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20060417: Green Lantern Meeting Notes

Hello there,

The following are the notes for the April 2006 meeting of The Green Lantern Investment Club:

Attendance:

All who were supposed to attend, did attend.

Headlines:

We lost Marc Maurer. I repeat, we lost Marc Maurer! Sad but true. Marc has been with the club since the beginning, literally – since before it even existed and we were both coming off of our failed reading group (how come nobody likes to read monster books anymore?). Marc is being forced by "the man" (Ameriprise) to give up all of his life's loves and primary interests so that he can focus on being a financial advisor with them. Something about "conflicts of interest, blah blah blah…".

The good news? As one of Marc's newest clients, I support his total subjugation to my needs. OK, that's a joke. Obviously, Marc will be missed. We'll cash him out of petty cash as soon as I see him next using his valuation this month.

We gained a new treasurer. When Marc's departure was announced to the group, the obvious next question was who would fulfill the treasurer position. No vote was required. When I looked around the table, everyone had their eyes directed straight to the floor (for shame, all of you!) except for one brave soul – Heather. Heather will be meeting with Marc this month (and I may accompany) so that we can handoff the treasury duties. We will also have occasional access to Maurer's brain should any questions arise. He still lives down the street after all.

We voted Noah Kanter into the group. Congratulations Noah! If you are inclined to join us, we're inclined to have you.

We bought a position in NVS. You can find the research attached to a prior post in this blog.

The investment portion of the meeting:

– Heather gave a great and spirited update about Home Depot, one of our holdings. We discussed the large increases in CEO pay and decided that it is probably a good idea for us to try and get to a place as a club where we are reviewing one of our existing holdings every month. We'll take a look at our holding next month, reallocate coverage, and come up with a timeline for reviewing them.

– I presented Novartis to the group. We voted to purchase it after a healthy debate.

Next month's meeting:

– Partnership agreement review: We have several new members who have not signed partnership agreements. I will send out the agreements to these folks (and everyone else for that matter) in advance of the meeting. Please come to the table with any of your questions, suggested updates, etc. We should probably make a quick revision of these and get everyone to re-sign.

– NAIC form review: We discussed that it might be good to show the newer members some of the past types of evaluation work we have done using these forms and how they have benefited the group. We will ake a few minutes to walk through filling one of these out.

– Bob Gross is interested in presenting GM to the group. Yeah, that's right, "General Motors."

– Mark Albonizio is interested in presenting CLRK, Color Kinetics.

– I am still interested in presenting EMC to the group but it is looking like a really full month. I will try to have a presentation ready, time permitting, but am willing to wait until the following month of June to present it if that's what it comes down too…

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Club Buy: Novartis (NVS): $55.94: 20060418

I presented Novartis (NVS) to the club on the 17th and we made a purchase on the 18th. Novartis is the currently the world's fourth-largest pharmaceutical company. It is Swiss-based and is traded as a deposit receipt here in the states. It made sense for our group since we did not yet have any positions in the pharmaceutical industry and it gives us a valuable hedge against the dollar. NVS is denominated to the Swiss franc, one of the most stable currencies in the world. Given the absolute monkeys we have managing US fiscal policy right now it is widely believed that the dollar will continue to deflate against some of the stronger currencies for the foreseeable future (at least for the next several years).

The pharmaceutical business is really driven by the following demands:

1) aging of the world's population

2) increased pace of technological discovery and development

3) quickly industrializing countries like India, China and Russia which are greatly increasing the availability of healthcare to their populations.

Novartis addresses all three very directly. I have posted a link to the research I presented to our group. It is available for download here.

Personal Sell: Disney (DIS): $27.82: 20060413

So I sold this stock for a few of reasons. Really, I felt it was the weakest story in my portfolio, I could get long-term capital gains treatment, and I needed the money for writing a check to the IRS this year.

My cost basis on the stock was $27.69 on 20050303. At a sell price of $27.82 a year later, I obviously did not make a ton of money on this one…

Since the time I sold, however, the stock has gone down a bit to a current price of $27.23. There just aren't many short-term catalysts on this one although I am still intrigued in how the digital strategy will play out.

Having Eisner out of the company and Iger getting much more chummy with Steve Jobs makes for an interesting mix and something which might be really fun to follow.

