constructive
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Posts posted by constructive
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I disagree with people above who try to say that only Buffetty (ROE, cash flow) value investing works. There are people who do very well by looking at book value. I personally go for Buffetty approach, but dismissing the net-net, P/book people just because it does not work for you is IMHO condescending.
Peace.
I'm not against any investment approach that works. Low price to book with a lot of cash is a proven successful strategy. My comment was aimed at a strategy that I perceive as not working very well - low price to book with low ROE and not much cash.
This topic is about pointing out potential flaws in other people's investment strategies, so there is a risk that any answer can be perceived as dismissive and condescending.
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I think a fair number of value investors put too much emphasis on book value, at the expense of earnings, cash flow and especially ROE/ROIC. Another way of putting it is they overemphasize accounting at the expense of economics.
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In Newton's defense, a lot of the systematic theory of investment value was not developed yet. He couldn't read Graham, Keynes, John Burr Williams or even Adam Smith - he had to figure out investing on his own. We don't have that excuse today.
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It takes 100-200 hours over 4+ months to set up a fund.
1. Pass the Series 65 or whatever securities exam you qualify for.
2. Find a lawyer, broker, accountant and auditor.
3. Register your corporate structure with your state. The most common is to set the fund up as an LP and the investment manager as an LLC.
4. Get federal tax ID numbers.
5. Set up an IARD/Web CRD account with FINRA.
6. Write your brochure, subscription document, LP agreement, code of ethics and other legal documents (with the help of lawyers who will charge $20k+). The most important detail from the regulator's perspective is the basis of your exemption from securities registration. The most important details from your client's perspective are fees, lockups, accounting policies, investment and risk management approach, etc.
7. Submit your Form ADV and brochure.
8. Register as an RIA and IAR with your state securities regulator.
9. Set up a brokerage account - you will need to provide them with the legal documents, RIA and IAR numbers, and tax ID numbers.
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It's not addressed -- they merely say that the plaintiff doesn't have standing. I agree that the logistics would be messy.
I assume that Sweeney is smart enough to realize that this is a capital structure problem which needs a capital structure solution. Mailing checks out to people wouldn't resolve the underlying problem.
If a judge ends up deciding for the plaintiffs, I would expect the most likely decision would be to roll back the net worth sweep, count all dividends in excess of 10% annual as paying down the government preferred, and recalculate the amount of government preferred outstanding.
Sweeney does not have the power to do that. Her court is only authorized to hear claims that result in monetary damages.
From what I have read, the USCFC only hears claims for monetary damages against the government, but they are also capable of delivering nonmonetary judgments on those claims.
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It's not addressed -- they merely say that the plaintiff doesn't have standing. I agree that the logistics would be messy.
I assume that Sweeney is smart enough to realize that this is a capital structure problem which needs a capital structure solution. Mailing checks out to people wouldn't resolve the underlying problem.
If a judge ends up deciding for the plaintiffs, I would expect the most likely decision would be to roll back the net worth sweep, count all dividends in excess of 10% annual as paying down the government preferred, and recalculate the amount of government preferred outstanding.
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1. I'd like to have a charity branded credit card that automatically donates my cashback to the charity. That way you can one-up the person with the black card or platinum card. Sure they're rich, but they aren't really cool if they aren't flashing an Oxfam, Habitat for Humanity, Red Cross, etc card.
2. A subscription service that automatically purchases new music from your favorite musicians and loads them onto your devices (computer - phone - car). It could also include members-only items like t-shirts and label mixtapes, and notifications / discounts on upcoming concerts.
3. A clothes buying subscription service. You specify your size and preferences and they send you $50 or $100 of clothes a month. There are a couple of these already that look very expensive, I haven't tried them yet.
4. A web based service that allows individual investors to keep track of investments, including a lot of highly customizable templates like industry comparisons, cutsheets, financial models, charts, links to relevant articles, etc. I keep a watchlist in Excel, and I have a portfolio on the Motley Fool, but I would like to find a service that does this more effectively.
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You can point to the occasional example like Uber where they successfully operate in a legal grey area. But I think 99% of the time not following the letter of the law is a bad business decision. And 99.99% of the time bad ethical decisions are bad business decisions.
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The writer's lament is that people don't use apostrophes correctly.
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I would need 2 conditions to put 100% into a single position.
1. Very limited downside.
2. A reason why it's not possible to diversify. For example, in most situations it's not feasible to buy 70% of a house or 40% of a business. You have to buy the whole thing or nothing at all.
I wouldn't make this decision by focusing on the potential upside.
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Sometimes I open up a lame post and it makes me a little unhappy. But then I think about all the people who aren't wasting their time posting in it and it cheers me back up.
I just want to congratulate everyone who doesn't make bad comments.
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Ads on archinect and archdaily would be a good way to reach architects. You could also go to undergraduate career fairs or send emails/flyers to undergraduate architecture and engineering administrative departments.
I don't think the leaflet is effective yet at targeting foreign students "interested in making a formative experience working for Italian design firms". Who is teaching the courses - architecture and engineering professors? Do the courses involve seminars with industry professionals? Does it involve travel or internships? Is it for people just out of college or mid-career professionals? Given that many of the units refer to architecture, is it applicable to design and engineering generally, or just architects and building systems engineers?
