Here are the (lightly edited) bits I found interesting in this week’s issue. My comments are in italics.
“New York state hosts the most lobbyists, 3,842, or 18 for every elected legislator…. Only in Maine and New Hampshire do legislators outnumber lobbyists …. Some 43% of first-time buyers put zero money down on their home purchases last year; by contrast, two years earlier, 28% bought a house with no down payment.” – Alan Abelson
“It’s no mystery why hedge funds are sometimes tax-inefficient. Many of them trade heavily and often, holding stocks for hours or days, instead of years. That means hedge funds generate a lot of short-term capital gains, which are taxed by Uncle Sam at 35% — and often they don’t generate as much in long-term capital gains, taxed at 15% …. Prospective investors should always ask a hedge fund, ‘How did the fund do on an after-tax basis?’ But most never do.” – Erin Arvedlund [Ed. – Most investors in mutual funds don’t ask about after-tax returns either.]
“Under the SEC rule, hedge fund advisers are subject to examinations and must have a compliance program, including a chief compliance officer …. Managers who ‘lock up’ invested assets for two years of more don’t have to register …. Some offshore funds, unwilling to register, are returning money to U.S. investors …. For 2005, hedge funds had net inflows of $47 billion, compared with $73.6 billion in 2004 and $70.6 billion in 2003.” – Lawrence Strauss
“Ford has two big pluses going for it — the engineering departments of Mazda and Volvo, its Swedish unit.” – Jay Palmer [Ed. – Where are the home-grown American designers and engineers?. Sheesh. ]
“Stanford now has the third-largest endowment of any North American university — over $12.2 billion — trailing only Harvard and Yale …. Silver jumped over 11% on the week to a 19-year high of $9.76 an ounce after reports that a Barclays silver ETF might be approved. Platinum hit an all-time high of $1,060 an ounce.” – Robin Blumenthal
“Federal-funds futures have priced in a 100% probability that the policy-setting Federal Open Market Committee will raise rates Tuesday by 25 basis points for the 14th straight time, to 4½%. Perhaps more importantly, futures indicated about a 70% to 71% probability that the target overnight-lending rate will reach 4¾% in March.” – Jennifer Ablan
“World 2005-06 sugar consumption should surpass output by 1.5 million to 2.0 million tons after Brazil’s disappointing center-south harvest …. Analysts and trade houses made supply-demand forecasts for the season based on sugar prices at 10.5 cents, not 18 or 19 cents …. if the market slides abruptly , some physical buyers could renege on forward purchases, as Russian and Chinese buyers have done in the past.” – Susan Buchanan
“U.K. institutions are moving heavily into long-dated government securities in response to new regulations that force them to invest in high-grade bonds to better cover their future benefits payments. Last Tuesday’s sale of 50-year inflation-index-linked gilts produced a real yield of just 0.46%, the lowest ever for an auction.” – Vito Racanelli
“Japanese shares are at a five-year high and are 100%-plus above the lows of April 2003.” – Leslie Norton
“The Russell 2000 small-cap index is up 8.8% for the month and is at an all-time high. The S&P Small Cap 600 and the NYSE Composite likewise hit all-time highs …. short interest in tech is the lightest of any sector of the S&P 500 …. assets in the Rydex Precious Metals Fund amounted to 18% of the assets in all Rydex funds, and the two Rydex energy funds together account for more than 35% of all firm assets.” – Michael Santoli
“Moody’s and Standard & Poor’s, the two leading bond-rating agencies have a duopoly with a combined market share of almost 80% …. Moody’s was spun off from Dun & Bradstreet in 2000 …. Standard & Poor’s is McGraw-Hill’s crown jewel, accounting for almost 70% of total profits …. McGraw-Hill could follow the successful Moody’s model and spin off S&P to shareholders …. McGraw-Hill is one of the two top producers of elementary and high-school textbooks, along with Pearson, the British publisher …. Since 2000, S&P’s operating profits have risen to $1 billion from under $400 million. In comparison, profits in the education unit are up a more modest 35%, to $410 million, while information and media earnings have collapsed to $60 million from more than $200 million …. S&P now gets 37% of its ratings revenue abroad …. Moody’s has a lush operating profit margin of 55%, above S&P’s 42%.” – Andrew Bary
“Henry Schein today holds 32% of the $5.8 billion dental market in North America, virtually even with Patterson …. Schein is the single largest supplier of flu vaccines, with about 50% of the market.” – Neil Martin
“Plum Creek Timber is the nation’s second-biggest manager of forestland, with just under 8.5 million acres …. timber assets are seen as a hedge against traditional stock and bond investments …. The company’s plan to sell nearly half of the million acres it owns in Maine’s North Woods and Moosehead Lake region has set off enormous controversy. Opponents refer to the company as Scum Creek and Plum Creep …. Though the bulk of Plum Creek’s revenues come from timber sales, land sales also make a sizable contribution. About 55% of cash flow comes from timber sales, 35% from land sales and the rest from manufacturing wood products …. One sign of timber’s current cachet is the decision by International Paper to sell its 6.8 million-acre portfolio — what some are calling the biggest transfer of land since the Louisiana Purchase.” – Sandra Ward
“Last year saw 187 initial public offerings, totaling $33.7 billion. While the dollar volume was down 22% from $43.4 billion in 2004, the number of deals was off only 8% …. three sectors attracted the greatest number of offerings: technology, with 34 deals; finance, 26 deals; and 35 health-care deals … Refco, 2005’s eighth-largest IPO, disappeared before the year’s end in bankruptcy …. Back in 2000, VC-backed deals accounted for almost 40% of the IPO dollar volume and 66% of the deals. In 2005, they comprised 10% of the volume and 22% of the deals — the lowest percentage of transactions in 16 years. ” – Jack Willoughby
“A third of Citigroup’s earnings come from emerging countries …. The top 10 homebuilders account for 22%-24% of the industry.” – John Neff
“Investments in oil infrastructure declined from their 1981 peak for 20 years. Supply does not respond quickly to rising demand, as investments are capital intense …. A few years ago it was a buyer’s market, and drillers accepted multiyear contracts at low prices. Today the drilling industry still has about 70% of its fleet contracted at rock-bottom rates. Most of these contracts are ending this year …. The total market value of all gold-mining shares is a little over $100 billion, about a third of Microsoft’s market value …. only 4% of the money in Fidelity’s sector funds is in precious metals, up from 1% at the bottom of 2002.” – Felix Zulauf
“In the next 15 years, there will be a dearth of great-quality arable land. We’ll have to use existing acreage. To feed the world’s population, productivity per acre will have to increase by about 40% …. Research in Motion has 75% of the market for wireless e-mail users. The company makes money on handsets, but not nearly as much as it makes on having a network and providing the service. There are over 60,000 BlackBerry enterprise servers.” – Art Samberg
Copyright © 2006 Dow Jones & Company, Inc.
