Hedge Fund of Hedge Funds

I think it was Charlie Munger of Berkshire who coined the phrase, "Hedge Fund of Hedge Funds". If a Hedge Fund is good, would not a Hedge Fund of Hedge Funds be better? Give me a break. I was watching Squawk box this morning and they were spouting some statistics:

• Over $1 Trillion in Hedge Funds
• Hedge Funds can account for 30% of trading volume
• Some Hedge Funds managers make $1b

You know what? I don't care. There is such a thing as too much gov't. If people want to give their money to a hedge fund manager, knowing that the manager is taking 20% of the profits and 1% of assets managed then I say, "let them". Now I do have a problem with the gov't bailing out a hedge fund if it gets in trouble. Markman (Why you'll feel the hedge funds' pain) and Jubak (Profit from short-sellers' problems ) have had some interesting things to say about Hedge Funds in the past. They have basically said that a number of the Hedge Funds trade using very similar approaches. With their computer-based trading, they cause momentum to over-react to the plus and negative sides. This is an opportunity for us, the small guys, if we are willing to buy and hold past the volatility. JG pretty much cuts to the chase (what a great phrase) in his book when he says:

"By law, most hedge funds can only accept investors who can afford to lose large amounts of money. But even if you qualify for this dubious honor, it's not clear that this is the smart way to go...

But most hedge funds charge huge fees - at least 1% of assets under management plus a 20% share of profits. No doubt attracted by the large fees, thousands of new hedge funds have been created in the past few years. Most will have no chance of justifying their fees. There just aren't that many great managers and your chances of finding one are quite slim."

Should be an interesting day in the markets today. Arcelor finally agreed to let MT buy them (I never thought I'd see this happen as the French don't like to see their companies sold). I always have a soft spot for Mittal as that is the single stock where I made the most money in the past 5 years getting a ten bagger. This merger will help boost other steel stocks, several of which are on MFI lists (NUE & CLF for instance). Then I saw PD was buying Inco. That along with the purchase of KMG on Friday shows that there is a bottom for the commodity stocks and we are very close to it.

The feel good story fo the weekend was Warren Buffett committing to donate $35b to the Bill & Melinda Gates Foundation. What a classy guy. I wonder what the foundation will do with all that money? I know they are big into education right now and that seems a worthwhile approach. I admire people who are charitable. At my church yesterday, they introduced about 40 people who have volunteered to travel to Romania with Habitat for Humanity. It makes me want to cry, what a wonderful gesture.

Ok, enough sentiment, back to MFI blog.

Tales of the Tapes

PTSC.OB - They announced today that they have licensed their patents to Epson (PTSC: Seiko Epson Agreement). PTSC did add some language to their boilerplate wording that perked my interest.

1. Seiko Epson is the third global leader to purchase an MMP license this month
2. "This not only confirms that our MMP licensing program is strong and gaining momentum, but it also adds to the continuing evidence of the strength of our jointly owned patent portfolio."
3. Latest reports from the licensing team indicate that now some 300 companies have been put on notice of likely infringement of one or more patents included in the MMP portfolio.
4. Remarkable level of success has produced advice from attorneys and independent accountants that licenses are no longer extraordinary events in the conduct of the company's business.
5. This means that the company finds itself in the difficult position of wanting to share the exciting details of license revenues at the time the licenses are announced, yet we are legally prevented from doing so.
6. Investors expecting to learn the dollar amounts of revenues received by Patriot Scientific in connection with recent and future licenses will find that such information will be available only as included in regular quarterly financial statements filed by Patriot with the SEC.
7. Based upon our positive business developments in calendar 2006, the Patriot Scientific Board of Directors is considering additional strategic moves intended to enhance the strength and profitability of the company for the benefit of our shareholders.
8. The revenue associated with the license agreements they have produced in the program thus far encourages our board and management team to continue to evaluate resources and further develop our dynamic business strategy to move the company forward with a look to considering related business opportunities in domestic and international markets and diversifying our revenue stream.

Perhaps I have rose-colored glasses, but I am seeing the glass as more than half-full for PTSC.

PCU is up over $4 today. I knew that the PD deal for N was a very positive signal on the fact that commodities had hit bottom.

TGIS is in a tight race for the worst performer on the Naz today. Absolutely no clue why that should be so. They did go up quickly and now dropping just as quickly. Not a stock for those with queasy stomachs. With them just upping their stock dividend, I believe that this is a buying opportunity.

Wow. It is the end of the day. Nice day for the market as a whole, but my MFI portfolio was essentially flat. TGIS was the lead baloon, dropping over 12%. Without that, I'd have been on par with the market (in early trading my MFI portfolio was up 1.2%). My non MFI stuff was up well over 1%, so in whole it was a nice day... actually my 5th straight winning day (stll down for the month of June, nothing to get excited about).

Final thought while I watch Cramer. He is lecturing on how people should do their research. I am glad he is making an effort, but I gotta believe that Cramer "dingleberries" are watching and listening to him so they don't have to do their homework. These are the people who bought Cliff Notes in college (do they still make those?).