Investor Bulletin

Download 2011 Year End Comments Letter [PDF]

The good news is that financial disclosure requirements for municipal bond issuers are improving. The bad news, at this time, is that investors would find it to be problematic to discern the true credit worthiness of many municipal issues based on publicly available financial disclosures.

Below are some excerpts from the investment analyst Meredith Whitney that were published in the Wall Street Journal on Wednesday, May 18, 2011:

Next month will be pivotal for most states, as it marks the fiscal year end and is when balanced budgets are due. The states have racked up over $1.8 trillion in taxpayer-supported obligations in large part by underfunding their pension and other post-employment benefits….. Next month will also mark the end of the American Recovery and Reinvestment Act’s $480 billion in federal stimulus, which has subsidized states through the economic downturn. States have grown more dependent on federal subsidies, relying on them for almost 30% of their budgets…..While over the past 10 years state and local government spending has grown by 65%, tax receipts have grown only by 32%….. Today, off balance sheet debt totals over $1.3 trillion, as measured by current accounting standards, and it accounts for almost 75% of taxpayer-supported state debt obligations….. Only recently have states been under pressure to disclose more information about these liabilities, because it is clear that their debt burdens are grossly understated. Since January, some of my colleagues focused exclusively on finding the most up-to-date information on ballooning tax-supported state obligations. This meant going to each state and local government’s website for current data, which we found was truly opaque and without uniform standards…. For example, New Jersey’s ratio of total tax-supported state obligations to gross state product is over 30%, and the fixed costs to service those obligations eat up 16% of the total budget. Even these numbers are skewed, because they represent only the bare minimum paid into funding pension and retirement plans….. Defaults in a variety of forms by states and municipalities are already happening and more are inevitable…..And state and local government employees are having to renegotiate labor contracts that they once believed were sacrosanct. Municipal bond holders will experience their own form of contract renegotiation in the form of debt restructurings at the local level. These are just the facts. The sooner we accept them, the sooner we can get state finances back on track, and a real U.S. economic recovery underway.

1stQ Client Letter

Join Us Friday April 1st, 2011 for a FREE Investment Seminar -

Featuring Pennsylvania’s Marcellus Shale natural gas play.

Sponsored By:

SEC Registered Investment Advisor
Div. of Kevin Hart Kornfield & Co., Inc.
Originally Established 1986

Location:
April 1st, 2011 at Clipper Stadium – Wheatland Suite
650 N Prince St, Lancaster PA

Agenda:
11:00  – Registration
11:30  -  Buffet
12:15 – 2:30 – Speaker

Description:
This is a ‘don’t miss’ seminar…..UGI: Marcellus Shale and investing for the coming natural gas economy!!  Learn how the Marcellus ‘super giant’ gas field could contain the reserves, at current USA consumption rates, to provide natural gas to the entire country for the next 20 years.  What can this mean to you as a resident of PA or a UGI stockholder? Will this plentiful supply of natural gas lead to greater usage as a transportation fuel?

Our speakers:
Charles K. Scharnberger, Ph.D., P.G., Professor Emeritus of Geology, Millersville University, will introduce our first speaker:
From the Pennsylvania Geologic Survey, Helen Delano, Senior Geologic Scientist, with responsibility for education and outreach.
Brad Hall, President of UGI Energy Services, Inc.  Mr. Hall’s division has a service area with a “footprint” covering several states from New York down to Virginia.

Our speakers will share with us their expertise about Marcellus Shale. We will learn about the findings by the PA Geological Survey. We will hear about the part UGI is playing in the game changing world of the coming Natural Gas Economy.

For more information please click on the below links to learn more about our topic of Marcellus Shale, Natural Gas, and UGI:
http://www.ugienergyservices.com/
http://www.dcnr.state.pa.us/topogeo/oilandgas/marcellus.aspx

Due to limited seating, reservations are required. First Requests, First Reserved

To attend this event, RSVP by March 23, 2011.

Contact Kornfield Investment Management
Call 717-392-0002 or email invest@kornco.com
Please include the number of attendees, and contact information.
IMPORTANT: Reserved seating is established ONLY after you receive an email confirmation or written confirmation from our office.