Palantir

I think that if you are a value investor, the better way to play options is to accentuate your investment view via options. Say you believe BRK.B is a good stock, but you only feel it's 20% undervalued, but want to buy it at 40% discount. So you should sell put options at that particular price. That way you make money off the premium, and if the option is exercised, then you get the stock you want at your price, because option cost effectively reduces the price.

I agree....you may not be using macro to generate ideas, but I think if you're managing a portfolio....you must be aware of macro events, and be able to think defensively. Outperforming the benchmark by 4% in a 08-style crash is good, but I'd rather be the guy who avoids that alltogether...

I came across DVA a while back and loved it. But it's a restricted entity where I work and I cannot invest. :'( Shame. I'm estimating their intrinsic value to be.... about 15B compared to 9.8B right now....I might as well go in. Do you have any estimate of IV?

I think the way to think about it is - if you have a good insurance operation that generates float at zero or even negative cost, then an investor can probably be "plugged in" to the operation to invest the float, and due to the leverage can get great returns. So the key here I think, is having a great insurance business.

http://www.linkedin.com/in/zacharybuckley

I'm skeptical. $10 sounds fine to those who use the forums already. But to prospective users who aren't quite familiar with the site to know its value, it'll drive them away I think.

This begs the question: Why am I not buying DaVita??? The PE is 18, but if you do P/OCF, it's like less than 10

What if they destroy value via bad acquisitions?

Cadbury's are hella tasty. [/contribution]

I am not as knowledgeable about this as some of you. I am curious to know how does this internal leverage generate high returns? Is it essentially buying up businesses with low RoC and low risk with the float?

I wonder how a rising Yuan will change his thesis on Chinese banks...

Thanks....that's pretty much in line with historical values. I went in at PB=1, and I'm just trying to decide how long to hold.

I'm not skilled enough to value BRK...what rough BV multiple do you guys feel it's worth?

Yeah but, if you buy above book value, you will not get the benefit of investment returns....say BV is going to compound at 10% annually, but you buy at 1.1xBV, what's your return? For example, look at Loews, they're trading at a 20% discount to BV....and have similar growth record as FFH. Anyways this is outside my circle of competence...I'll stick to GOOG and PH.

So essentially you're saying it's basically a large closed end equity fund, with the leverage coming from insurance float? Also, if rates stay suppressed for a long time (possible), all that time is wasted when you could have bought things like GOOG.

There are a lot of insurances selling at book or near book...what sets FFH apart from firms like WTM or MKL? Now at least WTM has been buying back aggressively, they've reduced share count by 25% over the past five years and selling below BVPS.....

To me, investing is work, creativity, and passion, it is not about making a lot of money, but being intrinsically interested in studying firms and economies and unraveling the threads connecting them.

Excellent paper on asset class returns. I'm going to have to read this over and over again....If you guys find more of these, hope you post them.

Right now my favorite 3 undervalued are Parker Hannifin, Daily Journal Corporation DJCO, and George Risk Industries RSKIA. With more pitches to come....

Is SumZero any good? I read VIC, and that's obviously really first rate.

Yes, if anything, this is the traditional style of value investing, you sell when the business rises to its intrinsic value, or when you start seeing better opportunities for that cash locked up in the investment. People mistakenly think that Buffet tries to hold his stocks forever, when in reality only a few stocks are worth holding forever.

I think it can be valued at both liquidation and operational value. Keep in mind that a firm can trade for less than liquidation if the firm is destroying capital or if the assets or liabilities are undervalued/overvalued. That can be the case in some financials. What I mean is, you have to separate "Operational businesses" from "nonoperating assets". So if Loews has operational businesses you can value in terms of CF, you should do so, but the nonoperational components like cash/bonds should be valued at liquidation. IMO, even if a nonoperating asset is valuable, it should not be valued if the firm doesn't have the ability or intention to release the asset. Say Microsoft has a goldmine under its HQ... Loews, being an odd collection of assets should be valued on the basis of its businesses individually, and then summed up...Not easy, but I don't see ambiguity there.

Claire Barnes is a woman has an outstanding record apparently. http://www.apolloinvestment.com/cbarnes.htm

10K in my Roth IRA :D

What is interesting is that ESL is buying the rights too. Rights are about 2.20, so we would want the shares to be worth far more than 17.20 for this to be worth anything.