Investors & Friends:

Here's a summary of our investment actions from the past week.

Option Strategies - Covered Calls

1) Blackstone Group LP (NYSE: BX) - Our Jan '12 calls reached 80+% of their maximum value, so we closed them out.

The date we opened the trade was 3/8/10.

Click here for the Investrio Stock Selector Fund Bull and Bear Market Indicators Report for the week ending September 3, 2010.

Click here for upcoming IPOs.

Lead Fund Manager
Investrio

Etcetera

1) Illinois has shouldered to the fore, as its dysfunctional political class refuses to pay the state's bills and refuses to take the painful steps to close a deficit of at least $12 billion, equal to nearly half the state's budget. Then there is the spectacularly mismanaged pension system, which is at least 50 percent underfunded and, analysts warn, could push Illinois into insolvency if the economy fails to pick up... Every major rating agency has downgraded the state; Illinois now pays millions of dollars more to insure its debt than any other state in the nation. "Their pension is the most underfunded in the nation," said Karen S. Krop, a senior director at Fitch Ratings... The state pension system is a money sinkhole and the most immediate threat. Illinois reports that it has $62.4 billion in unfunded pension liabilities... Many analysts, liberal and conservative, warn of a Greece by Lake Michigan. Borrowing costs are rising and the state's unpaid bills balloon each month.
-- Michael Powell, NY Times

2) Diageo, the maker of Johnnie Walker whisky, found an innovative way to plug its gaping pension hole: handing over two million barrels of maturing whisky from its distilleries in Scotland. Diageo said Thursday that it would transfer ownership of £430 million ($645 million) worth of whisky to a pension financing partnership. Diageo employees will not receive their pensions in whisky rather than cash, but they will have a guarantee that they will not walk away empty-handed should the company default. "A pension funding partnership will be formed, which will hold maturing whisky spirit as assets," Diageo, which also makes Guinness stout and Smirnoff vodka, said in a statement. As part of the deal, Diageo agreed to pay the pension partnership £25 million a year as it sells the recently distilled whisky once it matures after three years and replaces it with new stock. The agreement will expire after 15 years at which point Diageo will buy back the whisky. "We're seeing a huge growth in the use of noncash funding," Marc Hommel, leader of the pensions practice at PricewaterhouseCoopers in London, said. "There are big pension deficits and sponsors are cash-strapped. These mechanisms provide security for the pension plans in exchange for less cash." Diageo's pension deficit was £862 million at the beginning of April.
-- Julia Werdigier, NY Times