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Lemley Yarling Management Co
309 W Johnson Street
Apt 544
Madison, WI 53703
Bud: 312-925-5248       Kathy: 630-323-8422

December 28, 2012

Model Portfolio Value As of 31 December 2012

$ 688,130

Comment on Model Portfolio activity

We sold most of our holdings this week. The sales had nothing to do with the fiscal cliff talk. Rather, the markets have had a good run this year and we have had an even better run of luck and following the maxim of bulls, bears and pigs we decided to get to the sidelines for a while.

The market seem tired and while the fiscal deal when announced may lead to a pop higher we expect the markets to then rest and consolidate. Usually such a move doesn’t occur till March or April but the action in the market this Fall has been unusual with only one instead of two pullbacks since August.

We kept three positions and have only quit our trading stocks for a while; we haven’t abandoned them for good.

Happy New Year!!!!


Winter Solstice 2012

Model Portfolio Value As of 21 December 2012

$ 688,716

Comment on Model Portfolio activity

Cheer up, summer in on the way.

We are holding pat. The failure of the Boehner plan last night was a positive although the markets this morning are in the tank on the news.

Happy Holidays from all of us.

Gerald, Kelle, Katie and Bud - 2012 - Tyler, Lisa, Dave, Abby, Bud and Katie


December 14, 2012

Model Portfolio Value As of 14 December 2012

$ 674,965

Comment on Model Portfolio activity

We added Alcatel Lucent to some accounts and also added to our Sony position in a few accounts.

The Fiscal Cliff loooooooooooooooooms!!

A short two months ago as Apple approached $700 per share analysts were falling all over themselves to raise price targets to $900 to $1000 per share. Now with the shares at $500 most are rethinking their calls. Buy ‘em up; sell ‘em down as the old stockbroker used to say about the analyst community.

An article on solar power on individual homes:

First, the investor-owned utilities that depend on the existing system for their profits have little economic interest in promoting a technology that empowers customers to generate their own power. Second, state regulatory agencies and local governments impose burdensome permitting and siting requirements that unnecessarily raise installation costs. Today, navigating the regulatory red tape constitutes 25 percent to 30 percent of the total cost of solar installation in the United States, according to data from the National Renewable Energy Laboratory, and, as such, represents a higher percentage of the overall cost than the solar equipment itself.

In Germany, where sensible federal rules have fast-tracked and streamlined the permit process, the costs are considerably lower. It can take as little as eight days to license and install a solar system on a house in Germany. In the United States, depending on your state, the average ranges from 120 to 180 days. More than one million Germans have installed solar panels on their roofs, enough to provide close to 50 percent of the nation’s power, even though Germany averages the same amount of sunlight as Alaska. Australia also has a streamlined permitting process and has solar panels on 10 percent of its homes. Solar photovoltaic power would give America the potential to challenge the utility monopolies, democratize energy generation and transform millions of homes and small businesses into energy generators. Rational, market-based rules could turn every American into an energy entrepreneur.

Pearl Harbor Day 2012

Model Portfolio Value As of 7 December 2012

$ 660,123

Comment on Model Portfolio activity

We traded Apple in a few accounts for a small loss this week without disturbing our original holdings. We also bought Nokia and First Solar and added to DELL and Old Second. And we sold Facebook for a nice trading profit.


Credit Suisse‘s networking equipment analyst Paul Silverstein today writes that the movement to replace networking equipment with so-called software-defined networking has been “greatly exaggerated” as a threat to Cisco Systems (CSCO) and Juniper Networks (JNPR) and other traditional vendors, and that it is in fact “more distant and limited than what appears to be the current view held by most members of the investment community.”

Silverstein writes that he attended this week the Gartner Data Center Conference in Las Vegas, held by the research firm, where “Most enterprise IT professional we heard from and spoke to at the conference appear to be at the initial stage of simply trying to understand what is SDN, let along what is its value proposition.”

SDN is in “the classic ‘hype stage’ of the technology adoption cycle,” he writes, and “deployment and significant interest in SDN currently appears to be limited to large, cloud service providers which require significant scalability, multi-tenancy or business agility.”

Cisco, in fact, whose shares he rates Outperform, is in much better shape in enterprise switching than many suspect:

Our takeaways from numerous presentations, round tables and user forums at the conference, including a presentation by David Yen, SVP and GM of Cisco’s Data Center Group (and previously EVP and GM of the Fabric and Switching Business Group at Juniper, where he led the QFabric initiative in data center network research and development) indicate to us that Cisco is far better positioned than most investors appear to fear regarding SDN. Our takeaway regarding Cisco’s SDN strategy is that it is a practical and flexible approach that responds to different requirements and different customers and use cases. We suspect that Cisco will spend much time discussing its SDN strategy at its upcoming analyst day on 12/7/12 and that most investors will be similarly impressed–or at a min less concerned re: Cisco’s SDN competitive position.

Cisco shares today are up 20 cents, or 1%, at $19.41.

