Buy Like Buffett

Jaguar, Buick dethrone Lexus in reliability study

AP Article

Jaguar and Buick surged to the top of J.D. Power and Associates’ closely watched vehicle dependability study this year, tying for the No. 1 spot and dethroning Lexus for the first time since the Japanese luxury brand has been a part of the survey.

Lexus, Toyota Motor Corp.’s luxury brand, took the next spot in the study released Thursday, followed by Toyota’s namesake brand, then Mercury, Infiniti and Acura.

“Buick and Jaguar both lead the industry in nameplate performance,” said Neal Oddes, director of product research and analysis at J.D. Power. “In terms of individual model performance, Lexus and Toyota still do very, very well.”

The annual study measures problems experienced by the original owners of vehicles after three years. Suzuki owners reported the most problems among the 37 brands assessed by J.D. Power.

Despite losing its crown to Jaguar and Buick, Lexus still swept top awards in four segments, while Toyota’s namesake brand took five awards. General Motors Corp.’s Buick LaCrosse was J.D. Power’s top midsize car, while Ford Motor Co.’s Lincoln brand took two awards. Chrysler LLC, which took no segment awards last year, won top honors for its Dodge Caravan in the van segment.

Jaguar jumped from the No. 10 spot in 2008, while Buick leapt from the No. 6 spot. The movement is notable for a study that is fairly consistent from year to year, and the results marked the first time Lexus was not either first or tied for first since it was first included in the study in 1995. Oddes said both Jaguar and Buick have made significant improvements recently.

“We see improvements all over the board with Jaguar,” Oddes said, citing fewer reported problems with vehicle exterior, sound system and the overall driving experience. “The improvement at a nameplate level is significant.”

Mike O’Driscoll, Jaguar’s managing director, said the award marks a huge step forward for Jaguar’s image in the U.S., which he acknowledged has suffered recently. He said the company has been working furiously to reinvent itself in recent years.

“The improvements really started with a major investment we made at Jaguar in new technology and a much more intelligent approach to design,” he said. “This is really a vindication of that investment and technology.”

Oddes also said Buick has taken heed of problems reported in previous J.D. Power studies and made “continuous improvement on their side of things.”

Jamie Hresko, GM’s vice president of quality, said the win for Buick is a win for GM overall because the company has duplicated the lessons from Buick in all new models.

“I think we still struggle with the perception, that the perception of our product is substandard,” he said. “If we continue to attack the markets that we consider will be high volume, which is markets like the Chevrolet Malibu, and we can sell a few hundred thousand of them, the reputation will spread.”

The entire article can be found at here.

Shares of Nucor (NUE) dropped to $33 yesterday amid news that the steel operator expects to report a 1st quarter loss due to weak global demand for steel. Nucor expects a weak 2nd and 3rd quarter in 2009 if economic conditions remain the same. US Steel, Ak Steel and Arcleor Mittal were all down as well on Nucor’s news. I think that metal stocks represent an intriguing value right now and have been buying shares of US Steel in the teens. If stimulus packages done in the US and China have any effect; I would expect the demand for basic materials to rise as well.

Things are worse for Alcoa than I initially thought. Alcoa (AA) will cuts its annual dividend from 68 cents per share to 12 cents. Alcoa announced that the company will also be selling more stock and issuing more debt. I thought Alcoa was cheap before news came out about another stock offering. This offering will only dilute the equity of current investors.

AP Article on the US Recession

America’s recession “probably” will end this year if the government succeeds in bolstering the banking system, Federal Reserve Chairman Ben Bernanke said Sunday in a rare television interview.

In carefully hedged remarks in a taped interview with CBS’ “60 Minutes,” Bernanke seemed to express a bit more optimism that this could be done.

Still, Bernanke stressed — as he did to Congress last month — that the prospects for the recession ending this year and a recovery taking root next year hinge on a difficult task: getting banks to lend more freely again and getting the financial markets to work more normally.

“We’ve seen some progress in the financial markets, absolutely,” Bernanke said. “But until we get that stabilized and working normally, we’re not going to see recovery.

“But we do have a plan. We’re working on it. And, I do think that we will get it stabilized, and we’ll see the recession coming to an end probably this year.”

Even if the recession, which began in December 2007, ends this year, the unemployment rate will keep climbing past the current quarter-century high of 8.1 percent, Bernanke said.

A growing number of economists think the jobless rate will hit 10 percent by the end of this year.

Asked about the biggest potential dangers now, Bernanke suggested a lack of “political will” to solve the financial crisis.

He said, though, that the United States has averted the risk of plunging into a depression.

“I think we’ve gotten past that,” he said.

It’s rare for a sitting Fed chief to grant an interview, whether for broadcast or print. Bernanke said he chose to do so because it’s an “extraordinary time” for the country, and it gave him a chance to speak directly to the American public. (A transcript of the interview was provided in advance of the broadcast.)

Bernanke spoke at a time of rising public anger over financial bailouts using taxpayer money. Battling the worst financial crisis since the 1930s, the government has put hundreds of billions of those dollars at risk to prop up troubled institutions and stabilize the banking system.

