Saturday, January 17, 2009
commentary
We certainly HOPE that what goes around, comes around. Those who fabricate and mislead people should be exposed, no doubt, and that is what is being done here. If there is any erroneous information here, it needs to be corrected with facts and figures and would be considered a public service to do so- just as the information provided here has been done with that same intent. What does the Code of Ordinances say about handshake deals? How has the fire-sale prices to encourage Springs residents to join the swim team worked out so far? If it has been a smashing success and there are verifiable numbers to document that phenomena, GREAT! Lets see the numbers and documentation for the past three years (to account for seasonality). Or is this an open-ended, secret marketing approach that nobody knows about, has no end, and answers to NOBODY? When was the Council made aware of this stupendous marketing move? and when did they approve it? Did they approve it in perpetuity? With NO conditions or discussions? Was the Council concerned that the $200 a month was a mere FRACTION of its actual worth and probably only benefitted the private swim team owners? It is agreed that slander, libel, and personal attacks have no place in this public forum as they do not address the issues or move the discussion forward toward a rational resolution. Factual statements that can be and are documented DO have a place here, however, and will continue to be encouraged. This can be, and most of the time IS, and exercise in American democracy, where the people can go to have their voices heard.
residents as watchdogs
Is it possible that Gym has extended his secret backroom handshake deals into the future? Nobody knows what the handshake deals are anyway, so its possible he might try, but in order to get THAT past Council (Dotson mostly), he would have to explain what the handshakes deals consist of, wouldnt he? What the terms are, the duration, the liabilities, etc. Why is it that the residents are the only ones monitoring the City Managers actions? Is it NOT the duties and responsibilities of our elected officials to safeguard and protect our resources? It seems the residents have been forced to take over the responsibilities of their elected officials because their elected representatives REFUSE to do it themselves! A democracy is based on a system of checks and balances. When elected officials refuse to provide those checks on salaried city employees, things get out of balance- in this case it is our checkbook that gets out of balance, as monies disappear without a trace! The new Council will hopefully take their responsibilities seriously and oversee and supervise the City Manager, as their duties and obligations as elected officials require, not leave it up to the residents to do. We are willing to help, but shouldnt be expected to do it all. Dotson is the only one who takes his oversight responsibilities seriously.
peculiar?
After all the fanfare, articles and pictures in the Gazette, etc., doesn't it seem peculiar that the new Rec Director would resign and there would be not ONE WORD from the City Manager who hired him to the Council? That seems strange, doesn't it? Perhaps Gym just gave him an extended leave of absence, at FULL PAY of course! Wouldn't you think that would be put on the public record somewhere? An FOI was also requested regarding the theoretical Optimist connection and the slim possibility that the Optimists put the concession monies into their account to avoid resale taxes.
lets make a deal
An FOI was requested yesterday regarding the resignation of the new Rec Director, IF it exists. Didnt Dr. Johnson offer to reveal his academic qualifications if city officials will provide a roster of MDAC swimmers and 3 years of cancelled checks from MDAC for pool rentals? That way both parties get to satisfy their curiosities. What do you say? Its a win-win situation where both sides win! If you think hes bluffing, or just incredibly stupid, call his bluff! The personal attacks will not change the facts of the issues discussed here.
bet on it
You can believe that Dr. Johnson is running and it WONT be on a " Vote for me, Im a gringo" platform to counter Garcias "Vote for me, Im Latin" nonsense! He will run on the issues. The residents do not care where anybody comes from- they want responsible, accountable, honest representation. In these times of recession, unemployment, and foreclosures residents want good stewards of their tax dollars. "Money is no object", and "Price is irrelevent" is not responsible or prudent money management.
Friday, January 16, 2009
FOI pool response
Apparently Jim Llewelyn is running against Bob Best this time. Pool rental information was provided today from 12/10/08 request, but hasn't been reviewed thoroughly as yet. At first glance it does appear that invoice numbers are provided and dates of payments. MDAC entries go back to 11-6-06. Where these numbers have been for the past 8 weeks or more is not clear at all. It seems very possible that they were derived from the entities themselves. There are no meet revenues of $750 per day noted, at first glance. Could it be that meet pool rentals are classified as something else, and not under Aquatics? MDAC has hosted NO meets back to 2006? Co-hosted, like the one with the Sun Devils? The devil is probably still in the details.
Quick Recycling facts
Quick Facts about Recycling
When you recycle, you help conserve natural resources like trees, oil and elements such as aluminum.
If Americans recycled every phone book each year, an estimated 650,000 tons of paper could be saved.
Recycling half the world’s paper would save 20 million acres of forest land.
Recycling one stack of newspapers about 6 feet tall saves the life of one tree 35 feet tall.
Recycling approximately 1 ton of newspaper saves 17 trees.
The EPA has found that making paper from recycled materials results in 74% less air pollution and 35% less water pollution. This means that every ton of recycled paper keeps almost 60 pounds of pollutants out of the atmosphere that would have been produced if the paper had been manufactured from virgin resources.
Every ton of recycled paper saves approximately 4 barrels of oil or 4,200 kilowatt hours of energy which is enough energy to heat and air-condition the average North American home for almost 6 months.
Recycled paper is made to the same standards as paper from virgin pulp. Moreover, recycled paper has features which make it more desirable than virgin paper, such as being more opaque, dense, and flexible.
For every 15,000 tons of old newspaper recycled annually, 30 jobs are created to collect the paper, 40 jobs are created to process the paper, and 75 jobs are required to manufacture the newsprint.
Plastic soda bottles can become carpet fiber or park benches.
Rubber from used tires can be used for floor mats, or as an additive in asphalt.
A used aluminum can is recycled and back on the grocery shelf as a new can, in as little as 60 days. There is no limit to the amount of times aluminum can be recycled.
Recycling one aluminum can saves enough energy to run a TV for three hours, or the
equivalent of a half a gallon of gasoline.
The energy saved from recycling one glass bottle can run a 100-watt light bulb for four hours.
A typical family consumes 182 gallons of soda, 29 gallons of juice, 104 gallons of milk, and 26
gallons of bottled water a year. That’s a lot of containers; make sure they are recycled.
Sources::
http://www.recycling-revolution.com/recycling-facts.html
http://www3.niu.edu/recycling/page5.html
When you recycle, you help conserve natural resources like trees, oil and elements such as aluminum.
If Americans recycled every phone book each year, an estimated 650,000 tons of paper could be saved.
Recycling half the world’s paper would save 20 million acres of forest land.
Recycling one stack of newspapers about 6 feet tall saves the life of one tree 35 feet tall.
Recycling approximately 1 ton of newspaper saves 17 trees.
The EPA has found that making paper from recycled materials results in 74% less air pollution and 35% less water pollution. This means that every ton of recycled paper keeps almost 60 pounds of pollutants out of the atmosphere that would have been produced if the paper had been manufactured from virgin resources.
Every ton of recycled paper saves approximately 4 barrels of oil or 4,200 kilowatt hours of energy which is enough energy to heat and air-condition the average North American home for almost 6 months.
Recycled paper is made to the same standards as paper from virgin pulp. Moreover, recycled paper has features which make it more desirable than virgin paper, such as being more opaque, dense, and flexible.
For every 15,000 tons of old newspaper recycled annually, 30 jobs are created to collect the paper, 40 jobs are created to process the paper, and 75 jobs are required to manufacture the newsprint.
Plastic soda bottles can become carpet fiber or park benches.
Rubber from used tires can be used for floor mats, or as an additive in asphalt.
A used aluminum can is recycled and back on the grocery shelf as a new can, in as little as 60 days. There is no limit to the amount of times aluminum can be recycled.
Recycling one aluminum can saves enough energy to run a TV for three hours, or the
equivalent of a half a gallon of gasoline.
The energy saved from recycling one glass bottle can run a 100-watt light bulb for four hours.
A typical family consumes 182 gallons of soda, 29 gallons of juice, 104 gallons of milk, and 26
gallons of bottled water a year. That’s a lot of containers; make sure they are recycled.
Sources::
http://www.recycling-revolution.com/recycling-facts.html
http://www3.niu.edu/recycling/page5.html
Business Recycling Program
Business Recycling
Commercial establishments in Miami-Dade County produce an estimated 1.7 million tons of solid waste annually -- more than 50% of the total waste generated countywide. Managing this waste stream through recycling and waste reduction is good for South Florida's environment, but it also makes good business sense. Evaluating how your company is producing waste can uncover organizational inefficiencies -- some of which may be costly. Further, an environmentally responsive approach to managing solid waste can enhance your company's image. But, if these reasons aren't convincing enough, you should know that commercial recycling is also required by law.
Commercial Recycling Ordinance Requirements
Commercial recycling became mandatory countywide in July of 1992. The County Ordinance requires the following:
To view Chapter 15, Section 2 of the Code of Miami-Dade, click here
Owners/Property owners of commercial establishments in Miami-Dade County must provide a recycling program for their employees and tenants, using the services of an authorized waste hauler or private recycling hauler.