On Thursday CNBC interviewed Fred Smith, the CEO and founder of Fed Ex, who decried the high corporate tax rates in the U.S versus Singapore and other low tax countries. Fed Ex makes its money by delivering packages. Those deliveries take place over highways built by the Federal and State governments. Initially Fed Ex flew its packages from a hub in Memphis to airports all over the U.S. Every commercial airport in the U.S. is built by local government with generous Federal subsidies in the building and maintaining process. The FAA, a federal agency, makes sure that the planes can fly without harm. Fred is a billionaire because he had a great idea and acted on it and more power to him. But the government created and maintains the facilities that allowed Fred to earn that fortune. Too bad he can’t appreciate what taxes do.

We make and lose our money the honest old fashioned way--- a few others, not so much—


One-Time Hedge Fund Wiz Faces Second Abysmal Year

One of the hedge funds run by John Paulson, whose prescient bets against housing where chronicled in the book "The Greatest Trade Ever," is on track to be the second worst performer of 2012 among the universe of funds tracked by HSBC. Last year, it was the worst.

Paulson's Advantage Plus fund, which uses additional leverage than his other funds, is down 19 percent through the end of October, following a 53 percent loss last year.

The fund bests just the Conquest Macro Fund, which is down 27 percent through the end of November.

The firm's other flagship fund, the Paulson Advantage Fund, is down 13 percent this year, putting it among the top 10 losing funds in the HSBC universe this year as well.

Paulson's funds are underperforming because of a bet on a Euro collapse and subsequent positions in gold and makers of the hard asset. Fast forward: the Euro is little changed on the year and one of the firm's biggest holdings, South Africa's AngloGold Ashanti (AU), touched a 52-week low last week.

"A potential collapse of the Euro triggered by a Greek default or other event could throw the world into recession and serious financial disorder," wrote Paulson in the outlook section of his 2011 year-end letter.

It's easy to pick on Paulson, whose bets against the housing market made him a multi-billionaire and were immortalized in more than one books and glowing articles, however most hedge funds are underperforming the market this year. The Hedge Fund Composite Index from Bank of America shows hedge funds are up just 2 percent in 2012, trailing the 14 percent gain in the SPDR S&P 500 ETF Trust (SPY).

Ironically for Paulson, the best-performing hedge fund in the HSBC universe is the BTG Pactual Distressed Mortgage Fund, up almost 40 percent so far in 2012. The fund, managed by a Brazilian wealth manager, has benefited from a comeback in the very kind of residential mortgage securities that Paulson bet against during the crisis.

Among the big name winners this year is Daniel Loeb. His Third Point Ultra Fund is up 25 percent as of last week, likely because of a comeback in shares of Yahoo.<

Different strokes for different folks:

A woman who embezzled about $123,000 from her employer, then disappeared for a week after police questioned her, was sentenced Monday to four months in jail.

Keri M. Geschke, 39, of DeForest, was sentenced to six years of probation, with the four months in jail as a condition of probation, for stealing the money from Sound Billing of Middleton, now called MyFleetCenter.com, where she worked as an accountant, between 2006 and 2010.

The jail sentence was longer than the one month that Assistant District Attorney Paul Humphrey and defense lawyer Robert Hurley had agreed to recommend. Dane County Circuit Judge Stephen Ehlke said he didn't think one month was long enough because the thefts were not a one-time lapse of judgment and because Geschke worked in a position of trust.

Read more: http://host.madison.com/news/local/crime_and_courts/woman-who-embezzled-k-from-employer-sentenced-to-months-in/article_51b14458-3da8-11e2-8ba5-001a4bcf887a.html#ixzz2E65I40xU

The story of 54-year-old Roy Brown, a homeless man who couldn’t afford to pay basic food and shelter expenses, is heartbreakingly cruel.

A homeless man robbed a Louisiana bank and took a $100 bill. After feeling remorseful, he surrendered to police the next day. The judge sentenced him to 15 years in prison. 

The day after this story appeared, prosecutors celebrated the fact that they were able to get a 40-month prison sentence for investment tycoon Paul R. Allen, who defrauded lenders of more than $3 billion...

Roy Brown is black and homeless, while Paul R. Allen is white and extremely wealthy.

Dick Armey, the former Republican Congressman, who is an ardent conservative and anti-government fanatic, is resigning from an anti government nonprofit foundation and receiving $8 million to go away. Since nonprofits exist-in part because the government allows tax deductions for donations- the government is funding half of Armey’s walking away money. On top of that Armey has a government pension from his years in Congress, and Medicare- that hated government program.

(AP) A confidential contract obtained by The Associated Press shows that Armey agreed in September to resign from his role as chairman of Washington-based FreedomWorks in exchange for $8 million in consulting fees paid in annual $400,000 installments. Dated Sept. 24, the contract specifies that Armey would resign his position at both FreedomWorks and its sister organization, the FreedomWorks Foundation, by the end of November. According to the contract, Armey’s consulting fees will be paid by Richard J. Stephenson, a prominent fundraiser and founder and chairman of the Cancer Treatment Centers of America, a national cancer treatment network. Stephenson is on the board of directors of FreedomWorks.

Read more: http://www.businessinsider.com/dick-armey-resigns-freedomworks-buyout-8-million-2012-12#ixzz2EBs2jGNI





















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