ORNAX: The Crowd is Always Wrong [01-Dec-08]

Lee Eugene Munson and Lorraine Ell provide independent fund research on the Oppenheimer Rochester National Municipal Fund (ORNAX, ORMBX, ORNCX).

At the most basic level, most analysts simply lack an understanding of the Oppenheimer Rochester National Municipal Fund (ORNAX, ORMBX, ORNCX) managed by Ronald Fielding. Most analysis of ORNAX highlights parts of the portfolio without context and paints the fund as risky, not suitable for a core municipal bond portfolio. Although the short-term volatility of ORNAX is higher than the average AAA rated muni fund, over time it has produced outstanding results. To paraphrase Buffet, we would rather take a lumpy 14% than a smooth 12%, or in the case of munis, a smooth 3%.
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Ford: Have you driven a convertible preferred lately? [04-Nov-08]

Lee Munson and Patrick Kirts analyze Ford Capital Trust II, a convertible preferred stock. Published on Seeking Alpha

The news is horrible for the auto industry. In October, J.D. Power and Associates published a study that suggested a potential collapse in the global auto industry in 2009. We love to buy panic, but this time it seems real. If you want to make money in such a dire situation, you will need to understand what you are putting up, what you could lose, and what is the payoff.

Part of our core portfolio includes a convertible preferred issued by Ford (F). But before we get too technical on how to play the global auto collapse, we need to see where Ford is in all of this and what could possibly cause it not to go broke. For those of you that don’t like reading, here is the punch line. The company has the cash to stay alive for a little while, it doesn’t have to be that great, and a little known version of the stock is selling cheap and pays well. For those that like to read, here you go.

Read the full article here.

Unilever: Will Cherry Garcia Save the day? [28-Oct-08]

Lee Munson and Patrick Kirts analyze Unilever’s financial performance. Published on Seeking Alpha

Part of constructing Portfolio Asset Management’s core retirement portfolio includes looking at companies that are going through some type of corporate change that will act as a catalyst for future growth in profitability. We started searching for a staple that could sustain itself though a deep recession and still make a profit. This year has been hard on the staple sector due to the high input prices of oil and food. If a firm can make money in this environment, can it also profit if volumes and input prices decline? We don’t know. So, we have to look at how the company is set up. We will go through Unilever (UN) in enough detail to understand its management changes, product restructuring, and financial strength. This will lead to clues that can help us decide if there is a high probability of the firm maintaining its market share and profitability.

Read the full article here.

Schlumberger: The Switzerland of Oil [26-Aug-08]

Lee Munson and Patrick Kirts assess volatility in energy markets. Published on Seeking Alpha.

After seeing the historic volatility in oil over the last year we at Portfolio Asset Management asked a simple question: How should we take on risk in the energy markets? Warren Buffett once said, “Risk is not knowing what you’re doing.” Others see risk as the chance of permanent loss. We agree with those ideas, so in this context we need an investment well positioned to handle the uncertainties of the oil market.

First, we don’t know where oil prices are going in the short term, and that means companies extracting or producing oil (E&P’s) have uncertainty in earnings. Second, the end user (you, me, and China) is under pressure. We saw Exxon exit the gas station business this year as competition increased. Refineries and retail sales operations do not excite us. Third, political uncertainties are at fever pitch.

Oilfield services contractor Schlumberger is the Switzerland of the energy industry. By focusing only on servicing fields, they gain the trust of their largest client base, independent oil companies, by not competing with them. National oil companies, which control 60% of the world’s reserves and are its second largest client base, do not want an integrated oil company competitor managing their oil fields. Even the large, integrated oil companies depend upon their services.

Over the past four decades, Schlumberger has built an international management team and workforce. The ability to share and act on innovation is at the core of their culture. This is in direct opposition to many competitors, who rely on management from their home countries.

Read the full article here.

Nucor: The End of Steel? [26-Aug-08]

Lee Munson and Patrick Kirts analyze Nucor’s financial performance. Published on Seeking Alpha

Recently the financial media has made much to do about all things related to commodities. We doubt that most investors or advisors understand how to approach investing in commodities outside of the ever increasing and complex ETF’s sold to them. The historic volatility and recent popularity of the commodity market should make us ask a greater question: Why bother? At our firm we buy a lot of shares in a focused group of undervalued companies and take profits appropriately. We stole this idea from most of the billionaire investors on the planet and have yet to see a better way. A great way to approach this is the large unloved firm. Here we will focus on Nucor (NUE). Some will call it a ‘commodity’ or ‘basic material’ play. We are more concerned that it makes profits, has real assets, and is well managed. Profits fund dividends, real assets protect us from permanent losses, and good management should sustain the first two. Add to that the recent selling pressure that appears to come from our fair-weather hedge fund friends, and you may have something of value.

Read the full article here.