’s after-tax estimate, one must gross up the reported $3.18 billion of after-tax losses. Assuming a tax rate of 38%, it appears that S&P is estimating MBIA’s actual cash losses at $5.13 billion, nearly $2 billion more than the losses adjusted for tax benefits.

Insurance claims must be paid in cash. A bond insurer is only able to obtain tax benefits if the insurer is a going concern and is able to generate sufficient taxable income in the current or future years to offset the losses from paid insurance claims. Your analysis makes the aggressive assumption that the bond insurers will remain going concerns and will therefore be able to continue to write new premiums and generate income in the future.

Based on recent industry developments – including Berkshire Hathaway’s entrance into the business – it appears unlikely that MBIA, Ambac and many of the other bond insurers will be able to continue as going concerns. In a runoff scenario, we do not believe that the bond insurers will generate sufficient taxable income to offset the net operating losses generated by paid losses. While U.S. corporations can receive tax refunds by carrying back tax losses up to two calendar years, the amounts that could be refunded from carrying back losses are de minimis relative to claims payable. Even in the event the bond insurers generate taxable income in future years, it may be many years before these tax benefits can be realized, if ever, particularly in the event of corporate ownership changes caused by capital raising or stockholder turnover.

Net operating loss carryforwards are not cash and are not available to pay claims and should therefore not be deducted from losses in calculating bond insurer capital adequacy. By using after-tax loss estimates rather than pre-tax losses – the amount that will need to be paid in cash – you are understating the actual losses payable by more than 60%.

Your updated rating assessments should be adjusted to exclude tax benefits in your calculation of capital adequacy

2) Covenant Violations and Loss of Access to Liquidity Facilities

As a result of recent losses, both MBIA and Ambac have triggered covenant violations on their liquidity facilities. As a result, Ambac has lost access to $400 million of funding and MBIA to $500 million of capital. The impact of the loss of these facilities is material to the liquidity profile of the holding companies and their insurance subsidiaries and must be considered in your credit assessment.

3) Loss Estimates Must Incorporate Reinsured Exposures

Your ratings of the bond insurers are based on the bond insurers’ net credit exposures. That is, you reduce their credit exposure by those exposures that have been reinsured. This is best understood by example.

As of September 30, 2007, MBIA has re-insured approximately $80 billion of par value
of its exposures. More than $42 billion of this reinsurance was purchased from Channel Re, a Bermuda- based reinsurer whose only customer is MBIA. The two most senior officers of Channel Re are former executives of MBIA. MBIA owns 17% of the company and has two representatives on Channel Re’s board of directors.

On recent conference calls, Moody’s and S&P have stated that they have not yet updated their ratings of the monoline reinsurers including Channel Re. Earlier this week, on January 16th, Partner Re and Renaissance Re, the majority equity owners of Channel Re, wrote off the entire value of their investments in Channel Re due to losses it has recently incurred that substantially exceed Channel Re’s capital, an impairment that Channel Re’s two majority owners have concluded is “other than temporary.”

Despite the fact that Channel Re has negative book equity and $42 billion of MBIA’s credit exposure – $21.5 billion of which is CDOs of ABS or CLO/CBOs – Moody’s and S&P continue to rate the company Triple A with a stable outlook. Fitch does not rate Channel Re and apparently relies on S&P’s and Moody’s stale Triple A ratings in its
analysis of MBIA’s capital adequacy.

Captive reinsurers whose ratings are not regularly updated offer the potential for abuse.

We believe that MBIA reinsured on a quota share basis 25% of its 2007 CDO transactions with Channel Re. As a result of Moody’s and S&P not updating its ratings of Channel Re, these exposures do not appear on MBIA’s list of exposures and have not been included in your calculation of MBIA’s capital adequacy.

MBIA’s second largest reinsurer is Ram Re which has reinsured $11 billion of par as of September 30, 2007. While the rating agencies have not updated their credit ratings of Ram Re, the market appears to have already done so. The publicly traded stock of Ram Holdings Ltd., the parent company of Ram Re, has declined 92% in the last year. The company currently trades as a penny stock with a market value of $32 million.

We believe that Ram Re is substantially undercapitalized and therefore, like Channel Re, is unlikely to be able to meet its obligations to MBIA.

We also note that MBIA reinsures Ambac, and Ambac reinsures MBIA. You must also consider the iterative impact of downgrades of one on the other with respect to both reinsurance and their respective guarantees of each other’s investment portfolio assets which we discuss further below.

In your updated assessment, it is critical that you update your ratings of the bond insurers’ reinsurers and reconsolidate and calculate the losses on these exposures that have been reinsured with reinsurers that are inadequately capitalized.

4) Investment Portfolios are Riskier Than They Appear

As you are well aware, the investment portfolios of the bond insurers include a substantial amount, often a majority, of bonds that are guaranteed by either the bond insurer itself or by other bond insurers. The bond insurers include these guarantees in calculating the weighted average ratings of their investment portfolios. We note that a minimum average Double A rating is a key rating agency criterion for the insurers’ Triple A rating.

A guaranty to oneself is of course worthless and therefore you should exclude the bond insurers’ guaranty of its own investment obligations and use the underlying ratings of these instruments in determining the portfolios’ credit quality.

You should also carefully calculate the impact of a downgrade of the bonds held by one bond insurer that are guaranteed by other insurers in your calculation of capital adequacy. In light of the general distress in the industry, we believe that the rating agencies should evaluate the bond insurers’ investment portfolios as considered on an underlying rating basis.

5) Commercial Mortgage Backed Securities (CMBS)

To date, you have limited your analysis to RMBS securities and other structured finance securities with exposure to RMBS (CDOs). This limited review of exposures ignores the fact that the same lending practices and flawed incentive schemes that fueled the subprime lending bubble have been very much at work in CMBS and corporate finance.

On January 17, 2008, Fitch commented that it believed that CMBS delinquencies are “likely to double, and perhaps even triple, by the end of 2008.” As of September 30, 2007, MBIA had insured $43 billion net par of CMBS securities, the vast majority of which was underwritten in the past two years. Failing to consider the potential for losses in this portfolio in your calculation of capital adequacy is simply negligent.

