Spekulatius

Jurgis, good points on starting out in an expensive market. I looked at some of his pics and none of the stroked me as particularly cheap. The stock market relies too much in multiple extension for return, but can you get rich buying mid to high single digit growers at 15-20x earnings? Maybe as an investment manager you can do well, if your performance is better than the indices, even if they are low in absolute terms, but I think that will be tough as well.

Media companies like DISCA, FOX, SNI come to my mind to qualify as strong cash generators and have decent growth, unless you think that the business model for content is broken.

Great comments Oreo- I can see that the weird style of self promotion through feigning humility or showing of us brilliance rubs many the wrong way. It's also clear that he want to be seen as more experienced than he is. But then again, he is just 22 year old, started his own asset management firm and had a good start, hard to argue with that. If I were his dad, I would advice him to write less and let his performance do the talking. And I would be very proud of my son.

Yes it is. The main capitalization is the government guarantee. I am no expert on this matter, but I think the preferred will not work out. I don't understand the legal issues very well, but my 10000 foot high perspective goes like that: 1) You are suing the US government on technicalities. Fannie and Freddie were broke many times at the time they were seized. now, they are profitable, but possibly because they have access to cheap capital, due the government guarantee. The lawsuits will be endless, because the government will not easily accept a loss. 2) If the lawsuits do work out and Fannie/Freddie do become private again, they need to raise a lot of capital. More expensive mortgages would be a huge political issue and not likely to happen. The government will compete with them, by opening up a government sponsored institution doing the same thing, capitalized with $1 US, and a guarantee by he US government. Good Luck competing with that.

If you plot this relationship, you will see that risk goes up dramatically as PE increases. If you pay 50x (2% yield) and interest rates increase 1% (to 3% yield), then your stocks drop 34%. At a more "normal" 20x, the drop is only 16% for a 1% rise in rates. Theoretically, the risk premium should increase at lower interest rates to compensate for the higher risk. This risk premium puts a limit on the rational multiple you will pay. Very true. These relationships fall apart on the fringes. As we approach the ZIRP singularity, strange things are going to happen.

Besides the issues with the profit sweep and the conversatorship - how good would these business be without the government backing them up? What would their margins be and how much capital would they need to hold to run their business and insure millions of homes and assume the interest rate risk for millions for 30 year mortgages? How would they fare if the government would compete with them by founding a new GSE backed with a government guarantee?

How did you know that? :o But I guess that's normal with this guy. Having been burned by the Chinese reverse mergers, I guess he finally saved enough money to get back into the game again, so he is desperately needing to swing through the fence and make a large profit. Then he can start bragging about his legendary trade. Taleb's monkeys at work.

I think we get the next bear market with zero percent interest rates and the Fed will try to find a way to ease further.

I don't think it's no brainer. Yes, his compensation would have been higher with investment format. But he would have faced at least couple of issues: - flighty capital, especially when his AUM would have become large - complications in acquiring full businesses. I guess hedge funds can do this, but there are likely issues. I think with just stock investing Buffett would have performed worse than he did with buying whole businesses. - possible regulations if his AUM got to BRK size? - no float? Though some hedge funds now have insurance companies for float, but then how is this different from BRK? I think Buffet would have hit a wall in terms of size when he had continued to operate as a partnership. I don't think it would have been possible to acquire the many business in BRK under an LP umbrella, and there is the issue with non-permanent capital as well.

I think the idea is to look for equities (leveraged, but paying down debt with FCF), that have the same treats like the private equity deals that work out from his set of data. These would be: 1) small caps that are leveraged 2) Reasonably valued per EV/EBITDA 3) showed a pattern of paying down their debt from FCF Not a bad idea. If there is a credit freeze, his fund will get absolutely destroyed, I think.

The funds look quite terrible. It's not just the performance (or lack thereof) that is bothersome - but when I look at the portfolios, I see a pattern of the largest position (by cost) going bust, while a lot of the smaller ones work out. Maybe he averages down on bad bets? The rationale for VRX looks amateurish too. I would not put a penny in these funds.

MY suggestion: 1) Make annual vote in pay mandatory. It is already in some countries and I don't see, why the owners should not be allowed to decide on this 2) Make separation of management and board of directors mandatory. Oversight needs to be separated from execution or it's not oversight. This is already he case in many countries and I believe this will have some impact on the CEO/top management compensation as well. 3) Make is easier for shareholders to vote based on advisory groups. Allow for easier access to advisory groups and also allow for look through votes on mutual funds. I think divisors groups could make a large difference. Right now, most shares are held through mutual funds and those seem to vote mostly along with management. Voting on many individual stock positions held through individual accounts is time consuming and I suspect many individual investors forfeit their rights.

