Spekulatius

I guess I am one of these guys who seem to know less about investing than 20 years ago - all I have learned is humility and a healthy respect for Mr. Market. I am a diversified investor and typically have about 40 stocks in my portfolio. I did not find that my "best" ideas necessarily performed best in the past. I often had secondary ideas where I bought just a small position and those outperformed my best ones, (or those I considered best when I bought in). I like to be diversified as an insurance against my lack of knowledge and more so against my hubris. Being diversified has advantages. I found for example that when I have large positions in a stock, my judgement tends to me less rational. i think what happens is that a large position becomes not only a matter of money, but also a matter or ego (you got to be right) and due to the large stake involved (both financial and emotionally) the decisions about buying and tend to be less rational than with smaller stakes. I view diversification as "cheap" insurance against blow ups ands keep sound sleep at night.

+1 cant find much. Looking at what I can find with google search very asset rich company. Have nightmares though of holding it for years/decades with value never being monetized. Here is an older annual report. https://www.amstock.com/proxyservices/Files/AR16728.pdf I have concerns about fraud and companies imploding because changing business environment, but never about a company/stock just sitting there and doing nothing. If company is doing nothing, I just sell the stock at a somewhat opportune time and move on. Other than opportunity cost, I should not have lost money. No investment is worth having nightmares about it. If I were to have nightmares about and investment, it's a sure sign that I own either too much of it, or the stock is not suitable for my situation. Better to sell down the position or sell it out entirely and get the sound sleep back.

No it wasn't me. However, it is clear that the value of the ranch exceeds the book value by far. I also think that based on the rent income (roughly 2.1M$), the value of the RE exceeds the book value of ~16M$ as well. If and when the value is realized remains a big question, but I think as long as the assets are well managed and appreciate in value, the stock price should just appreciate likewise, plus there is a chance of a huge payoff, if the company decides to monetize some assets.

Spek, do you still hold QUCT? Yes, and I added a chunk at 1080$ a few days ago. They only publish number since a year and that is it. Last years profit was down, because the costs in the trust business were growing faster than revenues, supposedly a result of a branch expansion. QUCT bought a decent chunk of commercial RE last year for 8M$ (~160M$/ share), but I don't think that this increase GAAP earnings although it my improve intrinsic value over time. They still should have a decent amount of net cash even after this investment. OK, this is probably a value trap, but I don't think I will lose money on that one. I estimate the asset value at least twice the current market value and maybe more, if they indeed would find a buyer for their ranch (I don't think they are looking to sell the ranch actually at this point). Overall, the assets are getting more valuable, the trust business throws of cash and the insiders as far as I know don't rob the company, so I think this illiquid, but safe.

QUCT, obscure company that runs a trust business, owns a huge ranch in central CA, commercial RE and a bunch of cash and bonds. Trades on appointment only. The folks running it are the same folks that own and run FMBL, a southern CA business bank.

I look at asset quality and asset quality trends first. i won't buy anything with a high Texas ratio. Typically a 40% Texas ratio is my limit. I look for a combination of low PE and low price/tangible book ratio. I look at pot. Vulnerable assets like construction loans, how assets held up during the great recession and generally I like to see the potential to earn at least a 1 % ROA, without risky endeavors. I think nowadays, one should look at the duration of their loan and securities portfolio as well (interest rate risk).

It's one if the cheapest aerospace manufacturers/suppliers in the US stock market currently, if the earnings forecast from management comes through. This is not a sure thing, because they disappointed in 2013. I think the issues are fixable and if management isn't able to fix it, somebody else will do it for them.

ALLY, NN.AS and TGI

Paychecks are pretty rare nowadays, pay is mostly done with direct deposits. It is possible that business with a lot of empoloyee turnover do a lot of payroll using Paychecks. In any case, this has nothing to do with MA or V's business. FWIW, I came back from a vacation and had a hell of a time to get a 100$ note "broken down". Most transactions are done using credit cards or debit, so business don't have much cash in their register, maybe a few twenties, few tens and one $ notes, but no more.

