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Reserve Primary Fund Sends Goodyear Scrambling for Cash
Tweet Share on Facebook September 25, 2008 Comment (2)It's not just small investors who have their money locked up in the Reserve Primary Fund, which broke the buck last week when its net asset value dropped to 97 cents a share. Goodyear Tire & Rubber Co. (symbol GT) said in a press release Thursday that it will draw $600 million from its credit lines because it can't access more than half of its cash investments, which are tied up in the fund, reports Dow Jones. The Reserve Primary halted redemptions on September 16.
Although the company has been trying to pull its $360 million out of the Reserve Primary, the fund has delayed acting on Goodyear's request "because federal regulators have called for an orderly disposition of the fund's securities," says the WSJ. Goodyear says it's going to use the $600 million credit to support seasonal needs and enhance its cash liquidity (it maintains that its other cash investments are still accessible.)
Shares of Goodyear aren't in good shape. They've fallen from $30 at the end of September 2007 to just $16 at yesterday's close.
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Everything You Always Wanted to Know About Buffett (but Were Afraid to Ask)
Tweet Share on Facebook September 24, 2008 CommentI've always liked Warren Buffett, with his unpretentious lifestyle (this gazillionaire lives in the same house he bought in 1958, drives his own car, unapologetically eats lots of steaks and burgers—hold the veggies—and has a thing for Cherry Cokes.) And you've got to love his candid observations. This morning, he told CNBC: "It's nice to have a lot of money, but you know, you don't want to keep it around forever...I prefer buying things. Otherwise, it's a little like saving sex for your old age."
Yes, he's a brilliant investor. But a soon-to-be released biography, The Snowball: Warren Buffett and the Business of Life, makes me like him even more as a person. The book, written by former insurance analyst Alice Schroeder, will be the first biography in which Buffett has taken part. "Whenever my version is different than somebody else's, Alice, use the less flattering version," Buffett told Schroeder, according to the book (the Associated Press obtained an audio version). Judging from the handful of snippets that have been released, the book reveals an even more endearing side of Buffett, and a very sad one.
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Pickens Loses $1 Billion on Oil Bets
Tweet Share on Facebook September 24, 2008 Comment (2)A setback for T. Boone Pickens: Funds run by the Texas oil tycoon and hedge fund manager have lost roughly $1 billion this year. That includes $270 million out of Pickens's own pocket, the WSJ reports. One hedge fund focused on energy was down nearly 30 percent through August, and the paper said a smaller, commodity-centric fund is down a whopping 84 percent. "It's my toughest run in 10 years," he told the Journal.
Crude oil prices are up by more than a dollar today, at nearly $108 a barrel. Pickens told the paper he thinks oil will finish the year around $120 or $125 a barrel.
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For a Moment, iPhone Steals G1 Google Phone's Thunder
Tweet Share on Facebook September 23, 2008 Comment (1)Google may be rolling out its G1 phone today (here's a peek and some details), but Apple is generating buzz of its own.
Piper Jaffray analyst Gene Munster said late Monday that he thinks Apple—which doesn't report earnings until mid-October—has sold 4 million iPhone 3Gs (in addition to the 1 million it sold the first weekend it went on sale).
Munster raised his estimates of Apple's fourth-quarter earnings 13 percent to $1.17 a share from his previous estimate of $1.04 a share (more details here). Munster left his price target for calendar year 2009 at $250 per share.
The main number to watch, says Cnet, is 10 million—which Apple pegged as its 2008 target. "That number appears easily within reach if the 5 million estimate is accurate: Apple sold around 2.5 million iPhones during the first six months of 2008 as it ran out of the original model," Cnet says.
Apple's stock was up more than 3 percent midmorning. Google's stock was up just less than 2 percent.
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New Penny Shows Lincoln Reelin' in the Years
Tweet Share on Facebook September 23, 2008 Comment (42)Get your penny loafers out. The U.S. Mint rolled out four new designs for the penny yesterday, in honor of the bicentennial of Abraham Lincoln's birth (and the 100th anniversary of the production of the Lincoln cent).
