constructive
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Posts posted by constructive
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If someone put 50 ideas in front of me with capital to invest in all of them I would pick the best. I can clearly see which are better, the problem is I'm not starting from a clean slate.
For me that would be a problem. I don't want my portfolio to represent past ideas - I want it to reflect my current thinking on each position, all the time. I used to have more of an ad hoc portfolio structure, but I was not comfortable with it.
Now I have a prescriptive structure that I created, with 20 long positions (ranging from 12% to 2%) and 20 short positions (each around -1.5%). It's really nice for me to not spend time thinking about portfolio sizing.
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oddball,
One way to think about it is with a diversification utility curve and a confidence curve.
The diversification curve has a positive slope and is concave down. Diversifying from 1 position to 2 positions offers the greatest utility - diversifying from 49 to 50 offers much less. Likewise the confidence curve has a negative slope and is concave up. You probably have a larger drop in confidence between your #1 and #2 ideas than between your #49 and #50 ideas.
Where the curves cross will determine the individual portfolio structure.
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+33.7%
Top 10 holdings: GNW (biggest winner), AAPL, INTC (biggest loser), BRK-B, SYA, TEVA, GLW, F, CYD, EMC. Currently 125% long, 33% short. Other contributors: VQ, PPP, C.
My timing was above average, raised some cash going into Q2 and redeployed it going into Q3.
Have been actively investing since 2007. 2012 felt like a breakthrough in my thinking about investments, especially portfolio structure.
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"I’m having difficulty finding a suitable total-return index so that I can be sure that I’m including the effect of reinvesting the dividends which the S&P 500 pays out but Berkshire does not."
Shorter Felix Salmon: "I'm incompetent in my job as a financial blogger."
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Outside of frontier markets, Russia and Argentina appear very cheap (probably with good reason, but at least their political risks are diversified away from general market risk).
Anyone own Lukoil, Farmstandart or Nortel Inversora/Telecom Argentina? Those look interesting to me.
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With the increased competition in US exchange market share over the last decade, I think this deal will go through.
I also think Hong Kong Exchange, Singapore Exchange or Bovespa should think about buying Nasdaq - that would be really strategically significant.
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There's no "I am more rational than Buffett/Munger"?
If that option existed, I might have abandoned false modesty and bumped my answer up one notch. :D
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But you may be overthinking this trade, buying calls makes more sense than a put spread since it's asymmetrical.
LUK/JEF is totally different, stock merger, no particular reason why that would use a put spread either.
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Yes, lucky for me I lost my HOV borrow before I lost much money.
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In the opposite direction, Hovnanian (HOV) has bonds trading at 44, 56 and 82 cents on the dollar, yet shareholders are comparatively very enthusiastic.
LDK, RDN, RDDC, VRS, GTIV, BONT, etc. are also possible suspects. They have comparable prices/yields to many companies in bankruptcy. The equity market may be right about a few of those though.
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Also Exor (EXOR:MIL) offers a big discount on Fiat, as suggested by rjstc, ASTA and Sportgamma in the other blog:
Bestinver says they are trading at 50% of NAV:
http://www.marketfolly.com/2012/05/bestinver-asset-managements.html
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Also, after resolving their legal issues in the next few years, Porsche could merge with VW and erase the discount. Now that VW owns the Porsche brand & operations, no real reason for Porsche to be a separate company.
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Porsche (POAHY), FFP (FFP:PAR) and Toyota Industries (6201:TYO) offer holding company discounts to Volkswagen, Peugeot and Toyota. The subsidiaries can be shorted out for a stub trade if desired.
Porsche trades at ~68% of NAV:
http://online.barrons.com/article/SB50001424053111904706204578002262308707842.html
Value Investing France owns shares of FFP - by his calculation it trades at ~48% of NAV:
http://valueinvestingfrance.blogspot.com/2012/06/ffp-english-version.html
According to Brooklyn Investor, Toyota Industries trades at ~72% of NAV:
http://brooklyninvestor.blogspot.com/2011/10/6201-toyota-industries.html
Concentration
in General Discussion
Posted
No, but sometimes I take a week or two off from thinking about investments, and then start with a clean mental slate.
Your description of your investment style makes sense (to anyone who has read Graham). I was just struck by the comment that you don't have a clean slate when making buying decisions. I used to feel similarly and for me it was negative. I had a disorganized portfolio and made trades to improve it - now I envision the entire portfolio and execute that plan.