6) Claims-Paying Resources Definition Overstates Capital Available to Pay Claims

The rating agencies have adopted the bond insurance industry’s definition of capital in the form of “Claims Paying Resources” or “CPR.” We believe there are significant flaws with the calculation of CPR used by the industry and the rating agencies.

First, bond insurers include the present value of future premiums discounted at extremely low discount rates ~5% in their calculation of claims paying resources. Substantially all of these premiums are from structured finance guarantees. We believe that the bond insurers and the rating agencies do not adequately consider the facts that:

(1) when structured finance obligations default, accelerate, or otherwise prepay ahead of schedule these premiums disappear,
(2) purchasers of secondary market guarantees are likely to terminate their periodic premium payments because of the deteriorating credit quality of the bond insurers,
(3) the reserves for losses on these exposures (for example 12% of premium for MBIA) have proven to be inadequate and therefore overstate the net premium income, and
(4) there is no provision for overhead, remediation, legal or other costs required for the bond insurers to run their business going forward.

There is also no mechanism whereby the bond insurers can borrow against these potential future premiums to be used to pay claims in the present day.

There is no other financial institution in the world which takes the present value of interest spread income on loans in its portfolio and adds it to its capital. For all of the above reasons, we believe that the present value of future premiums should not be included in CPR.

CPR includes the bond insurers’ so-called depression lines of credit. As you well know, depression lines of credit can only be drawn to pay claims on municipal obligations and only after a substantial deductible. In that the losses are occurring primarily on structured finance obligations, these lines of credit should not be included in CPR

The Capital Base included in CPR is also likely to be overstated because the investment assets of the bond insurers consist primarily of bond insurer guaranteed obligations that are valued inclusive of the guarantee, when they should be valued on an unwrapped basis. The high degree of balance sheet leverage for certain bond insurers means that small changes in the values of these portfolios have a large impact on the bond insurers’ capital base.

You should adjust your estimate of CPR for each insurer to reflect the above factors in order to accurately establish the capital available to pay claims.

7) MBIA’s $1 Billion Surplus Note Issuance

Last Friday, MBIA priced an offering of surplus notes at par with a 14% yield. Within one week the notes traded down to the mid-70s and have a yield to call of more than 20%. Previous to their pricing, the notes were rated by Moody’s and S&P at Double A.

The MBIA surplus note issuance is perhaps the clearest example of the failure of the rating agencies to accurately assess the creditworthiness of a bond insurer. MBIA is still rated Triple A by all three raters. The notes received a Double A rating because of their subordination to the other obligations of MBIA Insurance Corporation. That said, how can a billion dollars of Double A rated obligations sell in a cash transaction between sophisticated parties at a 14% yield, and then trade to yield of 20% or more — a rate consistent with a Triple C or near-to-default obligation?

Bank of America 5 ¾% bonds due 2017, obligations of a financial institution that is also rated Double A, closed today at 5.55% yield, a more than 15 percentage point lower rate than the MBIA surplus notes. This is prima facie evidence that your ratings of MBIA are overstated.

Billions of MBIA’s CDO Exposure Require Payment on Default

You have stated that bond insurers have no accelerating CDO guarantees and that all of their contracts are structured as “pay-as-you-go.” I quote S&P from a paragraph entitled, “Time is On Their Side,” in their December 19, 2007 report: “Detailed Results of Subprime Stress Test of Financial Guarantors.”

“As for swap exposure, except for ACA there are no collateral posting requirements and swaps are written in pay-as-you-go format.”

On January 9, 2008, MBIA filed a copy of a powerpoint presentation which was used in the Surplus Notes offering road show. On page 8, MBIA states that $8.1 billion of its Multi-sector CDOs require payment with “Credit events as they occur.”

The liquidity demands of accelerating CDO exposure create extreme liquidity risk and must be considered in the context of the bond insurer ratings. We encourage you to examine all of the bond insurers CDS/CDO exposure to determine the amount of exposure that is not pay-as-you-go, but rather accelerates, and consider the liquidity demands of such exposures in your rating assessments.

9) Holding Company Liquidity Risk

In light of recent events, we believe it is likely that most bond insurers will be prevented from upstreaming dividends to their holding companies as a result of regulatory intervention, as regulators work to preserve capital for policyholders.

Most bond insurer holding companies have limited cash, have lost or will lose access to liquidity facilities, and have substantial cash needs for interest payments, operating expenses, and dividends (for so long as they continue to be paid). In addition, bond insurers with substantial investment management or swap operations have additional liquidity needs in the event of a downgrade.

We believe that both MBIA and Ambac have substantial collateral posting obligations in the event of a holding company downgrade. For example, MBIA has $45 billion of derivative obligations at the holding company that relate to currency, interest-rate, and credit default swaps that the holding company has entered into. The combination of volatility in each of these markets and the increased collateral demands required in holding company downgrade scenarios will put a severe strain on holding company

The bond insurers’ muni-GIC business is also a large potential liquidity strain as municipalities withdraw funds from these GIC programs, assets must be liquidated, and/or collateral must be posted. Various MTM programs also create liquidity risk as assets may have to be sold to meet redeeming bondholders. The liquidity risks of these programs and the underlying assets should be carefully examined.

ACA’s immolation is but one example of what happens to a once-investment grade bond insurer which, if downgraded, is required to post collateral.

In addition, as a result of shareholder, bondholder, and/or surplus noteholder litigation, we expect holding company legal expenses and eventual litigation claims to rise substantially. Because the holding companies typically provide indemnities for employees and directors, we would expect that directors would be loathe to allow liquidity to leave the holding company estate, depriving directors and employees of the resources to protect themselves from claims. In these circumstances, we would expect companies to seek bankruptcy as a means to protect the allocation of value among various stakeholders.

10) MBIA - Warburg Pincus Transaction

You have assumed in your analysis that the Warburg Pincus deal and follow-on rights offering are certainties even though neither transaction has closed. While Warburg has made affirmative statements about the transaction, both publicly as well as privately, to surplus note buyers and the media, we believe there continues to be transaction closure risk for both the initial stock purchase and future rights offering, with the rights offering having greater uncertainty.

