thepupil

as an FYI, this was Jardine Strategic. On Sunday night (Monday morning in Singapore), I was able to seamlessly sell the Strategic in Singapore and buy Matheson. Instantaneously, the Matheson I purchased in Singapore became the Matheson ADR and my Strategic ADR's went away. So it didn't really cause any issues (maybe Fidelity does it to get some ADR fee which I don't notice lol) With another Fidelity account that is a) not margin b) not set up for international, I had come friction not being able to transact in Singapore and that cost me, but that was my own fault procrastinating setting that account up appropriately.

can you elaborate here? this makes sense to me for someone of substantial means (say a retiree with $5mm and a $1mm mortgage and a couple of 0% financed cars). that wealthy retiree would benefit more from his $2mm bond portfolio having actual yield than the cheap debt on the mortgage/cars. But for the vast majority of normal americans, particularly those that only have a little wealth, much of which is tied up in home equity (particularly minorities),it would seem to me that housing deflation / higher rates would be pretty devastating for the more median and below households. at the least the transition to a different regime where rates are higher would be painful.

I'm biased, but that seems pretty ridiculous to me. Berkshire has traded below 1x book briefly in November 2008, Summer 2011, and March 2020 (GFC, Europe Sovereign, Coronacrisis). Progressive (Geico) has never traded at a discount to book and currently trades for 3x (at least since 2000) UNP (BNSF) trades for 8.0x book, it hit 1.1x in 3/2009. Now you have to adjust for the goodwill that BNSF ahs versus UNP (Berkshire takeover premium, but not going to out of laziness) The S&P 500 Utilities sector (Berkshire Energy) trades for 1.9x book, it hit 1.2x in the early 2000's and has not traded below book since 1990. The stock portfolio is marked to market and is burdened by a 0% interest long duration deferred tax liability. this could be worth a discount to book in certain market environments (but it's tough for me to see) hard to see Berkshire's non - GEICO insurance ops being worth < book barring some calamity that impairs broad corporate earnings power, I see 1.6-2.0x book as more likely than 1.0x-1.3x over the long term. I've only been picking stocks for about a decade, but I've never really observed a Buffett premium, seems to me to have always been a Berkshire / Buffett discount that's varied in size. If berkshire traded for a long time below book, with a similar ROE / capital structure to today, I think it would just eat itself until it didn't.

I'm always eager to own good companies I can hold for long term and upgrade from some of my more asset heavy stuff. I've mostly been struggling to get there when I pro-forma for higher tax rates and covid tailwinds becoming headwinds. Probably being too valuation sensitive and have been considering legging into HD, DG, COST, DPZ, etc.

While I think the $53B number might be "fair", Berkshire Energy would probably be one of the most desirable ESG/GARP utility "stories" out there and would probably trade 2.0x+ book, $70-$75$80B+ (forgot that BE's 10-K is out and shows $43B of equity). This doesn't really matter because Berkshire won't sell/spin/whatever. 2.0x book for Berkshire Energy ($72B $86B) and 90% UNP ($120B) are my lazy shorthand "market comps" for those two. Not what I'd like to pay for them, but how I think about them in terms of the overall portfolio and marking everything "to market". It makes the AAPL position, for example, seem a bit less intimidating / daunting in its size if you know that BNSF is almost as big and that he's trimmed/trimming a little.

i mean all the cool kids are doing it. I just bought a smidge more, pretty much replacing trims in the $60's/$70's.

After 3Q the 2nd quarter of over 6% annualized share reduction + continuation in the 1st quarter shows that Berkshire is increasingly comfortable with a ~100% payou ration and capping the growth of excess capital (if the stock price is sufficiently cheap). think we knew this already, but it's always good to get confirmation. Likewise, we could comp BNSF to UNP and get a number of $120B or whatever, but it's also great to see that "pretty much a toss up" language from the GOAT.

we seem to be flipping between inflation and rates (which are obviously related), but one data point re childcare. the cost of childcare (albeit for those fancy enough to have a nanny which is not the general populace) is up 25%+ in DC area (in 1 year) if you're the typical yuppie scum household in our area, a $1mm house pre-covid is now $1.2mm and has 2x the offers/more competitive, and the nanny you were paying $20/hr ($44K/yr if you don't pay under the table), is now $60K/year. these are obviously rich people (or at least high earning people) problems, but there's definitely plenty of covid impacted stresses on the supply chain, whether that be lumber or nannies or whatever. TBD as to whether post-covid sees some mean reversion. https://www.whitehousenannies.com/for-families/salaries-fees/

