Warren Buffett is well-recognized as a smart investor, which should be giving investors a clue. The billionaire investor has recently agreed to purchase shares in two institutions facing sharp declines: General Electric (NYSE: GE) and Goldman Sachs (NYSE: GS). Many investors are speculating that he was brought into these deals to calm fears, but he is not exactly playing on a level field. Under both of these deals, the billionaire receieved preferential treatment...

The billionaire purchased a $5 billion stake in Goldman Sachs last month, but it wasn't just common stock. The billionaire received $5 billion in perpetual preferred stock and 43.5 million warrants priced at $115 per share. These warrants give the investor a theoretical 16% stake in Goldman Sachs - one of the world's premier investment banks - for only $5 billion in investment. In fact, with shares trading at around $130 a piece, Buffett has already made $650 million in paper profits!

Buffett also managed to pick up cheaper than normal shares of General Electric. The billionaire invested $3 billion at a 9% discount to the stock's closing price Wednesday to buy up preferred stock that pays a 10% dividend. Buffett also stated that he would support measures to alleviate near-term liquidity concerns. Not only is the billionaire making a dividend on his investment, but he is also receiving a sharp discount.

So, before investors go believing that Warren Buffett's investments signal confidence - they should be sure to take a look at the terms of the deals...

Related Companies
Deutsche Bank AG (DB)
Credit Suisse Group (CS)
Friedman, Billings, Ramsey Group (FBR)

thinkorswim Group Inc. (NDAQ: SWIM) shares jumped higher after the company reported preliminary operating metrics for September 2008 early due to extraordinary price volatility, regulatory intervention and liquidity concerns. During this time period, thinkorswim delivered its 24th consecutive month of record growth by opening 8,550 new accounts, 3,400 funded accounts, executive 63,600 retail DARTs and maintaining client assets of approximately $3.2 billion.

Trading volumes at thinkorswim exceeded 96,000 retail trades in a single day during the month and now expects to outperform analyst consensus for the third quarter. Many brokerages have benefited from from the increased market activity as they have collected more in commissions. However, some brokerages have failed to offset these gains with losses from margin accounts that have defaulted.

thinkorswim Group Inc., formerly Investools Inc. (Investools) operates in two segments: Investor Education and Brokerage Services. The Company offers investor education and brokerage and related financial products and services for self-directed investors. Its Investor Education segment offers a range of investor education products and services that provide learning in a variety of interactive delivery formats.

Related Companies
Capella Education Company (CPLA)
Apollo Group, Inc. (APOL)
Strayer Education, Inc. (STRA)

Presidential candidates are gearing up for a good fight and environmental policy is near the top of the list of concerns. Many countries around the world are waiting to see whether or not the United States will sign the Kyoto Protocol this year that would require companies to reduce their carbon emissions between 2008 and 2012. This would put a relatively new, but growing carbon market into the forefront of the global financial system.

The carbon market represents an administrative approach used to control pollution by providing economic incentives for achieving reductions in the emissions of pollutants. Countries bound by the Kyoto Protocol can use carbon trading as a way to meet their obligations to reduce carbon trading and therefore mitigate global warming. To date, carbon trading is seen as one of the most viable approaches to control global warming through economics.

EcoloCap Solutions (OTC-BB: ECOS) is developing an integrated development approach that focuses on both existing and needed infrastructure facilities to produce substantial new value in the form of tradable CERs while also maximizing alternative energy generation co-products. Partnerships with owners of facilities that generate harmful greenhouse gases as well as environmental project owners in developing countries will allow the company to capitalize on opportunities emerging in carbon trading.

To the owners of these projects, EcoloCap offers its expertise in the United Nations certification process, engineering, project management and capital in exchange for rights to the carbon credits that are generated over the life of the project. The company makes money by purchasing these credits for far less than they are worth when sold on the open market. Often times, this differential can be significant, especially when accrued over the life of the project.