You have also assumed that 100% of the $1 billion Warburg deal will be downstreamed to the insurance subsidiaries and this, too, is not a certainty. You should receive assurances from MBIA and require it to contribute the full billion dollars to its insurance subsidiaries before you include the funds in calculating insurance company capital.

With the collapse in MBIA’s stock price and today’s downgrade of Ambac, we believe it will be difficult for MBIA to execute the rights offering, particularly before the March 31st, 2008 drop dead date. With the stock at $8.55 per share and the market aware that the $500 million in rights offering proceeds is insufficient to adequately capitalize the company, it will be difficult to set a market-clearing price. Assuming for a moment the price is set at $5.00 per share, the company would have to issue 100 million shares and may sell control to Warburg at a discount in the event shareholders elect not to participate. We believe a shareholder vote and approved registration statement will likely be required in such a circumstance, delaying the ability to consummate the transaction beyond the March 31st Warburg backstop drop dead date.

11) Future Business Prospects and Franchise Value Have Been Irreparably

Following the dramatic decline in share prices, widening of credit protection spreads, dismal performance of the high yield surplus note issuance, and recognition of multibillion dollar losses in a supposed “no-loss” business, the ability of bond insurers to market their “AAA” seal of approval has been permanently undermined. As uncertainty has grown, municipalities have raised capital without insurance and found that they can borrow at attractive rates as compared to historical insured bond issuances.

The entrance of Berkshire Hathaway is a devastating competitive reality that will capture the lion’s share of an already shrinking market for municipal bond insurance. While some commentators have suggested that this might create a pricing umbrella that will benefit the existing bond insurers, this is demonstrably false. Because Berkshire Hathaway already possesses a real Triple A rating, the bonds that are wrapped with its guarantee will trade with a tighter spread when compared to a bond insured by a traditional bond insurer, even one without legacy structured finance exposure.

Consequently, Berkshire will be able to charge higher premiums than the other monolines by taking a higher percentage of the spread (perhaps as much as 80% or more) that is saved through the use of insurance, and still provide the issuer with an overall lower cost of borrowing that if they bought insurance from a traditional monoline. As such, we believe that Berkshire Hathaway will likely quickly reach an 80%-90% market share of municipal bond insurance.

12) Going Concern Opinion

In light of all of the above and other current developments, we believe it will be difficult for MBIA, Ambac, and certain other bond insurers to obtain going concern opinions from their auditors. You should consider the likelihood of the insurers’ obtaining clean opinions and the implications if they do not in your rating assessments.

Lastly I encourage you to ask yourself the following question while looking at your image in the mirror:

Does a company deserve your highest Triple A rating whose stock price has declined 90%, has cut its dividend, is scrambling to raise capital, completed a partial financing at 14% interest (now trading at a 20% yield one week later), has incurred losses massively in excess of its promised zero-loss expectations wiping out more than half of book value, with Berkshire Hathaway as a new competitor, having lost access to its only liquidity facility, and having concealed material information from the marketplace?

Can this possibly make sense?

Please call me if you have any questions about the above. As usual, I will make myself available at your convenience.


William A. Ackman


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#19) On September 26, 2009 at 1:10 AM, portefeuille (98.32) wrote:

Lastly I encourage you to ask yourself the following question while looking at your image in the mirror:

Does a company deserve your highest Triple A rating whose stock price has declined 90%, has cut its dividend, is scrambling to raise capital, completed a partial financing at 14% interest (now trading at a 20% yield one week later), has incurred losses massively in excess of its promised zero-loss expectations wiping out more than half of book value, with Berkshire Hathaway as a new competitor, having lost access to its only liquidity facility, and having concealed material information from the marketplace?

Can this possibly make sense?

Please call me if you have any questions about the above. As usual, I will make myself available at your convenience.


William A. Ackman


really funny!

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#20) On September 26, 2009 at 1:23 AM, portefeuille (98.32) wrote:

Could people please quit giving "underperform" ratings to leveraged ETFs?

What's the point?

Show some courage and read 170000 pages about something. Then give presentations and write letters like Ackman. I might be interested.

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#21) On September 26, 2009 at 8:45 AM, devoish (86.34) wrote:

Show some courage and read 170000 pages about something. Then give presentations and write letters like Ackman. I might be interested.

Fine. Then you track down the intermittent no-start in the Accord, fix the brake pull/pulsation in the Acura TL, pop a new intake manifold gasket into the Altima, address the stalling in Chevy p/up and the check engine light in the Ford mini-van.

Seriously, excellent post and thanks for taking the time to show me the size of the gap between what I know, and what is.

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#22) On September 26, 2009 at 9:14 AM, portefeuille (98.32) wrote:

Show some courage and read 170000 pages about something.

Not sure where that number came from. It should have been:

Show some courage, hire an expensive law firm and let them copy 725000 pages for you.

I guess that would give you the time to fix the cars in the meantime ...

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#23) On September 26, 2009 at 12:32 PM, DEALWITHTHEDAY (23.44) wrote:


Cramer has been all over the leveraged ETF (not that I agree). He must have more weight than I give credit for.


I live your picks MYRX, RIMM. Thanks.

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#24) On September 26, 2009 at 12:57 PM, dragonLZ (70.08) wrote:

Porte, I'm willing to bet against you and Ackman.

I say that MBI will outperform EMC from here up until the end of the year.

If I lose, I'll send a $100 check to the charity of your choice. If I win, you don't owe me anything.

Do you take the bet?

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#25) On September 26, 2009 at 1:21 PM, topsecret09 (83.94) wrote:

#24) On September 26, 2009 at 12:57 PM, dragonLZ (97.25) wrote:

Porte, I'm willing to bet against you and Ackman.

I say that MBI will outperform....     ( Chart says trend Is up...  Looks like breakout on volume, next stop $10.00  TS

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#26) On September 26, 2009 at 2:01 PM, portefeuille (98.32) wrote:

I don't think Ackman has any positions in MBI and neither have I. He does apparently hold EMC shares and so do I.