The program must recycle three items from the following list of ten: high grade office paper, mixed paper, corrugated cardboard, glass, aluminum, steel, other scrap production metals, plastics, textiles, wood.
Modified Recycling Programs -- those which incorporate modifications, substitutions or reductions to the requirements stated above -- may be submitted to the Department of Solid Waste Management for review and approval.
How do I start a recycling program?
Contact your current waste hauler. If you have a contract, check the renewal date and the renewal clause for terms and conditions. Many local waste haulers and private recycling vendors offer commercial recycling collection, so you may want to shop around to compare rates and services. If you choose your existing waste hauler, check to see if you can reduce your level of waste service (either the size of your current waste container or frequency of pick-up) to help offset the cost of implementing a recycling program.
How are the recyclables collected?
Most recycling and waste haulers provide portable, 96-gallon containers ("toters") that must be placed outside on the day of collection. If you have significant amounts of corrugated cardboard, "cardboard-only" containers are also readily available. Additionally, many businesses have found that employee participation increases when deskside recycling containers are located within individual offices or workstations.
What If I have nothing to recycle?
Most businesses have something to recycle, even if it is only a small amount of material. If your business generates very limited amounts of recyclables, consider applying for a Modified Recycling Program.
What happens to commercial establishments that don't recycle?
Rather than penalize businesses that do not conform to the law, Miami-Dade County prefers to assist those uncertain about how to comply by providing specific information and suggestions on how to get started. However, the County does randomly notify, and if necessary, inspect commercial establishments reported to be out of compliance by haulers and concerned citizens. Those who do not comply with recycling may be subject to fines ranging from $300 to $950, based on the size (in square feet) of the commercial establishment.
To learn more about setting up a successful recycling program that complies with the County's recycling law, visit the Business Waste Minimization and Pollution Prevention page or the Greening Your Office page on the Environmental Tips site.
Commercial establishments in Miami-Dade County produce an estimated 1.7 million tons of solid waste annually -- more than 50% of the total waste generated countywide. Managing this waste stream through recycling and waste reduction is good for South Florida's environment, but it also makes good business sense. Evaluating how your company is producing waste can uncover organizational inefficiencies -- some of which may be costly. Further, an environmentally responsive approach to managing solid waste can enhance your company's image. But, if these reasons aren't convincing enough, you should know that commercial recycling is also required by law.
Commercial Recycling Ordinance Requirements
Commercial recycling became mandatory countywide in July of 1992. The County Ordinance requires the following:
To view Chapter 15, Section 2 of the Code of Miami-Dade, click here
Owners/Property owners of commercial establishments in Miami-Dade County must provide a recycling program for their employees and tenants, using the services of an authorized waste hauler or private recycling hauler.
The program must recycle three items from the following list of ten: high grade office paper, mixed paper, corrugated cardboard, glass, aluminum, steel, other scrap production metals, plastics, textiles, wood.
Modified Recycling Programs -- those which incorporate modifications, substitutions or reductions to the requirements stated above -- may be submitted to the Department of Solid Waste Management for review and approval.
How do I start a recycling program?
Contact your current waste hauler. If you have a contract, check the renewal date and the renewal clause for terms and conditions. Many local waste haulers and private recycling vendors offer commercial recycling collection, so you may want to shop around to compare rates and services. If you choose your existing waste hauler, check to see if you can reduce your level of waste service (either the size of your current waste container or frequency of pick-up) to help offset the cost of implementing a recycling program.
How are the recyclables collected?
Most recycling and waste haulers provide portable, 96-gallon containers ("toters") that must be placed outside on the day of collection. If you have significant amounts of corrugated cardboard, "cardboard-only" containers are also readily available. Additionally, many businesses have found that employee participation increases when deskside recycling containers are located within individual offices or workstations.
What If I have nothing to recycle?
Most businesses have something to recycle, even if it is only a small amount of material. If your business generates very limited amounts of recyclables, consider applying for a Modified Recycling Program.
What happens to commercial establishments that don't recycle?
Rather than penalize businesses that do not conform to the law, Miami-Dade County prefers to assist those uncertain about how to comply by providing specific information and suggestions on how to get started. However, the County does randomly notify, and if necessary, inspect commercial establishments reported to be out of compliance by haulers and concerned citizens. Those who do not comply with recycling may be subject to fines ranging from $300 to $950, based on the size (in square feet) of the commercial establishment.
To learn more about setting up a successful recycling program that complies with the County's recycling law, visit the Business Waste Minimization and Pollution Prevention page or the Greening Your Office page on the Environmental Tips site.
cast of candidates
Paul Dotson is running for Mayor. Jim Llewelyn is running for Group 2. Peter Newman is running for Youngs open seat, and Dr. Mel Johnson is running for Group 3. Nobody has signed up to run against Dan Espino yet, who is running for Mr. Dotsons old seat, as far as I know. These are just facts, not opinions. There may very well be others to throw their hat in the ring before it is over. All the incumbents are running, of course, except for Youngs, who has term limits.
blank checks written
Went to Google translate- pretty cool. Spanish post didnt make a whole lot of sense tho, from their translation- something about the City Manager being Castro, butts in the air, people being hoarse, vote for Garcia- hes Latin, etc. Latin Americans want what every American wants- good representation and management of their tax monies- no less. Costs ARE important to ALL Springs residents, especially in these difficult recessionary times. Writing blank checks to contractors and other private businesses is NOT being responsible with our tax dollars. And who ARE these communists (?) that have recently popped up in our midst? How can THAT be ? Is there even a SHRED of evidence to that effect? A scintilla? ANYTHING? Or is it more scare tactics by people who have nothing rational to say, or issues to discuss?
Thursday, January 15, 2009
no problem, Gym
Not following the hiring policies and procedures is just ANOTHER failure on Gyms part and his way of thumbing his nose at the Council and Mayor. To allow that disrespect and disregard by the Mayor and Council is THEIR failure. The nose thumbing and disrespect by the City Manager to the Council has been richly deserved over the years, as they have failed to supervise and oversee the City Manager since he has been here, allowing him to do whatever he wanted however he wanted. Handshake deals at the pool- no problem Gym! Give away city facilities for a fraction of what they are worth- no problem, Gym! Pay TRIPLE the going rates for the bathrooms- not a big problem, Gym. Pay $600 a square foot for the CC enclosure- no problem. FORGET to include water, electrical, and plumbing connections to the new bathrooms- no problem. Pay $33,000 for a sewer hookup to the bathrooms that should have cost $5,000- no problem, Gym. Pay $38,000 to elevate the bathrooms that anybody else could have had done in one day for 6k- no problem. Pay $414,000 for the bathrooms that SHOULD have cost $140,000 (which includes a fat 25% profit for the contractor)- no problem. The Mayor and Council has had NO PROBLEM wasting our tax monies by the TRUCKLOADS! No problem, Gym. When the monies run low, we will just raise their taxes and fees! No Problem! The taxpayers may whine and complain but, DONT WORRY! We know what is best for them and really DONT want or need them to rack their brains deciding anything in an election! WE will decide whats best for them! No matter WHAT the cost! The costs are immaterial! Of NO real consequence to us! No problem, Gym. After all, its NOT like its OUR personal money disappearing now, is it?
rumors flying, facts needed
WHAT contract would MDAC be talking about? I have heard it is just your normal everyday secret backroom handshake deal that the City Manager does regularly. The City Clerk knew of NO contract a couple months ago- wonder if one has miraculously popped up? No response yet either, to the FOI of 12/10/08 regarding revenues received from MDAC,MSSH, Reagan HS, and the middle schools. How many months does it usually take to get a TIMELY response to an FOI? Wonder if the State Attorney would say a month is enough time? It is rumored that Councilman Dotson wrote a scathing letter to the Mayor and Council about the way the recent Rec Director was hired. Anybody else hear that? Wonder if an FOI could get a copy of that letter, IF it exists? At the same time it might also be good to request a copy of the Optimist letter and any possible letters of resignation written in the past two weeks. Rumors are flying, but facts are needed. These requests will resolve some of the rumors quickly, if responded to in a TIMELY fashion. Lets see what happens.
campaign comments
Can it be that Mr. Garcia has ALREADY started his "Vote for me, Im Latin" campaign that he usually does? In these times of recession, fiscal conservatism is what the City needs and the residents wont really care about the ethnicity of whoever saves them money. His "Money is no object", and "Costs are irrelevent" approach will come back to haunt him, and us, down the road. It seems he has already started calling others communists too. He seriously underestimates the residents, as they are too aware for that smear campaign because he offers, and has, NO proof! NONE. NADA. ZERO. Just scare tactics. How long will it be before opponent yard signs start missing? Will Mr Garcia AGAIN be forced to exercise his nonexistent public obligations as a Councilman (and apparently zoning inspector too) to remove ONLY the yard signs of his opponents? Stay tuned.
