Where’s the Oversight?
These big mutual fund companies such as American Funds, Vanguard, and Fidelity are basically useless when it comes to holding boards accountable. How many times have you seen one of these companies file a 13D and take an activist position?
The reason I blame the mutual funds is because they accumulate a ton of assets under management from investors 401k’s and monthly mutual fund purchases. I can’t think of many times where one of these companies, who might hold 7% – 10% of the outstanding shares, ever takes on management.
Most mid-cap and large-cap stocks have institutional ownership of over 80% of the shares outstanding. They have the muscle to stop the sweetheart deals and good ‘old boys clubs on these boards but choose to do nothing.

The boards of most companies are filled with presidents of universities, CEO’s of other companies, former politicians, and other “celebrity” type directors. Rarely do you see anybody that has years of industry experience. The board has the fiduciary duty to protect the shareholders but in essence it is the CEO who runs everything and the boards are yes men and women.

Evil Hedge Funds?
The politicians and media love to portray the hedge fund industry as gun-slinging high rollers out trying to break up companies for a quick buck ala Pretty Woman. While there are some quick draw McGraw traders out there, a vast majority of hedge funds are longer term investors.
They get vilified in the media of being wealthy fat cat tax evaders but at least they are going after crappy managements. There are some great activist investors out there that have the capital to take a 10% stake in a company and force change upon horrible managements. This is something you don’t see the mutual fund industry doing.

The Need for Change
Hopefully people wake up to these cozy relationships on the boards and the self dealing that many insiders partake in and get angry.
McClendon may have started Chesapeake but once he took it public it wasn’t his company anymore. However he and the board have treated it that way. Who in the world has ever heard of a company buying a CEO’s map collections for hundreds of millions? Who ever heard of the CEO skimming off the top of every well drilled? Who ever heard of a CEO running a hedge fund right alongside the company? It’s amazing he hasn’t even been fired yet.
Unfortunately more of this goes on than most people realize or imagine. Until more people get angry about it, it will continue.

Unfortunately I own CHK. Fortunately it’s only been a round-tripper for me as I bought a long time ago for $19 and change and have ridden it up and back down again. There’s valuable assets there, but as long as McClendon’s at the reigns they are his assets.

Break-even:  I breakeven on this trade if GLD closes at $158.49 or $171.51 by June 15, 2012.

Unprofitable: I lose money on this trade if GLD closes under $158.49 or above $171.51 by June 15, 2012.  I like this trade, because I am risking $349 per 1 lot to make $1000 and I make money on this trade if stock stays flat to $170.  I am catching a falling knife with this one, but I think this is good risk vs reward and I always like to play GLD to the upside.   

UPDATE 5.7.2012  With GLD rallying a little bit this trade is currently worth $3.80 and already good for a 8% winner in 3 days.  I will leave this trade on, because I think there is more upside in Gold

UPDATE 5.8.2012  With GLD getting crushed by more than $3 today, this Spread is decreasing in value as well.  This Spread is now currently worth $2.50, but I will leave it on as I remain bullish Gold.    

UPDATE 5.9.2012  With GLD down again today, this Spread is currently worth $2, but I will leave it on as I think Gold could get a bounce.

UPDATE 5.10.2012  With GLD getting a small bounce today, this Spread is worth $2.15, but once again I will leave it on for more potential profits.

UPDATE 5.11.2012  GLD is selling off and this Spread is worth $1.91, but I still think Gold will work higher this summer.  

UPDATE 5.14.2012  With GLD selling off once again this Spread is now worth $1.33.  I will not add to my position yet, but getting close.  

UPDATE 5.16.2012  I still remain bullish in Gold, but risk vs reward is defined so I will leave this trade on.  It is one of my smaller positions and actually added to my position today at $.93.  Risking $93 per 1 lot to make $1000 is a great risk vs reward play.

UPDATE 5.22.2012  GLD and Gold got a nice POP and the Spread is now trading $1.80, so I am actually up money on this trade, because I added more.  I took this trade off yesterday as I was frustrated with any LONG positions.  

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– Chesapeake Energy (CHK) price target to $26 from $35: Canaccord Genuity

– Visa (V) price target to $145 from $120: FBR Capital

– CVS (CVS) price target to $50 from $48: Mizuho

The productivity report, also posted this morning, showed nonfarm productivity down -0.5% while
unit labor costs were up 2.0%. This is for data from the first quarter of 2012. The productivity report
measures the labor efficiency in producing goods and services in the economy.

Not a Gaffe but the latest word on IPO offerings will be that of Graff Diamonds, a high end jeweler based
in London. They will be seeking approval from the Hong Kong Stock Exchange today for an IPO of as
much as $1 Billion dollars according to Thomson Reuters. This would be the largest listing in the Asian
Pacific so far this year. Also of note the Carlyle group, a private equity group, priced its IPO at $22 per
share, which is lower than it expected range of $23-$25.

Factory orders, which came in yesterday, were at a -1.5, a better result than the market expected of
-1.8.

In other action is that of the treasury department delaying their decision on the offering of an 18 month
floating note, which would replace the securities maturing on May 15 th. This FRN is the latest tool in the
department’s monetary policy arsenal.

– LULU, and NKE Breaking out to the upside

– Inflation is raging, Onions are up %400 since 2006. Yale Tuition was 1600 in 1969, Now 40000+ grand.

– Looking for some key cycles to peak around May 6th, and May 20th. Sell in May and Go away may have happen in april. Any Higher in the $SPX and you should see some barn buring short covering.

Crude Oil futures, which were much higher earlier in this week, fell to lows following the weekly inventory data at 10:30 a.m. ET. Oil inventories were  2.84 million barrels last week. 

With the relative weakness in the stock market, we see the growth retail stocks such as LULU, NIKE, AND UA ALL raging higher today.  Strong stocks get stronger and weak stocks such as RIMM down 5% and CHK down 13.7% today.  The movement in the Mini S&P 500 Futures have been small and tight, maybe waiting for the breakout later this week.

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Break-even:  I breakeven on this trade if RIMM closes at $16.15 by January 18, 2013.

Unprofitable: I lose money on this trade if RIMM closes under $16.15 by January 18, 2013.  The most I can lose on this trade is the Price of the Spread can be worth $2.00 minus the Price I bought it for $.15 or a total of $215.  In this trade, I am playing for a takeover and as long as RIMM stays above $9 I will only lose the $.15 that I paid for the spread.

UPDATE 5.3.2012  Thankfully I did not get LONG this stock, because it is getting punished again today to $12.05 and hitting another 52 week low.  This spread is down about $.15 and is worth even money.  I will leave it on, because it is a long-term position not a trade.

UPDATE 5.4.2012 This stock isnt moving in the right direction, but I will continue to keep it on.

UPDATE 5.7.2012  This stock isnt moving which makes me more nervous by the day, but I think RIMM can hold $9, so I will leave this trade on.  

UPDATE 5.8.2012  This spread is not moving as I said this is a POSITION not a trade.  

UPDATE 5.10.2012  This Spread will be left on until further notice and does not need a day to day update.

UPDATE 5.22.2012  This Spread is worth $.17 debit, so I am down a little bit in this trade, but I will leave it on for
a potential buyer of RIMM Stock.

UPDATE 6.4.2012  This Spread is worth a $.50 debit and I am looking to take it off any on any rally. 

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