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#27) On September 26, 2009 at 2:03 PM, portefeuille (98.32) wrote:

I am not interested in any private bets. My EMC related "bets" are in the form of long positions in plain vanilla calls.

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#28) On September 26, 2009 at 2:10 PM, portefeuille (98.32) wrote:


#13) On February 27, 2009 at 9:59 AM, portefeuille (99.99) wrote: MBI - 2.90 - outperform

#755) On August 27, 2009 at 1:19 PM, portefeuille (99.99) wrote: MBI - end outperform - 6.01 - new rating: market perform


(from here)


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#29) On September 26, 2009 at 2:49 PM, portefeuille (98.32) wrote:


Yara sticks to outlook after Potash Corp warning

Mon Sep 21, 2009 10:11am BST

OSLO, Sept 21 (Reuters) - Norwegian fertilizer company Yara International (YAR.OL) said on Monday it was sticking to the outlook from its second-quarter report after Potash Corp (POT.TO) cut its outlook on Friday.

"(Potash Corp) is not very strongly related to our business activities," Yara spokesman Torgeir Kvidal said. Asked if Yara was maintaining its outlook, Kvidal said: "That is correct."

He said Yara was monitoring the political debate in Ukraine over the privatisation of a Black Sea chemical plant, where Yara has said it has filed documents with partners to be qualified to bid.

"If the (privatisation) process begins, we cannot say if we will bid or how much," Kvidal said.




#773) On September 06, 2009 at 12:03 AM, portefeuille (99.99) wrote: YAR.OL - 29.88 (179.30 NOK) - outperform



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#30) On September 26, 2009 at 2:54 PM, portefeuille (98.32) wrote:


Ukraine president moves to halt chemical plant sale

Thu Sep 17, 2009 9:57am EDT

* Yushchenko move seems aimed at rival, PM Tymoshenko

* Tymoshenko says auction will still go ahead

* Government hoped sale would boost revenue by $500 mln

By Yuri Kulikov

KIEV, Sept 17 (Reuters) - Ukrainian President Viktor Yushchenko on Thursday moved to block the privatisation of a Black Sea chemical plant in what analysts said was a clear act to spite his rival, Prime Minister Yulia Tymoshenko.

A decree from Yushchenko's office said he took the decision to suspend privatisation of the Odessa Port plant, which the government hoped would bring at least $500 million into depleted state coffers, because of national security concerns.

But analysts and opponents saw the decision as a clear move by Yushchenko to stymie Tymoshenko, a rival who is far more popular in the country and is a front-runner in the race to succeed him in a Jan. 17 election.

Yushchenko and Tymoshenko were allies in a pro-Western revolution in Ukraine in 2004 but quickly fell out and are now fierce rivals for authority in the country.

Tymoshenko has high ratings and good chances in the January election while Yushchenko, whose current ratings are low, appears to have little chance of re-election.

"This (suspension move) is a continuation of the confrontation between Yushchenko and Tymoshenko ... In these conditions the (state property) fund can not hold the Sept. 29 auction. It seems to me that the sale will not take place before the presidential election," Agshin Mizazade, analyst for Foyil Securities, told Reuters.

But Tymoshenko herself said Yushchenko's move would not stop the auction, in which a Norwegian, Polish and Libyan consortium has expressed an interest.


Norwegian fertiliser giant, Yara International (YAR.OL) said earlier this week it and partners from Poland and Libya had submitted documents to bid for the plant.




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#31) On September 26, 2009 at 3:30 PM, portefeuille (98.32) wrote:


22.09.2009 17:46

Bids in on banned sale of Odessa plant-organisers

KIEV, Sept 22 (Reuters) - Three bids have been received for the sale of Ukraine's Odessa Port chemical plant and the auction will go ahead on Sept. 29 despite a presidential ban, Prime Minister Yulia Tymoshenko said on Tuesday.
A spokesman for the State Property Fund, the national privatisation agency, told Reuters that bids had been received from two Ukrainian companies, Frunze-Flora and Nortima, and Russian firm Azot Servis, a unit of Sibur holding.
Norwegian fertilizer company Yara International, which said last week it was interested in bidding together with a Polish and a Libyan companies, appeared finally not to have made an offer.
President Viktor Yushchenko issued a decree last week to block the sale in what analysts said was a clear act to spite Tymoshenko, his rival in a presidential election on Jan. 17.
The government has hoped to raise at least $500 million from the sale.
'I am convinced that the privatisation will go ahead in the scheduled time-frame ... Everything will be fine,' Tymoshenko told journalists.
'The auction commission has opened the envelopes of three participants in the auction ... The financial proposals will be opened at the auctions and they will compete with one another,' said Fund spokeswoman Nina Yavorskaya.


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#32) On September 26, 2009 at 4:21 PM, portefeuille (98.32) wrote:

and have a look at my list of calls!

a recent track record is here.


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#33) On September 26, 2009 at 4:23 PM, portefeuille (98.32) wrote:

a guide to my blog posts can be found in the comment section to this post
(should be or should be close to the last comment)                                                               

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#34) On September 26, 2009 at 4:29 PM, checklist34 (99.06) wrote:

EMC is the kind of stock I've completely ignored.  My whole theory for investing in this huge market crash has been "the boom or bust" concept.  Find cmpanies who's shares have to at minimum double if they simply live, then pick the ones that will live. Maybe it will be the best bet 

But ... ultimately that kind of hyper deep value has more or less washed out of the market except in perhaps a few spots...  So I found a company and bought a position based on its potential for improved prospects rather than just value, that was rjet.

i have been toying with the idea of trying to short a stock, but ultimately the only stocks i've ever shorted in real life were...  ready now, ready...  levered ETFs

if i could routinely get the shares to borrow, and in quantity, i'd short them all day in the real world.  In matched bull/bear pairs.

shorting calls on levered bear ETFs was a great play a few months back. 


perhaps we're just too in the middle of the road from avaluation or market elvel perspective to really have much of anything worth 170k pages of reading...



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#35) On September 26, 2009 at 4:49 PM, portefeuille (98.32) wrote:

perhaps we're just too in the middle of the road from avaluation or market elvel perspective to really have much of anything worth 170k pages of reading...

