You’ve got to hand it to him. When he’s right, he’s right. Here he is laying out in two minutes exactly why it would be nuts to try to topple Saddam Hussein.


Okay – I’m worried about the market and all those aforesaid chickens coming home to roost. (Or not.) But it’s a little like Congress. Everybody hates Congress but most people like their own representative. I’m downbeat on the market here – but would I really sell my GLDD? Won’t we need to dredge the waterways no matter how bad the economy gets? (Or doesn’t get.) Would I really sell my BOREF? (And to whom?) My HAPN warrants? HAPN has the cash to complete its acquisition; and even if the underlying stock dropped from $5.60 to $3 (say), the right to buy it at $5 for the next three and a half years would still be worth more than 29 cents.

Of course, in a really bad market, everything goes down. But even then, you wonder whether it makes sense to sell, pay tax on the gain, and hope you’re smart enough – and brave enough – to buy back your shares when they’re 30% lower. And what if they move higher, instead?

The only two things I know for sure are, first, that I don’t know where the market is going (even though I’d guess it’s going down). And second, that neither you nor I should – ever – put money in the market that we can’t comfortably afford to risk or that we might actually need in a year or two.


Would I really sell my FMD? My guru on this one writes:

I have spent some time reviewing the FMD earnings release, supporting securitization data, and 4th quarter conference call. They had a knockout quarter, exceeding expectations, and are very well positioned to continue their momentum into the 2008 fiscal year. Virtually all previously amplified issues (client concentration, confidence in carried value of residuals, strength of management, durability of industry utility model, etc.) have been diffused at this point, with the only remaining material (in my view) issue being stability of and consistent access to the Asset-Backed Securities funding markets – and here they have reasonable contingency plans. Based on market action Friday – up $2.80 on high volume (against a back drop of pain for other financial services companies) – it would appear that we will start to climb back to a more reasonable price.

As I look forward, FMD is a proven 30-40% earnings grower, with significant and measurable competitive advantages that is currently selling at less than 7x forward earnings. In addition, FMD has doubled its dividend over the last year and currently pays out at 2.9% (rather extraordinary for an early stage growth company) – and I would expect material increases approaching that magnitude on a go-forward basis.

My biggest fear on FMD is that someday the government will change the whole business. I linked to a Forbes story a few weeks ago. Here‘s a similar piece from the current New Yorker. My guru remains unfazed.


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