Also I'm not sold on the degree name - how it looks on the resume is not an inconsequential concern for students. In my opinion, a degree name from a foreign university which many people aren't familiar with is not the place to make the new word "glocal". On English resumes I think it would look better as "MS Global Design Leadership".
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I disagree with both valuation methods. You can't value something by how much it costs, otherwise a bridge to nowhere would have value and a diamond you found in the sand at the beach wouldn't. We know the supply of bitcoin has an absolute limit, so its value will vary entirely with its demand. If a billion people use it as a medium of trade and depend on it for exchange, then its value will be enormous. If not, then it doesn't matter how much it costs per transaction, its value will be 0.
If you were making a transaction, how would you decide whether to use Bitcoin, Paypal, Western Union, credit card or bank transfer? Wouldn't it be rational to consider the cost, along with the other advantages and disadvantages of each system?
Right now most people who hold bitcoin are speculators and hobbyists. Over the long term, bitcoin will only grow if the number of practical users increases. Those people care about costs. The usefulness for real users will constrain the growth and price of bitcoin.
Please note that since I first linked to Matt Levine's post on valuing bitcoin, BTC fell 80% exactly as predicted.
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A friend of mine had the following take: Bitcoin is worth a multiple of the profit it generates ( just like anything else). So if Bitcoin takes hold, and is used to process transactions for a small charge per transaction, you just need to estimate those numbers and put a multiple to it.
I have no idea how to do that, though.
Disagree with this idea. The profit bitcoin generates is earned by miners. Bitcoin holders don't have any share of that profit.
I continue to think Bitcoin should be valued based on comparing overall system costs per transaction with alternatives including Western Union, MoneyGram, Paypal, credit cards, bank transfers, etc. That will give you a floor price, anything on top of that is speculative.
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I love the engine purr and pedal feel of my '03 Honda Civic. If I drive a rental car I feel like I'm cheating on her.
I hate LinkedIn and to a lesser extent Facebook. I don't want to engage with people that way but I feel like it's socially required. I'd rather go to the dentist.
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Can you elaborate why GLRE and TPRE should have higher valuations? They are subpar (re)insurers with subpar investment results and 2/20%-headwind costs. Why should market value them higher?
Greenlight and Third Point's short term investment results are average but their long term returns are excellent, after fees. I think their investment strategies will outperform in the future and their underwriting will not be a significant drag. If you look at their capital structure they are really long/short equity (& a bit of credit) funds with some underwriting tacked on.
Long/short equity has struggled since 2008 as asset prices have primarily moved upward and correlations between equities have remained elevated. I think the overall market offers limited returns over the next 10 years and high quality long-short funds will outperform, with less risk as well.
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Interesting framework.
8. The market tends to underprice industries which were previously fragmented but have become more concentrated through M&A. Examples: hard drives, DRAM, US airlines(?).
9. The market tends to underprice companies which have unpredictable earnings. Examples: Greenlight Re, Third Point Re, alternative / PE asset managers.
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What's this nonsense about economies of scale existing in the renewable energy space. The author barely mentions what I think is one of the biggest factors leading to the installation of rooftop solar, perception.
You are right that perceptions are important. But if the perception doesn't align with reality, it's certainly not a good long term foundation for a business model.
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I made similar comments in a SolarCity thread. SC is a lot less physically efficient than utilities (including solar utilities), so they can only attract large amounts of customers by accepting far lower margins than utilities.
Great for the customer, not so good for the investor.
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I recently passed both levels of the CAIA as I found the content more tailored to my interests than the broader CFA. I'm planning to get an MBA and get into asset management.
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(2) Why is the Treasury department discussing what the "Transition Plan" will look like for the GSEs when FHFA is supposed to be the conservator? Treasury's only role should be to deal w/ their PSPA duties.
- You can see this in things like "End activities the GSEs should never have been doing in the first place," or "Setting the required capital for the GSEs to 300 to 400 bps," or "Potentially accelerate recognition of losses prior to 2012."
Discussing potential policy is part of the Treasury department's job. They weren't interfering with the conservator's role or communicating these ideas to the GSEs.
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If you want your portfolio to be countercyclical, I think the more effective option is to buy well positioned companies and hold the short positions yourself. Otherwise you will need to do things like hold FFH and OAK even when they aren't very cheap, since no other companies can fill their place in the portfolio.
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But, if you know a business which is better positioned and more attractively priced than FFH, I am always interested to know what you think!
Being more specific, you clearly seem to want a business which is not just "well positioned" but countercyclical. That requirement narrows the investment universe by 99.9%.
GLRE and TPRE are the only two I know of that are cheaper and have significant equity hedges. Of course you are already aware of them.
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Looks quite useful. I'd like to help test it out.
How to start a hedge fund in the US? Any advice?
in General Discussion
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Yes, asking a lawyer for advice is the most efficient path. But I think developing a strong personal understanding of legal issues (not depending entirely on your lawyer) is essential to complying with the law throughout your business practices, and not getting sued in the first place.