muscleman

I am not a lawyer so I could be completely wrong, but I felt like it should be common sense for the current shareholder to receive the recovery. I read a story about a guy buying default credit card notes at 1-2 cents on the dollar during 2008-2010 and then try to collect 20 cents. He made a killing. Of course when he buys those papers and recover the money, he is the one to receive the money, not the previous bank who sold him the notes 1-2 cents on the dollar, right? When Fairholme buys the preferred shares at the market price, that price already discounted the potential recovery benefits, so if recovery does occur, fairholme is entitled to it, right?

Interesting. Why don't we try to place bids for 1 cent on the dollar on those failed loans here and then hire collect agency. Maybe we can make a lot of money this way. :D

Can you please elaborate on that?

I am interested in buying some PFICs in my 401k, but I felt bewildered that the following IRS announcement doesn't include 401k. http://www.irs.gov/pub/irs-drop/n-14-28.pdf an organization or an account that is exempt from tax under section 501(a) because it is described in section 501©, 501(d), or 401(a); a state college or uni versity described in section 511(a)(2)(B); a plan described in se ction 403(b) or 457(b); an individual retirement plan or annuity as defined in section 7701(a)(37); or a qualified tuition program described in section 529 or 530. Why would IRA and 401a be exempt from the PFIC issues but not 401k?

Why not call your broker? I am not long PR bonds because after the expected downgrade to junk, the bond did not sell off as I expected, which means it is bullish. I am long BPOP. :) Did you look at OFG? Any reason you picked BPOP over OFG? Have spent some time on both, curious as to your thoughts. No. I am not aware of OFG. I picked BPOP when it was $24-26. I sold recently around $35, and bought BoC, because I think Bank of Cyprus is more interesting at this stage. Bank of Cyprus currently is trading at 2.5 price/pre-provision earnings. And I expect the bank to at least break even this year. It has over 53% of non-performing assets, so when those are all gone, it should trade at 1.2 times P/E, which means the stock has the potential to go up 800-1000%. There is of course risks. They claimed that loan loss reserve + collateral should cover 113% of NPA, but who knows.....

Have you looked at Bank of Cyprus? This is similar to Eurobank except that this should be safer. Wilbur Ross owns 19% of this company. http://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/bocr-at-bank-of-cyprus/

I converted USD into EUR, wired to Fidelity and bought a meaningful stake in Bank of Cyprus. :D

Interesting that he is cutting back on BAC. Probably due to redemptions?

Just to confirm, buying PFIC stocks in a 401k plan should be fine, right? I got confused about the discussion of PFIC and ERISA accounts vs traditional IRA.

Are they allowed to do that? I remember back in 2011, the Greek government bonds got restructured under the UK law. It used to be under the Greek law. I wonder how much difference does that make. Or maybe they will announce again that private sectors holding their euro bonds will be forced into Drachmas bonds, and public sectors will not be affected? ::)

That's possible. I didn't closely track their positions. I realized it is likely a PFIC after I bought, so I don't want to hold this for long term anyway.

Similar to Frommi, I sold SEC today. The rational was that when I first bough SEC last month, the USD.CAD rate was above 1.27. Now it is only 1.21, so the NAV per share in CAD should have dropped from 300 to 280. Then the share price rised from 169 to 180 CAD. Therefore the discount has narrowed quite a bit. :) I have some other investments that I've been watching for. Maybe I will start buying some soon. :)

Why buying BRK.B right now? Is that a defensive move? I can't see the reason behind it...........

Thanks! I looked through it but seems very hard for me to understand. It is similar to MSTX that Green Wood likes. A lot of cash, a likely promising drug. I think investing in pharma startups is more like call options. You can either make a lot of money quickly or lose a lot quickly. Thoughts?

Hmm.. Correct. Also Greece is not supported. Do you think Fidelity is ok for a hedge fund? I know fairholme fund uses Fidelity. I heard IB has an automated reporting sheets that makes hedge fund reporting to clients super easy. Not sure if it is true and not sure if Fidelity has that same thing. Why use Prime brokers? They will be much more expensive than discount brokers like Fidelity and IB. What kind of advantage are you expecting from them?

