benhacker
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Posts posted by benhacker
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Great thread. Thanks for the pointers pupil. You don’t want to go wild with these, but the convexity is real... damn.
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Yeah, totally agree that recovery are garbage. I would not be buying distressed with hope of recovery in the general case. My bet on Denbury is that they do not file for a variety of reasons, but agree with you point wholeheartedly.
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Danbury bonds are interesting to me.
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Blast from the past... about 7 Fibrek threads, so I'm putting this here.
https://www.sec.gov/Archives/edgar/data/1393066/000119312519256452/d813207d8k.htm
Appraisal Rights process done in Canada for Fibrek investors... and the court agrees the acquisition prices was way below fair value:
ITEM 8.01OTHER EVENTS.
Effective July 31, 2012, we completed the final step of the transaction pursuant to which we acquired the remaining outstanding shares of Fibrek Inc. (or “Fibrek”), following the approval of Fibrek’s shareholders on July 23, 2012, and the issuance of a final order of the Quebec Superior Court in Canada (the “Superior Court”) approving the arrangement on July 27, 2012. Certain former shareholders of Fibrek exercised rights of dissent in respect of the transaction, asking for a judicial determination of the fair value of their shares under the Canada Business Corporations Act. For additional information, see Note 14 “Commitments and Contingencies” in Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2019.
On September 26, 2019, the Superior Court rendered a decision fixing the fair value of the shares of the dissenting shareholders at Cdn $1.99 per share, or Cdn $30.6 million in aggregate, plus interest and an additional indemnity, for a total currently estimated at approximately Cdn $43.9 million ($33 million, based on the exchange rate in effect on September 26, 2019) payable in cash. Of this total amount, Cdn $19.3 million ($15 million, based on the exchange rate in effect on September 26, 2019) is payable immediately. The payment of the remaining portion of the consideration and its timing will be dependent on the Company’s decision to appeal, as well as the outcome of such appeal, if any. The Company is reviewing the judgment and evaluating its options. As previously reported, we have accrued Cdn $14 million ($11 million, based on the exchange rate in effect on September 26, 2019) for the payment of the dissenting shareholders’ claims.
Pretty stunning, but most on this board felt it was a lowball at the time, and Fairfax/ABH (RFP)'s actions were super shady... and Fibrek board was ... something bad. :)
First appraisal rights situation I had followed loosely, so I wanted to follow up.
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Thanks for the kind words. After 15 years here, I’m glad I made a few friends and few (hopefully) enemies. ;)
I still miss board posts by Bsilly... but I’m dating myself....
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Spek, I'd be curious which of us long term investors, with our own money, would be ok to lock up $$$ in private companies where we are minorities?
In principal, not different than how we *should* think about investing. In practice, quite different IMO.
private businesses (even vs. truly illquid ones) should trade with a liquidity discount....
I have 1% of my assets in a liquidating co (non-traded completely) and 3% in firm(s) that could (maybe) become unquoted per the above rule. I'm a very long term investor, but for my clients, it's hard to say "yeah, you can move your money, but XYZ Co, that shit is now private..." :)
Certainly, individuals can do what they please, but I think most of us would rightly hesitate giving up tradeability...
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Make your voice heard.
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Castanza, there is no transparency. AS RB notes, essentially entire Corporate Bond market is OTC... Level II in accounting speak.
the FINRA data *is* the public domain data... used to be way worse.
FYI, this is the inefficiency that Bloomberg built an empire on. :)
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Thanks for that summary
Another interesting comparison would be Buffett's investment in USG equity which was held through their asbestos associated bankruptcy process. The equity was made whole.
It could have been purchased for under $5 and eventually peaked post bankruptcy to $120
Actually I think USG is instructive for another reason. ***after*** emergence from bankruptcy you had plenty of time to buy below $20.
My 2 cents at least. WR Grace another CH 11 reorg that worked, but I think these are vanishingly small as a % of situations.
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I think Bizaro and TCC have somewhat missed the key point.
