Effectively, the CME is lowering the cost to trade crude oil, gold, silver, copper, and a few other commodities. So far this has had no impact on prices of the SPDR Gold Trust (NYSE: GLD), United States Oil Fund (NYSE: USO), iShares Silver Trust (NYSE: SLV), nor in the iPath DJ-UBS Copper TR Sub-Index ETN (NYSE: JJC).

In the past, margin costs were raised on traders as an effort to curb runaway trading to the upside by making it more expensive for traders and speculators to trade energy and metals.  In short, driving up the cost of poker creates fewer gamblers. So what happens when they make it cheaper to trade?

The full details are here.

JON C. OGG

Jon Marino of PEHub.com noted that P.E. firms are hiring and referenced a follow-up report for BDO USA’s third annual private equity “PErspective” report… 57% of private equity executives increased professional staffing and 62% plan to hire again this year.  This is a complete reversal from the layoff waves of prior years.  Here is more detail from that report.

Whether you like millionaires or billionaires or hate them, the one aspect that is so unfairly portrayed about companies bought by private equity firms is as follows: Most businesses bought by private equity firms need to be turned around or need to be run better.  Sure, they get leveraged up and they scrap inefficient operations.  The dirty secret that private equity firms are not defending enough is that many of these companies would have headed for bankruptcy in the long-term if they had not stepped in.  If that results in a liquidation rather than a pure bankruptcy, guess how many jobs get lost at those companies… all of them, rather than some.

The business sector is not just a one-way street.  Companies hire workers in good times and most fire in bad times.  We even ran our own 2011 Layoff Kings.

JON C. OGG

• Feb 01 traded 125,300 shares and closed at $14.59
• Jan 31 traded 58,300 shares and closed at $14.25
• Jan 30 traded 33,400 shares and closed at $14.28
• Jan 27 traded 16,200 shares and closed at $14.20
• Jan 26 traded 400 shares and closed at $13.50
• Jan 25 traded 1,300 shares and closed at $13.59

We said it before and we will say it again… This ETF owns no shares of Facebook as of yet.  It will have to after the Facebook IPO but it does not now.  Interpublic Group of Companies, Inc. (NYSE: IPG) owns shares but barely rose today.  Affiliates of Goldman Sachs Group Inc. (NYSE: GS) own shares, and Microsoft Corporation (NASDAQ: MSFT) owns shares.  The social media company only has a halo-effect around the theme of social media.

Facebook is and was one of our Top 17 IPOs For 2012, but so was Twitter, Living Social and Yelp.

LinkedIn Corporation (NYSE: LNKD) closed up 6.4% at $76.98 solely on being a rival and Zynga Inc. (NASDAQ: ZNGA) rose 16% to $12.39 due to its being north of 10% of Facebook’s revenues.

What is so funny is that even FriendFinder Networks Inc. (NASDAQ: FFN), the adult-themed social networking site and one of the worst IPOs of modern time, rose solely because of the social media halo.  That gain was 16% to $1.33 against a 52-week range (actually under a year) of $0.51 to $10.01.

The one business development company which does own Facebook shares is GSV Capital Corporation (NASDAQ: GSVC).  Its shares have risen since the impending filing was telegraphed last Friday and the stock rose by over 7% to $18.51 today.

This is called the Halo-effect if there ever was one.

Facebook’s full IPO details are here.

JON C. OGG

The company is aiming to bring a site for serious collectors and sports fans and offer a broad selection from official licensees of the National Football League, Major League Baseball, National Basketball Association, National Hockey League, and the International Federation of Association Football.

Collectors can now browse collectible items by item type, sport, year, team and price.  The offerings will be from trading cards and ticket stubs to game-used jerseys and autographed sports gear.

For many of these products, the store will display the authentication source and condition rating from authentication service providers like Professional Sports Authenticator (PSA) of Collectors Universe, Inc. (NASDAQ: CLCT), and other such as James Spence Authentication (JSA) and Beckett Grading Services (BGS).

You will not find that T206 Honus Wagner baseball card for sale that we just discussed.  That is for sale for $775,000 and a higher-grade sample just sold for north of $1.5 million.  More detail on investing in the T206 Honus Wagner is here.