SPND - a small E&P microcap run by a husband and wife team. They are mostly buying stakes in drilling ventures around Fort Worth and are very very good at it, as they have been hitting singles for more than a decade now. Think they can do another 10x in ten years. OTCadventures has a post about the stock a while ago: http://otcadventures.com/?p=300 Needless to say, this stock is illiquid and hard to buy. I own some, bought in the low 2's, but not enough...

As far as the process if selecting/eliminating is concerned, I have over time gained a basic feel what to look for in various industries, like banks (FDIC records), insurance companies (book value growth, loss triangles), E&P's (reserves), which saves a lot of time. Once I research a company, In not only look at the financial records of the companies itself, I equally spent time to look at the records and presentations of direct competitors as well. This has proved very valuable to me, to get a different perpective, and often a liked a competitors stock more than the one ai initially was researching. I also like to read the shareholders letters and look at what metrics management looks at and how consistent the message is over the years. 10k's are valuable to look at somewhat hidden timebombs like pension or asbestos expenses or other liabilities that analysts often spent very little effort on, despite the fact that they can be a significant part of the EV and is not shown in any screener. All those things work well in situations where reversal to the mean is more likely, not so much in trend business like retail or tech (unless it is very mature in nature).

I have not done detailed calculations with the inflows/outflows recently, but I beat the SP500 most years. The biggest outperformance was during bear markets, in bull markets I generally perform more inline with the market. In my last detailed calculation in 2012, the IRR in my IRA started in 1998 was around 18% I believe the outperformance in bear markets is due to the fact that many stocks are "multiple pillar" stocks, backed by earnings and assets, with little correlation to the general market direction. I have also used volatility to my advantage with short term trades in my IRA. This works best in bear markets when volatility is very high, but not that well recently. I think a Graham like approach works, because one avoids doing stupid investments, where the risk of permanent impairments is very high. I acknowledge that a concentrated approach can yield better results, but there is also a higher tail risk and many will blow up over time. That said, I have been following a more concentrated approach in the last few years as well (via position weighting).

I am more of a Graham type investor. I keep a watchlist of a few hundred stocks (in yahoo) sorted by industry lists, countries etc. Those are all stocks that. I found to be interesting at some point. Once something becomes cheap and looks overly depressed I do a bit research and find the underlying cause for the price decline /depressed stock price. i look for low valuation metrics and reasonably solid balance sheet and a management that does not seem to screw over shareholders. I do accept low liquidity and in some cases low profitability, if I think the assets are worth way more than the current EV. i look for stocks that trade at less than 80% of their value, as determined by easily discernible metrics (RE valuations based on rent multiplier, cash and current assets,P/Book EV/EBIT metrics in some cases). My favorite areas are real estate, E&P's, banks, insurance and manufacturing. I avoid retail and tech (in most cases). I own a diversified portfolio with typically 30-40 positions at all times. I think of investing like farming, I seed some, grow some and harvest some at all times. My desired holding period is 1-3 years, similar to Grahams 2 years, but I do hold some shares longer and don't mind opportunistic short term trades either.

Wexboy has a series of posts on German real estate companies and ended up buying BIW.F (KWG). Although not a Reit, I like SPB.F (Sedlmayr Grund und Boden). They own commercial and residential RE in Munich and Stuttgart ( via Dinkelacker). They are good owner operators and have been building their RE holdings over more than a hundred years coming from the Brewery business (Spaten). My mom (who is ultra conservative) bought some on my advice, more than a year ago, at lower than prevailing prices. I will probably inherit them at some point. I also owned some Vastned (a dutch shopping center Reit) a while ago but sold, as the discount to NAV was closing. Generally, i found Reits in Europe not to be particulary well run. I do have a significant part of my portfolio invested in RE related stocks, but mostly in thr US and not much in Reits.