20060320: Green Lantern Meeting Notes: The Idea Session

Hey there folks,

Here are the notes for the March meeting of Green Lantern.

Attendance:

Everyone who was expected to show, did show. The only active member who was not in attendance was Heather (she was in Mexico). We had Noah visiting for his second session. He has indicated interest in joining the group so we will be voting on his membership status at next meeting. We had a quorum.

Financial Condition:

– The group's portfolio was worth 22,273 at the time of the meeting
– The group held 4,444 in cash at the time of the meeting (and prior to new funds being added)

The idea session:

This meeting was about everybody bringing in their ideas to create a watchlist for the group. Here are the stocks, in no particular order, that were brought up –

– ORCL – Oracle – Dave, Noah
– AQNT – Aquantif – Dave
– SYMC – Symantec – Dave
– ADOB – Adobe – Dave
– BUD – Anheuser-Busch – Mark, Marc
– MYG – Maytag – Mark
– MLHR – Herman Miller – Mark
– OATS – Wild Oats – Mark
– WFMI – Whole Foods – Mark
– NFLX – Netflix – Noah
– IFF – Intl Flavors and Fragrance – Noah
– SCHK – Schick Techs – Noah
– IRM – Iron Mountain – Marc, Eric
– EXPD – Expeditor's Intl – Marc
– TOC – Thomson Corp – Marc
– KMP – Kinder Morgan – Marc
– SYY – Sysco – Marc
– PCL – Plum Creek Timber – Marc
– SBUX – Starbucks – Ross
– NIKE – Nike – Ross
– HANS – Hansen's – Ross
– JSDA – Jone's Soda – Ross
– AAPL – Apple Computer – Ross
– NVS – Novartis – Eric
– MSFT – Microsoft – Eric
– EMC – EMC – Eric
– DBD – Diebold – Eric

I will look for a place to put these on a tracking portfolio that we can all watch. If you have any ideas, let me know in the comments section.

The next meeting of Green Lantern is April 17th at 7PM. The known agenda for this meeting is as follows:

– Statement of Financial Condition
– New Member Vote (Noah)
– Company Updates
– Marc to present Thomson Corp (TOC)
– Eric to present Novartis (NVS) and EMC (EMC)
– ?

Personal Buy: Microsoft Corp (MSFT): $27.61: 20060322

I’ve been watching Microsoft for a long time and the offering finally became so compelling I did not feel I could pass it up any longer. My timing, however, could have been a bit better. Literally days after picking this up, Microsoft announced that Vista would not be out until early next year. It was previously scheduled to ship in time for Christmas. Ouch!

Seriously though, launching near Christmas for a company like Microsoft is just stupid. Look how badly they hosed the 360 launch this holiday season. Why would you want to release the new OS before all of you vendors have a chance to get their products full ready?

Anyways, here are some major reasons for owning Microsoft:

– 10 years ago, sales were $6 billion. Last year? $40 billion.
– MSFT is in the midst of the single largest product/platform expansion in their history. Even the delay of Vista can’t hold it up too much.
– With Sony continuing to flub the PS3 release, MSFT has more options in cornering the next-gen gaming console market.
– Did you know that Bill Gates now sits on the board of BRK? If that’s not an admission that the dude knows how to mint money, I don’t know what it.
– Software – with an installed base like that of Microsoft’s, beaucoup dinero. Yowzah!

Tilson On Bloomberg

Whitney Tilson was on Bloomberg last week. I’m a big fan of his writing and value-driven investment philosophy. I’ve even corresponded with him once or twice – just long enough to say that I appreciate his work and to find out that I’m nowhere near having enough cash to partake in his hedge fund. Luckily, Whitney was gracious enough to give me a heads-up that he was about to launch a couple mutual funds, which I got into several months later.

This is a 5 minute video (approximately) of Whitney’s most recent appearance on Bloomberg.

TilsononBloomberg.wmv

Personal Buy: Tidewater Inc (TDW): $49.94: 20060309

Based on a recommendation from one of the trading services I subscribe to, I picked up a position in Tidewater. When an energy company decides to explore for oil and gas in deep seas, Tidewater is the premier service provider. If I get my own research on this posted soon, I will try and create a link to it. As it is, the only thing I have on paper is not something I can share as it is against the rules of the club. “The first rule of Fight Club: you don’t talk about Fight Club.”


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