muscleman

No NAV per share in that report?

Why do you say Cheers after every post, good news or bad news? Does this news sound like a good news? If Cohen doesn't testify, it is more likely or less likely to get him in jail? I am a bit confused. "Cheers" is just the tagline on the posts I have used since the day I started the board. I think I know better than anyone on here what it means if Cohen testifies or not. Cheers! Dang, muscle, you're messing with Eric in another thread and now with Sanj? You got some cojones. hahaha Haha, I am just making some jokes here. Please let me know if anyone feels upset. :)

Really? I don't think so. I use it from time to time, and the foreign commission depends on the exchange. For example, when I bouht stocks in Italy, I paid 19 Euro as the commission. Regarding forex fees, I think it totally. I could only hope that in the future when I have more money, the rate goes down. I think when it is 200k or more per trade, the forex fee decreases from 1% to something like 0.2%.

I am not using my explanation to justify purchase of AMZN or CRM. I am just trying to explain what is actually happening with these pumpers, and why their overvalued price may continue to be overvalued for a few more years. On the other hand, if we can find a fairly valued or even undervalued company that may kick off this kinds of boom/bust cycle, then it will be a great time to buy. If this cycle does not get kicked off, we lose no money. If it does get kicked off, we may make a lot of money. I have a 7% position in NOV, and I am investigating more to see if NOV fits this boom/bust cycle.

Now, I know you have powers of seeing the future with your $9 forecast on MBI, so now I worry that you are confusing a vision taken from one of these spirit talks with events already passed. This worries me a little given that I truly know nothing about SD. In truth, to date I have not purchased any calls on SD. Back to the "argument" of mine, I continue to stand by the definition of "future", and that all present actions of management are incorporated in a past future. I grew up on the words of the great philosopher Yoda, who effectively said "difficult to see is the future, always changing it is". Buffett talks about one foot hurdles -- he knows we can only make an estimate of IV, thus one needs to be WISE about what to throw in the Too Hard pile. Too hard to make a reasonably accurate prediction! Oh, my apologies! I thought you bought some SD leaps, but after I flip back to the previous two pages, I found it was tombgrt who bought the leaps. :P Yeah, I do have a $9 forecase for MBI. But given that I sold my MBI around $10 one week right before the settlement, I kicked myself really hard about that, so this time the forecast could be wrong again. :P If you view the IV in this way, I think I kind of agree with you then. This means companies like AMZN and CRM will fall into the too hard pile, because it is very unlikely to figure out what kinds of acquisitions they will make, at what price, and what will their stock's multiple be at that time.

Fidelity can work for buying Greece stocks. I am surprised that IB could not do that. But Fidelity's forex fee is 1% per trade, which is very expensive.

Why do you say Cheers after every post, good news or bad news? Does this news sound like a good news? If Cohen doesn't testify, it is more likely or less likely to get him in jail? I am a bit confused.

Eric, are you arguing that if a business is trading at 100x IV, it doesn't change the future IV if it acquires another business trading at 0.5x IV, or 10x IV? The other question I have is why did you just buy ITM LEAP for SD? I remember not a long time ago you mentioned that you did not understand drilling a hole into the ground, so you would not touch companies like SD?

