plato1976
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Posts posted by plato1976
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5-10x !!!
must be a micro-cap
Parsad, did you do the same thing you did with bank of america and go all in in your personal portfolio on this one?
No, but it's big. I didn't go all in with BAC in my personal portfolio, but close. I've also found something else that I'm really intrigued by and think it could be even better...5-10 bagger in a relatively short period of time. You guys would be surprised! Has risk like anything, but I'm trying to take a big position. What else am I going to do with all of this cash! ;D Cheers!
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one quick question, did Mr. Lewis warned the last crisis before its happening (or just reported it around/after the meltdown)
Nothing earth shattering here, but I thought the last piece was interesting
"Is there a particular threat you’ve identified that’s most likely to blow up next?
The answer is yes, but I can’t talk about it yet, because I’m in the middle of a book about it. It’ll come out next March.
And will that be before or after it erupts?
I can’t actually tell."
He knows Burry...and Burry recently opened up a new hedge fund. I wonder if there's a connection here.
http://www.businessweek.com/articles/2013-09-12/michael-lewis-on-the-next-crisis
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The wage has not been risen at 7% a year either in the past 20 years...
Between 1975 and 2013, we have seen 7% annual appreciation in the Los Angeles area. If you bought a 75K property in 1975, it is probably worth over 1M today.
I agree with a lot of what you say, BUT do you think property in CA, especially L.A will continue to appreciate 7% a year for the next 20 years? If so, that $1MM house today will be something like $4MM 18-20 years from now? Wages have not been going up that fast...
Who is going to be able to pay $4MM for a somewhat above average house 20 years from now? Heck, I am amazed there are enough people willing/able to pay $1MM for a house now...
In certain areas of the country, you can get a very, very nice house for $100k or $150k. At some point, I would think business/buyers will start moving away from the high cost areas. Granted, living in LA is better than living in Indiana or Michigan...but at some point the cost simply is not worth it...
You are starting to see this in the legal profession...work is being outsourced out of NYC and DC to Detroit and Minneapolis. You can get plenty of lawyers willing to work for $25/hour in the midwest....so work is moving out of the high cost areas. I think this trend will accelerate in the future.
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yeah, it's really hard to beat real estate investment if a region can appreciate at 7% annually for decades. At early stage when leverage is 5% this translates into 30%+ annual return, plus some rental income. For individual investors, real estate investment also has some tax benefits (esp for primary residence).
Real estate can be a great investment because of the leverage. You can buy a 2-4 unit building with 10-20% down (even less down if you go owner-occupied). If you buy in a coastal city, with strong rental demand, your property will probably appreciate faster than inflation. Between 1975 and 2013, we have seen 7% annual appreciation in the Los Angeles area. If you bought a 75K property in 1975, it is probably worth over 1M today. If you put 20% down, and realized 5% appreciation, that's about a 25% increase in equity each year. Other benefits include cash-flow, tax benefits, and principle reduction with each mortgage payment (all of which are less meaningful than the appreciation).
The other thing that should interest value oriented investors is the highly durable nature of the assets you own. Demand will usually remain consistent or grow over time. In most coastal areas of the country, rental demand will continue to be strong 30 years from now. Also, your biggest expense (debt service) can remain fixed while your rental income increases each year.
The worst part about owning rental properties is managing the tenants. Unless you have a background in law enforcement or debt collection, I suggest that you consider a good property manager. It's always a good idea to manage your first building for about a year or two just so that you get that experience under your belt.
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If the managers are consistent reckless risk takers and don't have enough skin in the game;
I can imagine no matter how cheap it is the risk here is huge
I missed that. Makes sense.
I am ok with every option but that one. All the other ones will create a bit of value and raise the share price. I hope thats boiler plate, and they arent considering issuing equity here. Better to sell assets at 80% of book value then issue equity at 50% of BV.
I dont think the dividend is the issue, but Mr Market will not let them continue with their current strategy. I hope they sell the shares in stock they hold, and the Duvernay assets. They can play the M&A game, when they are trading at .8 - 1x BV. They could have bought Trioil with shares if they had a reasonable valuation, so its time for a change in course.
Cut capex slightly, sell a decent chunck of assets, and term out the remaining debt at a much lower rate. Then perhaps look at the dividend policy.
Our dividend should be cut if they want to keep the DRIP inmo. We should not be selling equity via DRIP or capital markets at 50% BV. At some point someone offers 75% of book, and will capture the upside in EOR, and undrilled land.
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In fact, I did some analysis for all picks before he mentioned "someone got it":
Those with "X" can be excluded, I think. The one with "?" before it can be a likely candidate. It does look like GVC is the one !