As far as how Amazon will assure authenticity, it noted “The emphasis on authenticated selection, combined with our A-to-z Guarantee protection on purchases, allows customers to shop the new store with confidence.”

Buyers should know that this may distort prices paid in many cases.  If a wife or girlfriend wants to buy an item for an intimate other or if a father or mother want to buy collectibles for their kids, they may not have a firm grasp on the prevailing market price ranges that should be paid.

This will not derail the eBay auction dominance nor will it kill the auction houses which auction off the really high-end items.  What it may skew is all of the items out on the market in the under-$50 to $300 priced items.  The baseball memorabilia store’s top 7 items by price are all Babe Ruth signed baseballs and the rank is from over $46,000 down to $10,950.  Thanks, but no thanks. 

Lastly, keep in mind that Amazon has been selling many collectibles items.  This launch is more of a focused effort and it means that Amazon wants to attract many more sellers. The new launch is here.

JON C. OGG

While Facebook has said that it is choosing the “FB” stock ticker, it did not specify whether or not the NYSE or NASDAQ would get the listing.  Keep in mind that Mark Zuckerberg is where the buck stops if you evaluate the share structure.

Be advised that there is a dual-class of stock with A shares and B shares.  Each share of Class A common stock is entitled to one vote per share. Each share of Class B common stock is entitled to ten votes per share and is convertible at any time into one share of Class A common stock.

The underwriting group is as follows: lead book-runners are Morgan Stanley, J.P. Morgan, and Goldman Sachs; co-managers are BofA/Merrill Lynch, Barclays Capital, and Allen & Company.

BASIC STATS:

• 845 million monthly active users,
• 2.7 billion likes and comments per day,
• 250 million photos uploaded per day,
• and 100 billion friendships.
• The company also has 483 million daily active users.
• It also had roughly 3200 employees as of December 31.

Microsoft Corporation (NASDAQ: MSFT) is listed as a competitor and it is an owner, while Google Inc. (NASDAQ: GOOG) is not an owner and is listed as a key competitor.  Twitter is competitor.  As a reminder, GSV Capital Corporation (NASDAQ: GSVC) is an owner of stock as well.  Interpublic Group of Companies, Inc. (NYSE: IPG) still owns a small stake as well.

We are now finally getting to see at least some of the preliminary figures from Facebook to use for financial analysis:

• 2009 revenues $777M, $122M net income for shareholders;
• 2010 revenues $1.974B, $372M net income for shareholders;
• 2011 revenues $3.711B, $668M net income for shareholders.
• The company’s cash and marketable securities at the end of 2011 was $3.908 billion.

Zynga Inc. (NASDAQ: ZNGA) accounted for about 12% of 2011 total revenues for Facebook.

Mark Zuckerberg owns 28.4% of the total voting power, but he has a proxy over insider shares that gives him 56.9% of the total voting power.  Other big holders are James Breyer at 11.4% and Peter A. Thiel at 2.5%.  Large Class B share holders (1 million or more shares) are Sheryl Sandberg, David Ebersman, Mike Schroepfer. Theodore Ullyor, Marc Andreesson…

T. Rowe Price Associates, Inc. (NASDAQ: TROW) owns over 6 million class A shares and affiliates of Goldman Sachs Group Inc. (NYSE: GS) own over 65.9 million Class A shares.

As of December 31, 2011 there were outstanding:

• 117,097,143 shares of our Class A common stock held by approximately 110 stockholders;
• 1,758,902,390 shares of our Class B common stock held by approximately 1,070 stockholders;
• 258,539,434 shares issuable upon exercise of outstanding stock options;
• 378,772,184 shares subject to outstanding restricted stock units (RSUs).

