ebook essays pieces of the puzzle
Monday, March 28th, 2011
shale tale

Across the lake from the puzzle cave is the headquarters of Northern Oil and Gas (NOG).  Shown above:  Its market capitalization, its trailing revenues, and the price of West Texas Intermediate Crude.  It’s an “oil and gas exploration and production company,” and the action in the Bakken Shale Formation has propelled NOG ever higher.

And now it’s become a battleground in the market, the subject of what the CEO called “an obvious ‘bear raid.'”  He was referring to postings about the company from The Street Sweeper and Bronte Capital (each of those links also connects to an earlier piece with additional detail) and the short positions that were disclosed in them.

The backdrop of this story is the excitement over energy and the allure of wildcatting, be it on the Great Plains or a stock exchange.  But it also raises questions regarding the promotion of investment ideas (pro and con), the information that’s available to investors, the nature of corporate governance, and more.  The  latest salvo is from the company, a press release issued this morning.  This one is worth watching for all sorts of reasons.  (Chart:  Bloomberg terminal.)

anne berkshire hathaway

Who is this person of fame that supposedly causes Berkshire Hathaway stock to go higher when the camera fixes its gaze?  No, not him, although he gets a lot of air time for an octogenarian.  It’s her — and around here we call her Anne Berskire Hathaway.

it’s everywhere

Water is certainly a hot topic in the Upper Midwest right now, with record floods on their way for some river systems.  But water is a global issue, not just a local one, and it’s destined to be a topic on investors’ minds for decades to come.  For background reading, try out the April 2010 “water issue” of National Geographic and the PDF from Wharton called, “Valuing Water:  How Can Businesses Manage the Coming Scarcity?”

real and nominal

A site called Visualizing Economics came up with a truly wonderful way of conveying real versus nominal changes in a data series, in this case featuring housing prices.  For packing valuable information into an attractive setting, this is one of the best visualizations out there.  Bravo.

in a name

If you look for Google (GOOG) in the GICS classification scheme, you’ll find it under “Information Technology.”  Drilling down, the industry is “Internet Software & Services.”  Is that what it is?  Josh Brown doesn’t think so, calling it “a full-blown media company” on his site, The Reformed Broker.

Does it matter?  Yes, because we love to categorize, and where we draw the lines makes a difference.  How we think about competition changes depending on how we name something, as does how we value an investment.  Google uses technology well and is very innovative, but so are industrial firms, etc., in this day and age.  (Or consider the case of Amazon; codified as “Internet Retail” in the “Consumer Discretionary” sector.)

So what is Google and what should we call it and how should we value it?

hard to remember

“Every wrong attempt discarded is a step forward.” — Thomas Edison

“In the spring, at the end of the day, you should smell like dirt.” – Margaret Atwood.