I very rarely stumble into the macro land as I find ways to lose money in micro land, but the Fed seems to be doing a fine job keeping short term rates low. do they really mind if the 10Y goes to 2% and 30y to 2.5/3.0%? any problems with steep curve? I'm going on 8 years removed from being a bond trader so I don't pay attention to what the Fed wants the shape of the curve to be. the 3 yr yields 23 bps and 3m bills yield 3 bps, repo rates are 0, 3mL is 19 bps. 12mL is 28 bps. [this is fine dog meme]

I don’t think using look through earnings is aggressive, as long as one doesn’t then double count the stock portfolio. What’s more aggressive is to normalize the earnings power for interest rates without any other adjustments. He points out how much of the earning power this is so it’s easy to get rid of/not include. Overall, appreciate his work. EDIT: on second thought, this may actually not be that aggressive in that at reasonable earnigns multiples, you'll get a value lower than the actual cash amount.

Isn’t State Farm is a mutual? owned by its policy holders ; there is not publicly traded stock, right?

PINS is probably my biggest sin of omission. Early additions to Office as covid started heating up, was my biggest sin of commission. I was guilty of viewing covid as a shock that would end and something that companies would simply have to bridge through (so I was very focused on things like contractual cash flow and debt structure), rather than thinking of covid as a catalyst for long term secular changes. obviously the degree of those changes is still up for debate, but it wasn't going on in my head in late Feb / early march when i made some stupid and greedy additions to things down only a little bit, which hampered my aggression during the fattest of pitches. Not buying Pinterest in early April for a very reasonable price ($15 vs $80+ today) I put it on my to do list and never really dug. Should have prioritized it over other things. At the very least, I think the big picture was compelling enough for a starter position. 6x on a 2-3% starter would have been nice. I think it was hard for me to venture out of my comfort zone when I was in the trenches of real estate land and only just starting to recover from a 40% drawdown and giant change in fundamentals (and price) of everything i owned. Sent this to a friend on 4/4

Yea there was some discussion of this in a thread, I was thinking at one point that FAIRX would have to distribute JOE shares or sell, but that hasn’t happened and I ever dug in to find out the details.

i agree. without having ever spoken to the guy, my interpretation of events is that Bruce more or less gave up on managing a public mutual fund portfolio and got a consolation prize for a great run of a big (but heretofore neglected and unsaleable) slice of the redneck riviera. then CryptJOE went nuts and he's redeemed himself on recent performance metrics. I've been long JOE options and have made out nicely, but I don't really see any evidence of Bruce being a capable stockpicker or that he's doing anything at all. you can buy JOE or Fannie Freddie directly. https://www.fairholmefunds.com/reportsmgt 2019 Year End 41% JOE 38% Cash 20% Fannie Freddie 2020 65% JOE 20% Cash 10% Fannie Freddie

the bolded was wrong. if we assign credibility to the apartment REITs guidance (and assume no further degradation), NOI peak to trough is going to be more like 20%. since this post the apartment REITs returned 6-26% vs SPY of 56%, since I bought them the first time around, they returned 30-62%, but the S&P returned 77% (all rough figures, I've bot and trimmed them along the way as they've been volatile) despite the underperformance, I don't think they're super interesting today, own them in basket form in smaller size than peak. I think financing and capital market conditions have been wonderful, better than they ever have been for these guys, and the cities are showing green shoots (and sunbelt is going nuts MAA/CPT), but even assuming full recovery they're not super attractive, unless you give FULL credit for the private market sub 4 cap craziness going on. on the other hand, with single-family housing prices doing what they're doing, the value proposition of an amenitized $2,500 / month apartment is probably being further validated (if you want to live in these areas). and i do think multi-family is one of the few spots in real estate where it is a legit inflation hedge (1 yr lease length, 60-70% NOI margins, relatively low capital intensity (compared to office), increasing land/labor/materials cost increase cost of new supply)

The Russell 3000 endured a 33% drawdown, then went up over 80% from there, and is up by 24% since this thread was started. Market timing is hard. Hope RuleNumberOne is doing well and compounding on the mid 50’s.