As a result, one company to watch during the upcoming presidential elections may be EcoloCap Solutions. Any actions by the United States to join the Kyoto Protocol would result in a substantial boost to the carbon market in general and would in turn benefit companies like EcoloCap that sell carbon credits in the open market. After all, demand would increase while supply would remain the same, thus driving up the price of carbon credits and the value of EcoloCap's inventory. Investors interested in learning more can view a research report by clicking here.

Related Companies
TurboSonic Technologies, Inc. (TSTA)
First National Power Corp. (FNPR)
Donaldson Company Inc. (DCI)

Allied Capital (NYSE: ALD) is playing out by the book - that is, David Einhorn's book! Allied and David Einhorn have been involved in what some on Wall Street have regarded as an epic struggle between themselves, regulators, government officials, and several government organizations. In fact, Einhorn even wrote a complete book on the struggle called "Fooling Some of the People All of the Time". His premise is that Allied's loan portfolio (or that of its subsidiaries) has been impropertly valued - a thesis that may now prove to be true.

Allied Capital announced that Ciena Capital, one of its portfolio companies, voluntarily filed for bankruptcy protection today. The company said Ciena has continued to experience "significant deterioration" in the value of its assets due to the uncertainty of the financial markets and a reduction in the number of loan buyers. As a result, Allied said its unconditional guaranty of the obligations outstanding under Ciena's revolving credit facility may become due.

This is bad news for Allied Capital as it may be required to pay $320 million to the lenders in connection with the revolving credit facility. This is $150 million of the cash Allied gained on the sale of its good investments while it may have to borrow another $170 million of its unsecured revolving line of credit. Some believe that this could put the company's all-important dividend at risk - the dividend that so many investors have stayed in the stock to receive.

Allied Capital Corporation (ACC) is a closed-end, non-diversified management investment company that operates as a business development company. The Company’s investment objective is to achieve current income and capital gains. The Company is engaged in private equity business. ACC primarily invests in debt and equity securities of private companies in a variety of industries. From time to time, it may invest in companies that are public but lack access to additional public capital.

Related Company
Main Street Capital Corporation (MAIN)
PennantPark Investment Corporation (PNNT)
American Capital Ltd. (ACAS)
MACC Private Equities Inc. (MACC)

Circuit City Stores (NYSE: CC) shares dropped sharply after it reported disappointing earnings, but there is at least one remaining hope for shareholders. The electronics retailer said it would undergo an extensive review of its strategic options. Unfortunately, investors looking for a sale transaction may be waiting awhile- the company noted that it was initially focused on internal improvements to operate as a standalone business. Regardless, a successful turnaround is definitely a prospect worth watching!

Circuit City shares have been in a free fall ever since 2007 when the company first started experiencing a slowdown in sales. This latest quarter has been a nail in the coffin as it posted wider losses and withdrew its financial outlook as it reviews its business ahead of the holiday season. This follows the departure of its Chairman and CEO just last week. Meanwhile, experts are predicting an extremely bleak holiday season this year.

So, where's the opportunity here? Well, Circuit City still owns a substantial number of retail stores and any new blood in management could help a turnaround. Circuit City may have posted losses for five of the six quarters, but any successful execution this holiday season versus competitor Best Buy could help position it for the future. The company plans to launch a new marketing campaign, upgrade its store signage, and boost its in-stock position on key categories.

Related Companies
Best Buy Co., Inc. (BBY)
RadioShack Corporation (RSH)
Rex Stores Corporation (RSC)

The carbon market represents an administrative approach used to control pollution by providing economic incentives for achieving reductions in the emissions of pollutants. Countries bound by the Kyoto Protocol can use carbon trading as a way to meet their obligations to reduce carbon trading and therefore mitigate global warming. To date, carbon trading is seen as one of the most viable approaches to control global warming through economics.

Under the supervision of the United Nations, industrialized member nations are bound to reduce their emission of CO2 and other harmful gases by 5.2%. Companies or other groups that do not meet their reduction quotas can buy "carbon credits" from those who have exceeded their reduction targets.

