ECRI WLI and WLI Growth Numbers for January 29, 2010

The ECRI came out with the WLI and WLI Growth numbers for January 29, 2010.

• WLI = 130.9
• Previous WLI = 131.4
• WLI Growth = 21.5
• Previous WLI Growth = 22.7

Picking Up Pennies

The Burlington Northern Santa Fe Corp (BNI) and Berkshire Hathaway (BRK.A, BRK.B) merger is pretty much a forgone conclusion. I provided a synopsis on the deal as a merger arbitrage play back on November 5, 2009 when BNI was trading around a 3% discount. A significant discount considering that Warren Buffett was making the bid and the only way he would lose out is if another company came in and outbid him. Although the arbitrage spread is gone, we still have a way to add to our return on this deal, selling Puts below the buyout price. I liken it to picking up pennies off the street.

ECRI WLI and WLI Growth Numbers for January 22, 2010

The ECRI came out with the WLI and WLI Growth numbers for January 22, 2010.

• WLI = 131.4
• Previous WLI = 132.2
• WLI Growth = 22.7
• Previous WLI Growth = 23.5

Has the divergence ended? Are both the WLI and the S&P 500 now trending down with the WLI Growth number? We’ll have to wait and see what the next few sets of numbers bring in. The WLI has been flattening out and one down week does not make a new trend, however; it will be interesting if the WLI has now joined the WLI growth number’s downward trend. The S&P 500 is a component of the WLI and because of the S&P 500’s recent sell off this could be the main reason why the WLI is down from the January 15th number.

Merger Arbitrage: 3Com Corporation (COMS)

On November 11, 2009 Hewlett-Packard (HPQ) announced a definitive agreement to buyout 3Com Corporation (COMS) for $7.90 per share in an all cash deal. Then on January 26, 2010 3Com Corp’s (COMS) shareholders approved the merger. 3Com Corporation (COMS) currently trades at $7.45 a share, an oddly large discount to an all cash merger that has shareholder approval.

The merger is not under threat from U.S. anti-trust laws and the lawsuit against the merger appears to have fallen by the wayside. The last remaining obstacle is China’s Ministry of Commerce and its anti-monopoly laws. Hewlett-Packard (HPQ) and 3Com Corp (COMS) submitted the paperwork necessary to start the phase I review back on December 28, 2009. Recently, the Ministry of Commerce stated that they will not be able to complete the review by January 27, 2010 and that they will now begin a phase II review that can take up to 90 days and can even be extended a further 60 days after that. Click here to read what 24/7 Wall St. had to say about China’s Ministry of Commerce’s review process.

Another Nail in the Bond Bull Market Coffin?

Public pension funds needing to boost their returns but frustrated with hedge funds and private-equity investments are turning to one of the oldest investment strategies—using borrowed money to boost performance.

The strategy calls for leveraging pension funds’ safest asset—government or other high-grade bonds—while reducing exposure to stocks. – Craig Karmin, Pensions Look to Leverage Up

Click here for the full Wall Street Journal Article.

Maybe not today, maybe not tomorrow, but someday the 28 year bond bull market will end. Great prediction, right? Given enough time I can never be wrong.