#1 - as noted, the TIPs bonds pay a coupon which varies with inflation effectively. This coupon has been positive and rising recently
#2 - it is not *rates* that effect the value of TIPs like other bonds... it is the "real" rate expectations (demands?) of buyers and sellers of TIPs.
Here is a table of 5, 7, 10, 15, 30 year TIPs *real* rates (aka, the rate of returns, after adjusting for the coupon *and* inflation that buyers are achieving when buying TIPs). Note this REAL rate has risen while nominal rates have also risen this year... but that is not how it in fact must work, so you should not confuse the two.
To read the table, a 7yr TIPs buyer on Jan 2 of this year was expecting a real return of 0.42%. Now that same buyer is only willing to pay up if they achieve a 1.04% rate of return (again, after inflation).
that is the equivalent of 0.6% / year in "rate rising" duration effect. This is non-trivial for a 7 yr bond... roughly I would guess that would have moved a price of the 7 yr bond purchased Jan 2 down by 3.5%... so a buyer probably lost money this year.
Hope that is clear. Note nominal and real yields do not have to move in tandem.
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If their app didn't suck as much as it does I'd look back at my order history. But I can't figure out how to find it.
You are a smart and very computer savvy judging by all your posts here and the fact that you have a blog, newsletter and banking website). Surely you are exaggerating. You can generate an annual statement in account management with a few mouse clicks / screen touches and find the trade in question within a few minutes. Maybe you don’t want to spend the time, but I’m 100% certain you can figure it out and 99.9% sure that you already know how to do that.
The guy telling us that the IPMI module on Super Micro servers is junk doesn’t know how to find back a trade on a website? Come on. I graduated in computer science but I had to look up IPMI on Wikipedia :P .
But this is getting off-topic. Apologies.
Chuckle... Love me some Oddball, but +2. :)
Also, for NZ stocks at Fido, don't they take a forex spread as well? It's embedded (or should be) into how you think about Commission. IB allows you buy and close forex position at the same time in spot (1-2 pips usually)... Fido charges the below:
Currency exchange feesIf you choose U.S. dollars as the settlement currency for your international stock trade, a foreign currency exchange fee (in the form of a markup or markdown) based on the size of the currency conversion will be charged when the foreign currency exchange executes.
Amount of currency exchange in U.S. dollars Currency exchange fee (basis points)
> $1M 20 bps
$500–$999K 30 bps
$250–$499K 50 bps
$100–$249K 75 bps
< $100K 100 bps
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Just pause and think of what ya'll are saying comparing IB's commission structure to the above at Fido... but not mentioning this forex fee?
Crazy talk.
It's like Bond commissions when you leave out other brokers charging markups... "don't include the markup it's not a real commission". <broker somewhere salivates>
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Fun fact from the NY atty gen’l. Coinbase has a prop desk that actively trades against its clients. 20% of all trades executed on the Coinbase platform were made by their prop desk. Just burn crypto down and start over. I’m serious.
No defender of Crypto... but this criticism is odd.
Dealer markets (including Forex, and Bonds) essentially operate this way as well.
Given the average Crypto customers... wouldn't you want to take the other side (on average)? ;-)
Does look like Crypto is coming for a reckoning though. The mating of Wall Street and Silicon Valley will need to be burnt down to a stump and start over. The corruption is endemic in many places.
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Don't the Series E preferred have a put feature with DC.a at $2? Does that concern you regarding dilution as a common owner?? I own a tiny slice of the D series preferred, so not following closely.
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Yeah, cool story.
There is no guarantee that it will ever reach positive expected value. Just the fact that the jackpot/prizes are getting bigger might also induce more and more ticket buying, and you never know how much tickets will be sold.
That's a good point. However, for Lotto Max specifically, I have checked it in retrospect enough times that I'm reasonably confident the expected value does end up positive, and that is partially for psychological reasons as more tickets are not necessarily sold as the pot goes up, because the headline jackpot stops changing. The way Lotto Max works is the jackpot reaches a maximum, and then they keep adding additional $1 MM prize jackpot draws as more is wagered. I think that reduces additional players. The expected value is very sensitive to sharing the big jackpot (usually $60 MM).