There are billions of pages out there "worth reading". Maybe I should link more ...

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#36) On September 26, 2009 at 4:54 PM, portefeuille (98.32) wrote:


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#37) On September 26, 2009 at 6:48 PM, portefeuille (98.32) wrote:

Oleg Deripaska in $30bn Hong Kong flotation

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#38) On September 26, 2009 at 7:18 PM, dragonLZ (70.08) wrote:

porte, I didn't mean to be disrespectful. I meant it more as a game (I'm bored, that's all).

I'm aware of your track record, and I know I can't compete.

Good Luck!

p.s. Do you by any chance live close to Stuttgart or Mannheim? I understand if you don't want to answer...

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#39) On September 26, 2009 at 7:45 PM, checklist34 (99.06) wrote:

i've always liked Ackmans presentation of himself, he is a remarkably confident speaker without sounding like a d-bag.  his leveraged bet on Target at the top of the market ...  kind of worries me.

Similar for Einhorn.  He didn't win in his bet against ALD, he got it wrong, slandered a company and tried his best to harm it, its portfolio, shareholders, and everybody.  And won in the end, but only...  only because of the credit crunch and the great recession.  tsk tsk

Kass has been nea rthe top of my "must read" for a long time, and he is clearly a sharp guy, but the amazing flopping and changing of positions makes me dizzy, and then I trip over things and get skinned knees.

Most profound statement shared to me by a professional inestor was by a gent from Heartland Funds when I withdrew my money from there and said that I just thought that a more risky, smaller cap approach was likely to be the best thing in this unique market. 

He says "you're on the right track.  the key to outperforming is to ignore the common rules of thumb for stocks.  buy companies with low debt and consistent eanrings in growth industries and all that.  The whole key to outperformance is to buy companies that don't have consistency while business is bad." or something like that.

There may be a billion pages worth reading...  but at what opportunity cost?  To read the opinions of a thousand others may enrich ones mind, but at the cost of lost chance to experience first hand, tangibly, in ones own life.  To each his/her own of course, of course, but I've always preferred learning things the hard way by just jumping right in.  not for the feint of heart.

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#40) On September 26, 2009 at 9:38 PM, portefeuille (98.32) wrote:

Julian Robertson: Markets Will Pay the Piper

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#41) On September 27, 2009 at 12:49 AM, checklist34 (99.06) wrote:

"my job is to find the 200 best companies and go long on them, the 200 worst companies and go short on them, and if the 200 best don't outperform the 200 worst I'm in the wrong business"

reading that, from julian robertson, was the first time I really realized that a hedged strategy, a market neutral strategy could pay off.

a time to not follow this would be when the 200 worst companies have dropped 95% and 175 of them will survive.  meaning they'll eventually be down only 75 or 60%, meaning that from down 95% they'll rally large multiples.  then you should not be short the 200 worst companies.

its all about fair value, very little to do with fundamentals or prospects orquality or anything else, all about fair value

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#42) On September 27, 2009 at 3:35 AM, checklist34 (99.06) wrote:

i'm feeling rough, i'm feeling raw in the time of my life. lets make some money, make some music, find some models for wives

i'll move to paris, shoot some heroin and fvk with the stars,you man the island and the cocaine and the elegant cars

this is my decision:  to live fast and die young. I've got the vision, now lets have some fun

yeah, its overhwelming, but what else can we do?  get jobs in officies and wake up to the morning news?  


I'll miss the playgrounds and the animals and diggind up worms.  I'll miss the comfort of my mother and the weight of the world, i'll miss my sister miss my father miss my dog and my home.  Yeah, and I'll probably miss the boredom and freedome and time spent alone.

But there is really nothing we can do, love can be forgotten, life can always start over new.  

The models will have children, we'll probably get a divorce, we'll find some more models, everything must run its course.  

We'll one day choke on our own vomit, and that'll be the end.  


And that my fine fellowed fools, is the lyrics to one of the best songs i've ever heard.  A picture of life and choice and what boys dream of when boys bother to dream.

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#43) On September 27, 2009 at 5:02 PM, isusan (< 20) wrote:

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#44) On September 27, 2009 at 5:29 PM, portefeuille (98.32) wrote:


IDT Corp. Launches Genie Energy Division

    •    Press Release
    •    Source: IDT Corporation
    •    On Thursday August 20, 2009, 6:00 pm EDT

NEWARK, N.J.--(BUSINESS WIRE)--IDT Corporation (IDT) (NYSE: IDT; IDT.C) said today that it has organized its energy supply and oil shale interests into a new division, to be called Genie Energy. Oil and gas entrepreneur Wes Perry will serve as Genie’s Chairman of the Board.
Genie Energy will initially be comprised of IDT’s interests in IDT Energy, American Shale Oil, LLC (AMSO), and Israel Energy Initiatives (IEI). IDT Energy is the largest independent residential energy supply company operating in New York State, and reported $227.7 million in revenues during the first three quarters of IDT’s 2009 fiscal year while generating $40.4 million in Income from Operations. American Shale Oil, LLC is a 50/50 joint venture with multi-national energy company Total (NYSE: TOT - News) to research, develop and demonstrate in-situ technologies for potential commercial shale oil production in western Colorado on a leasehold granted by the U.S. Bureau of Land Management. IEI has been licensed by Israel’s Ministry of National Infrastructures to explore certain public lands in Israel for the potential production of shale oil. Genie will own approximately 89% of IEI.
Mr. Perry, who has over thirty years of oil and gas industry experience, founded E.G.L. Oil Shale, LLC which IDT acquired in 2008 and renamed American Shale Oil, LLC. He is also the owner of S.E.S. Investments, which he founded in 1977 and which invests in oil and gas opportunities, and is CEO of E.G.L. Resources, an energy exploration and development company. In addition, Mr. Perry serves as the elected mayor of Midland, Texas.
“Both America and Israel have significant shale oil reserves. It’s difficult to overstate their potential to improve our respective economies and national security,” said Mr. Perry. “Genie Energy is developing the technologies America and Israel want to make rapid progress toward energy independence, while IDT Energy is poised for continued growth in the consumer market. I’m very excited to work with their management team to help meet the energy needs of the U.S. and Israel for decades to come.”
“Organizing our energy holdings under one managerial umbrella provides us with added flexibility to respond to opportunities in those areas,” said Howard Jonas, IDT Corporation’s Chairman. “As a visionary business leader, public servant and humanitarian, I can think of no finer person to lead this effort than Wes Perry, who has worked well with our team since our acquisition of EGL Oil Shale.”
Geoffrey Rochwarger, currently Chairman and CEO of IDT Energy, will also serve as Genie Energy’s President and Chief Executive Officer. Mr. Rochwarger, who launched IDT Energy for IDT in 2004, has directed the phenomenal growth of this business which today serves over 400,000 meters in New York State. Previously, he served as an Executive Vice President of IDT Telecom, where he launched the Company’s wholesale carrier arbitrage business while directing IDT Telecom’s global expansion. Mr. Rochwarger earned his BA from Yeshiva University in New York.
Claude Pupkin, AMSO’s President, will also serve as Genie Energy’s Chief Financial Officer. Mr. Pupkin previously held several senior management positions at IDT, including Executive Vice President of Corporate Development. Prior to joining IDT in 2003, Mr. Pupkin’s career included more than 17 years of finance and investment banking experience at several firms including JP Morgan Chase, Morgan Stanley & Co. and Citibank. Mr. Pupkin holds an MBA from The Wharton School of the University of Pennsylvania, and an MA in International Studies from the University of Pennsylvania.
About IDT Corporation:
IDT Corporation ( is a multinational holding company focused on the telecommunications and energy industries. IDT Corporation's Class B Common Stock and Common Stock trade on the New York Stock Exchange under the ticker symbols IDT and IDT.C, respectively.