I set up a few criteria like "declined this year and better declining in Aug and early Sep; not a big cap; valuation and corp economics disconnection; and so on"
***********************************************************************
XXX JCP
XXX SHOS One year ago at the same price
XX SD
XXX RFP
? BTH Disconnection between economy and valuation ? doesn't look like
X AAPL
XX LVLT
XX RICK
? Callinan Royalties
XXX Enbridge
? EBIX Parsad once showed doubt, so it's very unlikely, but anything is possible and maybe he changed his mind ...
? SCU
XX RFC
? GLN
XX PGH
X BP
X MSFT
XX WDFC
? ARO
XXX BPY
? GVC
**********************************************************************************
btw, did we settle down on the conclusion which stock is *the* so called greatest opp here ? :)
Parsad, your reverse psychology won't work! ;)
If that's what you think...so be it. Cheers!
Not really, but most seem to believe it's Glacier Media http://finance.yahoo.com/q?s=GVC.TO%2C+&ql=0
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btw, did we settle down on the conclusion which stock is *the* so called greatest opp here ? :)
Parsad, your reverse psychology won't work! ;)
If that's what you think...so be it. Cheers!
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:) is today THE day to unload ?
Not waiting until today to unload SHLD.
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A few years ago I bought quite some resource stocks at the cycle peak ; I thought the PE was really low and then 2008 comes...
I also bought some radio stocks with high leverage and one yellow page company - those were in secular decline and high leverage killed equity - most of them went to zero essentially
Another mistake is I was too conservative at 2009 low - looking back I still don't think it's a mistake to prepare for a depression - but obviously I should buy some performing loan in 2008 (chinese chem-petro loan was generating 20%+ at a time in 2008); I may should have bought some really high quality stock without much debt back then.
Buying Apple at $700... yes, I'm that idiot... Then I started speculating to try to make up the loss and ended up digging a deeper hole. My taxable account was down nearly 10% and Roth IRA was going nowhere for the first 5 months of the year. I started investing a year ago, knowing nothing about value investing or security analysis. I'm glad I screwed up because that motivated me to learn about value investing. Surprisingly, my taxable is now positive for the year and my Roth is outperforming the S&P500.
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When the whole sector is undervalued the situation is not that bad, if one extremely undervalued corp is acquired below intrinsic value (but still above the market price), you can take the money and switch to another corp in the same sector (hopefully similarly undervalued, or at least at a similar valuation as the buy-out price b/c buy-out will use sector valuation as a reference, usually). The situation is esp bad when your corp is really unique...
Anyway, that's why I think we should give berkshire or maybe fairfax some premium :)
The first thing that comes to mind is how much skin management has in the game. If they don't own much stock, acquirers can dangle shiny things in front of them to convince them to support a sale.
If they own a ton of stock, suddenly a lowball offer doesn't seem so attractive anymore...
I'm no expert by any means, but this is what I would look at first.
The problem is when the owners are the one buying out everyone else..
This is exactly why Berkshire is unique. The owner's manual (and their behavior) clearly puts your ownership interest at the same level as all other owners. You are the owner. Period. Berkshire may do very well or poorly in the future but the one thing you don't worry about is getting "bought out". As long as this culture is maintained, Berkshire will do fine for investors (owners), even past Warren's tenure.
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Then there's management leveraged buy-out
Say management holds 30% which is a significant stake, but if they are motivated to buy the remaining 70% at low price ...
I see these kind of things as a big risk for our small minor shareholders
The first thing that comes to mind is how much skin management has in the game. If they don't own much stock, acquirers can dangle shiny things in front of them to convince them to support a sale.
If they own a ton of stock, suddenly a lowball offer doesn't seem so attractive anymore...
I'm no expert by any means, but this is what I would look at first.
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This risk is stopping me from allocating a significant part of my portfolio into some small cap names;
the question is how to evaluate such risk
For mega cap like apple or BAC it's unlikely to happen, and I feel comfortable to invest a big portion of my money into them (20% or 30% or even more) when I think the timing and valuation is right.
But a small cap (100M to 1B), even if your entry is significantly below the intrinsic value, someone can still acquire it way below your entry and make your investment a permanent loss. I am not even talking about RIMM or DELL which are not that small... Maybe you can look into management holding ratio but then there is a possibility of LBO (esp when the corp is cash rich).
Any suggestion how to evaluate such risk ?
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I was suspecting it's fiat
; but the 40x return still "scared" me
don't think fiat will be a 40x (from $5) - in the optimal case it may be a 10x in a few years
btw - Did he reveal his mystery stock on the weekend?
-CM
Fiat. The 7-8 commercials, plus him saying "we have a position in Fiat" kind of gave it away! ;D Cheers!
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This is what I was saying: if their assets are not intrinsically inferior, its earning power can be fixed
Yes, it's cost cutting. PWT is seen as one of the less efficient operators. The hope is that Mr. George can work some of the same magic he produced for Suncor (who once upon a time had similar issues).
