no_free_lunch

+1

Sculpin, I really like the Sonde idea. I did a bit of digging on it, and the duvernay acreage alone could be worth considerably more than the current market cap. I am wondering what your thoughts are on future dilution though? I know they have a decent amount of cash but they are committed to the drilling in zarat. They said that they will likely raise some cash via equity. Any idea on what the timeframe is for an equity raise? It would be fairly destructive if they did that at current prices. Also, in general what do you think of management? Are they shareholder friendly?

I put an app in a few years ago and was rejected.. I think. The thing that bugged me was the rejection email was worded very strangely that it was difficult to interpret what it was actually saying. I couldn't figure out if my app was actually rejected due to poor quality or if they just weren't taking new apps at the time.

I am no expert on them and I feel like I'm cheating but I really like conglomerates that use financial engineering. Companies like LMCA, BAM, dundee, more that I can't think of right now. I figure if you can buy them below book they can make value by buying shares, spinning off companies, buying back spinoffs, there are just so many options. Reading Greenblatt's book, he claimed that all this complexity causes confusion and annoyance from the market which can lead to good pricing. It still seems to be somewhat true. Basically they are perpetual special situations which historically have lead to above average results. Nothing very complicated but then investing doesn't need to be complicated. You also have the advantage that as they are value investors, these guys will go where value is. Brookfield is investing in brazil, and in natural gas in canada. I don't need to go and research brazil and natural gas, I just have reasonable confidence that they know what they are doing because their track record is good. Again, it's simple but it seems to work.

40.5%. My best year since 2009, which really didn't count since I was just getting my money back. The surge in the general US indices was just incredible this year, I am mostly just riding that wave and I have found it difficult to get alpha with value stocks. I think 2014 will be a tougher year for the indexes but a better year for value investing.

I read the beyond proxy article and it comes across as quite in-depth. However, it ignores the elephant in the room which is the effect that inhaling this powder will have on the lungs. It took me all of 3 minutes on google to find a study claiming that diabetic inhalation leads to amyloid buildup in your lung tissue. I don't know. If you go onto diabetes forums and start reading on it, that is the main issue people raise, what is the impact on the lung. The bulls counter argument is, the inhaler is smaller, more convenient and the drug works better. Nobody cares, they just want to know if it is going to have long-term effects on your breathing. Diabetes isn't fatal, you could be taking this stuff for decades, so it's a really big issue. I don't want to make the claim that it necessarily will hurt people's lungs, just that that is the real issue, and if you want to invest in the stock, start by convincing yourself that there is no new health risk.

The private sector deleveraged during the past 5 years as well. Total debt to GDP has actually fallen during the past 5 years. The thing is the US isn't even the most extreme case, if you look at Britain they took on an ever great debt load during WW2. Or, if you go further back in time the UK had a 50 year period where their government debt to GDP was in excess of 150%, peaking at 250%. That was at a time of the gold standard when they couldn't slowly print their way out of things. I don't think the current situation is so unusual. It may not be the best days ahead but there are precedents.

Is this even true? It looks like the government debt went from 40% GDP to 110-120% during world war 2. 08-present, roughly 40% to 80%. There is also the ramp up in federal reserve holdings which might add another 10-15%. Combined it seems the current situation is very much comparable to back then. I don't understand the hyperbole, you can make a strong case without it.

Great link. Long but quite short compared to the snowball book. I like this quote:

I know I am taking this too seriously, but nevertheless, how do you know there isn't a link between cancer and immortality? I mean I am certainly no expert but I do know that cancer is related to mutations in our cells. It is entirely possible that the limit on cell division is to try to stop this run-away explosion that is cancer. http://en.wikipedia.org/wiki/Hayflick_limit http://www.sciencedirect.com/science/article/pii/0022519382903642 Science works in twists and turns, with unexpected outcomes. I wouldn't discount what could be learned here and will have to be learned about cell biology in order to defeat cancer. There could be substantial ripple effects.

I have heard it prophesized for years. We'll see if this comes to pass. It seems inevitable but the timing.. very difficult to pick. I can vouch for b & c. That was very, very common. I have even heard of excess of 100%. Not sure about point a. The one thing that concerns me about housing in Canada is the prevalence of 5 year mortgages. In the US, it seems that they are fully amortized over 15 or 30 years, so no interest rate risk. If interest rates ever rise in Canada, watch out. It is not just new buyers who are going to be hurting.