RISK FACTORS AS FOLLOWS:

• “If we fail to retain existing users or add new users, or if our users decrease their level of engagement with Facebook, our revenue, financial results, and business may be significantly harmed;”
• “We generate a substantial majority of our revenue from advertising. The loss of advertisers, or reduction in spending by advertisers with Facebook, could seriously harm our business;”
• “Growth in use of Facebook through our mobile products, where we do not currently display ads, as a substitute for use on personal computers may negatively affect our revenue and financial results;”
• “Facebook user growth and engagement on mobile devices depend upon effective operation with mobile operating systems, networks, and standards that we do not control;”
• “We may not be successful in our efforts to grow and further monetize the Facebook Platform;”
• “Our business is highly competitive, and competition presents an ongoing threat to the success of our business;”
• “Improper access to or disclosure of our users’ information could harm our reputation and adversely affect our business;”
• “Our business is subject to complex and evolving U.S. and foreign laws and regulations regarding privacy, data protection, and other matters. Many of these laws and regulations are subject to change and uncertain interpretation, and could harm our business;”
• “Our CEO has control over key decision making as a result of his control of a majority of our voting stock;”
• “The loss of Mark Zuckerberg, Sheryl K. Sandberg, or other key personnel could harm our business;”
• “We anticipate that we will expend substantial funds in connection with tax withholding and remittance obligations related to the initial settlement of our restricted stock units (RSUs) approximately six months following our initial public offering;”
• “The market price of our Class A common stock may be volatile or may decline, and you may not be able to resell your shares at or above the initial public offering price;”
• “Substantial blocks of our total outstanding shares may be sold into the market as “lock-up” periods end, as further described in “Shares Eligible for Future Sale.” If there are substantial sales of shares of our common stock, the price of our Class A common stock could decline.”

Again, the Top 17 IPOs to Watch in 2012 is here.

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JON C. OGG

The full S-1 SEC FILING is here.  PS… The traffic to the SEC.gov website was severely limited for almost an hour due to excessive traffic flooding the site due to readers wanting to read the Facebook S-1.

Keating has been a Director of the Group Finance.  The strategy change is to effect a split in the Irish and U.K. Retail Division into separate units for each country.  Each unit will be led by separate chiefs and both chiefs will be members of the group executive committee.  U.K. Retail will be led by Des Crowley; Ireland Retail will be led by Liam McLoughlin. The new structure’s implementation date is expected to be in mid-March of 2012.

Shares at the local level in Dublin were up 5.2% on last look, but the ADRs in New York were up 3.1% at $6.46 against an adjusted 52-week range of $3.99 to $27.00 if you account for the reverse split.

Our take: This could lead to more of a break-up or allow asset sales more easily down the road.  It certainly is not growth ambitions, but whatever adds to survival chances right now is what matters the most.

JON C. OGG

FULL PRESS RELEASE FROM THE P.R. DEPT. BELOW:

The Governor and Company of the Bank of Ireland (the “Bank of Ireland”)
1 February 2012

Bank of Ireland Announces Board and Executive Management Changes

Bank of Ireland has today announced changes to its Group Structure and to its Senior Executive Team.

Board Change
Andrew Keating has been appointed an Executive Director of Bank of Ireland and Group Chief Financial Officer with immediate effect, replacing John O’Donovan who has retired from that role.  Andrew was formerly Director of Group Finance where he spearheaded a major transformation of the Finance Division in the Bank of Ireland Group.  He joined Bank of Ireland in 2004, prior to which he held a number of senior finance roles with Ulster Bank having qualified as a chartered accountant with Arthur Andersen.

Andrew is also a Director of Bristol & West plc, which is a wholly owned subsidiary of Bank of Ireland.

There are no details requiring disclosure for Andrew under paragraph 6.6.7 (2) to (6) of the Listing Rules.

Changes to Group Structure
Having embedded considerable benefits from the sharing of best practice and synergies in areas such as segment/product propositions, operational management and infrastructure the Group is enhancing the visibility of and focus on two of our most significant businesses.  Accordingly, for strategic management purposes we will split our Retail (Ireland & UK) Division into Retail Ireland Division and Retail UK Division.  Each will be headed up by separate Divisional Chief Executives who will be members of the Group Executive Committee.

Changes to Group Executive Committee
Des Crowley will be Chief Executive of the Retail UK Division where he will be responsible for the various UK based retail businesses within our subsidiary Bank of Ireland (UK) plc and outside the subsidiary.  Prior to this he held a number of positions on the Group Executive Committee since 2000, including Chief Executive, Retail Financial Services and Chief Executive UK Financial Services, having joined Bank of Ireland from Arthur Andersen.  As we work through the revised structure we will need FSA regulatory approval for key changes/appointments which we make during the course of transition.

