Wednesday, September 10, 2008 10 comments ++[ CLICK TO COMMENT ]++

Hope for Newspapers and Magazines? Esquire & Their E-Ink Cover

When I was researching a potential investment in newspapers, I came across this Washington Post discussion of "electronic ink" from E Ink Corporation. E-Ink provides a super-thin electronic display that is purported to be a replacement for paper, although we are nowhere near that. This is also the technology behind Amazon's Kindle. Well, it looks like Equire magazine is releasing a special 75th anniversary edition with an E-Ink display.

(source: pt's photostream at flickr. Original link from

The display seems very simplistic but this is just the early stages of the technology. I imagine that they were hamstrung by the limited amount of energy in the battery. You can check out the electronics behind the display from this slashdot post.

I'm not into fashion and Esquire is too high-end for me but I'll see if I can pick up that magazine (Note that there is a normal version of the magazine so if you are simply buying to check it out, grab the right one.)

Esquire says that advertising sales have been very strong for this issue. I don't doubt that but I wonder if this is a one-time boost due to the novelty. Will E-Ink or similar technology really save newspapers and magazines? As discussed in the past on this blog, newspapers own the content but are having problems figuring out how to monetize that if they don't distribute physical papers.


10 Response to Hope for Newspapers and Magazines? Esquire & Their E-Ink Cover

September 11, 2008 at 1:36 AM

I've been busy you haven't had the benefit of my profound economic insights and ultra-deep investment wisdom. But...that's gonna change. Brace yourself.

Needless to say, I've been following YMM, David Dreman and Marty Whitman lately with great interest. YMM, of course, had Fraudie implode on him. David Dreman had Phoney implode on him. Whitman has apparently escaped the Dynamic Wealth Destruction Duo and remain unharmed, though his foreign real estate holdings have been taking a pounding lately.

As I said before, I sympathsize with these 3 characters' fund shareholders. And I say that without my usual irony and sacrasm. It truly is unfortunate for them to lose money investing with this bunch. Dreams and hopes delayed or destroyed.

HOWEVER, I have absolutely no sympathy for YMM and Dreman. These punters should have known better. I don't think they are stupid. Nor are they asinine, dumb, dim-witted, moronic, dense. In the end, it is (only) simply one humoungous and stupendous misjudgement, and in the need to have their ego masturbated, they took leave of their senses and doubled down and kept digging the hole they created for themselves.

YMM, especially, should deserve your scorn. He really should be publicly humumiliated to the maximum extent. But I understand why you have some emotional attachment to Your Main Man, so I'm not gonna press this pt.

David Dreman may be suffering the same senility disease as Marty. But here is an opportunity I am watching very closely. Dreman runs a close-end racket called Dreman-Claymore Dividend and Income fund (symbol DCS). The fund as of 8/31 had 1% invested in FNM common, and 9% in FNM preferreds. It also has another 2% invested in the clunker called Washington Mutual. During the past 2 days, its comatose shareholders have finally waken from its vapid obliviousness and start dumping the DCS shares. The end result is that as of tonight it has an above-average marekt price discount to NAV of 18.83%.

You can check for yourself here: fundsummary.aspx

With close to a 20% discount, i think it does adequately account for Dreman's senility and lack of humility. Call it the "senility discount" if you wish.

The fund does invest in a bunch of energy and dividned-paying stocks and preferreds so the senility discount does give you a margin of safety if the commodity space continues to blow chunks.

The plus side is that w/ the discount, you should get a nice dividend yield @ the current market price, even if you whack the Phoney's prefereeds' dividend to 0.

I would caution that the year-end tax-loss selling is probably gonna kick in, so the senility discount may widen even more, but it is something worth paying attention to.

Since you and ContrarianDuke's investment time horizon seems to stretch to the afterlife, this fund could be a good long-term hold. And who knows, maybe by some strong collective magical-thinking and happy thoughts, Phoney and Fraudie would make a come back. DCS would be a cheap way to play this fairy tale.

If the discount gets wider, even I may have to play the ridiculous "intrinsic value" card get myself some of this stock.


September 11, 2008 at 10:33 AM

Vlado thanks for the reference. I wonder if this is an economic investment or an attempt to gain fame. Some people still like owning media for the prestige and contacts it brings you. This is tiny stake by Slim's family but I wonder if it is actually an economic decision. Interesting nevertheles... NYT seemingly has a high valuation but their earnings are depressed so it depends on how well they can grow their earnings...

September 11, 2008 at 10:50 AM


I would concur with your views regarding Bill Miller. Some of his picks have certainly blown up. This generally doesn't mean much for the average investor but since he is a concentrated investor, it is a huge blow.

As for Martin Whitman, he will probably do poorly in the immediate term but he seems fine to me. This article seems to imply that Whitman has broken even on Ambac (but not MBIA or Radian, although this doesn't factor his MBIA surplus notes or anyhing) due to his averaging down (note that the gurufocus numbers are rough estimates of returns and do not correspond to exact portfolio returns since we don't know the actual purchase price and other details.) It is possible that ContrarianDutch may also be in the positive right now.

