rpadebet

I wrote some April 40-strike puts on FAST today. In a week I'll either have a starter position in FAST at a basis of $39.15 or $0.85 per share profit. Im watching fast too, do you think the multiple premium is still justified at these prices? I can't tell for sure if they're going to keep growing like in the past but I do like that insiders are buying and the shares buyback. I am prepared to buy more if it does go down a lot. I do not know if the high multiple is justified. I'll get more serious about looking into FAST if I get put to on Friday! In the FAST thread Phaceliacapital points out that FAST has always been priced at a high multiple. Of course that is no justification unless the growth is still there. I also noticed the insiders were buying and that helped pushed me to go ahead and write some puts. Edit: FAST is by far the highest multiple stock I have looked at in a long time. Don't you think the predictability of the business deserves a higher multiple than average? Regarding growth, their investor presentation points to a very long runway ....so I am not concerned abt the growth as such (it will happen, just a matter of when). I recently swapped some of my long held AIG position to FAST - moving up the quality of business chain. I can sleep better with my entire net worth invested in FAST as opposed to AIG even though the multiple on AIG is paltry.

Curious how you rationalize currents prices of say, BABA or AMZN? Do you run some sort of DCF out many years, assuming the companies will grow into their valuations and still give you sufficient safety in your investment? I'm not looking to attack, genuinely curious as to the thought process :) See AMZN thread, I have elaborated my thinking many times there. BABA is also similar, but more growth and lower margins (as % of GMV). I think once they get their market share, they are going to take advantage of the associated network effects to increase the margins to more "normal" levels. Btw, next year BABA's GMV in china is estimated to be 80% of WMT's GMV worldwide next year. How would you compare BABA with Softbank? I own softbank because I wanted to own BABA. I also owned Softbank because of BABA. I like Softbank and it is definitely more undervalued, but as others have pointed out, the discount persists for different reasons and I made the call that at this point, I'd rather have direct exposure to BABA than indirect given where BABA price is. So replaced Softbank with BABA. Might swap again if the BABA: Softbank ratio improves and I see Sprint turning around a bit.

I'd sleep as much as my current life allows me...I do enjoy sleeping a lot Some years I have done the 4 hour sleep routine and some years 10+. If circumstances are right, I can sleep 12-14 hrs. Now that I have a kid, my sleep is interrupted every 3-4 hrs, but i still manage 8+ hours

Curious how you rationalize currents prices of say, BABA or AMZN? Do you run some sort of DCF out many years, assuming the companies will grow into their valuations and still give you sufficient safety in your investment? I'm not looking to attack, genuinely curious as to the thought process :) See AMZN thread, I have elaborated my thinking many times there. BABA is also similar, but more growth and lower margins (as % of GMV). I think once they get their market share, they are going to take advantage of the associated network effects to increase the margins to more "normal" levels. Btw, next year BABA's GMV in china is estimated to be 80% of WMT's GMV worldwide next year.

BABA (Yes I am a growth investor now with BABA,AMZN,FAST,VRX,BR, AAPL and CTSH making up 50% of my portfolio)

I guess this is only true if you straight-jacket value investing to mean very low P/Es and P/Bs. Maybe the quantitative index style value investing has under performed, but value investing is more nuanced than this. Its good to understand the difference between value and price and that sometimes there is no quantifiable relationship between them. Quantitative value indices also make this error of assuming low price automatically means high value. To me value investing means 1. Identifying contrarian/asymmetric opportunities 2. Being selective of the businesses you invest in 3. Demanding a large margin of safety (either quantitative or qualitative) Its basically play the odds only when they are in your favor You can't make an index using these rules (and I am a professional indexer). So anyone saying value investing hasn't worked, isn't analyzing this properly. If you could identify value in FB when it was trading in the teens and held it because you believed there was a high probability of the growth they would show, that's value investing for me. But buying radio shack because it had a low PE and low PB isn't value investing for me.

Seems like I have seen this movie before. (forgot the name) I think lawsuit->prison/bankruptcy->book deal->speaking circuit come next.

I think it was more of a "capital allocation" decision 8) Nowadays he seems to prefer large businesses like railways where they not only generate tons of cash flow after maintenance capex, but also are able to invest a lot in growth capex internally i.e. long growth runway. My guess is he thought Exxon could be one of those as well but with what happened with Oil industry, he probably thinks Exxon's internal/industry investment opportunities are limited for the foreseeable future. Scratch the previous rationale.... The Oracle obviously foresaw this happening today http://www.cnbc.com/id/102435803

I think it was more of a "capital allocation" decision 8) Nowadays he seems to prefer large businesses like railways where they not only generate tons of cash flow after maintenance capex, but also are able to invest a lot in growth capex internally i.e. long growth runway. My guess is he thought Exxon could be one of those as well but with what happened with Oil industry, he probably thinks Exxon's internal/industry investment opportunities are limited for the foreseeable future.

Surprising part of XOM was he was in and out in a flash.(for BRK) If I remember correctly at the time he bought XOM, he had a choice of AAPL in 400s, MSFT in 30s, ORCL in low 30s. At that point some posters here felt that his buying XOM as opposed to these other mega caps was sort of a vote on their relative value and riskiness. I find it interesting that the others are up at least 50% and XOM down to flat.

