Kick off the weekend with these top stories at Value Investing News:

1. Analysing Financial Statements and AeroGrow
2. Six Promising Dividend Increases in the News
3. Puget Energy: Price Drop On No News
4. Capital Crossing Preferred (CCPCN) and HealthShares ETF Liquidation
5. Stocks Lose Money In Bear Markets…Or Do They?
6. Special Situations Real Money Portfolio November 2008 Update
7. Fat Pitch Financials Portfolio November 2008 Update
8. 117th Edition of the Festival of Stocks
9. Stock Analysis: Sovran Self Storage, Inc. (SSS)
10. Does This Market Have A Bottom?
11. Eight Stocks Raising Dividends During The Market Downturn
12. Benjamin Graham Basics (Session 6) A Company with a Future
13. No Dividend Cuts Yet From Canadian Banks
14. All Net-Nets Not Created Equal
15. Dividend Capture Strategy - The illusion of getting something for nothing

I’ve gotten very behind in my personal finance reading. Given all the changes in my personal financial situation and the changing government administration, I think it’s time for me to start focusing a bit more on personal finance. To get a jump start in that direction, I recommend reading the Carnival of Personal Finance that comes out each week. This week’s Carnival of Personal Finance is at Mighty Bargain Hunter.

Just before the market close yesterday, news broke that Electricite de France SA, also known as EDF, was once again interested in Constellation Energy Group (CEG). As you might recall, MidAmerican Energy Holdings, a Berkshire Hathaway (BRKa) subsidiary, is in the process of buying Constellation Energy for $4.7 billion or $26.50 a share.

Read the rest of this entry »

The Special Situations Real Money Portfolio held up pretty well in the volatile month of November. I had one minor setback this month, but was still able to end the month with an account balance of $17,914.97. That’s down only 3.2% since October. My return since the beginning of the year is still a positive 12.32% as of the market close on November 28th. Finally, going all the way back to the inception of the Special Situations Real Money Portfolio on October 19, 2004, my total return for this portfolio at the end of November is 79.15%, which comes out to a positive 22.86% internal rate of return.

As I first mentioned above, the Special Situations Port did run into a bad deal in November. Capital Properties (CPI) cancelled their going private transaction. Thankfully, I was able to react quickly to the news and sell for just a minor loss of $21.31. This minor setback was more than offset by the big win on my Anheuser Busch merger arbitrage play. That one netted the portfolio $690.05, a 10.9% total return for that position.

As the month came to a close, I started on a streak of bad luck, or maybe you could say my luck ran out. Just before Thanksgiving, new broke that the accountant’s preliminary review of BCE Inc. (BCE) has found the proposed acquisition may not meet solvency requirements. Basically the BCE takeover deal looked dead in the water and the stock dropped from just above $30 to the $18-$19 range. My plans for now are to hold onto BCE until more definitive information comes out about the fate of the deal. The company has been holding back its dividend and if the deal is called off it might likely restart its dividend and maybe even issue a special dividend.

Sadly, BCE is not the end of the Special Situations Real Money Portfolio bad news. But that will have to wait for another post, since the next piece of bad news hit on December 1st. If you would like to learn about that trade early and also review all the current “workout” opportunities that I’m tracking, please consider subscribing to Fat Pitch Financials Contributors Corner.

Disclosure: I own shares of BCE. I no longer own shares of CPI or Anheuser Busch.

Sadly, there was no improvement for the Fat Pitch Financials Portfolio in the month of November. The portfolio ended November 28, 2008 with a balance of $848,439.73. This is down 8.1% since the end of October.

I originally started this paper portfolio at Marketocracy with a balance of $1 million back on September 21, 2004. Until this current financial crisis hit, I had kept this portfolio above water. Since October, however, the portfolio has struggled to stay in positive territory. I guess I shouldn’t feel too bad about this, since I’ve been reading a steady stream of articles on Value Investing News of professional value investors also facing huge portfolio declines this year.

Year-to-date the portfolio is down 39.5%, very close to the S&P 500 decline of 37.7% over the same period of time. The most disappointing performance statistic is the portfolio’s total return since inception. The Fat Pitch Financial Port is down a total of 15.39% versus -13.83% for the S&P 500. My alpha has dropped to zero and my annualized rate of is -3.91%.

