ItsAValueTrap

Why don't we just compile all the picks into a Google Drive spreadsheet? It's easy to pull real-time quotes into such a spreadsheet.

1- The real problem with gold miners is that the management teams are pretty bad. Some of them have reasonably good management teams. However, even those guys are playing the game where they use their overvalued stock to roll up other companies (e.g. Goldcorp). So even if management is rational, the stock is overpriced. There's a reason why these guys aren't buying back their shares. 2- Some ways to play gold: Short leveraged ETFs. Really, the idea here is to short leveraged ETFs in general. Their transaction costs are a little ridiculous and they have to trade every day. Long NFD.A - You get a portfolio of speculative junior mining stocks. Management compensation is very reasonable and this company is definitely off the radar. You can go to archive.org and look at their old website. 3- There's a reason why Buffett hoarded physical silver instead of buying silver miners. I think he rightfully figured out that mining stocks are way, way too hard. *Though Buffett did buy Cliffs (CLF) at one point in time. Cliffs may have owned steel mills back then.

Is suitable sand plentiful? Also, does the distance between the mine and the customer matter a lot? To me, this seems like a questionable macro play on shale gas.

I've written about Malone's cable strategy here: http://wp.me/p1mOGr-MF The general idea is to operate the assets well and to turnaround other poorly managed cable companies. Malone sold a few LBTY_ shares while LMCA has been buying Charter shares.

I was thinking if one of the big tech companies (Amazon/Google/Facebook) wants to get into the payments business. They can acquire one of the payment/card networks and will mount a fairly serious challenge to the rest of the industry. (they have more product/technical skills to come up with new ways of payments or adding functionality on top of the existing payments network) Having purchase data (even if anonymized or on an aggregate level) can also help their existing businesses, especially for advertising. Both Amazon and Google got into the payments business. Google Checkout gained pretty good market share. Then they exited the business!! My guess is that they were getting killed by fraud. Or look at Square... very popular, users love them... bleeding money. I suspect that Amazon might also be losing money. It's hard to tell because Amazon doesn't break it out. But it is very easy to lose money in the payments space. The barrier to entry is fraud. The survivors are the ones who didn't get killed by it (e.g. Paypal, Visa, Mastercard, Amex).

Visa probably has a stronger moat than Coke. Fannie/Freddie used to have a good moat, but management screwed that up.

CRM has a wonderful business and makes amazing software. It is arguably overvalued. (Let's assume it is overvalued.) (A) If you put in more elbow grease, you can find overvalued companies where the underlying business is really awful (or will be). (B) Or, you can find frauds. © Or, you can find frauds that don't report insider selling. (e.g. like the pump and dumps that Jordan Belfort of The Wolf of Wall Street did.) I shorted CRM in the past. To me, it is a mistake because I could be doing A, B, and/or C. I have 20+ short positions doing A/B/C. B is the easiest for me to find, then A, then C.

Hong Kong has had Chinese frauds too.

Here in Canada we don't really have the perverse government subsidies. But private education exists because they are selling a dream and some people think that they can buy themselves a job after paying the ridiculously expensive tuition. I don't think that the students get a very good deal at all... yet they will attend a private educational institution. The business model works without government subsidies.

1- I don't really have a problem with the Christmas bonus described in the article. The real problem is that CEO can find creative ways to enrich themselves in ways that don't show up in regulatory filings. 2- There are some CEOs which openly steal from shareholders in massive multimillion dollar deals. Here is an interesting piece on NNVC: http://seekingalpha.com/article/2010691-nanoviricides-house-of-cards-with-minus-80-percent-downside-strong-sell-recommendation

1- Looking at this from a different angle... "science project" stocks are a really good way to scam investors. Because it's a science project, you can promote the snot out of it and make overly optimistic projections about the future. Most people don't understand the science so they can't figure out if it's BS or not. Some people just want to gamble and that's the target market for this type of fraud. Because the science is uncertain, it is really really difficult to charge insiders with fraud. Were insiders lying or were they merely overly optimistic? It's hard to prove beyond a reasonable doubt that insiders were clearly lying. 2a- I would consider underwater mining to largely be a "science project". 2b- Robert Friedland has promoted underwater mining in the past. He is technically a convicted felon. Steve Jobs hates him. He is an environmental villain. He is an interesting character. He also happens to be a billionaire. 3- Is Ivanhoe Energy's proposed technology viable and have a good shot at being economic? That's something you should research. 4- I think a lot of companies have been working on ways to *economically* convert heavy oil to lighter oil.