Wednesday, January 14, 2009
NT Times article
Published: January 13, 2009
To most people the word “geothermal” means hot springs and geysers — like parts of Iceland or Yellowstone National Park where water is heated by the presence of magma near the surface of the earth. But the earth’s heat lies below everywhere, and it offers a virtually untapped energy reserve of enormous potential with a very short list of drawbacks.
Times Topics: Geothermal PowerIn 2006, a panel led by the Massachusetts Institute of Technology surveyed the prospects for electricity production from enhanced geothermal systems. Its conclusions were conservative but very optimistic. The panel suggested that with modest federal support, geothermal power could play a critical role in America’s energy future, adding substantially to the nation’s store of renewable energy and more than making up for coal-burning power plants that would have to be retired.
Following up on the M.I.T. study and a separate survey of its own, the Bureau of Land Management issued a decision last month that would open up as many as 190 million acres to leases for geothermal exploration and development. These lands are mostly in the West, where hot rock lies closer to the surface than it generally does in the East.
There is a lot of research yet to be done about geothermal sources, new techniques for deep drilling and energy generation at the surface. But the basics are clear enough. Water is injected deep into the earth where it absorbs heat from the surrounding rock. As the fluid returns to the surface, that heat is used to generate electricity. The fluid is then re-injected. The system forms a closed loop. It creates almost no emissions and is entirely renewable. It also occupies a smaller surface area than either solar or wind power.
Still, large-scale commercial production is at least a decade away and will require improvements on currently available technology. Geothermal development also will mean still more competition for scarce water, more holes in the ground and more roads to service those holes.
The M.I.T. report’s statement that the success of geothermal production “would parallel the development of the U.S. coal-bed methane industry” is no doubt meant to be reassuring. Yet in parts of the West, coal-bed methane has been an environmental disaster, both for fragile landscapes and the wildlife that depend on them.
Geothermal development must not be allowed to foster another drilling free-for-all of the kind we’ve seen during the past decade. Done right, it could help free the country of the grievous environmental burden of coal-burning power plants. Done wrong, it could create grievous environmental problems of its own. Mindful of the dangers, the next administration should commit to developing this extraordinary resource
To most people the word “geothermal” means hot springs and geysers — like parts of Iceland or Yellowstone National Park where water is heated by the presence of magma near the surface of the earth. But the earth’s heat lies below everywhere, and it offers a virtually untapped energy reserve of enormous potential with a very short list of drawbacks.
Times Topics: Geothermal PowerIn 2006, a panel led by the Massachusetts Institute of Technology surveyed the prospects for electricity production from enhanced geothermal systems. Its conclusions were conservative but very optimistic. The panel suggested that with modest federal support, geothermal power could play a critical role in America’s energy future, adding substantially to the nation’s store of renewable energy and more than making up for coal-burning power plants that would have to be retired.
Following up on the M.I.T. study and a separate survey of its own, the Bureau of Land Management issued a decision last month that would open up as many as 190 million acres to leases for geothermal exploration and development. These lands are mostly in the West, where hot rock lies closer to the surface than it generally does in the East.
There is a lot of research yet to be done about geothermal sources, new techniques for deep drilling and energy generation at the surface. But the basics are clear enough. Water is injected deep into the earth where it absorbs heat from the surrounding rock. As the fluid returns to the surface, that heat is used to generate electricity. The fluid is then re-injected. The system forms a closed loop. It creates almost no emissions and is entirely renewable. It also occupies a smaller surface area than either solar or wind power.
Still, large-scale commercial production is at least a decade away and will require improvements on currently available technology. Geothermal development also will mean still more competition for scarce water, more holes in the ground and more roads to service those holes.
The M.I.T. report’s statement that the success of geothermal production “would parallel the development of the U.S. coal-bed methane industry” is no doubt meant to be reassuring. Yet in parts of the West, coal-bed methane has been an environmental disaster, both for fragile landscapes and the wildlife that depend on them.
Geothermal development must not be allowed to foster another drilling free-for-all of the kind we’ve seen during the past decade. Done right, it could help free the country of the grievous environmental burden of coal-burning power plants. Done wrong, it could create grievous environmental problems of its own. Mindful of the dangers, the next administration should commit to developing this extraordinary resource
chickens come home to roost
All of those Council members who have voted in the past to spend outrageous and unnecessary amounts of money on various city projects will be hard-pressed to explain them to the people over the next couple months. Those who have refused to monitor and supervise the City Manager will find it difficult to explain WHY they didnt take that obligation and elective responsibility seriously. If they have no clue as to what they are supposed to be doing, they should be replaced. If they have an idea, but were just too lazy, they should be replaced. If they know what their elective responsibilities are, but just DONT CARE, they should be replaced. If they know what they should be doing, but dont do it because it interfers with their personal or political agendas, they should be replaced. In these times of recession and instability we can no longer afford to have clueless, lazy, unconcerned, or overtly ambitious representation that ignores the wants and needs of the residents. Raising taxes and fees, borrowing millions in a recession at high interest rates to build a new multi-million dollar gym that the people didnt even get to vote on is but one example of a Council out of control and out of touch with what the people want and can afford. They stopped listening a LONG time ago.
fiscal conservative needed
It is believed that Springs residents are less concerned with the ethnicity of a candidate, be they Latino or gringo, than they are the fiscal soundness and sense of responsibility they bring to the office. They will not be fooled into thinking that one group or another is inherently better than the other. In these times of ever-deepening recession judge the candidates by their positions on a wide range of issues and positions that have been taken in the past to monitor the spending of city officials. Springs residents want to be sure their tax dollars are being spent judiciously and wisely, not wasted. All the way with Dr. J !!!
Tuesday, January 13, 2009
tenaris
A Pipeline to Profits
They say the best way to hit the mother lode in a gold rush isn't by digging -- it's by selling picks and shovels to the miners. That's fortunate for Foolish investors, because there's a massive gold rush taking place the world over. Black gold, that is.
Don't let the recent oil headlines scare you: While the price of oil is ever slippery, long-run demand is heading in just one direction -- up. That leaves Tenaris (NYSE: TS), a global supplier of essential oil field equipment, lined up to profit handsomely.
About the Company
Everyone uses oil, and somewhere along the way, that oil comes through a tube. And Tenaris makes those tubes.
If you're drilling a well, Tenaris almost certainly sells lots of the parts you find handy, even necessary. Specifically, it sells steel pipes -- and lots of them -- as well as casings to support well walls and tubes to transport crude oil and natural gas to the surface and on to refineries or storage locations. There's nothing flashy about Tenaris' business, but there's a simple beauty to it. And barring the development of "Beam me up, Scotty" technology, these pipes and tubes will remain essential to drilling and transporting oil and natural gas.
Because your basic steel pipe is pretty ordinary, standing out and earning extraordinary profits becomes, well, extraordinarily difficult. A company needs the right product mix, good geographic breadth, and battle-tested management. Tenaris has each in spades.
Tenaris differentiates itself in a crowded industry by emphasizing premium pipes. These pipes -- including the deepwater drilling line Tenaris makes for Petrobras and a special cold-resistant pipe for Russia's Rosneft -- can better withstand extreme temperatures and pressures during drilling and garner more profitable margins than conventional steel pipe can.
Domiciled in Luxembourg to take advantage of corporate-friendly taxes, Tenaris is listed on stock exchanges in New York, Buenos Aires, Italy, and Mexico, and has manufacturing facilities in 15 countries. This global footprint adds value in three ways. First, Tenaris' geographic manufacturing breadth puts it close to key production basins and gives it a leg up on its competition by lowering shipping costs. (Think your Amazon.com shipping fees are expensive? Try moving a thousand feet of steel pipe.) Second, that breadth allows Tenaris to develop broad and deep relationships with global oil giants -- companies with deep pockets that are best positioned to ride out recessions. And third, a global revenue base helps defend against the regional ebb and flow of capital budgets for oil and gas exploration and production.
But despite its global reach, the company hasn't strayed from its roots. Argentina remains the country with the largest portion of Tenaris' 23,000 employees, and Chairman and CEO Paolo Rocca is a grandson of the company's founder. The Rocca family, which has a controlling ownership stake in Tenaris, has guided the company through thick and thin over the decades, and Paolo Rocca himself has overseen Tenaris' dramatic recent growth since becoming CEO in 2002. Tenaris is still 60% controlled by the founding Rocca family. We love that high figure. Although the family's controlling stake could seem intimidating to minority shareholders, we like that the family's interests are so closely aligned with us Main Street investors.
More Oil... Please
At the heart of the case for Tenaris is our belief that worldwide oil and gas drilling will stay robust for years to come. The recent slowing of the global economy has some industry observers predicting that short-term global oil demand could slip a tad from the current level of around 86 million barrels a day. But Fools should keep their eyes on the ball: The long-run trend of oil demand is unquestionably on the rise, and producers will need to scramble to keep pace.
