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February Expiration Friday

Expiration Friday, February 17th, 2012, Rhinelander, Wisconsin, USA

What were we thinking when we decided to spend our 61st birthday alone in Rhinelander, Wisconsin? Well, it was partly because of our ripe-old-age that we decided, instead of flying all-the-way back from Orlando to Arizona, only to fly back to New York a few days later, that all that extra time in the air could be better spent at our frigid lakeside home in Rhinelander. The two 5-hour flights back to-and-from Phoenix have simply been replaced with the two-and-a-half hour flights to Wisconsin, and that includes stop-overs in Milwaukee. A no brainer, if you ask us. So what if the temperature in Rhinelander might be 100 degrees colder than that of Phoenix, we don't live in the Valley anyway, and the Prescott temps might be "only" 80 degrees different.

After our Christmas time travel mis-adventures at the hands of Frontier (RJET*), which included a cancelled flight out of Rhinelander and a 28-hour "stop-over" in Milwaukee, it was understandable that the many-multi-flighted February Trade Shows tour was a cause for concern. And when you throw in the fact that not all of the airlines have "sharing agreements," and the flight changes from Southwest and Air Tran (LUV*), along with getting our bag off one flight and re-checking it onto another on Frontier - including another TSA security "frisking," had us very worried. Did we mention there is another airline in the multi-flight mix, US Airways, part of America West Holdings, which is partly owned by a major private investment outfit, Texas Pacific Group, or TPG.

TPG is known in the corporate take-over, merger and acquisition field as a contrarian - many times taking the other side of a trade that no one else would take. Of course, taking this taboo trade usually allows them an extraordinary entry price, and oftentimes, in Sam Zell-like fashion, the parts, when sold off or managed effectively are much more valuable than the initial company taken-over. We actually had a personal involvement in the original America West Airlines, when it was being developed in the late 1970s and later founded in 1981. At the time we were a struggling racquetball pro in Chicago, who was also learning the ropes on the trading floor at the Chicago Board Options Exchange (CBOE). A fraternity brother, from ASU, who was an Arizona-based stock broker at the time, called one day and asked if we wanted to invest in an upstart airline, being founded by a brokerage customer of his, Ed Beauvais. If you remember correctly, that was not a great time in the U. S. to be investing in an airline, as we were just coming out of a recession, besides, we didn't have the money, and what money we did have was paying HUGE returns just sitting in money market funds (15% - 20%)!

It ended up being a fabulous missed opportunity, as the initial airline struggled with a grow-at-any-means type mentality, and we don't know if the original investors were ever made whole. This further proves that leaving your gun in the holster is sometimes a great idea and that not making a trade can oftentimes be a great trade!

Have a profitable expiration Friday and a nice long weekend. In spite of the markets being closed on Monday, we will be at the New York Trader's Expo at the Marriott Marquis on Times Square - hope to see you there.

"You can't be a real country unless you have a beer and an airline - it helps if you have some kind of a football team, or some nuclear weapons, but at the very least you need a beer." -- Frank Zappa

(* = FHW position)

What's Frank Thinking? | 2/17/2012 8:35:39 AM | 0 Comments