Certainly there are risks involving such companies. Here is a blog that might be interesting: http://www.chinalawblog.com/2011/07/thinking_clearly_about_chinese_companies_listed_on_us_stock_exchanges.html Well I learned the hard way that China really doesn't work the way I think it works. Apparently you can run away with a real business and all of the cash (!). I forgot to mention that many stocks that are listed on both PRC and non-PRC exchanges have price disparities. The shares listed in China get a premium valuation. So you have to wonder why Chinese founders would want to list their company outside of China. Chinese stocks (especially reverse mergers) are the one area of the stock market where fraud is extremely high and the shenanigans committed are rather egregious (e.g. running off with everything). Because there are close to zero consequences for committing fraud and because Chinese authorities are kind of on the fraudsters' side, you have to deal with an extreme level of adverse selection. And then when you think you understand Chinese fraud... maybe you find out the hard way that you don't understand it. For example, it's extremely unintuitive that Chinese firms were able to easily fake their cash balances to big four auditors. Cash is one of the easiest things to audit, yet local branches of banks were corrupted into providing fake bank confirmations. There are things about China that are unintuitive. I'm not sure if honest Chinese business owners would want to list their company on foreign exchanges for legitimate reasons. 2- I think I'm wrong about Chinese stocks listed on Hong Kong exchanges being ok.

Title insurance is ridiculously profitable for the mortgage originator. When somebody buys a house, they often do not shop around for title insurance. This allows title insurance to be sold at really high prices. Usually the new homeowner will go with the title insurance company that the mortgage originator prefers (the paperwork is the fastest). It's the originator that gets the bulk of the profits from title insurance as they take kickbacks/commissions from the title insurance company.

I'm not a fan of Chinese stocks listed on US exchanges for various reasons: - The Chinese government has laws against foreign corporations owning Chinese companies - Exchange controls - Rule of law is extremely weak. Authorities in China protect fraudsters. - Tax leakage??? The ones incorporated in PRC and in Hong Kong SAR (which is outside of PRC) are a little better than companies incorporated in other places.

ATPG, Gold Group, Baja Mining, Yukon Nevada, and a bunch of other resource stocks are written up on VIC. Those stocks did not end well. *I am short Yukon Nevada (now Veris Gold). I did not short it a few years ago when I recognized that it was awful. (ALS.TO and the Ken Peak-era MCF are also on VIC.) To me, it's kinda crazy to invest in things you can't perform due diligence on and things you can't value.

Or another way of looking at it. Your options are: 1 - Perform due diligence. You need the engineering expertise and access to data to do this. I don't believe that there are any oil and gas companies that provide technical data on their properties such as permeability, porosity, pressure, 3-d seismic (if applicable), etc. etc. 2 - Figure out if they are honest and if they have a track record of making accurate estimates. If so, then maybe you can take their word for it. There isn't a lot of honesty in oil and gas stocks... let me put it that way.

I happen to be shorting MPET and my position is currently underwater. (I have not done a lot of research on it.) In regards to Poplar: - They didn't pay a lot of money for the property. - They bought the property from entities affiliated with a former director of the company. - The 10-K talks about how tax wasn't paid properly and how Magellan paid (for) penalties on unpaid taxes. - For whatever reason, waterflooding (considered a form of secondary recovery) did not work on the property. I don't understand EOR that well but this might be a really bad sign for CO2 EOR. Kinder Morgan's EOR process involves alternating injections of CO2 and water. - Only 10% of the original oil in place was recovered, so there is something unusual about the property. Most reservoirs will recover a lot more of the original oil in place. In regards to MPET: - Their G&A is really, really high. - They raised capital recently. - Their track record doesn't seem to be very good.

I'm trying to figure out if imports track revenue growth at a particular retailer. Thanks!

1- I'm not sure if anybody in the financial media picked up on the errors in his book. They did pick up on the lie that the CEO of the BATS exchange told though. To some degree, I actually kind of liked BATS in the past. They were the underdog trying to take market share from the incumbents. It used to be that they were aggressive with pricing. (I haven't checked if that is currently still the case.) 2- What I find bizarre is that some people actually defend HFT, e.g. Kid Dynamite. 3- The HFTs are attacking Lewis because he may destroy their entire livelihood. If the SEC, exchanges, and brokers stop giving them special trading advantages... their business model will be in a world of trouble. Then they'd actually have to trade based on skill (which is what Swifttrade, Title Trading, SMB Capital, Bright Trading, etc. do). Their business model is based on fleecing investors' order flow and paying kickbacks to the brokers and exchanges. Obviously I think that this business model is stupid and destroys value.

