Adventures on the Whine Route

Kermit Lynch's delightful book on his adventures in Provence and French wine country can almost keep you warm on a cold winter's night. But mutual fund shareholders, who have been left wearing a barrel a year into this bear market, have far more pressing concerns than reading tasting notes, given the jugs of vinegar mutual fund managers have served them up recently.

Morningstar has done a good job pulling together the year end letters from the legends of the business - and there ain't a dry eye in my house, which is remarkable considering I don't have money with Wally Weitz, John Rogers, Mason Hawkins or Marty Whitman.

Or Bill Miller, whose annual letter did not get the press it usually does when it was released a few weeks ago:

January 20, 2009
In my opinion, the long-term opportunities for the fund have never been better and the overall quality of the portfolio has never been higher. Financials are now under 10% of the market’s capitalization for the first time since 1992, which was a great time to buy financials.

This is also the best time to buy quality in my investing career; it has never been cheaper and we continue to look for, and to find, names with excellent financial strength, good and growing dividends, leading positions in their industry, and trading at five- or 10-year lows and at historically low valuations. We believe this should lead to quite satisfactory results over the next five to 10 years. Bill Millers annual commentary

Probe to Keep the Heat on Pequot’s Samberg

The public flogging of Wall Street is only missing but one thing - the persecution of a high flying, and high profile executive.

And while Jim Chanos and Dan Loeb continue to be dogged by their involvement in the stock from hell, it would appear the hedge fund legend Art Samberg is in the crosshairs of Federal prosecutors who are no doubt relishing the opportunity to draw and quarter one of Wall Street's elite, and have reopened a semi-cold case.

Portfolio has the exclusive...

Federal prosecutors have opened a criminal investigation related to possible insider trading in Microsoft stock by Pequot Capital Management, the hedge fund run by Arthur Samberg, the transcript of a recent court hearing shows.

The U.S. Attorney's Office in Manhattan is leading the criminal investigation with help from the Federal Bureau of Investigation, according to information in the transcript and lawyers involved in the case. That original SEC investigation, which also had looked into whether Samberg had acquired inside information on a different company from Morgan Stanley CEO John Mack, received considerable public criticism after it was closed. Portfolio

Innocent until proven guilty, fersure, but this does not look good:

Peter Schiff Defends His Track Record on Fox Biz

Money Manager (and television pundit) Peter Schiff has been on his heels of late, defending his reputation from ex-clients and bloggers who claim his managed account portfolio's have been a disaster, and do not live up to the reputation he has secured as one of the leading financial market bears and doomsayers.

Schiff's Euro Pacific Capital primarily manages separate accounts, who place clients into a "model portfolio" when the funds are placed under his discretion. Schiff does not control the timing - retail accounts are notorious for chasing hot managers and pulling the money during downturns. Is this the case with Schiff? Schiff was long many natural resource equities that have been savaged since mid-year 2008, and clients who entered his platform at that time are no doubt hurting.

Schiff went on the record to defend himself...and expect to see more of him now that he is exploring a run for U.S Senate.



1/30/09
Right Forecast by Schiff, Wrong Plan?
WSJ

BuySide: Please Resume Your Chit-Chat

Securities regulators have done a lot of stupid things over the past year, but the SEC's temporary ban on short selling financial stocks was probably the biggest. SEC chairman Chris Cox called it the biggest mistake of his tenure and the unintended consequences to Hedgistan, combined with the downfall of Lehman Brothers, unleashed a 1-2 punch that decimated the gang that probably deserved a medal, as opposed to the enema they received.

My take is that Hank Paulson (after being goaded by brokerage CEOs) strong-armed Cox into the move; intimidation seems to be a big part of Paulson's management style. Bernanke does not seems to stand up to him either and will fianally crawl out from under his desk as Paulson leaves town in two weeks.

But one of the more asine proposals regulators have been floating is to restrict communication between money managers. Dan Loeb of Third Point LLC is never one to back down from a scrap, and penned a response to regulators who were seeking to blame shorts for talking amongst themselves and driving down the stocks of brokers:

2008 Man of the Year: John Paulson

We don't wear kneepads around here very often, but occasionally we fall in love. And not just with Erin Callan. I fell hard for Strategist Frank Veneroso this year; if you are running real money you really need to cough up the hard dollars on get on his good side. He just missed my list of nominees for 2008's Man of the Year mostly out of respect for his low-profile. But he is the best kept secret on the Street.

John Paulson had a stellar 2008, and joins previous winners Eric Bolling and Peter Thiel as our Man of the Year. Paulson edged out a strong crop of contenders; perhaps 2009 will finally be Meredith Whitney's year after making our final cut in '07 and '08.

Five years ago Paulson was running $600 million but thanks to his hot hand he has grown his AUM to $32 billion. Portfolio Magazine ran the most in-depth piece I have seen on him (although it lacks these goofy pics) and I don't have much to add - you can't argue with the numbers he has generated and he, unlike Jeff Gendell, is the last man standing.

Will he step up his charitable activities in the future? Or perhaps lend a hand in cleaning up this mess? John Paulson has a chance to become more than a rich guy. Right now this country could use a few heroes. And all the better if they are solvent.

Congrats John Paulson. And if you need to hire a StockJockey you know where to find me. Although my vacation is stretching until Tuesday.

The Man Who Made Too Much
Portfolio

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