1. Andre Kostolany : Geldgeschichten (Kostolany did more to popularize stock investing than anybody else in Germany in the 80's) 2. N Taleb: Fooled by Randomness 3. Buffet/Munger: Berkshire shareholder letters and other writings (Their writings are better than the books about them,imo) 4. Greenblatt: Little book that beats the market 5.Kindleberger : Maniacs, Panic and crashes

There was no recession in 98 in Europe or the US per say, but there was a severe and short lived bear market in many tech stocks. Of course there was a severe bear market with asian stocks and even quality companies could be bought for a song. This was similar to 2010 (Europe crisis) or 2011/2012 (Japan, Fukushima). Bottom line is that there are buying opportunities at least every 5 years in major stock markets.

Adidas' market cap is ~22B$ vs UA's ~10B$, so even if UA catches up to them, it's not going to get you far. I think it is pretty far fetched to find a stock that makes you rich based on buy and hold right now, given, extended valuations and a pretty extended economic cycle (5 years into a recovery). Once we head into a recession and the market turns down 30% or more and some baby's do get thrown out with the bathwater, things will get easier. Yes I get excited just thinking of that day..... someone once said, you make all your money in the bear market, you just dont realize it at the time. HOWEVER, we can spend our lives waiting for the bear, Warren Buffett has said if he was starting over with 1 million he'd be fully invested..... Bear markets in average occur every five years or so. I have seen 1982, 1987, 1990, 1998, 2002, 2008,2010 and there were some pretty good opportunities in between. I have experienced all the above (started out in 1982 with 600 DM then) The key is not to lose too much going into the bear markets. Guy Spiers Aquamarin (just to name one example) lost ~47% in 2008, this is just too much. I lost a great deal too in 2008, but not 47%. So getting more defensive towards the end of a bull market cycle is key. Problem with value investing is that many value investors are starting to stretch at the end of the cycle and growth stocks simply become unaffordable. Just take SAM at 20x EBITDA and 30x earnings . It just does not make any sense to own these things from a risk/reward perspective, since they can loose 50% in a bear market, even if fundamentals stay intact and even more if they don't. I am not claiming to have a solution to this as there are issues with market timing and opportunity cost, but I do like to keep a healthy cash buffer around in times like this (20%, preferably more)

They could fill them easily but before that, they need to go down 5-10x in price.

Adidas' market cap is ~22B$ vs UA's ~10B$, so even if UA catches up to them, it's not going to get you far. I think it is pretty far fetched to find a stock that makes you rich based on buy and hold right now, given, extended valuations and a pretty extended economic cycle (5 years into a recovery). Once we head into a recession and the market turns down 30% or more and some baby's do get thrown out with the bathwater, things will get easier.

I just tried it, google then hit images. That is odd. What does google think BH stands for? Big Hooters? in dutch it stands for bra BH=Buestenhalter (german=Bra)

Germany --> North Bay, CA

At 5$/share, buying back stock would have done wonders for BAC, at current valuations, I think they are better off paying some dividends. BAC trades at almost the same price/tangible ratio than JPM and JPM is arguable a much better managed bank.

MUSA spinoff : Positive aspects are: 1) Solid balance sheet 2) Exited noncore business (ethanol) for a nice chunk of cash 3) They own their real estate 4) Insider buys 5) Low cost leadership, which is important in Commodity business 6) Other companies in the same sector doing well (Susser) the big Y: [http://brooklyninvestor.blogspot.com/2014/02/alleghany-corp-investor-day.html/url]

Has any one looked at CVE? This integrated E&P seems to have a huge runaway in terms of production growth in front of them, which so far has been financed internally. I think they have done some smart moves in the past,like spinning of ECA and swapping upstream assets for a stake into COP (now PSX) refineries, which sort of hedged against WT/bitumen brent spreads. They pay a modest dividend too. Despite good production growth in the past, the stocks trades at a multi year low. Anybody own this or is looking into this stock? I think it could be a long runaway kind if stock.

Debt load generally appears too high, given the risks and volatility of the business. To make matters worse, some companies appear to distribute too much of their cash flow. I wonder when some of them, just get the message and deleverage. The Canadian E&p's certainly looks cheap based on price/cash flow metric, but one should look at the EV/cash flow ratio and then the relative valuation advantage to US peers is not as large as it first seems, imo.