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COMMENT

Prior to the meltdown, it went under the Greenberg/Rienhead (?) 15 year accumulative total return growth for about 30 years and was a very well run company. Got into trouble by effectively ensuring everything. When derivative plays effectively got caught, they ultimately ended up having to dig a ton of money from the government and the government still owns a ton. Catalyst for this story is that the balance sheet is probably reasonable now, insurance markets are going to move higher and will be a better equity performance. Going to be a very long story. There are better opportunities.

insurance
HOLD

Sold half of his position around the $20 mark. Chinese market for mobile phones and smaller devices is what is really going to drive a lot of the semiconductor market moving forward. Unfortunately, phones do not require big or expensive chips like what is needed in a notebook, PC, etc. Defensive tech at the moment is not very interesting. People are looking for high levels of growth. If this dips down, you could buy it.

electrical / electronic
COMMENT

This railway had the biggest exposure to coal. There has really been a slowdown in coal production and shipments, so the company had some fairly significant damage. Recently the whole sector has tended to trade off a little bit. He prefers Union Pacific (UNP-N) whose volumes are more diversified. As a category, these railways are not cheap but they tend to reward shareholders every year with a dividend increase.

Transportation
SELL

There are big expectations baked into this story. $45 billion worth of CapX per annum for a long period of time to take off huge oil reserves from the ocean floor. Company has not executed well. Also, issues of political interference. Thinks this will be a “show me” story.

Oil and Gas (Integrated Oils)
COMMENT

(He buys individual banks, not ETFs.) Instead of this, you could just go direct and buy some of the ADRs such as China Mobile (CHL-N). Trouble with ETFs is that you are going to have some movement and you may not know what is responsible for it.

E.T.F.'s
DON'T BUY

This company came from a monopoly position and is now trying to move into new markets. Has a ton of cash. Feels it has to reinvent itself and to figure out whether it is going to be a growth company or is going to be a slow and steady dividend aristocrat type, which pays dividends and buys back shares regularly. Doesn’t think this is a long-term secular growth story. He would stay away.

computer software / processing
SELL

Had a virtual monopoly in terms of US communications. As communication networks slowed down, growth opportunities have slowed. They tried to fix this with bolt on acquisitions and broadening of product offering. A lot of their acquisitions have proven not to be good. A company that he is watching but has not pulled the trigger yet is IBM (IBM-N) which is a share buy back story and a dividend grower. A little expensive now but definitely watch it.

electrical / electronic