Where is this massive demand growth coming from? China, of course. And even though China's oil consumption has risen from 3.5 million barrels per day in 1997 to 8 million today, there's still plenty of room to run. The average Chinese citizen uses only 2.3 barrels per person a year, compared with 7.5 in Mexico and 24 in the United States. Simmons & Company estimates that if India and China saw their demand rise to that of just Mexico, it would add another 49 million barrels per day of oil demand.
But enough about demand. Let's talk supply -- or the lack of it, anyway. Long gone are the days when a poor mountaineer would chance upon an oil field while shooting for some food. Most large, relatively easy-to-tap fields such as Mexico's Cantarell and Alaska's Prudhoe Bay are either peaking or have seen better days.
To make up for fading production from traditional sources, oil companies are increasingly turning to more expensive, technically challenging reserves, such as the deepwater fields off the coast of Brazil, the frozen tundra of Russia and Kazakhstan, and the oil sands of Canada. Even extracting natural gas has grown trickier and costlier, with the latest U.S. finds requiring unconventional horizontal drilling. These sources require more and pricier equipment -- including pipes and tubes -- than traditional reserves do. Combine tight, hard-to-reach supply with steadily rising demand, and you have a recipe for sustained high energy prices. That's bad news for just about everyone, except for investors in companies such as Tenaris that make it all possible -- and that will profit from this bonanza.
Investment Thesis
Though the steel tubing industry is intensely competitive and affected by outside commodity costs such as the prices of steel, oil, and natural gas, Tenaris still boasts a competitive advantage, thanks to its global manufacturing presence. Tenaris' close proximity to key production basins allows it to deliver its tubes more quickly and cheaply than more distant competition. Tenaris offers just-in-time delivery to rigs, and as you might expect, the incremental shipping costs for large steel pipes run a pretty penny, so the manufacturer with a closer facility can offer a better relative value. Indeed, Tenaris' holdings in Mexico, Venezuela, Brazil, and Canada are the sole or leading producers of steel pipes in those countries. Tenaris' global presence also reduces exposure to a slowdown in any one drilling basin -- an especially valuable advantage, given the boom-and-bust nature of the industry and the intense geopolitical risks associated in some oil-producing regions.
The proof of Tenaris' value proposition and its high regard in the industry shows up in its client list. Tenaris supplies the biggest of Big Oil names the world over: Saudi Aramco, Rosneft, StatoilHydro, Pemex, and many, many more.
The world's growing thirst for energy seems to be taking a respite, but this breather in oil and gas exploration is only a blip on the radar. Worldwide drilling activity is likely to stay robust in the years to come, and oil field service providers and equipment manufacturers should profit handsomely. Among them, Tenaris stands out.
They say the best way to hit the mother lode in a gold rush isn't by digging -- it's by selling picks and shovels to the miners. That's fortunate for Foolish investors, because there's a massive gold rush taking place the world over. Black gold, that is.
Don't let the recent oil headlines scare you: While the price of oil is ever slippery, long-run demand is heading in just one direction -- up. That leaves Tenaris (NYSE: TS), a global supplier of essential oil field equipment, lined up to profit handsomely.
About the Company
Everyone uses oil, and somewhere along the way, that oil comes through a tube. And Tenaris makes those tubes.
If you're drilling a well, Tenaris almost certainly sells lots of the parts you find handy, even necessary. Specifically, it sells steel pipes -- and lots of them -- as well as casings to support well walls and tubes to transport crude oil and natural gas to the surface and on to refineries or storage locations. There's nothing flashy about Tenaris' business, but there's a simple beauty to it. And barring the development of "Beam me up, Scotty" technology, these pipes and tubes will remain essential to drilling and transporting oil and natural gas.
Because your basic steel pipe is pretty ordinary, standing out and earning extraordinary profits becomes, well, extraordinarily difficult. A company needs the right product mix, good geographic breadth, and battle-tested management. Tenaris has each in spades.
Tenaris differentiates itself in a crowded industry by emphasizing premium pipes. These pipes -- including the deepwater drilling line Tenaris makes for Petrobras and a special cold-resistant pipe for Russia's Rosneft -- can better withstand extreme temperatures and pressures during drilling and garner more profitable margins than conventional steel pipe can.
Domiciled in Luxembourg to take advantage of corporate-friendly taxes, Tenaris is listed on stock exchanges in New York, Buenos Aires, Italy, and Mexico, and has manufacturing facilities in 15 countries. This global footprint adds value in three ways. First, Tenaris' geographic manufacturing breadth puts it close to key production basins and gives it a leg up on its competition by lowering shipping costs. (Think your Amazon.com shipping fees are expensive? Try moving a thousand feet of steel pipe.) Second, that breadth allows Tenaris to develop broad and deep relationships with global oil giants -- companies with deep pockets that are best positioned to ride out recessions. And third, a global revenue base helps defend against the regional ebb and flow of capital budgets for oil and gas exploration and production.
But despite its global reach, the company hasn't strayed from its roots. Argentina remains the country with the largest portion of Tenaris' 23,000 employees, and Chairman and CEO Paolo Rocca is a grandson of the company's founder. The Rocca family, which has a controlling ownership stake in Tenaris, has guided the company through thick and thin over the decades, and Paolo Rocca himself has overseen Tenaris' dramatic recent growth since becoming CEO in 2002. Tenaris is still 60% controlled by the founding Rocca family. We love that high figure. Although the family's controlling stake could seem intimidating to minority shareholders, we like that the family's interests are so closely aligned with us Main Street investors.
More Oil... Please
At the heart of the case for Tenaris is our belief that worldwide oil and gas drilling will stay robust for years to come. The recent slowing of the global economy has some industry observers predicting that short-term global oil demand could slip a tad from the current level of around 86 million barrels a day. But Fools should keep their eyes on the ball: The long-run trend of oil demand is unquestionably on the rise, and producers will need to scramble to keep pace.
Where is this massive demand growth coming from? China, of course. And even though China's oil consumption has risen from 3.5 million barrels per day in 1997 to 8 million today, there's still plenty of room to run. The average Chinese citizen uses only 2.3 barrels per person a year, compared with 7.5 in Mexico and 24 in the United States. Simmons & Company estimates that if India and China saw their demand rise to that of just Mexico, it would add another 49 million barrels per day of oil demand.
But enough about demand. Let's talk supply -- or the lack of it, anyway. Long gone are the days when a poor mountaineer would chance upon an oil field while shooting for some food. Most large, relatively easy-to-tap fields such as Mexico's Cantarell and Alaska's Prudhoe Bay are either peaking or have seen better days.
To make up for fading production from traditional sources, oil companies are increasingly turning to more expensive, technically challenging reserves, such as the deepwater fields off the coast of Brazil, the frozen tundra of Russia and Kazakhstan, and the oil sands of Canada. Even extracting natural gas has grown trickier and costlier, with the latest U.S. finds requiring unconventional horizontal drilling. These sources require more and pricier equipment -- including pipes and tubes -- than traditional reserves do. Combine tight, hard-to-reach supply with steadily rising demand, and you have a recipe for sustained high energy prices. That's bad news for just about everyone, except for investors in companies such as Tenaris that make it all possible -- and that will profit from this bonanza.
Investment Thesis
Though the steel tubing industry is intensely competitive and affected by outside commodity costs such as the prices of steel, oil, and natural gas, Tenaris still boasts a competitive advantage, thanks to its global manufacturing presence. Tenaris' close proximity to key production basins allows it to deliver its tubes more quickly and cheaply than more distant competition. Tenaris offers just-in-time delivery to rigs, and as you might expect, the incremental shipping costs for large steel pipes run a pretty penny, so the manufacturer with a closer facility can offer a better relative value. Indeed, Tenaris' holdings in Mexico, Venezuela, Brazil, and Canada are the sole or leading producers of steel pipes in those countries. Tenaris' global presence also reduces exposure to a slowdown in any one drilling basin -- an especially valuable advantage, given the boom-and-bust nature of the industry and the intense geopolitical risks associated in some oil-producing regions.
The proof of Tenaris' value proposition and its high regard in the industry shows up in its client list. Tenaris supplies the biggest of Big Oil names the world over: Saudi Aramco, Rosneft, StatoilHydro, Pemex, and many, many more.
The world's growing thirst for energy seems to be taking a respite, but this breather in oil and gas exploration is only a blip on the radar. Worldwide drilling activity is likely to stay robust in the years to come, and oil field service providers and equipment manufacturers should profit handsomely. Among them, Tenaris stands out.
Motley Fool Stock Advisor
A Pipeline to Profits
They say the best way to hit the mother lode in a gold rush isn't by digging -- it's by selling picks and shovels to the miners. That's fortunate for Foolish investors, because there's a massive gold rush taking place the world over. Black gold, that is.