I disagree. IV doesn't change. Your perception of IV changes along the turbulent path of discovery. You keep trying to predict the unpredictable, and blame it on the IV of the business rapidly changing. No. To get the IV prediction accurate with a higher batting average, and thus fewer investment mistakes, stick to businesses that are more predictable. (that's a "Duh" comment). I guess that by definition of the term "predictable business", you then realize that your IV number is a "prediction of the business"... well, more of the obvious. I would say IV changes in some cases and doesn't in other cases. For example, due to the fact that AMZN is trading at extremely inflated multiples for prolonged time, it is able to issue a small amount of equity to do a lot of things. The IV increase whenever it issues the equity at such extremely inflated multiples. You can run some simple math. Suppose AMZN's book value is $10 per share, and it issues equity at $200 per share and doubles the share count, what is the book value now? It is $105 per share! Who can create value faster than this? Buffet clearly cannot! ;) Then if the market thinks OMG, AMZN is much cheaper now than before, buy a ton! Then the stock price will jump to maybe $400. Those kind of companies' IV has little to do with BV and thus the effect on IV is much smaller. It's substantial but I don't see how they could exploit this forever. Do you have examples of extreme cases that were able to double share price a few times? I doubt they are out there and if they are it simply won't be for the capital injection but market perception of the company / simple momentum. OT: Bought some ITM SD leaps. Is CRM not a good example? They are making reckless acquisitions, so eventually they will go really bad. But assume they can issue shares at such extreme multiples and have our champ ERICOPOLY on the board to manage all the acquisitions, won't you agree that over the past few years, their IV would be growing? My point is, when these kinds of ridiculous companies trade at 100x IV, and they issue shares to acquire companies trading at 0.5x IV, doesn't this increase their own IV significantly? Oh yes of course. But that is assuming they actually do something valuable (even if overpaying) with the cash they get from issueing new shares. I assumed your hypothesis stopped after they issued shares. So they just hoard cash or use it for internal capex. Take a look at CRM for example. They keep acquiring smaller companies, and each quarter, Benioff brags about another "Incredible", or "Monster" quarter because of the revenue growth. Normally this kind of companies won't just issue shares and hold the cash. They would issue shares to acquire smaller companies. My hypothesis does not stop because this is a continuous process. After they issue shares and acquire smaller companies, their revenue grows and their share prices goes up. Then they can do this same thing again and again. Eventually the boom will turn into bust because they can no longer find such smaller companies to buy to justify the growth, or because the smaller companies trade at higher multiples as well, or some crisis happens and their share price tanks.

I disagree. IV doesn't change. Your perception of IV changes along the turbulent path of discovery. You keep trying to predict the unpredictable, and blame it on the IV of the business rapidly changing. No. To get the IV prediction accurate with a higher batting average, and thus fewer investment mistakes, stick to businesses that are more predictable. (that's a "Duh" comment). I guess that by definition of the term "predictable business", you then realize that your IV number is a "prediction of the business"... well, more of the obvious. I would say IV changes in some cases and doesn't in other cases. For example, due to the fact that AMZN is trading at extremely inflated multiples for prolonged time, it is able to issue a small amount of equity to do a lot of things. The IV increase whenever it issues the equity at such extremely inflated multiples. You can run some simple math. Suppose AMZN's book value is $10 per share, and it issues equity at $200 per share and doubles the share count, what is the book value now? It is $105 per share! Who can create value faster than this? Buffet clearly cannot! ;) Then if the market thinks OMG, AMZN is much cheaper now than before, buy a ton! Then the stock price will jump to maybe $400. Those kind of companies' IV has little to do with BV and thus the effect on IV is much smaller. It's substantial but I don't see how they could exploit this forever. Do you have examples of extreme cases that were able to double share price a few times? I doubt they are out there and if they are it simply won't be for the capital injection but market perception of the company / simple momentum. OT: Bought some ITM SD leaps. Is CRM not a good example? They are making reckless acquisitions, so eventually they will go really bad. But assume they can issue shares at such extreme multiples and have our champ ERICOPOLY on the board to manage all the acquisitions, won't you agree that over the past few years, their IV would be growing? My point is, when these kinds of ridiculous companies trade at 100x IV, and they issue shares to acquire companies trading at 0.5x IV, doesn't this increase their own IV significantly?

