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Palantir

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Posts posted by Palantir

  1. I thought Ben Bernanke was printing money and debasing the dollar and raising inflation and generally sending America to hell incahoots with his communist buddy BHO! [/sarcasm] . Apparently Big Ben knew what he was doing with a program of monetary easing.

     

    More seriously though I think most have expected EU to see deflationary pressures unless it initiates a program of monetary easing, which it is prohibited from doing...how that affects investments, no idea.

  2. Isn't the idea of WEB buying capital intensive businesses that they earn a return on capital on the marginal dollar of capital invested that's higher than the cost of capital.

     

    Hence, each dollar invested will be worth more in the future than it is today.

     

     

     

    Could you explain this point? Not saying you're wrong, but I'm not clear what you're getting at. Wouldn't a capital light business also do the same?

  3. ^ I think Buffett might have been exaggerating a teensy bit. Given the size of Berkshire's balance sheet it's hard to see how they would have gone belly up.

     

    I am no superinvestor, just a 25-yo investing his little Roth IRA, my $0.02 are:

     

    So far I believe in equal weighting positions. That's really more of a risk management view - I don't know which of my positions is more likely to be successful, so I'd rather not favor one position over the other (will MSFT do better than GOOG? No clue). I am more of a "moat" investor, so I believe if you're looking for "great companies at decent prices", you need to take substantial, meaningful positions, at the same time, not so big that it will bring down your portfolio, and thus far, I've settled on 10% allocation to each stock. So the largest loss I can make on a position is 10%, but it also limits my gains. Sometimes I feel 10 stocks is too diversified, but I'm still basically a beginner, so I'll settle for not making major mistakes.

     

    I think if I was doing a deep-value strategy, I'd try to invest in much more diversified positions, so I would probably allocate 2.5-5% to a net-net type of stock.

  4. I'd like to know more about this as well. I felt the acquisition of BNSF was done at an extremely rich valuation. What FCF growth was WEB assuming for that?

     

     

    Also the interest in investing in "capital intensive" businesses I don't get either. I understand BRK generates a lot of cash, and they need to deploy it....but why this? If a firm is capital intensive, doesn't that also imply it will have low return? Or should we expect that Buffet is planning on leveraging a low return business with the float?

  5. This is the real weakness with value investing as an investment style from an investor perspective. You need to put outsize faith in your manager, be willing to stick with him when their returns are poor, and be ready to wait years before you can actually get any benefit out of your allocation. Not everyone's cup of tea.

  6. Buffett barely "invests" to begin with. Most of his investment activity is in the secondary markets, and not the type of capital creation that drives real investment back into the economy.

     

     

    But that doesn't stop him from giving sanctimonious lectures to the rest of the world.

     

     

    EDIT: The above isn't there to intentionally start a flamewar, I actually mean it. :)

  7. This is why I think the best way to own timber is in a really asset-lite structure preferably personally with title.  In down years you don't have to do anything, in up years save the surplus cash.

     

    Seems like this might be a great idea for a savvy individual.  Start a fund, buy a bunch of land, keep expenses REALLY low, and sell the heck out of it to hedge funds and institutions that want exposure to this asset class.

     

    I believe there is a firm in Oregon that does something similar. It's called Campbell Group and they create investment vehicles to invest in timber assets.

  8. ^ Yeah health-driven shifts are a big reason why Coke could see its moat diminish. I'm not that bullish on Coke.

     

    Furthermore, you have to remember that Coke is so dominant in soft drinks, that national governments could start taking steps to dismantle its monopoly. Can't rule that out.

  9. Or, maybe he just has a better understanding of the issues and what's important to discuss than you do, and you don't realize it.

     

    Or maybe he doesn't, and he is equally as clueless as you? A big part of the problem is due to excessive spending and entitlements, however, being politically difficult to cut, Buffett isn't willing to speak up for it.

     

    Keep in mind, even if tax rates rise, Buffett will not pay much more in taxes....his income is 100k!

  10. M* builds the case around the point that most of BRK's operations are insurance, and therefore low moat. This point is logical in that insurance is a commoditized service. However, they do fail to point out that the second way insurance firms make money is by investing float, something at which Berkshire is stellar at. In that regard, there is far less concern for the economic moat.

     

    They also hint at skepticism over capital allocation, but we know for a fact that Berkshire has skilled capital allocators apart from Buffett, and that particular job can be done by many within the firm.

     

    Simply the combination of negative cost of float + excellent investment performance (likely) + deep moats in non-insurance businesses make me pretty confident regarding BRK's future. But that's just IMO.

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