They outperformed the index over 5 and 10 years before the Valeant debacle by a narrow margin only, and lost that when Valeant lost most of it's value. Valeant was over 25% of their portfolio , so the performance impact was significant. However it is also clear that even without that Valeant debacle, they had performance issues already.

They underperformed, YTD, over 1 Year, 3 Years, 5 Years and over 10 Years. That all one needs to know. Another win for index funds. RIP

They don't move quickly, if they can't.

Now that's the spirit. I raise a pint of Goose Island Kölsch to you.

was he even born? Obviously he went back in time. He used the Tesla that comes with a flux capacitor. That is the model which has an incredible battery that can deliver 1.21 gigawatts to the flux capacitor for time travel. Manufactured in the gigafactory of course. It's model E. You can order it for 2025, it's gonna be made in 2030, and delivered to you in 2018. That's why Elon is so good - he is ahead of his time because he can travel in the future. I vote for "not human".

I drink when I am not driving. Always looking forward to a glass of wine or a beer in the evening.

I think one of the reasons they are paid more is the technology. With private jets, smart phone, big data, etc, etc. A CEO can run a much bigger and more complex company than decades ago. It's like these mega sports stars, I don't think Lebron James is better thank MJ. However, with today's technology, he can sell to a much bigger audience and realize more value for himself. In today's world, it's more than ever winner-takes-all. It's not that those CEOs create more value. They are just in the right position to take more value created by other factors, such as technology. The same is true for everyone, even the lowest paid workers. I work as an engineering manager (low level) and have some low level temp workers operating $2M pieces of equipment. It makes a huge difference in va,UE creation for the company, if they do the job well, but very little of the value accrues to them. They are truly seen as a commodity and being replicable, which is true to some extend, except that the replacement could be a screwup guy. Yet, in the current economy, the value creation of some is not rewarded. My own take is that everyone is replaceable, which applies to CEOs as well. HAlf the CEOs That I worked for I'm my carrier did not make a whole lot of difference, I only, but they still get paid as if they did.

Business I admire: Nestle: a consumer staples company truly managed for the long term. Focus in innovation and health. AAA balance sheet since forever. Keyence: Japanese company that is the undisputed market leader for optical sensors. Engineers love them. It seems like a company driven by Engineering and pretty successful at that. Fuchs Petrolub: Family controlled business with focus on mundane lubricants. Very systematic approach to gain market share (acquisitions, R&D) and strong long term financial performance.

I see - thanks. I'm looking at a refi right now, but I honestly can't imagine refinancing again after this. How much lower can mortgage rates go? By my math, my fees will be repaid by monthly savings within 15 months of refinancing. I'm about to pull the trigger on it. If we get a recession, the 30 year mortgage will get below 3% for sure. I personally like a payback in less than 12 month before refinancing. NY has a tax on mortgage, which creates a hurdle on refinancing with a different lender unfortunately. When I was in CA, I was a serial refinancer with low/no fee refinances. My 30 year mortgage sits at 3.625% and I will start looking if we hit the 3.0%. I give this about a 50% chance.

Besides the rationalization of the consumer banking, the bigger industry challenge may be the rationalization of the investment banking, which I think is in the early innings. Investment banking is rally not earning any reasonable return on the invested capital since 2009, which in my opinion means that the business impaired if not broken. Yet, I have not really seen much rationalization and in particular don't know, why the sky high salaries in this sector have come down. It kind of funny to see an industry that tries to model all other industries (and to some extent determines how they are run) having such abysmal result itself year after year and not going through a rapid transformation that they would probably recommend for any other business sector, but their own. ::)

True, Mr Big has not and probably never will blow up. He will just continue to underperform. In addition, his business acumen is overshadowed by his greediness and hubris. I never invest, if I don't like the leadership. I actually think it is easier T discount a lack of business acumen in a CEO than a lack of integrity

MY favorite compounder is Nestle (NSRGY). I have owned it for 15 years (with some buys and sales over time) and never broke a sweat about owning this company. Over time, this stock has done ver well for me. FWIW! My last buy was in February 2009.

Wells Fargo's online banking platform is the worst of all major banks that I know (far inferior to BofA) and even my small CU is better than what these guys came up with. They have not really changed anything in their banking interface for about 10 years as far as I can tell. And don't get me started in Wells Fargo Brokerage, although the latter has been recently updated. It is simply amazing that a major bank has such an antiquated inline Interface. Their IT budget must be really really small...