Don't let the recent oil headlines scare you: While the price of oil is ever slippery, long-run demand is heading in just one direction -- up. That leaves Tenaris (NYSE: TS), a global supplier of essential oil field equipment, lined up to profit handsomely.
About the Company
Everyone uses oil, and somewhere along the way, that oil comes through a tube. And Tenaris makes those tubes.
If you're drilling a well, Tenaris almost certainly sells lots of the parts you find handy, even necessary. Specifically, it sells steel pipes -- and lots of them -- as well as casings to support well walls and tubes to transport crude oil and natural gas to the surface and on to refineries or storage locations. There's nothing flashy about Tenaris' business, but there's a simple beauty to it. And barring the development of "Beam me up, Scotty" technology, these pipes and tubes will remain essential to drilling and transporting oil and natural gas.
Because your basic steel pipe is pretty ordinary, standing out and earning extraordinary profits becomes, well, extraordinarily difficult. A company needs the right product mix, good geographic breadth, and battle-tested management. Tenaris has each in spades.
Tenaris differentiates itself in a crowded industry by emphasizing premium pipes. These pipes -- including the deepwater drilling line Tenaris makes for Petrobras and a special cold-resistant pipe for Russia's Rosneft -- can better withstand extreme temperatures and pressures during drilling and garner more profitable margins than conventional steel pipe can.
Domiciled in Luxembourg to take advantage of corporate-friendly taxes, Tenaris is listed on stock exchanges in New York, Buenos Aires, Italy, and Mexico, and has manufacturing facilities in 15 countries. This global footprint adds value in three ways. First, Tenaris' geographic manufacturing breadth puts it close to key production basins and gives it a leg up on its competition by lowering shipping costs. (Think your Amazon.com shipping fees are expensive? Try moving a thousand feet of steel pipe.) Second, that breadth allows Tenaris to develop broad and deep relationships with global oil giants -- companies with deep pockets that are best positioned to ride out recessions. And third, a global revenue base helps defend against the regional ebb and flow of capital budgets for oil and gas exploration and production.
But despite its global reach, the company hasn't strayed from its roots. Argentina remains the country with the largest portion of Tenaris' 23,000 employees, and Chairman and CEO Paolo Rocca is a grandson of the company's founder. The Rocca family, which has a controlling ownership stake in Tenaris, has guided the company through thick and thin over the decades, and Paolo Rocca himself has overseen Tenaris' dramatic recent growth since becoming CEO in 2002. Tenaris is still 60% controlled by the founding Rocca family. We love that high figure. Although the family's controlling stake could seem intimidating to minority shareholders, we like that the family's interests are so closely aligned with us Main Street investors.
More Oil... Please
At the heart of the case for Tenaris is our belief that worldwide oil and gas drilling will stay robust for years to come. The recent slowing of the global economy has some industry observers predicting that short-term global oil demand could slip a tad from the current level of around 86 million barrels a day. But Fools should keep their eyes on the ball: The long-run trend of oil demand is unquestionably on the rise, and producers will need to scramble to keep pace.
Where is this massive demand growth coming from? China, of course. And even though China's oil consumption has risen from 3.5 million barrels per day in 1997 to 8 million today, there's still plenty of room to run. The average Chinese citizen uses only 2.3 barrels per person a year, compared with 7.5 in Mexico and 24 in the United States. Simmons & Company estimates that if India and China saw their demand rise to that of just Mexico, it would add another 49 million barrels per day of oil demand.
But enough about demand. Let's talk supply -- or the lack of it, anyway. Long gone are the days when a poor mountaineer would chance upon an oil field while shooting for some food. Most large, relatively easy-to-tap fields such as Mexico's Cantarell and Alaska's Prudhoe Bay are either peaking or have seen better days.
To make up for fading production from traditional sources, oil companies are increasingly turning to more expensive, technically challenging reserves, such as the deepwater fields off the coast of Brazil, the frozen tundra of Russia and Kazakhstan, and the oil sands of Canada. Even extracting natural gas has grown trickier and costlier, with the latest U.S. finds requiring unconventional horizontal drilling. These sources require more and pricier equipment -- including pipes and tubes -- than traditional reserves do. Combine tight, hard-to-reach supply with steadily rising demand, and you have a recipe for sustained high energy prices. That's bad news for just about everyone, except for investors in companies such as Tenaris that make it all possible -- and that will profit from this bonanza.
Investment Thesis
Though the steel tubing industry is intensely competitive and affected by outside commodity costs such as the prices of steel, oil, and natural gas, Tenaris still boasts a competitive advantage, thanks to its global manufacturing presence. Tenaris' close proximity to key production basins allows it to deliver its tubes more quickly and cheaply than more distant competition. Tenaris offers just-in-time delivery to rigs, and as you might expect, the incremental shipping costs for large steel pipes run a pretty penny, so the manufacturer with a closer facility can offer a better relative value. Indeed, Tenaris' holdings in Mexico, Venezuela, Brazil, and Canada are the sole or leading producers of steel pipes in those countries. Tenaris' global presence also reduces exposure to a slowdown in any one drilling basin -- an especially valuable advantage, given the boom-and-bust nature of the industry and the intense geopolitical risks associated in some oil-producing regions.
The proof of Tenaris' value proposition and its high regard in the industry shows up in its client list. Tenaris supplies the biggest of Big Oil names the world over: Saudi Aramco, Rosneft, StatoilHydro, Pemex, and many, many more.
The world's growing thirst for energy seems to be taking a respite, but this breather in oil and gas exploration is only a blip on the radar. Worldwide drilling activity is likely to stay robust in the years to come, and oil field service providers and equipment manufacturers should profit handsomely. Among them, Tenaris stands out.
They say the best way to hit the mother lode in a gold rush isn't by digging -- it's by selling picks and shovels to the miners. That's fortunate for Foolish investors, because there's a massive gold rush taking place the world over. Black gold, that is.
Don't let the recent oil headlines scare you: While the price of oil is ever slippery, long-run demand is heading in just one direction -- up. That leaves Tenaris (NYSE: TS), a global supplier of essential oil field equipment, lined up to profit handsomely.
About the Company
Everyone uses oil, and somewhere along the way, that oil comes through a tube. And Tenaris makes those tubes.
If you're drilling a well, Tenaris almost certainly sells lots of the parts you find handy, even necessary. Specifically, it sells steel pipes -- and lots of them -- as well as casings to support well walls and tubes to transport crude oil and natural gas to the surface and on to refineries or storage locations. There's nothing flashy about Tenaris' business, but there's a simple beauty to it. And barring the development of "Beam me up, Scotty" technology, these pipes and tubes will remain essential to drilling and transporting oil and natural gas.
Because your basic steel pipe is pretty ordinary, standing out and earning extraordinary profits becomes, well, extraordinarily difficult. A company needs the right product mix, good geographic breadth, and battle-tested management. Tenaris has each in spades.
Tenaris differentiates itself in a crowded industry by emphasizing premium pipes. These pipes -- including the deepwater drilling line Tenaris makes for Petrobras and a special cold-resistant pipe for Russia's Rosneft -- can better withstand extreme temperatures and pressures during drilling and garner more profitable margins than conventional steel pipe can.
Domiciled in Luxembourg to take advantage of corporate-friendly taxes, Tenaris is listed on stock exchanges in New York, Buenos Aires, Italy, and Mexico, and has manufacturing facilities in 15 countries. This global footprint adds value in three ways. First, Tenaris' geographic manufacturing breadth puts it close to key production basins and gives it a leg up on its competition by lowering shipping costs. (Think your Amazon.com shipping fees are expensive? Try moving a thousand feet of steel pipe.) Second, that breadth allows Tenaris to develop broad and deep relationships with global oil giants -- companies with deep pockets that are best positioned to ride out recessions. And third, a global revenue base helps defend against the regional ebb and flow of capital budgets for oil and gas exploration and production.
But despite its global reach, the company hasn't strayed from its roots. Argentina remains the country with the largest portion of Tenaris' 23,000 employees, and Chairman and CEO Paolo Rocca is a grandson of the company's founder. The Rocca family, which has a controlling ownership stake in Tenaris, has guided the company through thick and thin over the decades, and Paolo Rocca himself has overseen Tenaris' dramatic recent growth since becoming CEO in 2002. Tenaris is still 60% controlled by the founding Rocca family. We love that high figure. Although the family's controlling stake could seem intimidating to minority shareholders, we like that the family's interests are so closely aligned with us Main Street investors.
More Oil... Please
At the heart of the case for Tenaris is our belief that worldwide oil and gas drilling will stay robust for years to come. The recent slowing of the global economy has some industry observers predicting that short-term global oil demand could slip a tad from the current level of around 86 million barrels a day. But Fools should keep their eyes on the ball: The long-run trend of oil demand is unquestionably on the rise, and producers will need to scramble to keep pace.