Institutions that have been thrown lifelines include American International Group Inc., Citigroup Inc., Bank of America Corp., mortgage giants Fannie Mae and Freddie Mac and others.

Democrats and Republicans on Capitol Hill have questioned the effectiveness of the rescue efforts and have demanded more information about how taxpayers’ money is being used.

Bernanke’s TV interview seemed to be part of a government public relations offensive. Treasury Secretary Timothy Geithner appeared on PBS’ “The Charlie Rose Show” last week, discussing the financial crisis and the Obama’s administration’s relief efforts.

The Fed chief on Sunday’s broadcast repeated his ire over the AIG bailout, saying that over the past 18 months, that was the case that angered him the most. He says he “slammed the phone more than a few times on discussing AIG.”

The government’s four efforts to save the troubled insurance giant total more than $170 billion. A collapse of AIG would have wreaked havoc on the global economy, the Fed has said.

AIG ignited fresh outrage over the weekend with news that it’s making $165 million in bonus payments to executives on Sunday, most of them in the unit that sold risky financial contracts that caused huge losses for AIG.

When the financial crisis intensified last fall, Bernanke and President George W. Bush’s Treasury Secretary Henry Paulson rushed to Capitol Hill for help. That led to the swift enactment of a $700 billion bailout package in October. Since then, banks have received billions in capital injections in return for government ownership stakes in them.

Looking back, Bernanke said the world came close to a financial meltdown. Asked how close, Bernanke responded: “It was very close.”

Bernanke admitted that the Fed could have done a better job of overseeing banks. Critics say lax regulatory oversight contributed to the crisis.

Bernanke said he believes all the big banks the Fed regulates are solvent. Big banks won’t fail under his watch, Bernanke said — though, if necessary, the government should try to “wind it down in a safe way.”

Full article can be found here

Started a position in the MarketVectors Agribusiness ETF (MOO) @ $26.95 per share. This ETF will provide me with exposure to the agribusiness sector with holdings in Archer Daniels, Mosaic, Monsanto and Potash. I think that when the economy rebounds that agribusiness will be a high growth area. Investing in this ETF is easier for me than picking individual winners in the sector.

Bought more shares of General Electric (GE) at $9.50 yesterday.

Warren Buffett fell from the world’s richest man to the 2nd richest man. Bill Gates reassumed his title as the richest man in the world. Buffett lost 25 billion dollars last year and his net worth has declined to 37 billion dollars. Buffett had a number of investment bets go against him. Investments in Wells Fargo, American Express, US Bancorp and Burlington Northern have declined significantly.

Buffett’s company Berkshire Hathaway also lost it AAA credit rating. Fitch downgraded the insurance conglomerate today, The downgrade is not based on any additional specific default risk found in Berkshire Hathaway but based on industry downgrades. Fitch believes that no financial services company warrants a AAA rating in this economic environment.

The Dow is up over 600 points the last 3 days.

General Electric (GE) has risen from the $5 level to the $9.50. I should have bought a lot more when the stock was in the high 5’s. GE rose today despite a ratings downgrade. GE dropped from AAA to AA+. Why is this important? Ratings downgrade raise the cost of obtaining capital in the credit markets. I am hoping that $5.87 was the bottom for GE.

Even American Express (AXP) and Capital One (COF)have risen over 25% the past two days. Both credit card companies still face rising delinquencies and defaults but the stocks appear to have been oversold.  The companies were pummeled to the single digits.

Blue chip companies like Microsoft (MSFT), Pfizer (PFE) and Disney (DIS) have all bounced double digits from their 52 week lows set last week.

PNC Financial (PNC)might be a good short candidate. PNC is trading at $28.55 which is significantly higher than other regional banks like Suntrust and US Bancorp. I know that PNC plans to pay back TARP funds but can they really do that until they know the extent of their real estate losses?

Global Finance highlighted the 50 safest banks in the world and 4 of the top 50 are in the US.

Wells Fargo (WFC) is rated as the safest bank in the US at Number 21.

US Bancorp (USB) is the 2nd safest US bank coming in at Number 26.

Bank of New York Mellon (BK) rates third in the US banking system at Number 35.

JPMorgan Chase (JPM) just made the cut at number 47 in the world.

Noticeably absent from the list are Bank of America (BAC) and Citigroup (C).

The Dow Jones Industrial Average was up for the second straight day. The Dow was only up 3 points today after being up over 300 the day before. In a normal market this wouldn’t even be news but in this market two straight up days is monumental. Hopefully we have seen the bottom of this market or are somewhere near the bottom. The market was up yesterday amid news from Citigroup that the banking giant made a profit the first 2 months of this year. Citi’s stock has rebounded from $1 to $1.50. I am glad that the market has turned upward after the brutal sell off but I am not sure what has changed exactly. It is good news that Citigroup is turning a profit but considering that we don’t know the extent of the losses at Citi; I am not sure why the stock is trading up. It is good to see optimism back in the marketplace even if it just based on hope.

Bought shares of US Steel at $19 per share and Pfizer at $13 per share.