#401) On March 28, 2009 at 10:08 PM, portefeuille (99.99) wrote: IDT - 1.15 - outperform



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#45) On September 27, 2009 at 5:37 PM, portefeuille (98.32) wrote:

American Shale Oil, LLC (AMSO)



Total and IDT Close on Oil Shale Deal

March 3, 2009 -

IDT Corporation (NYSE: IDT; IDT.C) today said that it has closed on the previously announced deal under which Total, the fifth largest international integrated oil and gas company, acquired a fifty percent interest in IDT's American Shale Oil, LLC (AMSO) subsidiary. The prospective deal was initially announced by both companies on January 14, 2009.
"Total's considerable expertise in unconventional fuels and large scale oil and gas development will be an important asset going forward," said Claude Pupkin, President of AMSO. "Together, we will vigorously pursue environmentally responsible approaches to developing this vitally important national resource. Our efforts could allow oil shale to make an important contribution to satisfy the world's growing energy demand."
AMSO is one of three holders of 10-year leases granted by the U.S. Bureau of Land Management to assess, test and demonstrate the potential for commercial shale oil production in western Colorado. Once AMSO has demonstrated that its technology is economically viable and environmentally acceptable, it will have the opportunity to expand its lease to 5,120 acres for commercial development. The rights covered by the commercial preference lease are estimated to contain multi billion barrels of recoverable shale oil.
Currently, AMSO is undertaking site characterization work on its leasehold in Western Colorado.
About AMSO
American Shale Oil, LLC (AMSO), ( a subsidiary of IDT Corporation (, is one of three companies holding a U.S. Bureau of Land Management oil shale research, development and demonstration lease of government-owned lands in the Piceance Basin in northwest Colorado.
AMSO's mission is to develop its proprietary technology into a commercially viable and environmentally sound method of producing commercial quantities of shale oil by using in-situ extraction processes.


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#46) On September 27, 2009 at 5:43 PM, portefeuille (98.32) wrote:


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#47) On September 27, 2009 at 6:16 PM, portefeuille (98.32) wrote:

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#48) On September 27, 2009 at 10:42 PM, checklist34 (99.06) wrote:

that IDT chart looks like my kind of thing. 

yahoo's profile gives a confusing description.

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#49) On September 27, 2009 at 10:48 PM, portefeuille (98.32) wrote:

That shale oil part could have considerable value. IDT is one of my larger positions.

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#50) On September 28, 2009 at 10:28 AM, portefeuille (98.32) wrote:


Viropharma (NASDAQ:VPHM): Upgraded to Outperform at Oppenheimer

Oppenheimer is upgrading Viropharma (NASDAQ:VPHM) to Outperform from Sector Perform with a $13 target.

According to the analyst the upgrade ise based on on a potential surprise for Cinryze revenues and the generic Vancocin overhang being priced into shares. Importantly, 1) investor focus should shift to the continuing Cinryze launch following the development of guidelines for generic Vancocin; 2) Oppenheimer sees minimal downside should Berinert P be approved, as it would likely not impact Cinryze prophylaxis utilization; 3) they believe VPHM shares are pricing in generic Vancocin; and 4) firm is increasing their Cinryze estimates based on penetration in patients currently receiving prophylaxis steroids.

Cinryze launch in focus; revenues could surprise: Oppenheimer believes 2009 Cinryze sales will beat guidance, with revenues surprising as early as 3Q09. In their estimate, VPHM has set an achievable bar to beat guidance. They estimate Cinryze sales of $100M versus consensus of $84M during 2009.

ViroPharma introduced 2009 Cinryze guidance of $80-$95M on the company’s 2Q’09 earnings call, which he firm sees as unimpressive, since low end implies flat 2H’09 sales. They believe 2009 Cinryze sales will beat guidance, with revenues surprising as early as 3Q’09.

Although a generic Vancocin approval would be a near-term negative, they believe investor focus should shift to the continuing Cinryze launch, which could provide significant upside. Based on comments by the company, a greater number of patients being added to Cinryze Solutions are new patients versus those coming from clinical trials. Additionally, the firm notes that approximately 1,500 patients are currently receiving prophylaxis steroid treatment for Hereditary Angioedema (HAE), representing a key switch opportunity for Cinryze given the adverse events associated with steroids.


