September 23, 2010
[No promo box this week]
Timely and provocative commentary, transcripts, research and analysis for serious investors, compiled by the Editors of
Value Investor Insight …
Hemlines and Investment Styles
(Link to http://bit.ly/cc6GUX)
Oaktree Capital Chairman Howard Marks in his latest investment letter looks to history for insight into today’s relative pricing between bonds and stocks. One conclusion: “I’m impressed today by the ability to assemble a portfolio of iconic, high quality, large-cap U.S. growth stocks that will provide appreciation in a strong environment, a measure of protection in a weak environment, and a meaningful dividend yield regardless. To me … these stocks’ potential over a range of possible scenarios is more attrac tive than bonds.”
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Credit Recovery On Track At Synovus
(Link to http://www.bankstocks.com/ArticleViewer.aspx?ArticleID=6182&ArticleTypeID=2)
Thomas Brown of Second Curve Capital (VII, October 28, 2005) details in this report his updated investment thesis for Synovus Financial, which he calls “a publicly traded embodiment of what I expect to happen to bank stocks generally.”
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The “CalPERS Effect” on Targeted Company Share Prices
(Link to http://www.calpers.ca.gov/eip-docs/about/board-calagenda/agendas/invest/201008/item05a-2-02-01.pdf)
Wilshire Associates in this report analyzes the stock performance of companies targeted by the California Public Employees’ Retirement System as needing improvement in corporate governance. Its conclusion: “CalPERS’ approach to improving portfolio returns by engaging management of poorly performing companies to rethink governance and strategy continues to work.
”
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What Determines Investor Behavior?
(Link to http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1467088)
This study of the investing behavior of identical and fraternal twins attempts to determine the extent to which one’s investment style is attributable to nature vs. nurture.
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Other Recommended Reading

Thought-provoking investment-related articles from both the mainstream and less-than-mainstream press.
 “Uncovering a World of Cheap Stocks”
(Link to http://www.forbes.com/forbes/2010/0809/international-investing -
“Beat the market by five points for a few years and you may just be enjoying a lucky streak. Do that for a sixth of a century and you're probably earning your keep as a money manager,” writes Forbes in this profile of the managers of Tweedy, Browne’s Global Value Fund (VII,
September 29, 2006).
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 “Where Have You Gone, Joe Dimaggio?”
(Link to http://www.iveybusinessjournal.com/article.asp?intArticle_ID=830)
After studying the literature on “great” companies, the authors of this Ivey
Business Journal article take issue with some of the conclusions drawn:
“The key insight is that luck can hide the “true nature” of any company: companies that are behaviorally entirely average can have what appears to be remarkable performance, while great firms might be buried under adversity. Our analysis doesn’t say that the companies identified by others as great are merely lucky; it implies that we can’t say with any confidence that they aren’t merely lucky.”
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 “Shrinking ‘Quant’ Funds Struggle to Revive Boom”
(Link to http://www.nytimes.com/2010/08/20/business/20quant.html)
In what it calls a “stinging comedown for the wizards of high finance,” The
New York Times details how quant-fund money managers have fallen out of favor since the onset of the financial crisis in 2007.
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 “Sokol Threatens to Shut Down NetJets”
(Link to http://aliceschroeder.com/blog/sokol-threatens-shut-down-netjets)
Buffett biographer Alice Shroeder has been following closely the difficult challenge Berkshire Hathaway is facing at subsidiary NetJets, now run by
David Sokol. In case anyone needed a reminder about how difficult running a company can be …
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 “Banks’ Self-Dealing Super-Charged Financial Crisis”
(Link to http://www.propublica.org/article/banks-self-dealing-supercharged-financial-crisis)
Investigative journalists Jesse Eisinger and Jake Bernstein in this article for ProPublica assert that by creating demand for mortgage-backed securities during the last two years of the housing bubble, “Wall Street

bankers perpetrated one of the greatest episodes of self-dealing in financ ial history.”
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 “Bill Gates’ Favorite Teacher”
(Link to http://money.cnn.com/2010/08/23/technology/sal_khan_academy.fortune/i ndex.htm)
Working out of a converted walk-in closet in his Silicon Valley home, Sal
Kahn is at “the epicenter of the educational earthquake that has captivated
[Bill] Gates and others,” writes
Fortune in this recent profile.
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