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I am wondering how much the liquidation will cost...
seems a good bet if it sinks to the $7 level
interesting, the question now is how much?
15?
10? LOL
I actually bought some. Wonder how much cash they burn last Q. Paying $3.5 (net cash) for the everything with Prem trading a pull off a deal seems not a bad bet.
What a screw up for Prem.
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All right, I guess the question boils down to whether the low earning power of PWE is due to the nature of assets, or due to mis-management in the past; if it's the later case, we may count on the new management team to improve...
No. Tangible book is meaningless in analyzing these assets. A company can spend a lot of money on drilling wells that are sub economic. There assets are tangible but not worth the cost.
Thinking like an owner, if you bought all of PWE, you would earn roughly 8% before tax on your capital. That doesn't come close to the hurdle rate I use. LTS is 15%.
PWE below tangible book is not cheap ?
The only one that is cheap is LTS. It also happens to the be the crappiest company on your list. I would short SGY and possibly LEG.
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I think LTS is just the old petraBakken (not sure if I spelled correctly)
At its current price the div yield is a staggering 13%
Not sure how sustainable it is
Also no idea why it cannot be taken under its current price.
This one used to catch lots of discussion on seekingalpha (most posts from the ID "canadian value investor", who seems familiar with the oil&gas industry)
I own PWE and LTS. LTS you get paid to wait and wont be taken under its current price. PWE has a new team, new focus, which works as a great catalyst.
I dont like the small players, they are being taken under on the cheap by foreign companies.
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PWE below tangible book is not cheap ?
The only one that is cheap is LTS. It also happens to the be the crappiest company on your list. I would short SGY and possibly LEG.
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why did you pick PML instead of PMF ?
muni bond makes sense for high tax bracket guys...
have to say , the marginal tax rate is killing the motivation of average w2 professionals
Did you guys pull the trigger on these? I nibbled a little PML and MQT before the fed gave us a little gift. Nice to get a little lucky sometimes.
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The market cap of this one cannot be too big;
otherwise Prasad wouldn't have been so careful
(if it's apple he could just let us know , b/c all of us plus mr. icahn won't move this baby a lot)
In the spirit of Carl Icahn I will go with Apple
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Any hint about the sector ??? !!!
Is it listed on NYSE/NASDAQ ??? !!! ??? !!!
Yes, I'm quite well-known as a stock-tease! LOL! Cheers!
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Hi, Everyone:
Due to the tax concern, I believe many should consider this as an asset allocation opp (including myself).
My question is, in 2008 PMF lost 35% NAV, why the drop was so sharp ? I checked some fidelity open-end muni bond fund and they dropped way way less (almost no drop actually). Is it b/c PMF had a portfolio that has much inferior quality ? The yield is nice now, but I don't want to lose significant nav when a downturn hits - I buy into a bond fund in the hope it can hold nav so that in the market panic I can switch to some fat equity opps.
I've been nibbling the pimco funds as well. I scaled into a little PML with my "granny money" several weeks back because at that time PML had the smallest premium and lowest duration of the pimco's. They have really jacked up the duration over the past month or so though. I also bought a little of one of the black rock one that has some higher rated bonds and a big discount to NAV; MQT is the one I went with there.
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I was somehow scared by Meredith comments on local gov debt problem;
so how can we be comfortable with the holding of these muni funds ? We cannot check their holding one by one - we have to trust them...
This appears to be an interesting space given the long-term deflationary trends in the system and these are yielding 7 to 8% tax-free (tough to beat those type of yields for fixed income). These funds but LT munis financed with short-term borrowings. Given that short rates won't increase until inflation is high and unemployment low, this looks like an interesting area. Many of these funds are approaching 2008 yields. Some interesting names are PMF and PNF (for NY residents).
Packer
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yeah, really no idea why fairfax and chou both love RFP so much...
most recent CHOEX filing reveals 40% cash, and 24% in RFP.
SHLD is down to 6%
MBIA 5.7%
OSTK 4.81%
http://portfolios.morningstar.com/fund/holdings?t=CHOEX®ion=USA&culture=en-US
Any thoughts on the RFP holding (I know there is already a very extensive thread on this company)?
Yacktman 's big three
in General Discussion
Posted
http://online.barrons.com/article/SB50001424053111904462504579139341318918238.html?mod=BOL_twm_fs#articleTabs_article%3D0
I couldn't convince myself to buy KO
I have heard of Yacktman 's argument for a while
Basically he's saying the forward yield is free cash yield + growth + inflation
So take KO as an example, currently its free cash flow yield is close to 4.5%, suppose we have 2% growth and 2% inflation we should have a forward yield around 8.5%
To me, the free cash flow yield of 4.5% is really not high enough to convince myself into buy this one, when other relatively low quality stocks still can generate 20% (see packer's ideas...)
My bar for these absolutely high quality ones is a forward yield of low teen at least...
What do you guys think ?