As an alternative however, carbon credits can be created in developing countries can also generate credits (known as Certified Emissions Reductions or CERs) at a lower cost, and under the UN sponsored exchange mechanism, can be sold to developed countries at the prevailing prices as set on the world market. Hence the business opportunity.

In effect, this forces polluters to pay a charge while sellers are rewarded for having reduced emissions more than needed. The theory is that those that can easily reduce emissions at a reasonable cost can do so, achieving pollution reduction at the lowest possible cost to society.

Market prices for these carbon credits are also on the rise as oil prices continue to rise.  The price of carbon credits is linked to the price of oil in that lower oil results in lower gas, which encourages energy producers to burn gas instead of coal.  Since gas is less carbon intensive than coal, demand for carbon credits falls as energy providers have to buy fewer credits.

Carbon credits are also seen as a safe-haven for traders looking to get into more secure investments, according to analyst firm Point Carbon.  The firm argues that a fell in the projected supply of carbon credits would exceed any drop off in demand, which should in turn lead to higher carbon credit prices by supply and demand economics.

Carbon credits are also gaining popularity among the larger public.  Trading on the European Climate Exchange market along has more than doubled during the first half of the year compared to the same period in 2007.  Chief executive Neil Eckert told BusinessGreen.com that "the growth is not in a straight line and there are ups and downs, but overall there is a really healthy growth pattern."

EcoloCap Solutions (OTC-BB: ECOS) is well-positioned to profit from the bullish carbon credit market as the are a leading producer of Certified Emissions Reductions (or CERs).  EcoloCap Solutions offers innovative and integrated business solutions to help combat global climate change. Specifically, the company helps create environmentally-friendly projects in developing countries in exchange for carbon credits that it can sell on the open market. Investors interested in learning more can view a research report by clicking here.

Related Companies
TurboSonic Technologies, Inc. (TSTA)
First National Power Corp. (FNPR)
Donaldson Company Inc. (DCI)

View SEC Filings
View Insider Trading
View Annual Reports

Wal-Mart Stores (NYSE: WMT) and Target Corporation (NYSE: TGT) have always been at odds with eachother. One popular strategy was to pair trade the two stocks based on the economic environment. Wal-Mart, famous for its low prices, is a popular stock during an economic downturn as people tend to flock to their stores. Conversely, Target tends to attact the middle class far more effectively during an economic boom when they are willing to part with their money more easily.

Many investors using this strategy have been long on Wal-Mart while short on Target during the economic downturn and it has paid off handsomely. Wal-Mart shares have appreciated over 30% in 2008 while Target shares were down over 5% on the year not long ago. However, Target has recently begun to rebound as an end to the economic crisis seems within reach. As a result, investors are now questioning whether or not it is time to switch the play around and look at going long Target while shorting Wal-Mart.

The question now becomes: Is the economic crisis on its way to being solved? Well, the majority of the problems can be traced back to the housing market and many believe that's where a recovery is needed first. Foreclosures not only resulted in a rise in bankruptcies for consumers, but also put pressure on consumer credit. This credit is extremely important to maintaining consumer spending and helping retailers like Wal-Mart. So, is the housing market turning?

Recent Federal bailout packages are expected to give the housing market some breathing room while working to return things to normal. Rising defaults and foreclosures on home loans, spurred by declines in home values, are the cause of the collapse in price and tradeability of the mortgage-backed securities. A $700 billion bailout package put together by the government should help solve those issues by injecting liquidity into this system and encouraging lending once again.

A successful execution of this plan could help the Target/Wal-Mart trade switch, but until then, many investors are likely staying put with their current positions.

Related Companies
PriceSmart Inc. (PSMT)
Dollar Tree, Inc. (DLTR)

Concord Camera Corporation (NDAQ: LENS) may soon be in trouble after a large shareholder expressed dissatisfaction regarding the company's response to his concerns. Everest Special Situations Funds have been petitioning the company to make key changes for some time now, but their calls have gone unheard. Now, the activist hedge fund is threatening to take its fight public through a proxy contest to replace the board of directors and unlock value itself.