I used to own them. How do you handicap the government though? From the article you posted: Those quotes pretty much sum it up. You have government owning shares and controlling the prices they sell in order to gain votes. A scary situation as an investor. Also note that there has been significant dilution over the past several years. For me, it is just too hard.

It's a great story. The way I see it, he had everything he needed to be happy so he channeled his wealth into making other people happy. Very inspiring.

I don't want to get too much into politics here. It is really not a question of other countries having a right to the bomb and others not. You can't roll back the clock so what' done is done. I am just saying that if you let everyone who wants to enrich uranium do so then at some point somebody will do something stupid. It might be intentional, it might be an accident but the consequences are too great. We have already had accidents with nuclear power in the US, Ukraine, Japan. We have had close-calls with nuclear weapons in the 60's. If you multiply this out and end up with dozens of countries with it, at some point a mistake will be made.

Once they have the bomb what's to stop them from invading another country? I mean really, if they do it is the US really going to start a war with a nuclear opponent? Look at the games North Korea is playing and how they have gotten away with it. I don't think 50 years of a handful of countries with the bomb is a rock-solid argument that nobody, ever, guaranteed 100% will use them or threaten to use them or prevent them from falling into the hands of some rogue actor that is willing to use them. I just don't buy the argument. I remember when analysts were saying that housing prices only ever fall regionally, a nation-wide pullback in housing prices wasn't even modeled. They were wrong, how do you know you're not wrong? There is not enough data.

It is no secret, the stock is CSU.TO (constellation software), I just didn't want to bring up the stock name as I don't know enough about it yet to have much of an opinion. I was thinking the description sounded like Valeant while I was writing. :) The basic numbers are cash flow of around $10.50 per share and a $185 share price. About 18x adjusted earnings. However, the stocks earnings grew 6 fold in the last 5 or 6 years, without taking on any debt. They finance the entire growth using short-term debt and then pay it down with cash flow. I actually feel fairly conservative estimating that it will grow 15% going forward given the past history. It definitely is not cheap enough if I assume they won't be doing acquisitions. So given the past history, isn't it cheap at 18x? BWLD, a restaraunt, grows 20%-ish and has a PE of around 40. So from that perspective, why shouldn't constellation have a similar multiple? Any suggestions on what I might be missing?

When you have a company that has a long-term (10 years) track record of successfully acquiring and integrating complementary companies, what value do you give to the historical growth? Is it even a factor or do you value the company based purely on the current set of companies? Or would you use a hybrid approach? The company has essentially flat to slow-growth organic revenues but has grown at 20%+ via acquisitions for the past decade or so. If it was a fast-food company, it would probably have a PE of 40-50 but perhaps the scaling is more reliable with a franchise. Any suggestions?

I had a similar experience with real estate. Prices went up 6-7% a year for 5 or 6 years, well ahead of inflation. I thought, well that can't continue. The next year prices went up 70%, in 1 single year. At that point, there were 2 camps of people, those who said real estate is the greatest investment ever and those who were adamant that it was over-extended and would crash back. Practically everyone was in the bullish camp. I am at that point a seasoned value investor so I think, that's it, look at the sentiment, that's the top. Wrong. 5 years later, prices are up still another 33%. It's important to have downside protection but trying to predict tops is a very dangerous game.

Well done sir.

Follow the money.

Ben, Do you care to share your results over this period? It is quite useful as far as correlating performance to growth rate. If not, it's all good and thanks for sharing your AUM figures.

Brooklyn investor just put out a piece on XOM. Your research might already be at a level beyond this but probably worth a read. http://brooklyninvestor.blogspot.ca/2013/11/exxon-mobil-xom.html

Anyone else having problems opening the pdf? I get a message that it is corrupted.

Barbell, There is a phosphate play (fos) which meets the basic criteria you are looking for. Essentially you have a company sitting on a phosphate claim waiting for prices to pick up. The company is selling for below net cash. Management seems patient and is just waiting it out and reducing costs. I started a thread on this board about it if you are interested.

I just read the original post. A PE of 1? I am not sure, I just checked the first few companies and they are nowhere near 1. Is there some company with a 1 time payout that is skewing the numbers? Just off the bat, look at coca cola HBC. According to bloomberg it has a forward PE of 29. http://www.bloomberg.com/quote/CCH:US Next up, hellenic telecommunications. PE of 9.9 http://www.bloomberg.com/quote/HTO:GA Next, OPAP. PE of 9.6. http://www.bloomberg.com/quote/OPAP:GA