I think it's interesting, but cheerfully admit its totally useless information. You'd need to buy tens of millions of tickets to ensure winning, and if you bought too many that would change the expected value as you mention. And that's aside from finding tens of millions of dollars to wager and being able to physically buy that many tickets.
Yeah, i think the amazing thing about this story was that two different lotteries had such low thresholds for waterfalling that made the economics for big pools reasonable for "small dollar" players to basically make the bet be risk free. Interestingly, they basically immediately started crowding each other out by betting more heavily.
Fun story.
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Who would trust these guys?
They have a stated goal of "10+ inflation". Either I'm misunderstanding their intent or it's pure marketing. None of their funds have achieved this goal. As of Q4 2017, let's look:
Partners fund since inception: 10.58% vs 9.91% for S&P 500. This is also before taxes and crazy drawdowns.
Small cap: 11.02% vs 9.80% for Russell 2000. Not bad but not meeting their stated goal either.
International: 7.89% vs 4.97% for EAFE. Not bad at all. However, a lot of that is due to out-performance when the fund was new It's under-performed peers and ACWI (close to EAFE but not quite the same) for 15 years.
Global 9.61% vs 11.66% against MSCI World.
So overall we have no funds meeting the 10+ inflation goal (some being managed over decades) and none with all that superior performance against respective indexes.
would you rather have them change their yard stick if they don't meet it? This is a funny criticism to me.
the logical extension is that you can only state an investment principal on performance *if* you are meeting the criteria? Seems a little self-referential to me... and dishonest.
Criticizing performance is certainly fair game, but criticizing an unchanging and logical goal seems silly.
My two cents.
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1) Has anyone bought them from IB?
2) Any thoughts on whether to buy a zero with 2 year maturity with different coupons?
3) Is everything considered interest, price appreciation and coupons? Has your TPA been helpful?
4) I've heard that if you own Zeros, you still have to pay taxes even if you have not received any coupons. Thoughts?
#1 - yes, but I have only bought long duration zeroes... was easy though.
#2 - I think you just buy the cheapest... they are probably are within rounding, so look to the lowest spreads...
#3 - What is TPA? bond appreciation/discount is accreted to income on 1099's I believe... so it's all interest.
#4 - Correct...
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+1 to everything Writser just said. At $10m I feel hamstrung a lot. Perhaps half of that is psychology, but I've had the market run away from me on 3-4 names in the last two years after placing *starter* size orders.
My 2017 was +14.5%. Too hedged, too cautious.
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Not sure... seems like the truth would have to lead one toward a company with something in the crypto space.
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They don't do it, but you can set up a 401(k) Trust (paperwork...) and then have the Trust held at IB.
I believe this option is challenging as you have to create a "real" 401(k) plan, and administer it, but there are some ways to do it on a shoestring. I know someone who does this, but I have not / do not myself.
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Just FYI that 13F securities exclude OTC/PINK/Grey issues... but it's a nice link.
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More than 3x book... nice.
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I'm near the sweet spot in Oregon and will be staying with family for the "event".
Oregon is a small state population-wise and the totality is in the rural areas generally. It is going to be a shit show I'm pretty sure.
Supposedly 1m+ people coming to a state with ~4m folks and they are going to go hang out in towns with two lane roads and infrastructure made for 25k people.
Search and rescue guys I know are gearing up for forest fires getting started by city folk who don't know how to camp and I have heard some hospitals are asking workers to stay home since no ambulances or people will be able to get to hospitals anyway (!!).
Hopefully the spectacle will equal the minutes of darkness. ;)
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Race, be sure you are counting "common" book, you can't include preferred equity (or if you do, the number means something else).
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I have never had the stability / login issues you raise (11yr on platform). Are you using TWS or webtrader? TWS is what I use.
Deep F______ Value
in General Discussion
Posted
Thanks for sharing. Good read, and he seems like he will do well (and already has). Great statement.