More surprisingly, Out of XOM and COP. Keeps reducing NOV. Clearly doesn't believe in Oil prices stabilizing around here. IBM staked upped and that's a head scratcher (for me at least)

Thanks once again merkhet.. The reason I am hanging my hat completely on a legal remedy (if possible) is opposite of what you alluded to.. Democrats love the net worth sweep because it funds their spending programs as long as they want. Republican administration would also love it once in power because the reduced deficit allows them room for increased defense spending or pay for tax cuts. (Dems did it already during the payroll tax cut) Politically, the crisis is in the rear view mirror. Employees at F&F keep getting paid well. 30Y mortgages are still being issued. Given the deficit reduction "powers" of this sweep amendment, its secretly attractive to both parties to continue the status quo. The "owners" here have been conveniently labelled as "greedy hedge funds"...so turning public opinion towards ending conservatorship is incredibly difficult.

merkhet - thanks for all your contributions here and help in translating the legalese.. My question to you is probably quite dumb... Do you think its possible to put an upper bound on how long the entire process would take assuming its decided one way or the other via the court system only? Are we looking at 2 yrs, 5yrs, 10 yrs or can it go on even longer theoretically? Assuming legislatively/politically we don't make much headway, is there anything else preventing the current or any future administration from continuing with the current system of net worth sweep each year to eternity?

Picked up this lottery ticket today for 1% position. Small enough not to bother me if it is a total loss

Here is my expert finger in the air prediction. I expect 40$ oil on average this year. Stays around there longer than people think i.e. more than 2-3 years at least assuming there is no large scale global supply reducing conflict. I think it is very low probability event that oil goes back up soon, even if it does 60-70 seems like a cap. I expect a story similar to Natural Gas to play out here, except I expect the price slump to be relatively shorter (Cheap Nat gas couldn't be exported economically so the price slump was longer there) To be honest. I have no clue and not much oil exposure except for NOV (5%) in my portfolio. I hope NOV's pipeline of projects last. They use the cashflow to make some good acquisitions when prices are depressed.

Daniel, meet BRK, FFH, etc. Also meet LEXCX. I don't know how much more autopilot you can go.

Take a look at the mutual fund LEXCX. the ultimate buy and hold. There is no manager. Just a trustee. They bought 20-30 stocks during the great depression and haven't rebalanced or changed anything. They never sell. 0% turnover. Current stocks are direct decedent's of original portfolio. It's beaten SP500 handsomely. Being an index investor is embarrassing actually when you consider this portfolio.

Because they tend to be businesses with high fixed costs and no pricing power and will see their profits killed in a deflationary environment. Yes, businesses without pricing power are bad in most environments, but how abt something like Railroads or utilities or telecoms or even airlines if they can maintain their pricing discipline.

Since Asset heavy businesses are supposed to be bad holdings in an inflationary environment, why can't they be considered good holdings in deflationary environment?

Fair point. But there is always a chance that there are better managers and better funds than I already have. :) btw anyone know of a fund heavily invested in BRK, FFH or MKL? (>30% weight)

I have some cash sitting in my 401K which allows me to only invest in Mutual funds. I can invest in pretty much any mutual fund through the brokerage account option my 401K allows. Over the years I have accumulated some pretty good funds but I am looking for some good recommendations by the community. I am currently invested in FAIRX FOCIX MXXVX LEXCX TBCUX FPACX WEMMX FARNX I am looking for Equity funds only (no interest in bond funds in my 401K unless they are special/distressed situations like FOCIX). Prefer focused mutual funds to diversified funds. Prefer a go anywhere approach rather than sector based or size based. I don't mind volatility at all, as I am just planning to buy and sit, but would insist on the manager having a value bent.

Alternatively invert, and put yourself in the shoe of a hiring manager 5 years down the line: He has two candidates in front of him with the exact same resume, but the difference being the first one is a Sr. Research Analyst at a brand name firm with standard experience and the other one is a Financial Analyst at a no-name firm with likely greater experience. You as a hiring manager want to pick the candidate who can best get the job done. Whom will you hire? Would you rely on the brand or would you give more weight to the experience?

Assuming you like to build a long career in this field, I would 1)ignore the difference in cashflow 2)ignore the size of the firm or how it looks on my resume 3)ignore the chances of promotions/raises 4)ignore relocation and geographic factors unless there are extenuating family circumstances 5)ignore the duration of work hours Out of college, you really want to be a learning machine at this stage. If you learn enough now, few years down the line the knowledge and skill will most likely pay you back in spades. Difference in cashflows then between a skilled/knowledgeable candidate and others will be huge. You will likely have some real world accomplishments to put on your resume rather than rely on brand name employer/college. Promotions/raises are a by-product. Relocation will be a bigger factor as your family responsibilities grow, so you want to factor in this only when u actually need to. Take the job where you feel you can learn the most.

I don't see many people predicting what Tepper and few others are predicting. That is why i think it has a decent chance of coming true. "Panic buying" might happen towards the later half of next year though if fed gives indications that it may delay rate hike or introduce QE again. Institutional investors who have under performed this year primarily due to their high cash %, are going to have to scamper to avoid losing investors.

LOL How is this value investing. Cash seems expensive @ 1000 PE. 2000 PE if you consider taxes.