Just finished reading the book. 1- I learned some things about HFT that I had no clue about. It did not occur to me that HFTs would abuse special order types and that there is publicly-available information about these order types. 2- There are some technical errors in the book. Lewis confuses taking liquidity with providing liquidity at one point in the book. He gives an example of a trade happening at $30.0001... he says that the the investor bought at that price when he meant to say that the investor sold at that price. I suppose that Lewis is trying to simplify a very complicated subject. 3- Lewis praises IEX as being the solution. However, IEX seems like it has some holes in it (which they may eventually fix). The book even gives an example where a HFT arbitrages dark pool pricing versus IEX's midpoint pricing. The midpoint order seems kinda derpy to me. In the example given in the book, the client should have placed a limit order instead at the midpoint. In an ideal world, regulators would allow all investors to price in sub-penny increments. They would have a solution to "shaving". Ebay for example has a solution to shaving. On Ebay, you can bid in penny increments. However, you need to top the highest bid by a certain amount (e.g. 25 cents or some percentage; I forget the exact number). If you don't, then the highest bidder will still have the highest bid. You can't beat a $1000.00 bid with a $1000.01 bid.

Richard Pearson

I'd mostly stay away from the TSX Venture. It's scum infested. In general (and this is my opinion here), really small companies aren't a great idea. You are going to experience a huge amount of adverse selection. To be publicly listed, most companies will have around $200k of overhead (auditor, listing fees, transfer agent, board of directors, legal, preparation of financial statements, etc. etc.). If the company has assets of $20M, then the overhead is 1% of "assets under management". That is a headwind. Many legitimate companies will try to lower their listing costs by getting off regulated exchanges. So you aren't going to find too many legitimate companies that are really small. And on the other hand, most scumbag stocks have smaller market capitalizations. Short sellers have problems shorting stocks with a share price under $2.50 and stocks with very low market capitalizations. Many pump and dump guys will intentionally make their promotions have a low share price and market capitalization so that short sellers can't skim off too much of their profit. And of course scummy stocks tend to be smaller because they don't make money. 2- But check out the other forum thread, and in particular check out Oddball Stocks. http://www.oddballstocks.com/

These guys take risk. It's not like the good old days of market making where market makers and brokers didn't take any risk. And it's a problem that they take risk because we could see something worse than the flash crash.

Suppose you have a hedge fund that goes 100% long. On top of that, the theory is that you could generate excess returns by adding leverage. So you might go 130% long, 30% short. (For some reason I think that Warren Buffett did this when he ran a hedge fund.) Or you might go 100% long and 30% short, where you are trying to generate excess returns in your short book. 2- I think Buffett and Munger did dabble in short selling, before realizing it wasn't worth it. 3- I think short selling can be seductive to some because: a- Frauds are incredibly easy to find. I've had no trouble finding them. b- Ridiculous stocks are easy to find. c- It meshes with some people's personality. 4- The long/short hedge fund is really popular right now. It might have to do with people emulating other "successful" people. At any given time, some long/short hedge fund will do really well thanks to the inherent leverage. (*I short stocks.)

They don't look all that hated to me. SWHC 2yr chart I have some SWHC. not bad :) To me, they're hated in the sense that valuations are low. Both RGR and SWHC are currently magic formula stocks. For-profit education and MLM are also currently showing up on magic formula investing, alongside tech companies like Microsoft, Apple, and King (!). Their short interest is high. However, if you define "hated" as stocks with high short interest and expensive borrows, then there are areas that short sellers hate a lot more. I think the intention of the original posted was to discuss areas that the longs hate. 2- On a backwards-looking basis, the gun stocks have seen their profits grow like Salesforces' revenues. Yet their P/Es are incredibly low. Super-hot growth stocks usually attract very high multiples. RGR is at a 11.33 P/E. SWHC is at a 9.82 P/E. So this is why I say gun stocks. I define hated based on my ideas about valuation. Of course, other people in this thread are applying different criteria. Certainly you could use criteria such as: "Ick factor" Declines in share price Price/book net-net liquidation value P/E PEG ratio Discounted cash flow Inability to raise capital share repurchases etc. (*I am long RGR calls, so I might be a little biased!)