Where is this massive demand growth coming from? China, of course. And even though China's oil consumption has risen from 3.5 million barrels per day in 1997 to 8 million today, there's still plenty of room to run. The average Chinese citizen uses only 2.3 barrels per person a year, compared with 7.5 in Mexico and 24 in the United States. Simmons & Company estimates that if India and China saw their demand rise to that of just Mexico, it would add another 49 million barrels per day of oil demand.
But enough about demand. Let's talk supply -- or the lack of it, anyway. Long gone are the days when a poor mountaineer would chance upon an oil field while shooting for some food. Most large, relatively easy-to-tap fields such as Mexico's Cantarell and Alaska's Prudhoe Bay are either peaking or have seen better days.
To make up for fading production from traditional sources, oil companies are increasingly turning to more expensive, technically challenging reserves, such as the deepwater fields off the coast of Brazil, the frozen tundra of Russia and Kazakhstan, and the oil sands of Canada. Even extracting natural gas has grown trickier and costlier, with the latest U.S. finds requiring unconventional horizontal drilling. These sources require more and pricier equipment -- including pipes and tubes -- than traditional reserves do. Combine tight, hard-to-reach supply with steadily rising demand, and you have a recipe for sustained high energy prices. That's bad news for just about everyone, except for investors in companies such as Tenaris that make it all possible -- and that will profit from this bonanza.
Investment Thesis
Though the steel tubing industry is intensely competitive and affected by outside commodity costs such as the prices of steel, oil, and natural gas, Tenaris still boasts a competitive advantage, thanks to its global manufacturing presence. Tenaris' close proximity to key production basins allows it to deliver its tubes more quickly and cheaply than more distant competition. Tenaris offers just-in-time delivery to rigs, and as you might expect, the incremental shipping costs for large steel pipes run a pretty penny, so the manufacturer with a closer facility can offer a better relative value. Indeed, Tenaris' holdings in Mexico, Venezuela, Brazil, and Canada are the sole or leading producers of steel pipes in those countries. Tenaris' global presence also reduces exposure to a slowdown in any one drilling basin -- an especially valuable advantage, given the boom-and-bust nature of the industry and the intense geopolitical risks associated in some oil-producing regions.
The proof of Tenaris' value proposition and its high regard in the industry shows up in its client list. Tenaris supplies the biggest of Big Oil names the world over: Saudi Aramco, Rosneft, StatoilHydro, Pemex, and many, many more.
The world's growing thirst for energy seems to be taking a respite, but this breather in oil and gas exploration is only a blip on the radar. Worldwide drilling activity is likely to stay robust in the years to come, and oil field service providers and equipment manufacturers should profit handsomely. Among them, Tenaris stands out.
Fisker Automotive
Henrik Fisker, CEO of Fisker Automotive, designed the "green" car company's breakthrough eco-chic KARMA to run on Quantum's Q-Drive - a fully electric-powered system that offers zero-emissions with no compromise on power and achieves 100 miles per gallon.
The innovative Q-Drive is a hybrid propulsion system configured with a small gasoline engine used solely to power an electric generator that charges a lithium-ion battery pack. The advanced propulsion system can take the KARMA from 0 to 60 mph in 5.8 seconds, reaching speeds in excess of 125 mph.
Quantum's Q-Drive technology will provide a base for all future derivatives from Fisker Automotive and moves Quantum one-step closer to its goal of becoming the premier, fully integrated alternative energy company. Fisker expects to deliver the first of the luxury hybrids by the end of 2009 with full production commencing in 2010.
For more information on the KARMA, visit www.qtww.com or www.fiskerautomotive.com.
The innovative Q-Drive is a hybrid propulsion system configured with a small gasoline engine used solely to power an electric generator that charges a lithium-ion battery pack. The advanced propulsion system can take the KARMA from 0 to 60 mph in 5.8 seconds, reaching speeds in excess of 125 mph.
Quantum's Q-Drive technology will provide a base for all future derivatives from Fisker Automotive and moves Quantum one-step closer to its goal of becoming the premier, fully integrated alternative energy company. Fisker expects to deliver the first of the luxury hybrids by the end of 2009 with full production commencing in 2010.
For more information on the KARMA, visit www.qtww.com or www.fiskerautomotive.com.
Motley Fool Inside Value recommendation
UnitedHealth Group
Its vast network, with more than 70 million insured, makes it a must for doctors and hospitals.
Sheer size puts it in a strong bargaining position, which reduces costs.
Headquarters: Minnetonka, Minn.
Recent Price: $20.52
No one likes the big managed healthcare providers these days. Rising medical costs, lawsuits, shaky Medicare and Medicaid reimbursement, and the uncertainty of healthcare reform have all weighed on the industry. But the valuation of UnitedHealth Group (NYSE: UNH) reflects these prospects and then some. The future of health insurance is anything but declining, and with 73 million members, UnitedHealth is one of the dominant companies in the industry.
The health insurance game boils down to size. Large insurers can negotiate lower rates on behalf of their customers, be they governments, companies, or individuals, and this leads to a virtuous circle. Doctors and hospitals rely on a network of tens of millions of patients, which affords UnitedHealth tremendous pricing power, allowing it to pass savings on to its paying members. In turn, the variety of healthcare providers and lower negotiated rates attract more people to the network. And the circle is complete.
UnitedHealth's database is also a huge asset -- it includes comprehensive clinical data covering 85 million people and pharmaceutical histories for 250 million -- that enables the company to smartly underwrite risks. Plus, according to government data, UnitedHealth is getting the biggest slice of the new Medicare drug plans and Medicare Advantage plans. Its share was also boosted by a marketing arrangement with AARP and the PacifiCare acquisition. This is one of the key growth drivers for the company.
The Risks
The rising costs of healthcare are a top concern. Reimbursement rates from the government on Medicare and Medicaid are constantly at risk of being cut. Large companies are increasingly moving toward service contracts in which they take on the risk of healthcare costs and have companies like UnitedHealth manage their programs, which lowers revenue but reduces risk.
Lawsuits are also part of the health insurance business. The latest: The New York State Attorney General's Office announced its intent to sue UnitedHealth, which could lead to a cash payout but shouldn't affect the stock's valuation.
The Foolish Bottom Line
Occasionally an entire industry falls out of favor with Wall Street for reasons that are unclear -- and temporary. It is in times like these that investors can hardly go wrong in picking up the strongest companies in the sector, including UnitedHealth. Over the next five to 10 years, UnitedHealth should thrive.
The Motley Fool owns shares of UnitedHealth.
Its vast network, with more than 70 million insured, makes it a must for doctors and hospitals.
Sheer size puts it in a strong bargaining position, which reduces costs.
Headquarters: Minnetonka, Minn.
Recent Price: $20.52
No one likes the big managed healthcare providers these days. Rising medical costs, lawsuits, shaky Medicare and Medicaid reimbursement, and the uncertainty of healthcare reform have all weighed on the industry. But the valuation of UnitedHealth Group (NYSE: UNH) reflects these prospects and then some. The future of health insurance is anything but declining, and with 73 million members, UnitedHealth is one of the dominant companies in the industry.
The health insurance game boils down to size. Large insurers can negotiate lower rates on behalf of their customers, be they governments, companies, or individuals, and this leads to a virtuous circle. Doctors and hospitals rely on a network of tens of millions of patients, which affords UnitedHealth tremendous pricing power, allowing it to pass savings on to its paying members. In turn, the variety of healthcare providers and lower negotiated rates attract more people to the network. And the circle is complete.
UnitedHealth's database is also a huge asset -- it includes comprehensive clinical data covering 85 million people and pharmaceutical histories for 250 million -- that enables the company to smartly underwrite risks. Plus, according to government data, UnitedHealth is getting the biggest slice of the new Medicare drug plans and Medicare Advantage plans. Its share was also boosted by a marketing arrangement with AARP and the PacifiCare acquisition. This is one of the key growth drivers for the company.
The Risks
The rising costs of healthcare are a top concern. Reimbursement rates from the government on Medicare and Medicaid are constantly at risk of being cut. Large companies are increasingly moving toward service contracts in which they take on the risk of healthcare costs and have companies like UnitedHealth manage their programs, which lowers revenue but reduces risk.
Lawsuits are also part of the health insurance business. The latest: The New York State Attorney General's Office announced its intent to sue UnitedHealth, which could lead to a cash payout but shouldn't affect the stock's valuation.
The Foolish Bottom Line
Occasionally an entire industry falls out of favor with Wall Street for reasons that are unclear -- and temporary. It is in times like these that investors can hardly go wrong in picking up the strongest companies in the sector, including UnitedHealth. Over the next five to 10 years, UnitedHealth should thrive.
The Motley Fool owns shares of UnitedHealth.
Motley Fool stock selection
WellPoint
Large scale and reach give it a healthy competitive advantage.
It produces a torrent of cash, which enables it to buy back shares.
Headquarters: Indianapolis, Ind.
