16 May 2012 A much-vaunted new material may change telecommunications
GRAPHENE, a form of carbon that comes in sheets a single atom thick, has gained a reputation as a wonder material. It is the best conductor yet discovered of heat at room temperature and is 40 times stronger than steel...

14 May 2012 The optimism bias

Are we born to be optimistic, rather than realistic? Tali Sharot shares new research that suggests our brains are wired to look on the bright side -- and how that can be both dangerous and beneficial.

13 May 2012 JP Morgan's Loss: The Explainer
All I know is that everyone's really mad about this JP Morgan mess. What on earth happened?

12 May 2012 The future of customer support
Some of the biggest brands in software, consumer electronics and telecoms have now found a workforce offering expert advice at a fraction of the price of even the cheapest developing nation, who also speak the same language as their customers, and not just in the purely linguistic sense. Because it is their customers themselves.

12 May 2012 Recoverable Oil in Colorado, Utah, Wyoming 'About Equal to Entire World’s Proven Oil Reserves'
The Green River Formation, a largely vacant area of mostly federal land that covers the territory where Colorado, Utah and Wyoming come together, contains about as much recoverable oil as all the rest the world’s proven reserves combined, an auditor from the Government Accountability Office told Congress on Thursday.

09 May 2012 Understood properly, the Death Star is not worth it
I wish to address the most important policy question of the millennium: Should we build a Death Star? This debate picked up this year after some Lehigh University students estimated that just the steel for a Death Star would cost $852 quadrillion, or 13,000 times the current GDP of the Earth.

09 May 2012 Should Robots Replace Regulators?
Politicians and regulators are bickering again over who should oversee the nation's 28,000 investment advisers, who manage some $50 trillion...

08 May 2012 This Unfolding LNG Story Could Have a Very Happy Ending
With decades of supplies in hand, a number of domestic producers are seeking permission to sell natural gas overseas, in many cases in the form of liquid natural gas (LNG).

08 May 2012 The Outlook for Energy: A View to 2040
ExxonMobil’s long-term view of the world’s energy future.

Global energy demand will be about 30 percent higher in 2040 compared to 2010.

Energy demand growth will slow as economies mature, efficiency gains accelerate and population growth moderates.

In the countries belonging to the Organization for Economic Cooperation and Development (OECD) we see energy use remaining essentially flat. Non OECD energy demand will grow by close to 60 percent.

By 2040, electricity generation will account for more than 40 percent of global energy consumption.

Oil will remain the most widely used fuel, but natural gas will grow fast enough to overtake coal for the number-two position.

For both oil and natural gas, an increasing share of global supply will come from unconventional sources, such as those from shale formations. Demand for natural gas will rise by more than 60 percent through 2040.

Demand for coal will peak and begin a gradual decline.

Gains in efficiency through energy-saving practices and technologies will temper demand growth and curb emissions.

Global energy-related carbon dioxide (CO2) emissions will grow slowly, then level off around 2030.

06 May 2012 Renting Prosperity
Americans are getting used to the idea of renting the good life, from cars to couture to homes. Daniel Gross explores our shift from a nation of owners to an economy permanently on the move—and how it will lead to the next boom.

17 May 2012 Buffett rides to Media General's rescue ( Portfolio )
Warren Buffett is famous for exacting a high price while serving as a lender of last resort for companies needing immediate access to cash, and this morning’s financing deal with Media General has many of the hallmarks of a classic Buffett arrangement.

"The blessing of the Oracle of Omaha: Priceless."

17 May 2012 Ackman — Give J.C. Penney’s New CEO a Chance ( Portfolio )
Activist investor Bill Ackman, a major J.C. Penney shareholder who helped place Apple alum Ron Johnson at the company’s helm, took advantage of his stage time at Wednesday’s Ira Sohn conference to talk up J.C. Penney.

17 May 2012 Buffett's Berkshire to buy Media General papers ( Portfolio )
Warren Buffett's Berkshire Hathaway to buy 63 newspapers from Media General for $142M.

16 May 2012 Martin Marietta Falls Most Since 2008 After Einhorn Criticism ( Portfolio )
“Recent earnings benefited from one time fiscal stimulus that is about to wind down,” Einhorn said at a conference in New York.

16 May 2012 Oakmark Funds' opinion on the upcoming Facebook IPO ( Portfolio )
Over the past few weeks, you haven’t been able to read a business magazine or watch financial news on TV without being exposed to commentary about the upcoming Facebook IPO. Facebook has obviously been an amazing success story and is clearly newsworthy as the largest IPO ever. This week, investors are being asked to decide whether or not Facebook is a worthy investment at a market cap of $100 billion. The debate over whether or not to invest at that price reached an absurd level this week when Apple founder Steve Wozniak said that he would buy Facebook on the IPO regardless of its price.

At Oakmark, that is a statement, applied to any investment, which makes no sense to us. No matter how attractive a business is, there is always a price above which it becomes an unattractive investment. Is the Facebook IPO above that price? I will answer that with the one comment I have yet to hear the experts say – we have no idea. That’s the beauty of this business – we can admit that, most of the time, most companies sell at prices that make us lack conviction about their investment merits, and we don’t need to invest where we don’t have conviction. As Warren Buffett has said, investing is like being the batter in a baseball game where there are no called strikes. You can simply wait for the pitches you believe you have the best chance of hitting.

Facebook doesn’t make much money today for a company with a $100 billion market cap. But what the company earns five years from now is likely to be wildly different from what it earns today. Perhaps future earnings will make this week’s IPO look like a bargain; perhaps it will make the buyers look foolish. Other than our general bias that IPOs, on average, don’t perform as well as the stock market, we don’t have an opinion, so we aren’t swinging.

Unlike Facebook, our most important positions tend not to be front-page news. How often have you recently seen analysts debating the merits of owning Capital One, Comcast, Discovery Communications, Liberty Interactive or TE Connectivity (the five largest holdings in Oakmark Select)? Probably never. Also unlike Facebook, these companies sell at modest multiples of current earnings, have business models that appear reasonably predictable, and are allocating excess capital to share repurchases. As value investors, we are used to investing in companies when there is relatively little media interest in them, and we have learned the rewards that come from following a disciplined investment approach.

We wish the owners and new investors in Facebook well. But we at Oakmark are watching with our bat on our shoulder.