Health Insurance Stats

-47 Million Americans are without Health Insurance
-8 in 10 uninsured people are from working families
-40% of uninsured population resides in households earning $50,000 or more
-11% of children in US have no health insurance
-25% of people who apply for health insurance are rejected

Bear Stearns Hedge Fund Meltdown

I wanted to put down a few thoughts so I wouldn't lose them before you all return to World HQ.Here's the 30 second version of my apocalyptic view (WC WAPing this event).The Bear HF had $600mm in capital that was levered 10 to 1, so $6bn invested (I'm now hearing there was some in margin accounts = more leverage, but just rumors). The problem was in the CDO (collateralized debt obligations) with sub prime mortgages as basis. As they tried to price the HF, early estimates were the CDO's had declined 6%, but with the 10 to 1 leverage - 60% of the equity was gone. Then a few weeks later, the CDO's were estimated to have fallen 18% now all the equity is gone & the lenders were underwater by $480mm (or 8.9% of capital lent). Merrill Lynch decided to liquidate.This is where it gets interesting - With a mark to model, prices are estimated until a transaction takes place. Now that Merrill is establishing a market price, how many others are at risk larger than estimated losses? Like Bear, is the equity gone? Are there other lenders underwater? Is there counter party risk?The icing on the cake is that the CDO's where there are currently problems were under-written in late 04 to early 05. Underwriters got more aggressive through the end of 06, so presumably there is more of this to come as the sub prime loans become "seasoned."What do we do? Given the quality of our companies & clean balance sheets, we should have very little direct exposure - only thing I can think of is counterparty risk to some of the forward oil & gas hedges, but that even seems remote. Most likely investors become more risk averse that could lead to multiple contraction in the short term (we may want to review high multiple stocks or those with the longest time horizons). But longer term, I think we are likely to be a net beneficary of the money that was chasing outsized returns without an appreciation for the risk profile as it returns to more traditonal products.

Shanghai Surprise

Well I may already have lung cancer. Just kidding Man, do they like cigarettes in China. I've already inhaled more second hand smoke than the last 6 months in Boston. Not kidding. The Pollution is remarkable. I have done a fair amount of travelling in my short life and have taken for granted the rest of the worlds understanding of English. ITs really cool to be here in that it is rare to find someone who speaks English. It should be a fun week as my chinese is very very rusty.Just wanted to check in. Trip is off to a good start. Made it to Shanghai. The city is right out of the Jetsons. I am on the 61st floor of a hotels that starts on the 56th floor, in The Jinmo building, the tallest in China. I had dinner with all the other solar investors. Its a good group. Its led by Jeff Osborne of CIBC who used to work on the Munder Net Net Fund back int 1999 2000. Small World. We just finished dinner. Its a pretty worldy group. There are investors from London, Singapore, San Francisco and other far flung places.OK I have nothing more but just wanted to get into the habit of blogging about my trip.
PJM
So it looks like my phone works and Ill have intermitten Internet Service.

A Best Practice

Good Work. Just as an FYI i put the BLOG address on my iGoogle homepage under favorites. This way i can just click to it from any browser. If anyone does not know how to do this and want too let me know.Also, notice when posting a blog. You can choose the title as well as lables for the post. We should not get too crazy with buckets but should give some thoughts to a common labeling practice for organizational purposes.I title this blog A Best Practice I Labeled this Blog Best Practice.

By PJM