There were no trades in the month of November. I was tempted a few times to enter the fray after a few of the big declines, but each of the rallies after were based on insignificant news events. I think tax loss selling in December will continue to suppress the market and allow me more time to make wise picks. Since nothing has changed, the table below of the current portfolio holdings and their current returns will look similar to the one posted last month, but with larger losses:

Disclosure: I own shares in all the companies mentioned in this post.

Welcome to the December 1, 2008 edition of Festival of Stocks. The Festival of Stocks is a blog carnival dedicated to highlighting bloggers best posts on stock market related topics. Fat Pitch Financials is the actual birth place of this online weekly event, so it is always a special occassion when I get the chance to host this roving event.

If you aren’t already familiar with my blog, Fat Pitch Financials, it is a value investing blog with a focus on wide moat companies selling at substantial discounts and Graham style workouts. I encourage you to subscribe for free to my blog feed to keep up with my latest postings.

You should also check my Fat Pitch Financials Contributor’s Corner while you are here. It is my premium members only community dedicated to unique arbitrage and special situation opportunities.

Now that you are familiar with Fat Pitch Financials, let’s take a look at this week’s Festival of Stock participants. There are a dozen entries this week divided up into stock analysis, value investing, portfolio management, and trading. Here are this week’s entries: Read the rest of this entry »

I hope everyone in the U.S. had a great Thanksgiving Day. I stuffed myself with the traditional turkey dinner. Now that I’ve woken up from my turkey induced coma, I’m ready to read this week’s top value investing headlines:

1. Magic Formula Stock Review: Net 1 UEPS Technologies (UEPS)
2. Warren Buffett Promises More Info On Berkshire’s Derivatives In Annual Report
3. Having Trouble Buying in this Market?
4. Stock Analysis: RLI Corp (RLI)
5. Analysis to Include Spider Graphs
6. DIY Investing Q&A
7. Seven notable dividend increases
8. Stock Analysis: Realty Income Corp (O)
9. Forbes Best Small Companies Screen
10. Value Investing: Learn How

The November Contest at Value Investing News will be ending this weekend. Be sure to enter for your chance to win a subscription to Fat Pitch Financials Contributors Corner.

I also want to let everyone know that you can now access Value Investing News on your wireless phone using a specially formatted version of the site made possible by Google. I’m loving Value Investing News Wireless on my new BlackBerry Curve 8330.

Recently, I’ve been highlighting several very profitable trades in the Special Situations Real Money Portfolio. The last one was the profitable merger arbitrage associated with the cash buyout of Anheuser Busch by InBev, now know as Anheuser-Busch InBev (INBVF). Well, it was bound to happen. My streak of good luck has run out. The reverse split going private transaction being conducted by Capital Properties Inc. (CPI) I bought into last week with my BUD cash didn’t pan out.

Back in August, Capital Properties Inc. announced that its Board of Directors had decided to take the company private by doing a reverse split. The proposed reverse split involved converting 75 shares into 1 share. Shareholders owning less than 75 shares would be cashed out for $25.00 per share. I shared this information with members of Fat Pitch Financials Contributors Corner.

It was not until the company issued a definitive proxy in October that I became interested in this deal. From experience, I’ve found the risk of a going private transaction being cancelled goes down significantly after a definitive proxy announcing the date of the shareholders meeting is issued. The vote date for this deal was set to be November 13th. However, in an amended filing, management delayed the meeting until November 21st.

On November 21, 2008, the shareholders approved the reverse split and going private proposal. However, management issued a press release after the market closed that day where they announced, “After considering the cost to the Company of the reverse stock split and the relatively small benefit to be derived, the Board of Directors decided not to implement the reverse stock split.” That was it for this going private transaction deal.

I quickly decided to sell. I placed a limit order over that weekend to sell all 74 shares of CPI in the Special Situations Real Money Portfolio at a price above $19.51. When the market opened on Monday, the first quote for the stock was $0.04. My jaw dropped. I went to check my account, and I found that my order was completed at a sale price of $22.65. Since I originally bought my shares on November 19th at $22.75, I only lost a small amount of money. My total loss came to just $21.31, a negative 1.3% return including commissions.