Vancocin generic overhang priced in: Firm believes VPHM shares currently reflect the launch of generic Vancocin in early 2010. Importantly, they anticipate FDA will issue final guidance and deny VPHM's Citizen Petition near term, leading to potential ANDA approvals in early 2010. However, they expect VPHM to retain ~$50M in annual branded Vancocin sales longer term

Increasing Cinryze estimates, upgrading to Outperform, $13 PT: Oppenheimer's 2009 Cinryze revenue estimate increases to $100M from $88M, and 2010 to $188M from $159M. Our 2009 total revenue estimate increases to $328M from $304M, and 2010 to $211M from $182M. Their 2009 adjusted EPS increases to $1.64 from $1.44, and 2010 to $0.38 from $0.30.





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#51) On September 28, 2009 at 10:30 AM, portefeuille (98.32) wrote:


#214) On March 15, 2009 at 5:20 PM, portefeuille (99.99) wrote: VPHM - 4.58 - outperform

#614) On July 29, 2009 at 11:23 AM, portefeuille (99.99) wrote: VPHM - end outperform - 8.09 - new rating: market perform


VPHM is currently at ca. $9.56.

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#52) On September 28, 2009 at 12:08 PM, portefeuille (98.32) wrote:

AIXTRON in Frankfurt trading




#462) On April 23, 2009 at 4:18 AM, portefeuille (99.99) wrote: AIXG - 7.05 (5.41 EUR) - outperform

#649) On August 01, 2009 at 10:43 PM, portefeuille (99.99) wrote: AIXG - end outperform - 16.58 - new rating: market perform


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#53) On September 28, 2009 at 2:37 PM, portefeuille (98.32) wrote:


Canaccord Adams Reiterates a 'Buy' on ATP Oil & Gas (ATPG); Attractively Priced Name To Own
September 28, 2009 11:10 AM EDT

Canaccord Adams reiterates a 'Buy' rating on ATP Oil & Gas (Nasdaq: ATPG), raises price target to $20 from $17. 

Canaccord analyst says, "The company announced two separate financings and an asset sale. Combined, these transactions should generate roughly $290 million of cash for ATPG. These transactions should give the company the liquidity needed to complete Phase 1 of the Telemark Hub and get production up and running in early 2010...We are raising our price target because with the financing and asset sales completed, ATP’s liquidity has improved, making 2010 production growth and cash flow generation from the Telemark Hub more tangible and likely. These new fields are oily and would increase ATP’s exposure to crude, which we view as a huge positive during this prolonged period of weak natural gas prices in the US. We find ATP Oil & Gas an attractively priced name to own...The successful installation of the top side to the Titan Hull and related facility would be positive as it sets ATP to start production at the Telemark Hub in early 2010. ATP looks well positioned to double its production next year."



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#54) On September 28, 2009 at 3:58 PM, Tastylunch (28.76) wrote:

I never realized Einhorn gave his proceeds from shorting ALD to charity.

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#55) On September 28, 2009 at 7:11 PM, portefeuille (98.32) wrote:

SEQUENOM Announces Completion of Independent Investigation

SEQUENOM to Hold Conference Call Today at 2:00 p.m. Pacific Time
Press Release Source: SEQUENOM, Inc. On Monday September 28, 2009, 4:02 pm EDT

SAN DIEGO, Sept. 28 /PRNewswire-FirstCall/ -- SEQUENOM, Inc. (Nasdaq: SQNM - News) today announced the completion of the independent investigation by a special committee of independent directors related to the test data and results for the company's noninvasive prenatal test for Trisomy 21 (Down syndrome). The independent counsel engaged by the special committee interviewed over 40 witnesses and reviewed over 300,000 documents and emails.
Based on the special committee's work and recommendations, the independent members of the company's board of directors have concluded that as a result of the company's attempted transition from researching potential molecular diagnostic tests to developing and commercializing those tests, the company failed to put in place adequate protocols and controls for the conduct of studies in the Trisomy 21 program at the company. Certain of the company's employees also failed to provide adequate supervision. In the absence of such protocols, controls and supervision, the test data and results in the company's Trisomy 21 program included inadequately substantiated claims, inconsistencies and errors. Due to deficiencies in the company's disclosure controls and procedures, in a number of instances such test data and results were reported to the public in the company's press releases and other public statements.
At the recommendation of the special committee, the company's board of directors has begun implementing a number of remedial measures, including:
new disclosure controls and procedures;changes in the company's organizational and reporting structure;enhanced training in ethics and scientific processes for the company's employees;new procedures for the conduct of research and development and clinical studies, including increased roles and responsibilities for independent third parties;new procedures for the storage and management of samples for testing; andcreation of a science committee of the company's board of directors to oversee its research and development strategy and activities.
The company has terminated the employment of its president and chief executive officer, Harry Stylli, Ph.D., and its senior vice president of research and development, Elizabeth Dragon, Ph.D., effective immediately. In connection with the termination of Dr. Stylli's employment, the company's board of directors has requested that he resign as a director, which he is obligated to do under the terms of his employment agreement. The company has obtained the resignation of its chief financial officer, Paul Hawran, and one other officer. The company also terminated the employment of three other employees. While each of these officers and employees has denied wrongdoing, the special committee's investigation has raised serious concerns, resulting in a loss of confidence by the independent members of the company's board of directors in the personnel involved.
Members of the special committee and its independent counsel will make a presentation on the investigation to the staff of the Securities and Exchange Commission.
Effective today, the company's board of directors has appointed chairman of the board Harry F. Hixson, Jr., Ph.D., former president and chief operating officer of Amgen, Inc., and director Ronald M. Lindsay, Ph.D., to serve on an interim basis as chief executive officer and senior vice president of research and development, respectively. The company's board of directors has also designated controller Justin J. File as principal financial and accounting officer.
The company reiterates that it is no longer relying on, and the public should no longer rely on, any of the previously announced test data and results for the company's noninvasive prenatal test for Trisomy 21.
At this time the company is unable to provide guidance on the timetable for the completion of research and development or for the potential commercialization of its Trisomy 21 test. However, the company continues to believe in the science underlying the test and is continuing its research and development program for this test. The release of fetal material into maternal circulation has been validated by a number of academic laboratories and potential competitors as well as the company. Sequenom continues to believe that this fetal material, including nucleic acids, will provide important information about the genetic makeup of the fetus and that this information may become the basis for new diagnostic tests. As a pioneer in this area, Sequenom intends to pursue these important developments that may have a major impact on maternal and fetal health.