You are right about Whitman likely taking losses on Asian real estate but note that (i) his cost basis is very low, and (ii) they are long-term invewstments. Regarding the first point, it is quite possible he is earning up to 10% dividend yield on his cost basis. Selling may not be desirable if you can't find better opportunities. Regarding the second point, if some of his holdings are strategic investments, short-term price declines aren't a big deal. This similar to the thinking espoused by an entrepreneur who is willing to take losses in the first couple of years in order to establish his or her business.

As for David Dreman, I am heavily influenced by his thinking but I don't really follow him closely so I don't know. Dreman follows a wide diversification strategy so I highly doubt that blow ups of Fannie or Washington Mutual or whatever else will impact him that much. Yes, he will post negative returns but he should be ok.

I don't have any opinion on the income CEF that you mentioned. I don't know much about it and I would be wary of "income-oriented" funds. If the economy remains weak for an year, junk bond defaults are going to increase, and preferred/common dividends will be cut so I'm not sure how safe those yields are even if you use conservative assumptions. Remember, most of the problems so far are limited to housing. A weakening economy will impact industries are haven't been hit hard yet (like autos (who have high dividends or coupons on their bonds), transporation companies, commodity businesses, and so forth.)

September 11, 2008 at 5:12 PM

Since I bought Ambac at $3 you can all do the math on how that purchase is faring.

Meanwhile Synchro, do inform us, how is your gold? Still shiny I hope?

September 11, 2008 at 10:21 PM

"how is your gold? Still shiny I hope?"


I am sorry to disappoint your chance at schadenfreude, but in the spirit of education and illumination, I will waste some some explaining my method:

The trend in gold changed. That's all. I am not married to my positons. And I don't rationalize with nonsense like "fundamentals" or "intrinic values"

I started investing in gold in the fall of 2005 when it turned up above 475. My average cost is about $600. During April and August, the choppy action caused me a couple whipsaws, but net-net I have been reducing my positions, and the reduction accelerated in August as key trendlines and moving averages were violated.

As a trendfollower, I will never top-tick the trading sardines, but hopefully I won't suffer davastating losses either. I controlled my risk by sizing my position conservatively (about 10% of overall portfolio), so from the top, my over portfolio is down 2~3%. In any case my exposure will keep getting smaller as the price keeps going against me.

The above happens _despite_ my _opinion_ about the need to have gold as an insurance against hyperinflationary financial armaggedon. After all, I could be wrong. The price of gold will tell me if my opinion is ultimately right when the trend turns up again and align _with_ my opinion. When that happens, I will be buying high and hopefully selling higher.

In the meantime, I am hiding in SHY and IEI w/ 90% of my portfolio, which, due to the drop in interest rates, completely cushioned my losses in gold.

I consider what happen to me in gold, and how I dealt with it a textbook example of anti-Sivaram's-Main-Man investment methodology. I never averaged down. I kept my ego in check (partly by expressing it in a non-monetary way by trolling blogs such as this one).


September 11, 2008 at 10:30 PM

One thing that did intrigue me though: I am weighing the contrarian signficance of you bragging about your ABK gamble.

I am seriously thinking about shorting this sucker now. If I do this, I will definitely do it with put options though.

I will have to think through my timeframe and stop-loss levels though, because so far the intermediate trend is swinging your way, so I am not about to fade you yet.

But, trust me, I will fade you when I see the swing turns.

September 12, 2008 at 9:56 AM

Wow... Synchro are you becoming irrational or what? Your Ambac short sounds like a joust against synchro (and me, to some degree) rather than an attempt to make money ;)

However, I can see you making money for a period of time. Ambac is very volatile and it can easily sell off along with the broad market, not to mention if Connie Lee doesn't get off (I don't think it will any time soon.) I don't think you will be right in the long-term but a short in the short-term can work. Puts might be really expensive for you but who knows. It still sounds like a wild personal challenge but whatever...

September 13, 2008 at 10:39 AM

I think you're right. I was wrong....Shorting just to prove a point is stupid. Not to mention ABK is a penny stock at this point....Who knows, Marty may stilll have some firepower to steamroll the shorts.

The other day I had an epiphany: i think you can probably make money in any method as long as you are disciplined w/ an entry and exit plan -- any plan. The different methodologies are simply different ways of expressing your timeframes. But..there's got to be a plan getting in and getting out.

With YMM's and Marty's method, you can hit really lucritive homeruns, but there will be clunkers long the way.

So being derisive of your methodology is wrong. And for that, I apologize.

September 14, 2008 at 7:39 AM

So at last we can agree that here is merit in different methods. As I said before Synchro, I wish you success with yours. It is intesting to compare approaches.

(BTW, how did I "brag" about ABK?)

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