Even though I came out of this cancelled transaction relatively unscathed, it still disturbs me that a Board can so easily override the will of a company’s shareholders. I recommend that the remaining shareholders of Capital Properites carefully consider whether the current Board of Directors best serves their interests.

Welcome to the November 24, 2008 edition of the Festival of Stocks. Today’s edition of the Festival of Stocks is what I like to call an express edition.

My internet connection was down for most of Sunday and this morning it was working poorly as well. Rumor has it that Comcast is pushing through an upgrade to the modems, but one support person also indicated that work was being done on the lines in my area. As usual, I have no idea what is really going on. Regardless, here are the submissions I received this week:

• This BUDs for Me posted right here at Fat Pitch Financials.
• More Dark Side Ideas: Oil Stocks posted at The StockMasters.
• Dividend Stock Analysis: Bank of Montreal (TSE: BMO) posted at Traders Corner.
• Surprising (and Promising) Aspects of the Financial Crisis posted at The Personal Financier.
• Investing Market - 10 Better Things To Do With Your Money posted at Learn The Stock Market And How to Trade.
• Dialing For Dollars At Office Depot posted at Barel Karsan.
• How YOUR Saving Advice Caused The Financial Crisis posted at The Shark Investor.
• Dollar Cost Averaging and the Great Depression posted at My Family’s Money.
• We Haven’t Seen the Bottom in the Stock Markets Yet? posted at Subprime Blogger.
• I’ll Pass on Eaton Corp (ETN), for now posted at Old School Value.
• Is Porsche the New Goldman Sachs? posted at My Simple Trading System.
• Stock Analysis: Canadian National Railway Company (NYSE:CNI) A Value Buy, But Not a Dividend Buy posted at Dividends 4 Life.
• How is Joel Greenblatt Performing in this Market? - MagicDiligence posted at MagicDiligence.
• Berkshire Hathaway Portfolio Changes for the quarter posted at Dividend Growth Investor.
• A 2009 Depression Investment posted at Zignals blog.
• Price to Earnings Ratio (P/E) posted at Investing School.
• Is Baidu.com (BIDU) getting crushed for good reason? posted at Intelligent Speculator.
• 10 Signs Of A Stock Market Bottom posted at The Digerati Life.
• Stock Market Buying Opportunity? - Not for Me posted at My Wealth Builder.
• Read Financial Footnotes, Invest Safely posted at Qovax.
• Is Citi Stock A Buy Now? posted at The Sun’s Financial Diary.
• Why Options Are More Valuable Now Than Ever Before posted at Trade in Groups.
• Microsoft (MSFT): Real Value For The Brave Buying Stocks posted at College Analysts.

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That concludes this edition. Submit your blog article to the next edition of Festival of Stocks using our carnival submission form. Past posts and future hosts can be found on our Festival of Stocks index page.

We are in need of hosts for upcoming editions of the Festival of Stocks. Please contact me if you are interested in hosting next week’s Festival of Stocks or any other future dates.

Here’s a list of top stories this week at Value Investing News to help start your weekend reading:

