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Wednesday Value Overview

Wedensday’s edition notes a few winners among the losers, including Dunkin Donuts (DNKN), Jones Group (JNY), and IAC/Interactive (IACI). Dick Bove gives a recommendation. Steven Cohen makes an announcement. George Soros loses a significant amount of money, especially with AdecoAgro (AGRO) and Interoil (IOC). Capital One (COF) planned ahead, and Warren Buffett has a recommendation about prioritizing payments.

The overall markets fell hard today as the debt ceiling debate has dragged on and a variety of economic indicators have gone negative. The S&P 500 fell nearly 2%. Not everything was bad, though, as Dunkin Donuts had a great start after its IPO, jumping nearly 50%. A few others like Jones Group and IAC/Interactive gained more than 10%.

Bank analyst Dick Bove may have summed up what many are thinking. He advises suspending investing until the debt ceiling is resolved. He believes all stocks will fall and recommends not being invested in stocks.

Steven Cohen announced today that his fund would stop accepting new investors August 1. Cohen manages $14 billion and feels that this is the optimal size for his fund. Unlike George Soros’s announcement yesterday, Cohen has the option of opening the fund up again in the future. Cohen’s largest positions are in Dendreon, Newmont Mining, and CenturyLink.

Speaking of George Soros, Insider Monkey has a post about how Soros lost $1.5 billion in six months. The problem was that it wasn’t just in one trade, but across his holdings. He sold gold, along with some of his stock picks, at market lows. His two largest holdings, AdecoAgro and Interoil were down 13% and 21%. InsiderMonkey points out that Whitney Tilson did very well shorting Interoil during that time period.

Bloomberg says that big banks aren’t seeing any irregularities in the credit markets, indicating that there is no panic yet about a U.S. downgrade. Capital One wasn’t taking any chances. They had to finance $5 billion for their takeover of ING Direct USA. They ended up moving up their capital raise to July 13 and 14 rather than deal with any more recent potential consequences. Nothing negative has materialized since then, but it does show that companies are planning ahead. What will happen if the U.S. actually is downgraded is an open question, and one that would survive the raising of the debt ceiling.

On my Twitter feed, the quote of the day about the debt ceiling came from Warren Buffett (via Alex Rubalcava), “I hope when they decide to cut Social Security that they pay it alphabetically.”

Disclosure: No positions

About the author:

Steven Kiel
Steven Kiel is the president and chief investment officer for Arquitos Capital Management, a Virginia-based investment management firm. He is a graduate of George Mason School of Law and a captain in the Army Reserves. He manages two spoke funds, The Freedom Fund, a value-oriented portfolio, and The Hayek Fund, a portfolio dedicated to free market principles. He can be contacted at steven.kiel@arquitos.com or through the firm's website at www.arquitos.com.

Visit Steven Kiel's Website


Rating: 3.0/5 (4 votes)

Comments

batman
Batman - 3 years ago
All those with the first names being with Aaron will get there SS checks. Ha, ha.

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