Recent Price: $39.35
A major provider of healthcare services and benefits, WellPoint boasts one of the largest medical memberships in the United States, with 35 million customers, compared with 73 million for UnitedHealth (NYSE: UNH), 16.8 million for Aetna (NYSE: AET), and 10.2 million for CIGNA (NYSE: CI). Its membership is roughly a 50-50 mix of fully insured and self-funded members. For the fully insured, the company receives a premium and takes on the risk, making it responsible for covering the cost of medical services. For the self-funded, it charges a fee for services such as administrative work and fee negotiations, but the employer or plan sponsor reimburses all or most of the healthcare costs.
As does UnitedHealth, WellPoint has a size advantage over the competition. Being big means it can spread nonmedical costs over a larger membership base, which improves profit margins. Larger networks are more valuable to healthcare providers -- imagine having access to WellPoint's 35 million members -- and therefore such networks can negotiate lower prices. This is a win-win for members, who have access to cheaper health insurance and a wider selection of healthcare providers.
The national network has a local effect, since people tend to use healthcare services close to home. WellPoint is the exclusive licensee for Blue Cross and Blue Shield brands in 14 states, giving it the No. 1 or No. 2 market share in these areas. On top of its scale and price advantages, WellPoint's membership base has yielded reams of historical data that should help the company understand underwriting risks and plan its business on economical terms.
Like all insurance companies, WellPoint earns considerable interest on its premium float, unearned premiums paid plus unpaid losses. In 2007, interest on WellPoint's cash plus its float exceeded $1 billion and free cash flow was $4 billion. WellPoint has been using this strong free cash flow production to buy back shares -- a worthy use of capital at today's low stock price.
WellPoint isn't a fast growing company -- mid-single-digit growth should come from 1% to 1.5% enrollment growth and 4% to 5% price increases. And the medical-cost ratio could inch up as cost increases slightly outpace price increases -- though management is confident that it can match the two.
The Risks
Systemic health-care reform presents a small risk, but I expect the largest insurers, like WellPoint, to do well while smaller rivals suffer more and experience further consolidation.
If the medical-cost ratio rises higher than expected it could lower the value of WellPoint. Also, as is the case for all insurance companies, WellPoint has an investment portfolio, including in mortgage-backed securities. Almost all these securities are guaranteed by government-sponsored entities, but that doesn't preclude risk.
The Foolish Bottom Line
WellPoint is an extremely fit company selling at a significant discount to its true value, based on little more than uncertainty. In turn, Wall Street has priced the shares as though the business is in terminal decline. Underwriting results will inevitably wax and wane, but WellPoint's long-term prospects are anything but declining. It operates in an industry with long-term growth built in as baby boomers age, and WellPoint should produce healthy returns far in excess of the market.
Large scale and reach give it a healthy competitive advantage.
It produces a torrent of cash, which enables it to buy back shares.
Headquarters: Indianapolis, Ind.
Recent Price: $39.35
A major provider of healthcare services and benefits, WellPoint boasts one of the largest medical memberships in the United States, with 35 million customers, compared with 73 million for UnitedHealth (NYSE: UNH), 16.8 million for Aetna (NYSE: AET), and 10.2 million for CIGNA (NYSE: CI). Its membership is roughly a 50-50 mix of fully insured and self-funded members. For the fully insured, the company receives a premium and takes on the risk, making it responsible for covering the cost of medical services. For the self-funded, it charges a fee for services such as administrative work and fee negotiations, but the employer or plan sponsor reimburses all or most of the healthcare costs.
As does UnitedHealth, WellPoint has a size advantage over the competition. Being big means it can spread nonmedical costs over a larger membership base, which improves profit margins. Larger networks are more valuable to healthcare providers -- imagine having access to WellPoint's 35 million members -- and therefore such networks can negotiate lower prices. This is a win-win for members, who have access to cheaper health insurance and a wider selection of healthcare providers.
The national network has a local effect, since people tend to use healthcare services close to home. WellPoint is the exclusive licensee for Blue Cross and Blue Shield brands in 14 states, giving it the No. 1 or No. 2 market share in these areas. On top of its scale and price advantages, WellPoint's membership base has yielded reams of historical data that should help the company understand underwriting risks and plan its business on economical terms.
Like all insurance companies, WellPoint earns considerable interest on its premium float, unearned premiums paid plus unpaid losses. In 2007, interest on WellPoint's cash plus its float exceeded $1 billion and free cash flow was $4 billion. WellPoint has been using this strong free cash flow production to buy back shares -- a worthy use of capital at today's low stock price.
WellPoint isn't a fast growing company -- mid-single-digit growth should come from 1% to 1.5% enrollment growth and 4% to 5% price increases. And the medical-cost ratio could inch up as cost increases slightly outpace price increases -- though management is confident that it can match the two.
The Risks
Systemic health-care reform presents a small risk, but I expect the largest insurers, like WellPoint, to do well while smaller rivals suffer more and experience further consolidation.
If the medical-cost ratio rises higher than expected it could lower the value of WellPoint. Also, as is the case for all insurance companies, WellPoint has an investment portfolio, including in mortgage-backed securities. Almost all these securities are guaranteed by government-sponsored entities, but that doesn't preclude risk.
The Foolish Bottom Line
WellPoint is an extremely fit company selling at a significant discount to its true value, based on little more than uncertainty. In turn, Wall Street has priced the shares as though the business is in terminal decline. Underwriting results will inevitably wax and wane, but WellPoint's long-term prospects are anything but declining. It operates in an industry with long-term growth built in as baby boomers age, and WellPoint should produce healthy returns far in excess of the market.
comfortable socks imperative
The entire Council and Mayor have tacitly given their approval of whatever the City Manager has done by NOT questioning, directing, or in any way supervising his activities. He does whatever he wants and the Mayor and Council blindly rubber-stamp it, whatever it costs. He facilitates their agendas and they eagerly and enthusiastically reciprocate. When they occasionally disagree, he tells them to take a hike, as happened Monday night, they start looking for their hiking boots, flashlights, maps, and comfortable socks.
self-serving
Perhaps the state tax authorities will do the pool audit that is so badly needed. They ARE looking for other sources of revenue to make up for the HUGE deficits. Are the ones doing the current city audit the same ones that have done it in the past? and found NO problems? NONE at the pool? Can it be that city officials consistently lowball their revenue estimates with ridiculously low numbers so that, at the end of the year, when revenues are found to be higher, they can congratulate themselves and ask for another raise? Is that POSSIBLE??? THAT would be totally self-serving, dishonest, and manipulative, right? Illegal?
campaign takes shape
Looks like the political races are taking shape. Those who are interested in change will get a chance to have their voice heard, as there will be clear choices available. It looks like a resident is going to run against Mr. Garcia. The incumbent will have the advantages of his position and a LOT of money, but stranger things have happened, as we have seen lately, and BIG obstacles have been overcome on the road to changing the fiscal irresponsiblity of the status quo. We shall see. The mud-slinging has already started, however, as it is rumored that an incumbent has already called another candidate a "communist" for some reason. Imagine that! A card-carrying communist right here in our midst! Did the accused advocate the government takeover of any and all businesses? Call for the execution of his political foes? Want to install himself as leader-for-life? This campaign should be run on the ISSUES. Lets not allow this to degenerate into a mud-slinging conflict where there WILL BE no real winners. Those who resort to slinging mud usually do it because they have no new ideas to offer. To cover their lack of originality or the presence of previous blunders, they attack the others ideas or personality. Lets hope this campaign will stick to the issues and leave the name-calling to the children.
clarification needed
For those who might have missed the memo then, here it is again- (item 5-C, dated December 5, 2008, addressed to Mayor Bain and Council)" Concession stand is run by volunteer parents and the money is deposited with the Optimist Club through their association with the team. As it is done through the Optimist Club, no resale tax is charged......". It goes on to talk about the GMAC meet and where that money went, etc. This is the claim made by the City Manager, word for word. It is assumed he is talking about MSSH volunteer parents working the GMAC meet. The meet in question is the GMAC meet, not a MSSH sponsored meet. It is also assumed that they were acting as the concession hosts because the meet was being held here in MS. That they applied the profits towards their pool rentals is also admirable. It is the Optimist claim that is in doubt. If they were doing the concessions as the nonprofit MSSH swim team parents organization no resale tax would be required, right? If they werent operating as the nonprofit group, resale taxes WOULD be required, as would an Optimist connection to get around that requirement. IF the payments actually were put thru the Optimist accounts there are deposit slips and bank statements to that effect, right? If the payments werent put thru the Optimists, that would be easy to see too, as there would be NO evidence to that effect, right? Fortunately, the President of the Optimists should have access to all this information and can quickly and easily clear this up for us, right?
good questions
The questions persist. Exactly HOW would a secret handshake deal be enforced? How would ANYBODY know if the terms were being accurately fulfilled? Are there any witnesses to these handshake agreements? What are the possible legal ramifications? How many of these handshake deals does the City have? Six? A dozen? More than that? Does the Mayor or any of the Council members know exactly what these deals are? If not, why not? If they DO know about these backroom handshake deals, why havent they let the rest of us in on the secrets and explained them? Do these secret handshake deals meet the Government in the Sunshine requirements? If yes, how could that be explained? If not, why are they in effect? Are secret handshake deals somehow exempt from Government in the Sunshine laws? Wonder how many secret handshake deals the County or the State has? Most of the business agreements with the city are dicussed during the Council meetings, but NOT all? When were these agreements discussed? Did the Mayor, Council, and City Attorney approve these handshake agreements? If so, when did this approval happen? If not, why are they not concerned that they exist? Why are they NOT demanding contracts be written?
audit to be interesting
Apparently there is a general audit for the entire city going on right now. Auditors are not as concerned with daily logs as they are deposit slips and bank statements, even tho the daily logs SHOULD match the other information. It will be interesting to see what THIS audit finds to be accurate in the pool revenue areas. Audits for the past couple years have found NO problems with the pool numbers tho, so it remains to be seen what THIS one will reveal. stay tuned.