Could you tell me what concerns you have with IB for hedge fund trading?

Does anyone know what this company is? :P Green Wood investory's 2015 Q1 letter: http://www.gwinvestors.com/Main/Blog/Entries/2015/4/2_First_Quarter_Letter__Continuing_to_Stack_the_Deck_files/2015.04.02%20Q1%202015%20Letter%20to%20Investors.pdf Given frothy valuations often collapse at the onset of the first piece of bad news, we believe the outlook for biotech blowups is turning up. Just yesterday we started buying shares of a recent blowup, as traders have lamented the setback the company’s latest stage cancer drug has had, even though we don’t think the program is six feet under already. The most exciting program in the company’s pipeline is a compound that, if early evidence repeats itself in subsequent data we will receive later this year, could be on a path to being able to effectively constrain energy to nearly any solid cancer tumor. Yes, it sounds like a moonshot, but one that we’re getting for free. The company’s medical efforts are run by the former head of Genentech’s envied (and later acquired) cancer programs of Herceptin, Tarceva, and Avastin. Given our limited downside over the next year, floored by the company’s healthy cash position, we are quite happy with the price we’ve paid for this moonshot pipeline of cancer drugs with a very able manager overseeing their development.

What does prime broker mean?

Curious how you rationalize currents prices of say, BABA or AMZN? Do you run some sort of DCF out many years, assuming the companies will grow into their valuations and still give you sufficient safety in your investment? I'm not looking to attack, genuinely curious as to the thought process :) See AMZN thread, I have elaborated my thinking many times there. BABA is also similar, but more growth and lower margins (as % of GMV). I think once they get their market share, they are going to take advantage of the associated network effects to increase the margins to more "normal" levels. Btw, next year BABA's GMV in china is estimated to be 80% of WMT's GMV worldwide next year. How would you compare BABA with Softbank? I own softbank because I wanted to own BABA.

muscleman, I have always wondered... You are not the guy in the picture, are you?!?! ;D ;D Cheers, Gio Nah!!! I am actually this guy: ;D https://encrypted-tbn3.gstatic.com/images?q=tbn:ANd9GcSDs4itqTsKv25DS3OWJ1XEVJ0_TJe-5aPtEpqjtuttxkD15gCqtA

I used to sleep 8-9. Now that I am 30 years old, I could only sleep 7 and sometimes 6. I found that if I exercise a lot during the day and be careful with food and drinks (avoid coffee or ginger after lunch), I could do 7.5.

Does this imply anything?

I believe that would make your entity a CFC (Controlled Foreign Corp), which is another can of worms. Also the whole scheme just sounds too good to be true, so it probably is. I mean, you probably wouldn't qualify for mark-to-market treatment at all, since your holding isn't really a marketable security. But if I make it listed in a exchange, with only two shareholders---my friend and I, and we trade back and forth for a few shares per month to generate trading volume, doesn't that make it qualify for Mark to Market? ;)

Many thanks Eric for pointing out this. I was reluctant to move past 401K money to rollover IRA partially for ERISA status. So if you have the rollover IRA and transfer the money further into a traditional IRA, does that get rid of this ERISA status? How about rollover IRA to roth?

I have a new thought and would like to get an opinion from smart folks like Ericopoly and other US super investors on the matter of PFIC taxes. Let's say I start a foreign tax exempt closed end fund with my friend. NAV is $100 and fund share price is initially $100. After year 1, fund share price still $100 but NAV $130. I choose mark to market election on the PFIC form. I pay no tax. After year 2, fund share price still $100 but NAV $180. I choose mark to market election on the PFIC form. I pay no tax. ......... After 40 years, fund share price still $100 but NAV $5 million. I choose mark to market election on the PFIC form. I pay no tax. Then in year 41, my fund buys back my shares at $5 million. I pay the 20% long term cap gain tax on the difference between $100 and $5 million. Am I missing something? This seems pretty tax efficient to me. Of course this is pure theoretical as the fund share price will likely go up over the 40 years instead of staying at $100, but suppose it does, it will be really nice?