Heads will still feature Lincoln's mug, but the tails side will capture four stages of Lincoln's life. The new coins will be issued in roughly three-month intervals throughout the year. The first, which will be put into circulation on Feb. 12, 2009, will represent Lincoln's birth and early childhood in Kentucky. The others will feature his formative years in Indiana, his professional life in Illinois, and his presidency. You can see the full lineup here.
The Los Angeles Times argues that it makes more sense to get rid of the penny than to redesign it, given that the cent can cost more than a cent to make. In other words, it has outlived its usefulness.
Do you agree?
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Money Blog Buzz: Lotto Sales Are Up, Bono's Investments Are Safe
Tweet Share on Facebook September 22, 2008 Comment (18)This week's Carnival of Personal Finance linked to a handful of interesting posts, including How Wal-Mart Is Watching You and How to Leave the Workforce at Age 29 (The carnival also included my post on How Kraft's Entry Affects the Dow.)
Elsewhere, I enjoyed this rundown from RooshV on Credit Default Swaps for Dummies, and a couple of quirky links from the Kirk Report: Manhattan strip-club traffic is down and lottery sales are up.
And for those who were concerned, Infectious Greed reports that Bono's investments are safe. Whew.
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Ameriprise Suit Alleges Reserve Primary Fund Tipped Off Big Investors
Tweet Share on Facebook September 22, 2008 Comment (5)More on the Reserve Primary Fund saga: Financial-services company Ameriprise Financial is suing Reserve Management Co., alleging it selectively tipped off big institutional investors about the troubled fund—leaving small investors in the cold. More specifically, the suit alleges that on the morning Lehman Bros. filed for bankruptcy—September 15—Reserve's agents notified a number of big-time investors that the fund held material exposure to the securities issued by Lehman and that the fund was at risk of "breaking the buck." Ameriprise says it filed the suit to "protect the interest of its retail investor clients." Clients of the company and its subsidiary, Securities America, hold more than 300,000 accounts in the Reserve Primary Fund.
Other brokerages that swept client money into the Reserve Primary include TD Ameritrade. Last week, an analyst with Friedman, Billings, Ramsey & Co. estimated that the Reserve's decision to cut the value of its shares could cost TD Ameritrade's customers as much as $100 million.
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Treasury Leaves Reserve Primary Fund Investors Hanging
Tweet Share on Facebook September 22, 2008 Comment (68)The Treasury released more details Sunday about its guarantee to insure money-market funds against losses. Unfortunately for investors of the Reserve Primary Fund, Treasury said it will cover shareholders only for balances held in these funds as of the close of business last Friday (September 19). The Reserve Primary fund dropped below a $1 net asset value on Tuesday, September 16.
Over the weekend, scores of Reserve Primary Investors posted to message boards—including the comments section below—in search of answers, such as whether Treasury insurance would cover them. More details:
- The program will be available for one year.
- Tax-exempt money market funds—aka munis—are eligible.
- The IRS will release further details on the program, including what documentation fund companies will need to participate.
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Oliver Stone: Wall Street Was Right on the Money
Tweet Share on Facebook September 22, 2008 Comment (1)"Greed, for lack of a better word, is good," proclaimed cutthroat corporate raider Gordon Gekko in the 1987 movie Wall Street. It's about time that the movie's director, Oliver Stone, weighed in on Wall Street's unfolding crisis. Here's what he told the WSJ's Washington Wire blog:
"The Gekkos of the world are still there," he added, castigating industry icons who have partied lavishly while mortgage corporations and establishment banks were tanking. "It was greed that drove this. Look at the greed, the size of it, the derivative schemes, the hedge funds..." He said he feels sorry for workers who lost their jobs. He said, "But it was inevitable it would end like this."
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The 10 Biggest Bankruptcies in History
Tweet Share on Facebook September 19, 2008 Comment (6)This has been a week of superlatives. AIG: the biggest government bailout. Lehman: the biggest bankruptcy. Russia: the worst financial crisis since the country defaulted a decade ago (and now home to the world's cheapest stocks). What's more, the Dow Jones industrial average dropped to its lowest close in more than two years on Wednesday. And today, U.S. stocks rallied the most in six years.
Here's a list to cap the week off. The Consumerist posted a list of the 10 Biggest Chapter 11 Bankruptcies in U.S. History (culled from a CNBC slideshow and Bankruptcydata.com). Drum roll, please:
