BKS

From Whitney Tilson:

You might not believe this in light of this morning’s news (Barnes & Noble, Inc. (NYSE:BKS) has roughly doubled, but this is what I wrote over the weekend but hadn’t yet sent:

For only the fourth time in our 13+ year investing history, we’ve gone long something we were previously short.  (Given how well it’s worked out the three previous times with Fairfax, General Growth Properties and Netflix, we should do it more often!)  In the past, there’s been some period of time between our switch, but in this case we went from short to long Barnes & Noble on the same day last week.  Such a rapid shift in opinion is unprecedented for us, but when we encounter new data/analyses that convince us that we’re wrong, we act quickly.

BKS had been a profitable short for us and we were already thinking of covering when two things caught our attention: we saw that Jana, a firm we know well and respect greatly, took a big stake, and read the write-up below on our favorite value stock idea web site, Value Investors Club.  We largely agree with the analysis in the VIC write-up: that the base business is worth almost the entire current stock price, so you get a nearly free call option on the Nook, which is doing much better than we expected.  Plus with more than 2/3 of the stock controlled by insiders and, according to Yahoo Finance, 67.2% of the float is sold short (87% if you include Jana’s new stake), even a hint of good news will likely trigger the mother of all short squeezes.

Also you can find the VIC analysis here.

Why Study Warren Buffett

This author provides many reasons why study Warren Buffett. At the end, he even provides some practical way as below.

1. read his annual letters to shareholders, which are openly available at www.berkshirehathaway.com.

2. read his book, "The Essays of Warren Buffett: Lessons for Corporate America,"

3. attend annual BRK shareholders' meeting.

Lastly, enroll in the Executive MBA course on Buffett’s genius at the University of Nebraska at Omaha’s College of Business. The program opens with three consecutive days of study prior to the Berkshire annual meeting. This one-of-a-kind course is an in-depth exploration into the science of investing and, more importantly, the art of managing.

Wells Fargo Reports 13% Increase in Q1 2012 Profits

While all banks are under great distress, WFC has been grabbing the mortgage lending business from others. I will buy and accumulate during its price weakness from now on to the next few years.  JC 4/17/2012
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Amid improvements in the mortgage sector, Wells Fargo & Company reported a 13 percent increase in first quarter profits, with a net income of $4.25 billion, and earnings per share at $0.75. Last year during the same quarter, the bank reported a net income of $3.76 billion, or $0.67 per share.

 Revenue increased $1 billion from fourth quarter 2011, to $21.6 billion. The $1 billion increase was driven by increases of $506 million in mortgage banking, $458 million in market sensitive revenue, and $181 million in trust and investment fees, the report stated.

Read more here.

Natural Gas Investment

Natural Gas is very low. Buy ETF ?  Watch out contango, K-1s, ....

How about find individual companies instead? 

Read the article below. You can also find out 10-year volatility of natural gas prices

The No-Brainer Natural Gas Investment?

Warren Buffett's View on Single Family Home Investment

On Monday, February 27, 2012 Warren Buffett appeared live on CNBC for his annual “Ask Warren” marathon. During this interview he mentioned that one of the best investment opportunities around right now in the United States are Single Family Homes!

BUFFETT: I would say that single-family homes are cheap now, too.

BECKY: You would?

BUFFETT: Yeah, single-family homes— but if I had a way of buying a couple hundred thousand single-family homes and had a way of managing— the management is enormous— is really the problem because they're one by one. They're not like apartment houses. So— but I would load up on them and I would take mortgages out at very, very low rates. But if anybody is thinking about buying a home— five years ago they couldn't buy them fast enough because they thought they were going to go up, and now they don't buy them because they think they're going to go down. And interest rates are far lower. It's a way, in effect, to short the dollar because you can— you can take a 30-year mortgage and if it turns out your interest rate is too high, next week you refinance lower. And if it turns out it's too low, the other guy's stuck with it for 30 years. So it's a very attractive asset class now.

BECKY: If you are a young individual investor at home and you have your choice between buying your first home or investing in stocks, where would you tell someone is the better bet?

BUFFETT: Well, if I thought I was going to live— if I knew where I was going to want to live the next five or 10 years I would— I would buy a home and I'd finance it with a 30-year mortgage, and it's a terrific deal. And if I— literally, if I was an investor that was a handy type, which I'm not, and I could buy a couple of them at distressed prices and find renters, I think that's— and again take a 30-year mortgage, it's a leveraged way of owning a very cheap asset now and I think that's probably as an attractive an investment as you can make now.

Warren Buffett: Why stocks beat gold and bonds

In an adaptation from his upcoming shareholder letter, the Oracle of Omaha explains why equities almost always beat the alternatives over time.   By Warren Buffett 

At Berkshire Hathaway (BRKA) we take a more demanding approach, defining investing as the transfer to others of purchasing power now with the reasoned expectation of receiving more purchasing power -- after taxes have been paid on nominal gains -- in the future. More succinctly, investing is forgoing consumption now in order to have the ability to consume more at a later date.  

Read more here. 

The Myth of Japan’s Failure

In this article, the author said that while Japan is often quoted by many experts as an example of "Lost Decades", Japan’s achievement is all the more impressive. Japan should be held up as a model, not an admonition.

Read more on The Myth of Japan’s Failure By EAMONN FINGLETON who predicted the Japanese financial crash of the 1990s