Liam McLoughlin will be Chief Executive of the Retail Ireland Division, where he will be responsible for the Branch Network, Business Banking, Mortgages, Personal Lending, Debit & Credit Cards and Wealth Management.  Liam has been Head of Group Manufacturing since July 2009.  Prior to that he held a number of senior positions in the Capital Markets and Finance Divisions.  He joined Bank of Ireland in 2004 from Ulster Bank Group prior to which he had been Financial Controller with the National Treasury Management Agency.  Qualifying with PricewaterhouseCoopers he is a fellow of Chartered Accountants Ireland.

Senan Murphy joins Bank of Ireland to become Head of Group Manufacturing.  Senan , a chartered accountant , was most recently Chief Operating Officer and Finance Director at Ulster Bank whom he joined in 2008 having previously been Finance Director at Airtricity. Before that Senan worked in a number of senior roles in General Electric in both the US and Ireland.  In his role with Bank of Ireland, Senan will be responsible for managing and enhancing the Group’s infrastructure (including its technology), customer service and contact centres, collection activities, its customer payment activities and cash distribution.  Senan will be a member of the Group Executive Committee.

Mr Murphy will join the Bank shortly and will transition into his new role for the implementation date of the new Group Structure at which time Mr Crowley and Mr McLoughlin will formally take on their new roles.

The new Group Structure will have an implementation date of mid March 2012.

1 February 2012
 
Enquiries:
Dan Loughrey, Head of Group Corporate Communications Ph: 00-353-623-4770
Helen Nolan, Group Secretary Ph: 00-353-76-623-4710

January 2012 is the first time in memory that two different samples of the T206 Wagner card have been for sale in the same month.  If you have nearly unlimited means, a T206 Wagner can end up in your collection right now.  Another T206 Wagner just sold in early January.

Published reports indicate that there may be 50 to 100 samples of the T206 Honus Wagner that exist, but there may only be around 50 in existence after speaking with industry sources.  A sale of $2.8 million for the “Wayne Gretzky” T206 Honus Wagner in 2007 set a record, and that was after the exact same card had been bought for about $2.35 million earlier that same year. 

The reason this card is so rare is known as Honus Wagner decided to have the American Tobacco Company withdraw his card from the T206 series.  The “why” this card is so rare remains a debate even today.  Only a limited number of this card made it out into the public, or at least only a few which are known to have survived.  In the late 1800s and early 1900s, baseball cards were promotional inserts for cigarettes packs and tobacco packages, as well as made for other products.  They were far from being kids’ bubble gum cards that later generations would come to cherish.

The most common belief is that Wagner was anti-tobacco and did not want his image promoting cigarettes and tobacco products to children.  Maybe, but Maybe not.  This may have simply been a contract dispute over compensation or terms.  Here is the argument for the latter case… Honus Wagner’s image appeared on cigar boxes in some of the same years around the debated time of 1909 to 1911 when the T206 cards were distributed.  Robert Edwards Auctions has auctioned two such cigar boxes in recent years, and the Baseball Almanac shows these images as well.

While most baseball cards rise and fall in value and can be very cyclical, that just has not been the case for a T206 Honus Wagner.  As it turns out, there are millions of people who collect baseball cards and memorabilia or who have collected in their lives.  The Wall Street Journal reported in mid-2011 that there were 3.1 million millionaires in 2010.  And the same report showed over 40,000 in North America worth $30 million or more.  Some of these people are still collectors and there is no greater prize in sports collecting than being able to flaunt a T206 Wagner.

It was not very well covered in the media, but a T206 Honus Wagner from the famed Dreier collection just sold in early January 2012 through Legendary Auctions.  It was graded by PSA, one of the industry-recognized grading services and the grading brand of Collectors Universe, Inc. (NASDAQ: CLCT).  It was graded as a “4″ (on a scale of 1 to 10).  This famed T206 Wagner sold for an undisclosed sum.  After speaking with Doug Allen of Legendary, it was a privately negotiated transaction.  Mr. Allen would not disclose the buyer nor could we get an exact price, but he quoted, “The sale was for more than $1.5 million.”  An incredible sum indeed. 

