snailslug

The odd thing in this article is the R0 of 3.5 for SARS. I always thought that SARS didn't become a pandemic because its R0 was low enough that it was preventable. But the R0 of 3.5 indicates that wasn't the case. Does anyone know why SARS ended up being no big deal? Was our test and track just so much better? Did most people already have immunity? Something else? People get severely sick from SARS right away so you could put them in quarantine. Didn't have the problem of many asymptomatic spreaders like COVID.

http://www.wsj.com/articles/kraft-in-talks-to-be-acquired-by-3g-capital-1427238184 Kraft in Talks to be Acquired by 3G Capital / Heinz

Vehicle Miles Driven: Population-Adjusted Fractionally Off the Post-Crisis Low http://advisorperspectives.com/dshort/updates/DOT-Miles-Driven.php "Young people aged 16 to 34 drove 23 percent fewer miles on average in 2009 than they did in 2001—a greater decline in driving than any other age group. The severe economic recession was likely responsible for some of the decline, but not all." http://www.uspirg.org/reports/usp/new-direction One-way car sharing http://www.nytimes.com/2013/01/26/business/car-sharing-services-grow-and-expand-options.html?pagewanted=1&buffer_share=2b664&_r=0&pagewanted=all

Normally for wesco meetings, you can just waltz in, no credential required. They are usually held at 2pm at the Pasadena Convention Center.

If you were to do this, what would your approach to property management be? I agree that the fundamentals / financials are extremely attractive, but residential property management in particular is extremely annoying, and I'm not aware of any residential property management firms on a regional or national scale that take care of all the tenant and property management issues, unlike in commercial real estate, where this is possible. I'd be interested in doing this, but I want to spend my time thinking about the investment merits, not dealing with contractors to fix a place up.

Urban malls on the rebound http://www.latimes.com/business/la-fi-commre-retail-20110123,0,2092512.story

+1

Li Ka-Shing of Hong Kong

In Sokol's defense, he's no longer "running" MAE. He's given several interviews where he's said something to the effect of "Greg Abel is the CEO", and "my job is to go and find opportunities" (meaning deals, I think).

http://www.hedgefund.net/publicnews/default.aspx?story=10256 http://www.bloomberg.com/apps/news?pid=20601087&sid=azn_i2mJOiuw Ouch.

I believe pretty much every Fortune 500 company has mission critical applications running on...Microsoft Excel and VBA. There is no way this is going to be displaced in the enterprise, when you have so much legacy code, macros written in VBA (and not simple ones, I'm talking incredibly complex ones with tons of business logic), people have all the keyboard shortcuts memorized, etc. There is a huge huge huge amount of stickiness here, and that's why people have not switched to the free StarOffice, etc. Probably less of a pain to switch from Word, but the pain to switch from Excel and Access is horrendous. I have written quite a few of these programs for several different jobs at different companies, so I know that switching to something "free" has a lot of cost. So, the moat may continue for another 10-20 years simply due to the legacy/switching costs. On the other hand, for those small businesses just starting out without legacy code, the free tools are quite attractive.

Can't you spread the risk by buying the puts from different counterparties?

He spoke to this at the annual meeting. He said all 3 successors are currently running large businesses and creating value for Berkshire. If they were to come to headquarters in Omaha, there wouldn't be anything for them to do. He made a joke like, I just finished reading the WSJ, do you want to read it now? It seems like what Warren is thinking is that if he lasts 10 more years, for example, that's 10 less years of operating genius / value creation he gets out of the successor. That could amount to a sizable sum, especially because good managers are hard to find. I think Sokol is the guy, and if that's the case, I don't forsee much of a transition problem, because he's working with Buffett on big deals, so knows the thought process, and MidAmerican already has some other random businesses other than energy (Home Services, the real estate brokerage).

Microsoft if they bought Yahoo would throw away Yahoo search and replace it with MSN search. What they really covet is the traffic so that they can achieve scale in selling ads. That is Ballmer's logic. http://online.wsj.com/article/SB120966628366460063.html?mod=yahoo_hs&ru=yahoo

Here in CA, less severe, for sure, but still pretty severe, probably -70% for subprime areas and -35% or -40% for prime properties, but still enough to leave the borrower underwater and the bank needing to take a write down even with 20% down. I'm not all that familiar with non-CA real estate markets. Is a CA-specific issue? I know the Pacific Northwest - Portland and Seattle are trending the same as CA. Or is it a coastal issue -- anyone know if NYC, Boston, DC, those kinds of places are trending similar? But have they reserved 30% on those jumbos, that's my question? Because what if they've reserved 1,2,3% on those types of loans based on historical default rates? Or have they been already written down (I doubt it?)?