Optimist vefification needed
Apparently somebody from the Optimists with the initials GL wrote the Council a letter regarding their theoretical connections to the swim team. IF that is true, there are deposit slips and bank statements to that effect, right? They are being dragged into this debate to cover Gyms butt. The Optimists have been outstanding and upstanding members of this community for decades. If, in fact, this relationship exists, and HAS existed for years, as claimed, why isnt it general knowledge to the majority of the membership? Could this be ANOTHER handshake deal? or just a simple fabrication? Optimist verification can settle this quickly. Or not.
pool cheerleader
Where the pool cheerleader came from is hard to understand, as their were a litany of problems laid out in detail last night with pool operations. the pool is an expensive convenience provided to the average 2-3 adults and 3-4 kids that use the pool at GREAT cost to the rest of us during the school year. The main beneficiary is the swim teams that get to use our pool year-round for a pittance, especially the for-profit team from Doral. Doral pays less than 40% of what they paid at MDC 4 years ago for less time. Why does the city subsidize them? Well, it IS possible that a handful of Springs kids are on that team, and we apparently subsidize the other 95% of that team because of that POSSIBILITY.
Monday, January 12, 2009
crime and punishment
This is what I would like to here Mr. Obama say on the 20th:
"America has labored for more than twenty years under the belief that we can push paper around, lie, cheat and steal our way to prosperity. The truth of this matter has now come home to rest in every American's home value and retirement account, and is responsible for most of the current job losses.
To those who have lied, cheated and stolen in our capitalist system, forcing bad debt to be "covered" by the American Taxpayer so that the financial system did not implode last fall, I stand here today to tell you that you're not going to get away with it. I am hereby directing the FBI, along with the Secret Service to investigate and prosecute all instances of fraud within our financial system, whether they be companies abusively shorting securities they are selling to investors, home buyers lying about their incomes, CEOs making false claims about their firm's financial status on cable TV or ratings agencies being effectively bought off to give inflated ratings on securities.
For more than a decade there has not been a cop on the beat, but this changes today. To those who have been defrauded and lost their life savings, we may not be able to get your money back even though we will try, but we most certainly can prosecute and jail those who robbed you, and who robbed America.
To those who have had their faith in Wall Street and our Capital Markets damaged or destroyed, we will restore your faith by holding to account each and every one of the person and corporations who committed these acts. We will not slap people with meaningless fines; where corporate misconduct is involved the firms responsible will lose their corporate charters and be dissolved, while those individuals, directors and officers involved will be investigated, indicted where appropriate, tried by a jury comprised of Americans, and if convicted imprisoned for the maximum term allowed by law. We will use our Racketeering Statutes to seize the assets of those convicted and, to the extent possible, make those who were defrauded whole and relieve the burden of the taxpayer.
America will no longer permit or practice Ponzi Finance, and those who attempt it will face justice rather than enjoying multi-million dollar yachts and penthouses.
Never again will anyone on Wall Street or Main Street, nor in Congress, believe they can buy influence or cheat American and foreign investors without consequence. The cop has left the donut shop, and is on the beat."
"America has labored for more than twenty years under the belief that we can push paper around, lie, cheat and steal our way to prosperity. The truth of this matter has now come home to rest in every American's home value and retirement account, and is responsible for most of the current job losses.
To those who have lied, cheated and stolen in our capitalist system, forcing bad debt to be "covered" by the American Taxpayer so that the financial system did not implode last fall, I stand here today to tell you that you're not going to get away with it. I am hereby directing the FBI, along with the Secret Service to investigate and prosecute all instances of fraud within our financial system, whether they be companies abusively shorting securities they are selling to investors, home buyers lying about their incomes, CEOs making false claims about their firm's financial status on cable TV or ratings agencies being effectively bought off to give inflated ratings on securities.
For more than a decade there has not been a cop on the beat, but this changes today. To those who have been defrauded and lost their life savings, we may not be able to get your money back even though we will try, but we most certainly can prosecute and jail those who robbed you, and who robbed America.
To those who have had their faith in Wall Street and our Capital Markets damaged or destroyed, we will restore your faith by holding to account each and every one of the person and corporations who committed these acts. We will not slap people with meaningless fines; where corporate misconduct is involved the firms responsible will lose their corporate charters and be dissolved, while those individuals, directors and officers involved will be investigated, indicted where appropriate, tried by a jury comprised of Americans, and if convicted imprisoned for the maximum term allowed by law. We will use our Racketeering Statutes to seize the assets of those convicted and, to the extent possible, make those who were defrauded whole and relieve the burden of the taxpayer.
America will no longer permit or practice Ponzi Finance, and those who attempt it will face justice rather than enjoying multi-million dollar yachts and penthouses.
Never again will anyone on Wall Street or Main Street, nor in Congress, believe they can buy influence or cheat American and foreign investors without consequence. The cop has left the donut shop, and is on the beat."
Council meeting recap 1-12-09
Council spent 30 minutes tonight trying to decide whether furniture actually resides in a home, or not. Tex said it is tough to decide whether furniture and goods are new, or not, which is probably true. Stuff with tags on it are new; so are stuff in cartons or boxes. A couple residents seem to be running businesses out of their house, in garage sales. 99% are following the rules altho as things get worse it wouldnt be surprising to see people do more and more garage sales to keep food on the table and the lights on. Several points were made by a resident regarding the pool and its operations. More discussion is scheduled on the zoning variances of the new gym next time. Billing quarterly for stormwater and trash will save the City 20k. Billing every 2 months will save 14k. A letter was sent to the Council regarding the Optimist connection to the swim team apparently, but wasnt revealed to the public. Thats a letter that needs to be public. The Corradino Group was hired to rework the figures and the annexation bid for 11k. The circle at Bluebird is a county project, and will include landscaping and pavers. Firefighters requested circle be stopped because its hard for their trucks to go around that circle. Dotson requested shuttle numbers. Twenty bids were received to be the Field Engineer on the new gym project. LINK is working on adjustments to the new gym project that will meet code.
no supersized buildings in our neighborhoods
IF 2/3 of the proposed building are in accordance with the current zoning regulations, and its a 33k square foot building, doesnt that mean that OVER 11k square feet of the building ISNT in compliance? Assuming they KNEW what the codes were BEFORE they started, wouldnt you think they would design the building according to their own regulations?? The people have made it clear in the past they do NOT want monstrosities in their neighborhoods!!!! Not McMansions, and certainly not oversized public buildings!!!!! Why dont they listen????
Sunday, January 11, 2009
more and more curious
How many TRULY ethical businesses invoke their Fifth Amendment rights to NOT reveal anything that may tend to incriminate them, when asked for something as simple as a roster? While it IS every Americans right to NOT incriminate themselves, how many ethical and honest businesses invoke that right? If there IS no incriminating evidence, why dont they just prove it? Gorland says hes pretty sure there are more than a handful of Springs kids on MDAC, but when asked where he got that information from, has NO reply. If he saw it on a MDAC roster, how many Springs kids were on it? How did he know how many were Springs kids? How recent was that roster? Since he has already told a resident that the number is in the single digits at times, what times would that be? Averaged out over three years, which was the City Managers idea to allow for seasonality, it should be easy to determine a verifiable average count. Gorland could easily get the roster, as could Gym, but they wont. Is it because they are afraid of incriminating themselves? Proving yet another fabrication? It just gets curiouser and curiouser. Gym told a resident he would ask the MDAC owners for a roster for the past three years, to average out seasonality- has THAT been done? If so, where is the roster? If it WASNT produced, what explanation was offered? Or were they hiding behind their Fifth Amendment rights as American citizens to NOT to provide information that may tend to incriminate themselves? It IS their right, of course, but they may lose a LOT of credibility as honest and ethical people in the process.
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