LC

Dazel, are you valuing PICO on a sum of the part basis? Selling their 42% stake of UCP at 15/share values all of UCP at $275m....more than half of PICOs current market cap and more than twice of their carrying value of UCP. Additionally their canola plant has a 5 year sales agreement with Land o Lakes to sell their canola at market price. Market price for canola oil and meal is at all time highs (source: http://www.canolacouncil.org/markets-stats/statistics/current-canola-oil,-meal,-and-seed-prices) although as you mention actual margins were squeezed recently. I haven't even begun to look at their water business and I'm not sure at what level their canola plant is operating at, although PICO is thinking about opening up another plant. On a quick glance this evening, provided the UCP IPO goes through, I'm thinking PICO is probably worth more than 500m...

I would say I am. 80 pct in my top 5 to 10 ideas and then a bunch of super small positions (mostly penny stocks or odd lot tender arbitrage). I disagree that a more concentrated portolio is less work...I am still reading an annual every day, and trying to come to a rough valuation and buy price.

Thanks hellsten...WTW!

I missed this too. I was apparently too lazy, staying up all night eating pizza and watching old Led Zepplin concert movies on Netflix. :) Funny, I picked up some shares of MJNA when it was trading at 4c/sh...more just to have fun with what as obvious sensational penny stock scam. Shoots up to 40c/share and to atone for the guilt i felt profitting on a scam penny stock I went educating everyone that its just a penny stock scam, don't get your hopes up, etc. etc. Hoefully some of the folks that bout at 20c got out without too much of a capital loss...

I'm going to disagree. If you think he needs to "talk up" to the investing public in order to move the stock price to what you think is a more appropriate multiple, that to me sounds like you either are looking for a short-term trading opportunity or you're not confident in the business model to consistently generate profits. In either case, why are you investing? Wouldn't you think buybacks would be more valuable at these multiples?

Looks like the grocery store has been having a slight sale the last few days. I picked up some tomatoes (WFC) and lettuce (PMI) but just a bit of each...maybe the sale will continue!

Thanks Morgan!

I'm not sure if it's been mentioned, but we also have to consider the competitive advantages of the two firms. Company A might be able to generate higher cash flows given the low capex, but if it turns out to be a tech company that will go out of business in 3 years, then the potential return on capital over the next 20 years doesn't really matter. So I'd invest in whichever company has a better "moat" :)

Berkshire has been investing in "local newspapers" and Buffett has said it is more of vanity investment rather than obscenely profitable investment...but I am thinking I will look at his actions and look past his words ;D So I think the question is, what do we think the newspaper business will look like in 10 years? If the trend we are seeing continues, then the business will be mostly selling digital subscriptions, yes? Whatever type of pricing model they choose, the nuts and bolts of it are that they will not be selling a physical paper. Therefore there is relatively little future capital investment needed, very little distribution costs, and the only major costs will be the cost of generating the content (i.e. staff). So could this be another brilliant move by good ole' Warren? I was looking at Lee Enterprises, which owns about 30 or so local newspapers nationwide. Berkshire has refinanced a portion of their debt at 9% and owns equity as well. I think it's just brilliant. Lee pays Uncle Warren the majority of the profits of their print & circulate newspaper business in interest on the debt. These operations will eventually fade off into the sunset, meanwhile Berkshire retains equity ownership as the digital business picks up with the next generation in these towns and generates recurring revenues. I think if one can pick up these "brands" at distressed or reasonably cheap prices, in 5-10 years they might look like a great investment. What do you folks think?

I'm curious....is it possible for a company (Apple) to take out a line of credit from an international bank in the US, use that money to buyback shares/issue dividends, then pay that bank's division in Luxembourg back on the LOC? This seems too simple to me so it's probably not feasible, but I'm no expert on international tax legalities.

Phaceliacapital, Thanks for reminding me about the tax issue, in that case I am more comfortable. I also understand from a theoretical perspective that if the earnings yield is greater than the interest rate on the debt, it will benefit shareholders. What I am troubled about, or I should say what I do not understand, is the thinking behind the type,s of firms I am seeing partake in this practice. I see a lot of firms with recurring revenues taking out debt to finance buybacks. It is a page out of John Malone's book, but I am curious what happens if these recurring revenues dry up? There seems to be almost no room for error when I see a company like ADT, which was just spun off, taking out another billion in debt over the Q1 to buyback shares at an earnings yield of 20. Have you seen this before in previous market cycles? How have you seen this play out in 5 years time? LC

I would like to know your guys thoughts on debt financed buybacks. A lot of large caps I'm looking at have been financing buybacks with debt. What are the implications of this?

SD has preferreds? Per Morningstar I only see bonds. Edit: found one issuance, SDRXP...I wonder why Morningstar does not list these.

Now might be the time to invest in a capital heavy project: at least that is what the Fed wants us to do via their policies. How often can companies access debt at such low rates? How does deleveraging play into this equation?

Models and bottles! That is, open up a bar next to really depressing/boring workplaces (financial institutions, gov't agencies, etc.)

Wow, great work! Thanks for sharing. If I may ask (and I would never ask that you divulge your secret sauce), where did you get the data to automate this process? The reason I ask is that I had been thinking of doing the same for quite some time, but I couldn't figure out where to get the share count data.

I doubt that...frankly I am in awe of the levels of thrift and practicality you have achieved. I agree with Kraven's words, "More power to you!"

Nate, I've been meaning to ask you this for a while now: why do you choose to invest with a net-net basket approach a la Graham? I am sure you know Warren and Charlie's take on the question. I am curious what the reasoning is behind your choice of investing philosophy. Louis

I think Risk is very difficult to measure accurately. I think it's easy to fool myself into thinking what "risk" is. Permanent loss of capital is a strong definition, but as you can imagine it is a very general definition. The way I define it to myself is that risk is "the potential of a business to lose value".

Simply contact Investor Relations and request that a copy be mailed to your address!

I'm somewhat skeptical...wouldn't their prices be very dependent on the cost of oil/gas? Additionally you are exposing yourself to catastrophe risk (oil spills, lawsuits, etc.).

I don't know which browser you use, but if it is Firefox get the "Nuke Anything Enhanced" add-on. . I use this whenever I want to print portions of a page on the web. It allows you to remove anything from a webpage. You can click on an object, right click and select "Remove this object", and it will be gone until you hit reload. What is nice is that if you remove stuff you can then print the page without the stuff you don't want. To print a single post from this board you could 1) Select the entire post that you want to print 2) Right click and you will see two options: "Remove Selection" and "Remove Everything Else". Hit Remove Everything Else and you will have just that post in your browser window with everything else gone. 3) Then you can print it as you normally would. 4) After you can hit refresh and the page goes back to normal. Thanks for the tip! I will check if google chrome has something like this.

May I ask what prompted the letter to Mr. Buffett?

If possible, perhaps more print options? As it stands, printing will bring up the entire thread. There are times where I would like to print a single post.

I agree with gio...which I believe is what Alice Schroeder said that Warren Buffett did for one of his early investments. He would look at the company, it's historical financials, the competitive environment, etc. and say, "Do I think this company can make 15% next year?"