1. How is Joel Greenblatt Performing in this Market?
   Joel Greenblatt recently disclosed his stock purchases in the past 6 months. We look at the performance of those picks. How is the inventor of Magic Formula Investing holding up in this train wreck of a market?
2. The DIV-Net: Ben Graham Net Net Deep Value Stocks
   Learn about Ben Graham’s style of deep value companies and how to find them.
3. I’ll Pass on Eaton Corp (ETN), for now
   Berkshire’s latest 13-F reveals a new position of 2.9 million shares in Eaton Corp (ETN). This is a small stake when compared to Berkshires other purchases. As George from Fat Pitch Financials mentions, the question remains as to whether this is a Buffett pick or from a subsidiary.
4. Forbes 200 Best Small Companies Project
   Forbes listed the 200 best small companies in its october issue. My goal is to go through each one and find the ones worthy of investment. The first 15 have already revealed 7 candidates worthy of further analysis.
5. 10 by 10: A New Way to Look at Yield and Dividend Growth
   Dividend investors often set minimum requirements for an “acceptable initial dividend yield and/or dividend growth rate when they are considering buying a dividend stock. Thus one investor might say, “I won’t invest in a dividend stock with a starting yield less than 3%. Another might say, “I want a minimum 10% per year dividend increase.
6. Joel Greenblatt on Stock Shopping Spree
   Ever wonder why Joel Greenblatt does not use his Magic Formula for his own portfolio? Here we go. Instead of a very concentrated portfolio, he bought 156 stocks with a $63 million portfolio. Now let’s see how a real magic formula portfolio works. These are the details of the buys…
7. Is Negative Dividend News Good for the Stock Price?
   Last week there were several companies that cut or suspended their dividend payments. As part of my studies to uncover market inefficiencies pertaining to dividend stocks I am measuring the performance of those dividend suspenders or cutters. As part of my sample I am measuring stocks which trade at least several hundred thousand shares per day.
8. Looking Ahead To When Auto Sales Return
   Value investors like to take advantage of markets like these, where cyclical dips allow investors to buy companies on the cheap. There are a few criteria to consider which will determine whether a stock qualifies as a low-risk, long-term investment.
9. The Role of Consumer Confidence
   As seen from the chart below, consumer confidence is at levels not seen since the early 1990s (source: Briefing.com). The only good news right now in the chart above is that by definition the confidence level cannot go below zero. But is consumer confidence even important?
10. Sir John Templeton And The Basket Approach?
    A brief bio on Sir John Templeton and his basket approach during the late depression years…
11. Peter Schiff Earned My Respect
    WARNING! The stuff you are about to witness is of gospel material. I will stop typing and let the video speak for itself.
12. Measuring Dividend Stocks Investment Risk Profile
    Once you know your investment risk profile, how do you gauge the risk of individual securities in your portfolio or your portfolio as a whole? I tend to weigh the risk on my portfolio as a whole and make adjustments through the selection of more or less risky investments.
13. Berkshire Hathaway Portfolio Holdings as of September 30, 2008
    A look at the third quarter changes made by Warren Buffett in the Berkshire Hathaway portfolio.
14. Which stocks is Buffett buying right now?
    The SEC just released an updated list of Berkshire Hathaway’s stock holdings as of 09/30/2008. The Oracle of Omaha, who is the main capital allocator for Berkshire added to the following positions:
15. Ackman: Yes, We Have No AIG
    Insurer’s stock momentarily pops on report of stake, but hedge-fund manager says he’s already sold.

Don’t forget that we are running another member contest this month at Value Investing News. Winners will get access to my Fat Pitch Financials Contributor’s Corner. All you have to do is become a registered member of Value Investing News and then earn user points by voting on articles, submitting story links, and commenting.

This evening I’m celebrating my homerun merger arbitrage hit with an ice cold Bud. My shares of Anheuser-Busch Companies (BUD) were cashed out this morning. I was expecting that I would be cashed out of this position rather soon ever since I saw last week that the Department of Justice cleared the merger with InBev (INBVF).

This morning the Special Situations Real Money Portfolio account showed $7,000 in cash had arrived for the hundred shares of BUD that I had acquired back on October 6, 2008. I originally purchased these 100 shares for a total cost of $6,309.95. Therefore, my total profit on this trade comes out to $690.05,  a 10.9% total return. If I annualize that return for the 45 days I was invested in BUD, the average annualized rate of return is an amazing 89%!

BUD was a great win for the Special Situations Port. Now I just need to temper my enthusiasm for merger arbitrage opportunities, since this unusually generous return for a large cap merger arbitrage play is not the norm. I believe this opportunity was only available as a result of the deleveraging of hedge funds and institutional investors during this market crisis. It goes to show you how important it is to adapt and remain flexible given the rapidly changing market environment. These opportunities in the often dull field of special situations are often only truly profitable when the markets get out of equilibrium and become irrational.

The closing of this Anheuser-Busch position frees up a lot of cash for new opportunities in the Special Situations Real Money Portfolio. I already put a portion of the cash to work in a classic going private transaction that I revealed to subscribers of Fat Pitch Financials Contributor’s Corner.

The Special Situations Real Money Portfolio ended the day with a balance of $18,763.44. I’m proud to say that this portfolio is up 17.64% for the year and currently sports a 25% IRR since inception. There are not too many other portfolios out there outperforming the indexes by this amount. My goal now is to try and maintain this level of performance by continuing to focus this portfolio on relatively low risk workouts.

Disclosure: I do not currently own shares of Anheuser-Busch (BUD) or InBev.