Now there is another sample of the card for sale right now, for a hefty price.  Memory Lane has a “PSA 2″ graded T206 Wagner for sale today for a whopping $775,000.00.  It is even advertised on eBay Inc. (NASDAQ: EBAY) as item #290661465614.  After speaking with J. P. Cohen of Memory Lane, this is card is on consignment and had previously been for sale at a higher price and the new price is said to be close to where offers came in for this exact card last year.

These two samples are not the only T206 Honus Wagner cards which have been sold in recent times.  A unique sample was a proof strip from the T206 set which actually belonged to Honus Wagner himself.  This was purchased at the Major League Baseball All-Star Auction by SCP Auctions (for an anonymous client) for the sum of $316,250 in 2010.  It was also SCP Auctions Inc. which brokered the record $2.8 million sale mentioned earlier of the prized Gretzky T206 Wagner.

Our take is that Mark Zuckerberg has been holding out to achieve a $100 billion market valuation for the IPO.  Even if Facebook does not deliver on its IPO paperwork next week, the IPO is coming soon.  The company is going to have to disclose its financials sooner or later due to its large base of shareholders.

GSV Capital Corporation (NASDAQ: GSVC) already owns shares of Facebook and its share have popped by 3% to $15.60 on this news.  As a reminder, Microsoft Corporation (NASDAQ: MSFT) invested in this and now should have exponential implied valuation gains on what sounded silly at the time.

Don’t forget about iShares KLD 400 Social Index Fund (NYSE: DSI).  It will end up being a holder as well and this should increase the trading volume of that ETF whether it is up or down in share prices.

Facebook is ONE OF OUR TOP 17 IPOs FOR 2012

Until an SEC filing hits the tape, we are treating this as a rumor.  One of many rumors.  Supposedly the Facebook IPO will create over 1,000 new millionaires.

JON C. OGG

The good news is growth, the bad news is that this was a tad light and we have not seen a headline GDP of 3% or more in four quarters.  There was a slight discrepancy in headline estimates: Bloomberg had a consensus of 3.1% growth and Dow Jones had a consensus of 3.0% after a meager third quarter growth of only 1.8% and growth of an even smaller 1.3% in the second quarter.

The deflator measures the inflationary component as a more focused GDP measurement and both Bloomberg and Dow Jones had the price-adjusted GDP projected at 1.5% versus about 2.6% in the previous quarter.

Consumer spending rose by 2.0%, and that is roughly two-thirds of GDP.  That is up from 1.7% in Q3 and up from 0.7% in Q2.  The rest of the boost came from businesses restocking shelves and inventory.

The good news is that we are still growing.  Unfortunately it remains extremely muted.  The total for 2011 now appears to be only 1.7% GDP growth for the whole year.  It is no recession, but it feels like telling your four-year old kid for the birthday gift that they can get two gifts of any choice… and you are at the dollar store.

JON C. OGG

The guidance on January 5 was victim of soft sales in the first two months of the quarter generating slightly negative same-store sales for its fourth quarter with non-GAAP earnings coming in a range of $0.65 to $0.70 earnings per share.

Our thesis was simple” For new investors, this is not a fourth quarter story.  This is not a story of guidance for the current quarter, and it may not even be a story of strong results in 2012… Ron Johnson is set to transform the look and feel of this company entirely.”

Penney’s shares at the time of our call were down over 6% on that day at $32.75.  The problem now, if there is a problem, is that the new concept unveiling and the leaner retail worker structure has met a guidance presentation all in one week.

A gain of 15% to $39.48 on Thursday now has shares up 20%.  Why is this a problem?  The consensus analyst target is down under $34.00 and the 52-week trading range is $23.44 to $41.00.  It was known that Ron Johnson was going to use his Apple magic to transform the company.  It was known that he was going to have the presentations.

A 20% gain in three weeks is generally a gift no matter how you cut it.  Even if analysts raise their price target objectives substantially, at a minimum we would only look to enter on a pullback now.  Taking at least some profit at this point would not hurt anyone even if it is only on part of the position.

JON C. OGG