Dollars and Jens
Sunday, February 27, 2005
The Aviator
A few days ago, the Wall Street Journal had a piece defending and telling the story of Juan Trippe, the antagonist in The Aviator. Bill Dyer (who has a pretty cool story of his own) notes that this piece is available to everyone online. What struck me about Trippe's career is that the earlier part was largely characterised by successful rent-seeking and the later part by innovation, vision, and execution. You usually see it done the other way around.

Friday, February 18, 2005
Economic Report of the President
The Economic Report of the President is out. There's a chapter on immigration and one on HIV/AIDS. Chapter five puts forth the intellectual foundation for the ownership society. More commentary here is quite possible.

Could Vioxx Return?
WASHINGTON (Reuters) - Merck & Co. Inc. will consider selling its arthritis pill Vioxx again if the U.S. Food and Drug Administration decides the cardiovascular risks are similar to those of related prescription pain relievers, a company official said on Thursday.

New information on competing pain drugs presented to a U.S. advisory committee over two days at a public hearing has changed the company's evaluation of Vioxx, Merck Research Labs President Peter Kim told an FDA advisory panel.

Merck voluntarily withdrew the drug in September after a study called Approve showed Vioxx doubled heart attack and stroke risk after 18 months of use.
I thought it a mistake to withdraw it from the market in the first place. The right thing to do, morally and financially, was to inform the public (and especially the doctors writing the prescriptions) that Cox-2 inhibitors really aren't a good idea for everyone. Risks exist, but so do benefits. They will balance differently for different people.

Friday, February 11, 2005
Arbitraging TIPS
According to Thursday's Journal, the ask on an April 2028 inflation-protected bond (accrued principal of 1180 with a 3.625% coupon) was 135+25/32, and the bid on an April 2032 inflation-protected bond (accrued principal of 1075 with a 3.375% coupon) was 137+22/32. Buying $1000 of the former and shorting $1000 of the latter would yield a bit over $5/year and provide more than enough in April 2028 to cover the short (assuming we aren't in a period of hyper-inflation by then).

If you're a typical retail investor, and you don't get the proceeds of a short sale, the capital costs will exceed the proceeds. But if you could make the trade without tying up capital, it would be pretty neat. I do wonder how sensitive to volume the prices are — the spreads are only 1/32 for each security, which suggests but doesn't require a certain amount of liquidity. It may just not be worth the big guys' trouble. Or maybe I'm mis-reading the table.

Friday, February 04, 2005
Commerce Group
A year ago, I wrote:
My car insurance company, Commerce Group, has been growing float and earning a consistent underwriting profit, with a combined ratio of around 98-99%. According to their latest financial reports, reflecting the end of September '03, they had non-investment assets (i.e., "bad" assets) of about $998 million, equity of $857 million, unpaid losses of $953 million, and unearned premiums of $853 million. If we sum the last three figures and subtract the first, we get a value of $1.665 billion, or about $52/share. The stock closed yesterday at $43.65.
My floor has climbed to about $58/share, and the share price closed today at $67.40. I just thought I'd mention that.

Powered by Blogger