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#56) On September 28, 2009 at 10:19 PM, TigerPack1 (33.61) wrote:

VPHM has been a great trading vehicle the past 3-4 years I have watched it and owned it, and usually has a considerable short seller position.

There have been 2 or 3 very distinct up/down cycles, and the "insiders" that run the company are big traders in the stock also.  When the stock goes up in price a large amount, they dump shares in numbers, and when good news is coming and the stock price has fallen enough they are huge buyers.

I think it caught my eye when there was a buying binge around $3 per share, even the janitor was reporting buy trades to the SEC.  It went to $20+ in less than a year.  Then insiders sold almost daily, and VPHM went back down under $10 to $8, then insiders bought in large numbers, and it went back close to $20, then they all sold as the price fell to $7, then back to $17 and more selling plus a bear market generally pushing the stock back to $4 or so months ago, then insiders started buying again in the $4-$6 range, and look where we stand today close to $10!!!

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#57) On September 29, 2009 at 8:44 AM, NYCFOOLIO (< 20) wrote:

Port -

what are your thoughts on SQNM now with the news:


Sequenom Inc.: (SQNM, US) The shares slumped in after-hours trading Monday after the biotech group fired its president and chief executive following an inquiry into the mishandling of data for a prenatal test for Down syndrome. "We are no longer relying on, and the public should no longer rely on, any of our previously announced test data and results for our noninvasive prenatal test for" Down syndrome, Sequenom said in a regulatory filing. Sequenom also said it has fired its senior vice president of research and development, while its chief financial officer resigned last week. Report this comment
#58) On September 29, 2009 at 9:22 AM, portefeuille (98.32) wrote:

A Sale May Be Sequenom's Only Option

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#59) On September 29, 2009 at 9:43 AM, portefeuille (98.32) wrote:


#162) On March 10, 2009 at 11:44 PM, portefeuille (99.99) wrote: SQNM - 13.75 - outperform


SQNM is currently at ca. $3.65.

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#60) On September 29, 2009 at 10:03 AM, portefeuille (98.32) wrote:

Repros Therapeutics Inc. Provides Update on Proellex

FDA Sends More Bad News to Repros: BioBuzz


#609) On July 25, 2009 at 11:12 PM, portefeuille (99.98) wrote: RPRX - 2.66 - outperform (high risk!)

#655) On August 04, 2009 at 10:14 AM, portefeuille (99.98) wrote: RPRX - end outperform - 1.38 - new rating: market perform


RPRX is currently at ca. $0.92.


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#61) On September 29, 2009 at 10:44 AM, portefeuille (98.32) wrote:

SQNM closed yesterday at $5.69. The low in after-hours trading was at ca. $2.70. Today's trading range so far was $3.18-$3.96. It is currently at ca. $3.73.



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#62) On September 29, 2009 at 10:47 AM, portefeuille (98.32) wrote:

52w range: $2.86 - $28.60. Not for the faint of heart, I guess ...

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#63) On September 29, 2009 at 5:27 PM, portefeuille (98.32) wrote:


ANALYSE-FLASH: JPMorgan hebt Ziel für Aixtron auf 25 Euro - 'Overweight'

    LONDON (dpa-AFX Broker) - JPMorgan hat das Kursziel für Aixtron von 20,00 auf 25,00 Euro angehoben und die Einstufung auf "Overweight" belassen. Er passe sein Bewertungsmodell an die langen Vorlaufzeiten von bis zu acht Monaten im LED-Werkzeuge Markt an, was zu einer deutlich früheren Belebung des Absatzes führe, schrieb Analyst Sandeep Deshpande in einer Studie vom Dienstag. Einer deutlichen Belebung des Beleuchtungsmarktes könnten weitere Anhebungen folgen./cmx/sf/ag


(Aixtron still "overweight", target raised to 25 EUR)

see comment #52 above.

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#64) On September 29, 2009 at 5:47 PM, portefeuille (98.32) wrote:

Transcript of AIXTRON Analyst Earnings Conference Call, First Half 2009 Results, July 30, 2009 (pdf)

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#65) On September 29, 2009 at 5:51 PM, portefeuille (98.32) wrote:

Transcript of AIXTRON Analyst Earnings Conference Call, Quarter 2009 Results May 7, 2009 (pdf)

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#66) On September 29, 2009 at 6:04 PM, portefeuille (98.32) wrote:

AIXTRON financial reports

AIXTRON IR Presentations


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#67) On September 29, 2009 at 6:07 PM, portefeuille (98.32) wrote:


AIXTRON Analyst Earnings Conference Call, First Half 2009 Results, July 30, 2009 (pdf)

Transcript of AIXTRON Analyst Earnings Conference Call, First Half 2009 Results, July 30, 2009 (pdf)




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#68) On September 29, 2009 at 10:29 PM, topsecret09 (83.94) wrote:

Port.... what do you know about (HLCS) Helicos Biosciences. Some Interesting stuff going on ........

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#69) On September 29, 2009 at 10:53 PM, portefeuille (98.32) wrote:

these are some related articles.

Following genome sequencing, Helicos moving fast for partner, buyout

Genome Mania

Quake Sequences Personal Genome Using Helicos Single-Molecule Sequencing

The Single Life: Stephen Quake Q&A

Publications of the Quake Group

Single-molecule sequencing of an individual human genome (pdf)



#787) On September 18, 2009 at 8:00 AM, portefeuille (99.99) wrote: HLCS - 2.41 - outperform (high risk!)



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#70) On September 29, 2009 at 11:14 PM, topsecret09 (83.94) wrote:

Thanks,   I will read the articles....  TS

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#71) On September 29, 2009 at 11:33 PM, topsecret09 (83.94) wrote:

  Very Informative articles... I see why you say "high risk". This Is definitely David verses Goliath. Their market cap Is getting up there,think they are a buyout candidate?

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