Here's a copy of their September 11th letter to the board:

Dear Mr. Lampert:
 
As you know Everest Special Situations Fund L.P. (“we”) owns approximately 7.29% of the outstanding capital stock of Concord Camera Corp. (“Concord” or the “Company”).  During the past year, through multiple written letters, an in-person meeting and numerous telephone conference calls with management, we have expressed our deep concern over the future of the Company and provided our views on ways to maximize shareholder value.  Unfortunately, despite your assurance that our serious concerns were being promptly addressed in a meaningful way, it appears our concerns and suggestions have fallen on deaf ears.  The Company has not provided us with or implemented any substantive responses regarding the significant concerns we have raised, including:

• the Company’s disastrous operational performance, including 17 consecutive quarters of losses;
• the Chief Executive Officer’s excessive compensation;
• the Company’s significant holdings in illiquid auction rate securities and how it intends to liquidate these positions; and
• the inadequate response of the Special Committee of the Board as to why after 2 years it still has not suggested any strategic alternatives for the Company.
  

As we have repeatedly suggested, in order to maximize shareholder value, the Company should immediately begin a liquidation process and accept our offer to assist in this process.  For all the reasons listed above and in our other public letters, we have lost faith in the ability of the Company’s current Board and management to carry out a liquidation.  If the Company had any intention of liquidating, management should have already communicated with the Company’s clients in order to lead a prompt and orderly process which would maximize collection of the Company’s account receivables and help the Company and its clients plan ahead.  As management has not done so, shareholders can only reasonably draw two conclusions:

• management is looking to entrench itself and not pursue a liquidation; or
• management is not capable in carrying out a liquidation.
  

We demand that the Company immediately modify the Board of Directors composition to add representatives of the Company’s shareholders to assist with and accelerate a liquidation or sale process.
 
If the Company does not promptly meet our reasonable demand, we will not hesitate to enforce our rights as shareholders to seek Board representation or take any other actions which we deem appropriate.  Specifically, we intend to nominate a slate of directors with experience in liquidations and sales processes at the Company’s next annual meeting of shareholders and intend to take all necessary steps to maximize shareholder value immediately following the election of our slate.

Related Companies
Eastman Kodak Company (EK)
Nature Vision Inc. (NRVN)

KHD Humboldt Wedag International Limited (NYSE: KHD) may have one of the strangest names on Wall Street, but it also represents one of the best values around. The industrial plant engineering and equipment supply company has been beaten down by the economic slowdown and now trades with a PE-to-Growth ratio of just 0.33. This indicates that KHD is substantially undervalued given its current share price, earnings per share, and earnings growth rates.

Many investors see KHD as an infrastructure play given its strong presence internationally. Over half of the company's $1.3 billion backlog comes from Russia, Eastern Europe, and Asia as their economies continue to grow. The company is also financially sound having reported an 88% increase in year-over-year profits and a doubling of its order intake. Combined, these factors make this company a definite growth play in addition to a value play.

KHD Humboldt Wedag International Ltd. is engaged in industrial plant engineering and equipment supply business and has a royalty interest in the Wabush iron ore mine. The Company's industrial plant engineering and equipment supply business focuses on services for the cement, coal and mineral processing industries. KHD Humboldt Wedag International supplies plant systems, as well as machinery and equipment worldwide for the manufacture of cement and the processing of coal and minerals, whether for new plants, redevelopments of existing plants or capacity increases for existing plants. The Company designs and provides equipment that produce clinker, cement, clean coal, and minerals such as copper and precious metals. The scope of services also includes feasibility studies, raw material testing, financing concepts, erection and commissioning, personnel training, and pre and post sales services.

Related Companies
Caterpillar Inc. (CAT)
Deere & Company (DE)
Joy Global Inc. (JOYG)