Rabbitisrich

It's not literally the same, and the literal differences can be very important. For example, in most cases, debt held in a portfolio company is non-recourse, and the relevant uncertainty is in the operating cash flows. If you hold debt in your account to hold an equivalent amount of stock, even if the debt is non-recourse, you have to consider uncertainty in market valuations.

I'm not sure that gold is best understood through cpi price movements, or even expectations. Look at gold in yen terms over the last two decades compared to inflation, or see gold in dollar terms relative to yield curve and tips implied inflation. Here are a couple of interesting conjectures about gold: http://krugman.blogs.nytimes.com/2011/09/06/treasuries-tips-and-gold-wonkish/ http://ftalphaville.ft.com/blog/2012/08/27/1128691/china-dollars-gold-and-a-theory-of-relativity/

I found S&P's message to be difficult to discern. They seemed to be making a mathematical argument about America's capacity to service debt in nominal terms. But then they would say something like this: So the explanation is perhaps better understood as a statement on federal character. Why did S&P spend so much time on capacity arguments without explicitly contextualizing bearish scenarios with character arguments? It leaves too much ambiguity and allows for pundits to make silly arguments over which "side" caused the downgrade.

It would be better for investors to set up some sort of mandatory tender facility, where investors are compelled submit stock pro rata to some pre-set aggregrate $ amount. The company would then immediately effect a stock split, so that each investor holds the same number of shares as before. You get a "dividend", but only pay tax on the gain.

Winning article on gold from the Adonis team at FT Alphaville: http://ftalphaville.ft.com/blog/2012/08/27/1128691/china-dollars-gold-and-a-theory-of-relativity/

If the dividend doesn't reduce bond yields, and the marginal ROC is shrinking, then Dell would want the cost of equity to be as high as possible. What is the benefit of a cash flowing business with a high equity yield paying a dividend except to the extent that it hedges against investor mistakes?

Hah, well if your business strategy involves bargaining with the terminally ill and their loved ones in the months prior to expected death, then I think that you lose some rights to indignation.

Ackman makes it easy being such a powerpoint jockey. Via Marketfolly: http://www.marketfolly.com/2010/06/bill-ackmans-ira-sohn-presentation.html http://www.marketfolly.com/2009/06/pershing-squares-general-growth.html I also enjoyed the "debate" with Hovde Capital: http://articles.businessinsider.com/2010-02-16/wall_street/30090966_1_ggp-commercial-real-estate-gold-mine

These days, I've been finding good research ideas from strong analysts with mediocre results. For example, Tom Brown from Second Curve and Meryl Witmer from Eagle Capital are smart as mountain goats, but for various reasons didn't show good returns. Just try to skip those reasons.

^This is a particularly good exercise for exactly that reason. I read an analysis of RIMM where the author listed attractive financial data and then surprised the reader with the name. Yet, you could have done something very similar with LOJN prior to when you couldn't.

There are a few issues that cloud the analysis, though I don't know to what extent. For example, the Buffett portfolio is assembled from the 13f-hr, then treated as constant weights between reports. So if a company outperforms the rest of the portfolio, the excess weighting may be treated as "sold", and then "repurchased" when it shows up at a different weight in the next 13f. The authors also try to look past tax effects by comparing a pre-tax stylized portfolio to the "Buffett" portfolio mentioned above. Yet, taxes and fees are a large part of portfolio management. It's a comparison of a tax-efficient portfolio strategy to a tax-free strategy, before taxes. These issues aren't really criticisms of the study, but they complicate the authors' conclusions. What is the turnover on the stylized portfolios? Does size affect tahe monthly rebalancing as the portfolio grows?

I forgot about this clever goat, but Lou Simpson has been filing 13f-hrs for several quarters. http://www.sec.gov/Archives/edgar/data/1534380/000117266112000880/sqadvisors2q12.txt

He probably stress tested the banks to determine the likelihood of requiring further capital. The paper also provided a floor on the conversion price--very handy when the market price plunged the next month.

I've been selling my basket financials positions, and selling Jan calls on my WFC position. I entered August with almost no cash, but I don't really have a view on market direction.

I remember an old CNBC interview where one of the Freddie Mac directors stated that the BOD held fiduciary responsibility to the conservator. Bill Ackman sat next to him, and received confirmation that the director would subordinate equity and preferred interests.

From what I understand, after the Washington Mutual seizure, the FDIC sent in staff to allow depositors access to their covered funds almost immediately. Similarly, Indymac shut down for a weekend and reopened under conservatorship. If you are within the coverage amount, then it's a pretty seamless transition.

It's strange to read Parsad describing an empty Holiday Inn at the 2002 Berkshire Hathaway AGM. Interesting comments from the meeting: http://msnbrkboardarchive.multiply.com/journal/item/9709/BRK-AGM-Notes

Keep them coming! Super interesting series. By the way, do you visit any real estate investing blogs or message boards?

Ragnarisapirate is too modest to post this, but he has a very interesting series called "Walking Away From A Few Million Dollars". I have been tempted by a glut of condos that trade for under $250,000 despite comparable floor plans renting at ~$1,500 monthly. These articles helped me to remove the dollar signs from my eyes and to look at the mysteriously low HOAs, low owner-occupancies, and special assessments histories. http://ragnarisapirate.blogspot.com/2012/05/sometimes-its-best-to-take-pass-40.html http://ragnarisapirate.blogspot.com/2012/06/walking-away-from-few-million-dollars.html http://ragnarisapirate.blogspot.com/2012/07/walking-away-from-few-million-dollars_18.html

To what extent does having a small fund support his returns? He doesn't hold a lot of small/micro caps. By the way, Business Insider mentioned the Lee Munsen character: http://articles.businessinsider.com/2011-04-01/wall_street/30024477_1_drug-dealer-rome-closing-bell

Margins don't look low to me at 37.5% gross margin and 20% ROC. Asset turnover is 3x+ and they can safely raise more debt even if sales fall to 2008 levels at 7% operating profit. Is this a clothing retailer? The numbers look similar to GPS but with Rue 21 asset turnover.

Plan, I think that Berkowitz always held a liquidation value thesis first, and only looked at the operating cash in so far as it covered expenses and allowed for breathing room. The March 2009 OID has a good interview [pdf file]: http://www.grahamanddoddsville.net/wordpress/Files/Gurus/Bruce%20Berkowitz/OID%20-%20Bruce%20Berkowitz%20-%203-17-2009.pdf

Yep, I like this thread. Even if you, understandably, don't want to arrive at a valuation from the financials alone, it's still good practice to attempt to match scenarios to the available data. ENR was a particularly good choice because of the swings in debt/equity, share count, and asset turnover.

Klarman sometimes talks about his longs. He thought that NWS was cheap on a sum of parts analysis. MSFT BBEP and PDLI had hedges and royalties, respectively, worth more than the market cap. His larger positions typically generate large amounts of cash relative to market cap. I think that he acknowledged RHI as a mistake, but these small positions are best viewed as a basket.

I suspect that such checklist banking motivated Dimon's unfortunate "Basel III is unamerican" comments. It just comes down to "by how much?" and "compared to what price?"