yea, I'm adding to duration, bought a 2050 zero @ $55 / 2% just now for a very small portion of my parents portfolio. I try to replicate the duration of a decent bond allocation w/ less than 10% of the portfolio in order to maximize convexity and keep a big slug of cash around, so this means zero's and quasi perpetuals. Right now have about 6% in century bonds of universities (MIT Caltech Bowdoin) and some shorter Harvards/Princetons and am going to average into duration as it sells off w/ 30 year zero's. that 6% probably roughly has duration of 30 ish so 2 pts of duration on the whole portfolio. Total bond index has duration of about 7 so that my portfolio of zero's and centuries should have the duraiton of about a 28% bond allocation that's diversified across the curve. there's a curve bet in there of course, but I'm okay with that. I want the most convexity, least re-investment risk and most deflationary punch possible. combine this with a prepayable 30 yr fixed mortgage and your left long rate vol and convexity (which they just took out at 2 7/8%)

I'm just pulling it off bloomberg. I think we can both agree that rising rates/inflation is not good for owning utility equity which is a low growth long duration asset. But I reiterate that if you see the rate rollover risk with this company as being a dealbreaker, you will see this risk with almost any company. that's your preferred way to invest and I that's perfectly fine, but I'll feel a need to contradict it when you cite it as a reason for not looking at something, particularly when it looks like the exact opposite (ie the company has an opportunity to decrease its cost of debt as high coupons mature, ie the 9% of 2021 issued in 1991 are refi'd and become 3.25%'s of 2050). If the curve shifts 300 bps up, they'll probably still decrease their WA coupon over the next 5 years. If you think the curve shifts more, that's a macro tail scenario. all portfolios of risk assets and bonds would likely suffer from that. I'm not saying that won't happen, but it'd hurt the vast majortiy of risk assets in a big way.

this company has a WA maturity of 16.5 years and a weighted average coupon of 4.5% and is a low spread IG issuer. the weighted average coupon for debt expiring in the next 10 years is 4.9%. I stand by my characterization of your macro view.

LearningMachine is somewhat obsessed with the risk of rolling over debt at higher coupons and has a much different than market view of interest rates. I think most would look at the debt stack here and conclude the opposite. NWN's lowest coupon is 2.82% and highest coupon is 9.0%. Its spreads range from 86 - 150 bps and prices on the bonds range from $101 to $144 because of the well above market coupons. Maturities are well laddered. About 60% matures in 10 years or more. The coupons over the next few years are 9%, 3.1%, 3.5%, 5.6%, 7.7%, 6.5% , 7.0%, 3.2% , 7.0% (that gets you to 2027). I would wager with 90% probability that interest cost will decrease for this AA rated regulated utility company, if not significantly. I admittedly don't know how passing on interest cost/savings to customers works at utilites There is a remote chance he is right and these are below market when they roll, but this is a tail macro scenario that applies to all companies with debt that isn't super long term.

so just glancing at the financials over 2010-2019 years: Revenue / share: $30--->$25 Operating income: $6--->$4.8 NI : $2.7-->$2.4 Divvy 0.43 / q to 0.48 / q it doesn't seem to be growing at all, whereas utilities index (and of course Berkshire Energy) are actually growing. with an additional 10 mins of work it seems like the big underperformance is warranted. Any thoughts Castanza?

Yea, seems delightfully boring way to make 5-7%/year, quasi bond / widows and orphan type stock. Why is it down 40% in the past year and at 2010 prices. This is much more than XLU. I’m assuming it’s a “natural gas is going away” sell-off, but is there something more

Who would have real money at robinhood?* *Watch IBKR go bust now as punishment for my snobbery

This one specifically (and the part 2). I watched a little bit of his live streams but they’re really long. I’m happy for the guy. I hate the whole populist kill the short sellers narrative but this guy is hilarious and got the big things right.

Loved this description. With the DOXXING of DeepF---Value as a CFA, investment advisor, and value investor, does this change your opinion at all? This seems to be a deep value play by DFV, Scion, Chewy guy, combined by some reckless shorts more than a pump-and-dump. Now the charlatans like Chamath, Portnoy, and Elon are piling on. But it started as a really smart deep value trade not a pump-and-dump. Roaring Kitty/DFV is awesome. just watched a couple of videos where he describes his style. nice, humble, student of the game who tonned it and made $13-$40mm+ for himself. to me that's the coolest part of this whole thing.