I disagree. IV doesn't change. Your perception of IV changes along the turbulent path of discovery. You keep trying to predict the unpredictable, and blame it on the IV of the business rapidly changing. No. To get the IV prediction accurate with a higher batting average, and thus fewer investment mistakes, stick to businesses that are more predictable. (that's a "Duh" comment). I guess that by definition of the term "predictable business", you then realize that your IV number is a "prediction of the business"... well, more of the obvious. I would say IV changes in some cases and doesn't in other cases. For example, due to the fact that AMZN is trading at extremely inflated multiples for prolonged time, it is able to issue a small amount of equity to do a lot of things. The IV increase whenever it issues the equity at such extremely inflated multiples. You can run some simple math. Suppose AMZN's book value is $10 per share, and it issues equity at $200 per share and doubles the share count, what is the book value now? It is $105 per share! Who can create value faster than this? Buffet clearly cannot! ;) Then if the market thinks OMG, AMZN is much cheaper now than before, buy a ton! Then the stock price will jump to maybe $400. Then they can do this game again and again and the book value will increase a lot consistently. For other companies, if the stock price is distressed and it gets some liquidity issue and is forced to issue equity, the IV will drop a lot, depending on how dilutive it is.

C’mon, beerbaron! That’s exactly Mr. Market’s thesis… There is always a reason why Mr. Market gives you an opportunity! And a repricing is never easy to foresee… What you can and do know with FFH is the price you pay and the value you get! Let a repricing unfold: I will average down gladly! ;) giofranchi It's not a thesis, the actual value of FFH went down with the bond portfolio. I like to anchor myself at a specific price/BV not a dollar value. I'll gladly buy a shipload at 90% of Q2 BV tough! BeerBaron The actual value of FFH will fluctuate a lot... Will go up and down... But I don't really care. What I care about is very simple: a company, that has increased BVPS at 20% annual for 26 years, has almost gone nowhere for 3 years now. And in the meantime it has done everything right. Someone believes they have made mistakes... But I disagree. I would have done exactely the same! And I don't think we will have to wait a lot more, to see BVPS increase very fast again. That's why I have no doubt that any price below $380 is great value! giofranchi I am not sure if they have done everything right. They shorted the SP500index since 1040, and it is over 1610 now. Regarding their largest equity positions, RIMM may do fine, but SD is quite worriesome to me. Why do they support TW, one of the greatest shareholder front runner? That is still puzzling to me. Firing TW costs shareholders 150M. Also I have no idea if the type curve is correct for SD. Its first year decline is over 76% but can only recover 25% of well cost? That means they have to make rosy projections for the remaining 9 years to justify the IRR of 40%. Of course, you could argue that SD and RIMM investments only account for less than 1% each of the total portfolio, but isn't the equity positions the reason to long FFH? Any insurance companies, be it AIG or White Mountain, they can all buy bonds and get 10% ROE. It is the equity positions of FFH that makes it stand out of the crowd. FFH bulls, please correct me if I am wrong. I have not spend extensive amount of time to study FFH so please let me know what I am missing here.

Thank you! I like his idea of liquified petro-gas as well. Which stock is he talking about? Is it Navigator Holdings? It seems to have very illiquid trading in the OTC market.

I went to 3rd point's website and found that historically the stock price trades at a 10% discount to NAV even in good years like 2007 and 2008. Do you know any reason? Is that typical for closed end funds?

Right. Soros will likely not buy a struggling company with a liquidation thesis. However he does pick stocks. If you read his books, you can see he mention individual company names. He only stopped picking stocks when his fund grows too large, and at that time, macro bets happens to be doable as the exchange rate starts to float freely. But he said that his record of currency bets is not as consistent as stocks. On the other hand, Soros DOES look for margin of safety before he bets a stock.

