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Steven Kiel
Steven Kiel
Articles (136)  | Author's Website |

Thursday Value Overview: Costco, BKNY Mellon, and Sprint

September 01, 2011 | About:

Thursday’s edition praises Costco’s (NASDAQ:COST) Jim Sinegal, looks at David Einhorn’s dealings with the Mets and his Sprint (NYSE:S) investment, reviews market valuations, and follows up on the BKNY Mellon (NYSE:BK) saga. Costco CEO Jim Sinegal will step down from his perch on January 1, 2012. Sinegal is truly a unique leader. I heard him described today as the Steve Jobs of the retail space. He turns 76 on January 1, so he feels like it’s time to step aside. Even so, he’s kept his sense of humor about it.

"It'll be an upgrade," Sinegal joked about being replaced as CEO on Jan. 1 by President and Chief Operating Officer Craig Jelinek. "He is well-liked and smart and energetic and all the things that I used to be."

Sinegal will stay on for a year as an advisor. Many iconic CEOs in an advisory situation create problems. I have a feeling that won’t happen with Sinegal. He said his job will be to give advice when asked and not interfere and “meddle.” For gurus, Chris Davis has a 5.4% portfolio position in the stock, and Bill Gates has a 3.3% position. The stock trades just below all-time highs.

It appears David Einhorn’s quest to buy into the New York Mets has fallen through. Einhorn was to provide a $200 million loan to Fred Wilpon. If it wasn’t repaid according to a schedule, Einhorn would have gained control over the team. It sounds as if Wilpon was a bit duplicitous in his dealings as he attempted to hang onto control over the team. It’s all in the ESPN story. On the investing front, Einhorn did well yesterday on his Sprint investment as the DOJ announced they would attempt to block the AT&T and T-Mobile merger. He’s still underwater in that deal, though. Einhorn’s cost basis for Sprint is $4.46. It closed trading today at $3.74.

Jacob Wolinsky has his monthly market valuation report over at ValueWalk. It should be up on GuruFocus later today. It looks like he’s got it at slightly overvalued to fairly valued if low interest rates are not taken into account. He notes, however, that once you take alternative investments like government bonds into consideration, you could get a different result. The overall markets seem to be bifurcated as well. You’ve got some historically cheap large caps and some out of control, bubble-level, tech companies. Stock pickers haven’t been rewarded recently, but now seems like a good time to be positioning ourselves using bottom-up analysis. Our time will come again. Take a look at Stock Market Valuation September 1st, 2011.

Following up on yesterday’s BKNY Mellon story, it turns out that CEO Robert Kelly did, in fact, lose the confidence of a majority of the board. It must have been bad. Kelly was the chairman as well as the CEO, so for him to not have allies, or for him to have alienated former board allies is fairly extreme. It was noted that his “abrasive” style was causing problems and the board was afraid that key employees would depart. Perhaps Kelly is the anti-Sinegal. It seems so long ago that Kelly was seen as a savior for Bank of America before turning down that job. Could it really turn out that Moynihan was the better pick and will be the better CEO in the long run?

Disclosure: Long BAC

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