Saturday, September 15, 2007
Insiders doled out $465.6 million to buy their own companies' shares in August, the largest amount since 1990. The retail, energy, and insurance sectors lead the charge.
It seems that liquidity hasn't completely dried up... SAC Capital, the hedge fund founded by billionaire Steve Cohen, raised $1 billion for its flagship fund despite market turmoil. So, not only are people willing to pony up some cash to bottom fish, they're also willing to pay 3% up front and 50% of earnings by betting on old Stevie.
Signs of a bottom... According to an industry insider, money is pouring into distressed-debt hedge funds at the fastest pace in six to seven years.
Phase 1 pick Pozen (POZN) was the biggest gainer on the Nasdaq last Friday, up 27.86%. The company announced the beginning of Phase III trials for an arthritis drug it's developing with AstraZeneca. Under terms of the deal, Pozen is eligible to receive $345 million in payments from its Big Pharma partner based on the drug's performance – its total market cap right now is only $380 million.
Pop quiz. Which country has the highest per-capita growth in real GDP over the last 30 years? If I gave you 30 guesses, you'd still never come up with this answer. It's not China. Or Hong Kong. Or Singapore. It's not Kuwait or any other oil-rich state. It is landlocked, and its topography is dominated (70% of its land mass) by a desert. The country is Botswana.
How did Botswana, surrounded on all sides by chaos, become the fastest growing economy in the world, averaging 9% growth for 30 years? Its leaders could teach America a few things. First, the country has a tiny army whose only real purpose is to catch poachers. (It had no army at all until 1977.) Botswana's government has always lived within its means – budget surpluses are the norm. Likewise, its citizens save and invest: Botswana's trade surpluses have created the largest foreign exchange reserves ($8 billion) in all of Africa.
The economy depends in large part on mining. Recently, large uranium deposits were discovered. And with demand growing for diamonds and precious metals, Botswana should continue to thrive. The big risk for the country is the AIDS crisis. Sources claim one in three people in Botswana are infected...
We're sending our editor-in-chief to Botswana late next week to see for himself what's happening on the ground in Africa's most stable nation. I've asked him to look at real estate, infrastructure, and mining companies. Do you have a friend in Botswana? Do you do business in Botswana? If you can make an introduction for us, please let us know: [email protected].
Russian corporations borrowed $29 billion in the last three months, up 40% from the year-ago period. That's their highest rate of borrowing since the country's $40 billion default in 1998. Some Russian companies are only paying 70 basis points (0.7%) above LIBOR. It seems like the banks want to force the Fed to lower rates by making progressively riskier loans. What's worse than a subprime loan in Florida? Any loan to a Russian company.
Witnessing the collusion between the banks and the government, gold is finally doing what it should: getting out of town. Tuesday was only the 15th time gold has closed above $700. Our own Tom Dyson opines that the market will move higher, because, so far, none of the plumbers are buying. Read Tom's research in DailyWealth.
Buffett on the move... Extreme Value pick Berkshire Hathaway (BRK-A) further trimmed its position in PetroChina to 9.72% from 10.16%.
Oil briefly hit $80 a barrel this week, an all-time high. Suddenly, Jim Rogers' brazen call for $100 oil seems closer to reality.
12% Letter pick Citigroup (C) is bullish on Turkey. The world's largest bank bought Opus Menkul Degerler, a Turkish broker. Last year, Citi took a 20% position in Akbank, Turkey's top lender. Why the sudden interest in the emerging market? Turkey's equity market has increased sevenfold in the past five years.
Our friend Chris Weber beat Citi to the punch by two years... He made a fortune by investing in Turkish bonds in December 2005.
Date Range:9/6/2007 to 9/13/2007
Date Range:9/6/2007 to 9/13/2007