I am reading George Soros' books again recently. What didn't make sense before started to make sense now. SPG is in the boom/bust cycle but SHLD is not yet in it. The low interest rate caused yield stocks like SPG to fly high. The more overvalued SPG becomes, the more shareholder value they can create simply by issuing new shares. I got that part figured out only recently. Yes. If they are trading at 2x book value, and they issue new shares, this will INCREASE intrinsic value per share. As the intrinsic value increases, if the share trades at the same premium, the share price will continue to fly high. If the premium increases and they issue more shares, that would create even more intrinsic value. This is a perfect boom/bust cycle. SPG is in the middle of the cycle, but I am unclear if it is near the top yet. If I had understood this a few years earlier, I would have bought SPG to participate in this boom/bust sequence. Right now there is no margin of safety to do this. Note that even when George Soros wants to participate in a boom/bust cycle, he would like to get some downside protection. I think this is quite similar to Buffet's buy a wonderful business at fair value philosophy. :) Regarding SHLD, it actually belongs to another category of stocks that Soros may like, which is that the share price drop does not affect fundamentals, and it is extremely hated. Note that Soros believes normally share price DO affect fundamentals through various ways like buybacks, share issuance, credit rating agency's reports, company's morale etc. Traditional value investors do not believe share price has anything to do with fundamentals, but that seems wrong to me.

http://www.nasdaq.com/article/national-oilwell-slips-to-strong-sell-analyst-blog-cm254127 Zacks downgrade to strong sell. This is a bit weird to be hated as much as a strong sell by analysts. :o

This is hilarious! :D

Hi Sanjeev, I am surprised that I am a hero member now. I am still relatively inexperienced. I asked a lot of questions in various posts so I could learn from other members, and I got confused why I became a hero member. I think this could be misleading to new members because if they see my posts and see I am a hero member, they may treat my opinion more seriously, but in fact I may be even less experienced than those new members, or some elder members who don't post a lot. Perhaps we should set a bar here and only manually promote someone to hero member if they have a few good investment ideas that worked out well?

During the financial crisis NAV reached a maximum of $10.02 on 18th June 2008, before decreasing to a minimum of $5.83 on 22nd April 2009 (see files in attachment): a -41.8% loss. So, Mr. Loeb definitely did not perform well during the financial crisis. He was not alone! :) giofranchi Not many people did well during that crisis, though I heard that event driven funds tend to have less correlation to the market. So in 2008, this fund was trading at a premium to NAV. Since then, it was trading at a discount to NAV. This is interesting because I thought all close end investment funds trade at a discount to NAV. BTW, regarding your thoughts on EXO, I doubt if they will hold Fiat forever. They are long term investors, but they do get new investments from time to time. They mentioned recently that they just found a new investment to allocate a large sum of money to. Does BRK hold KO and AMEX and GEICO forever? It seems yes to me too, but this doesn't mean they can't do well with this strategy. If a business has 10% ROE, and I can buy at 50% of book value, then I get 20% of return per year forever. Is that bad? It is not easy to dump this one and find another business that returns 20% per year. :)

Is there any way to find the historical NAV of this fund? I see the share price dropped to as low as $3.4 in 2009, but their 2009 Q1 letter said they lost only 2.2% versus S&P's 11%. I guess the NAV discount was huge at that time, but I would like to check if Dan Leob did a good job preserving capitals during that period. Overall, I think it is a very good idea to allocate a good chunk of the portfolio into event driven funds like this one because its performance is usually not as tightly linked to the stock index.

I'm always writing puts. I am short puts for May 31, June 7, June 22, and July 20 expiration dates. At various strike prices I am short puts on CF, AAPL, INTC, EMC, BAC, NOV, DTV, CHKP, COH, ORCL, MDT, STRZA, HRS, DELL, and CSCO. That is quite a collection of put shorts. :) Do you not worry about missing the upside for these stocks?

I heard that nowadays more companies use consolidated accounting for the subsidiaries. Will this inflate the EPS, which makes the Dow even more expensive? With that said, you mentioned if you saw something cheap, you would still buy it, right?

The current social signs does look like a warning, but I am curious how many value investors were calling for the top from 1991 to 1999? :) I think value investors tend to sell too early, and buy too early. My gut feeling is that the market will have a short dip to scare all these Common Man investors out, and then start to rally strongly after that. Then when these Common Man investors realized that the market has gone up so much after their panic selling, they got back into the market with a mood of revenge and hatred. :)

Why does this link only have the first 4 pages? It says there are over 100 pages. I am interested in its Marvel technology idea. :)