Also, to what extent do you guys think banks have written down their prime and jumbo prime portfolios? I'm not really a bank investor, so I don't know how much of their portfolio these comprise. However, I do know that out here in California, at the higher end, 750k+ with prime type of borrowers in good neighborhoods, prices are just starting to fall and foreclosures are just beginning. I know percentage-wise in terms of loans this may be small, but the loan values are just so huge, it must have a substantial impact. I somehow doubt these have been written down, considering the "aggressive" accounting that's been taking place.

But who ran LTCM? John Meriwether: John Meriwether earned an undergraduate degree from Northwestern University and an MBA degree from the University of Chicago Graduate School of Business. Also, there is a big difference between PhDs in Economics (which the LTCM folks were) and PhDs in Math and Science.

I think, as value investors, it's not really that important for us to understand how something like Simons' fund or another successful quant guy, Ray Dalio's Bridgewater, works, because unless you have a PhD in Math like these guys, you probably can't replicate it. However, as a rational person, a la Munger, this is indeed a Lollapalooza in the making, so I think it's of interest just simply from a rational, philosophical point of view. My understanding of these kinds of funds is that they traffic in all asset classes, from commodities, to equities, futures, anything that's liquid and easily tradeable. I read an interview with Simons where he said Buffett's approach is making a bunch of money on a concentrated bet, while his is like picking up pennies. I believe what they do is hire Math and Physics PhDs, many with no finance background, who comb through historical securities trading data looking for strong statistical correlations between price movement and certain variables. The reason they probably hire the PhDs is that finding statistical correlations is similar to finding correlations in science experiments. Also, note that they do not generally hire MBAs, they hire people who probably actually understand what sigma means, which probably reduces their blow-up risk. For example, with the net-nets, they probably found a correlation between stocks selling for less than cash and their prices going up over time, which is exactly what Graham found, but he found that using reasoning rather than statistical analysis. But, microcaps?? In many of the cases I've run into, they file a 4 because they own 10% or something, and the entire cap is like $30mn, so it's a $3m position in a $4bn fund (for Medallion)...talk about picking up pennies! I also read that they lever up about 3-4X. So, spread out a whole LOT of small sized, positive expected value risk-adjusted bets that are market neutral that is agnostic towards asset class, and have the computer trade, eliminates the problem of diworseification. Appears to be a rational approach to me, but difficult to implement for mere mortals. Makes sense that they would do well in an environment when there is a lot of volatility though if this is really the approach. Final point, note how different this approach is from other "quant" hedge funds that blow up. For example, the Bear Stearns funds that blew up were, buy a whole bunch of one thing that you think is very "safe" due to your "formula" (CDOs) and lever up like mad. I believe (but am not sure) that LTCM suffered from a similar idea, buy a bunch of trades on interest rate spreads only and then get margin called. Anyways, like I said, I don't think it's of much practical use, to me anyways, but I just find it fascinating.

No, he sold a portion (13.7m shares) to get a tax credit (real cash coming back from the IRS). However, according to GAAP rules, he had to write down the entire position still being held (71.2m shares) as if he sold the whole thing, including a write down for the part he did not sell.

http://www.sec.gov/edgar/searchedgar/companysearch.html Put in the stock symbol and look at the 4 or SC 13D / SC 13G forms

I've been running into 13Gs and 4's from James Simons' Renaissance fund a lot recently in microcaps that are net-nets. Anyone else experience this phenomenon? Maybe the fancy computer algorithms and Graham's ideas about net-nets are really not that far apart! Different path, but same outcome! I know this is probably one of only many strategies at Renaissance but just thought it was interesting.

Value Investing: From Graham to Buffett and Beyond (Wiley Finance) by Bruce Greenwald

Yep, that was exactly the sense that I got from the meeting. However, they a) are not spending a lot of money trying those things b) have the balance sheet flexibility to continue trying things until something sticks c) have the earliest of green shoots showing that some of those things are sticking (layaway, the blue crew appliance commercials have helped regain appliance marketshare) So, will it work? Not clear. But, they have time.

But in many other cases, their stores (more the Sears ones than the KMart ones) are in very prime real estate locations. In many cases, it's not the buildings that are valuable but the land/location. Obviously, in the short run, this is compromised by the economic meltdown, but if you take a 5-10 year view like I believe Lampert does, the land could have a lot of value for things other than Sears stores. Condos, office buildings, etc.