randomep

Well, maybe I'm easily impressed, but a 30-year-old founder of a company valued at 10bn by savvy investors like Larry Ellison, who built a business in a very tough and technical field, where large incumbent companies tend to dominate, and who wants to make hundreds of blood tests available in Walgreens and other drugstores to regular people for a few bucks impresses me. I wasn't seeing anyone else doing that quite yet, but maybe I missed it. We're likely talking passed each other, and it's probably my fault. You were probably just looking for more evidence of what Theranos is doing better than others, while I pattern-matched some of what you said and probably read too much into it (being "baffled", the "she's pretty.. but.." comment, "what's groundbreaking?", etc). I apologize for being a bit defensive. I also hope to learn more about Theranos. Maybe someday they IPO and we can learn more about what's going on in there. The recent press blitz certainly could be the an early step to going public. Ya its cool. I read about her a while back in my paper copy of fortune or some such magazine. And these questions stuck out in my mind. As I have no one to talk to about finance, this forum is one of very few outlets. So, I blurted out the first thing on my mind in this thread....... But definitely it helps for us all to stay on top of things. Health is a huge industry for growth, it is 18% of GDP and there's obamacare. There is tremendous pressure to shave costs. So the industry is hungry for a game changer. But it is hard in such a labour intensive industry. I mean it is ridiculous that my doctor still uses paper files.

i think this is a good start on validity of the claims. the company got recently got some FDA approvals for their system and hiv tests https://fortune.com/2015/07/02/theranos-fda-approval/ OK I really don't get what is the big deal. With HIV testing there are now at home tests using saliva that can give results in 15min. How is theranos groundbreaking? As for hepatitus and herpes, others also offer at home test kits. Seems like to me when they run out of new sexy ideas to tout in the financial community like internet backbone they take an plain vanilla idea and sell some small improvement as out of this world.... I know she is pretty and has an IQ of 180 but I baffled how she can be worth $5B. So you know nothing about the company (which was in stealth mode until recently so very little is known about it), but your are baffled by how it can be worth a lot? I know little too, but it's not too hard to imagine that its tests can be significantly better (faster, cheaper, more varied, lower false positives, based on patented tech that is defensible for a while, whatever), and that this could be worth a lot of money. You don't need something entirely "new" to build a valuable business and improve things. The iPhone was far from the first smartphone, the Model S isn't the first EV. I think the rational position is to say that you need more information to make up your mind, not to try to pooh pooh her company and its technology. I don't know yet if Theranos is the Apple or Tesla of its field, but what I've seen so far is impressive. I know about blood tests and at home tests cos I have used lots of them. So I know something about the industry. When you are worried about HIV, Hep C, price is not that big a deal. You say you know very little about the company but what you've seen is impressive. Ok to a guy who admittedly knows little about theranos plz tell me what is impressive. BTW I have read the articles....... Seems like to me we all know little. But I've seen the website talking about their tests. They require human assistance. And they are talking about a $9 pricepoint... I dunno I don't get it.

i think this is a good start on validity of the claims. the company got recently got some FDA approvals for their system and hiv tests https://fortune.com/2015/07/02/theranos-fda-approval/ OK I really don't get what is the big deal. With HIV testing there are now at home tests using saliva that can give results in 15min. How is theranos groundbreaking? As for hepatitus and herpes, others also offer at home test kits. Seems like to me when they run out of new sexy ideas to tout in the financial community like internet backbone they take an plain vanilla idea and sell some small improvement as out of this world.... I know she is pretty and has an IQ of 180 but I baffled how she can be worth $5B.

Wait she uses cyber university a lucrative effortless way to trade too. I have checked it out and I am going to sign up as soon as I find my credit card. Check it out! www.idiottrader.com

I know that, but isn't Theranos a private startup still? With presumably very little sales? So this is your typical private equity pie in the sky valuation? again.... i am just trying to get the facts......

I have heard about her. But what I am trying to understand is how do they get the $5B net worth valuation? Theranos from what I gather is a very secretive startup that has been around a loooong time. So this is just a dreamy startup with sales nowhere near their valuation, correct? Sorry to rain on the parade, but I first want to get the facts before passing judgement.

what for?

Just checked it out. I feel your pain man.

ditto, it is such a hard habit to break, but if you must hold me to a number, I'd say every 30min?

Hey all, I am always paranoid and I try to dream up worse case scenarios. I am not at all afraid of Grexit doing damage to my companies. However, I sometimes wonder, if the country decides not to abide by international laws, can they possibly nationalize foreign owernship in Greek companies? Like my shares? Is there any precedent? thanks

Karelia is very interesting. What do you know about their target markets, and what's the reason for the high growth levels? Well, the last year was very good because of currency gains. Strip that out and its wasn't THAT phenomenal. Otherwise, I don't exactly know why they are growing so much. I can say that they have a small market share so it is easy to expand. I get the impression the management is very good. They are also expanding capacity so that may further increase sales. In addition, their margins I noticed were a bit worse than PM, so that will improve with the new equipment they bought.

Karelia Tobacco, around 85% from export

Well, now that I think of it I can see you are right in a large number of cases. Some owner operators are irrational or overly greed or incompetent. I've screened through a large number that have decent numbers at first but appear to be such after further digging. But as Ben Graham (or someone else said) it is pretty easy to detect such problems simply looking through a few years of financials. But to say it is a crapshoot for you, maybe you got burned a few times by not doing your due diligence. But once you do your due diligence some good owner operators will come up. Then I am sure you will pass :) Some examples (and my memory for the exact facts isn't the best around): - two really cheap HK companies, but gave up after reading that one is accused of bribary or something shady; another I think served some time in jail and was accused of threatening to break an employee's leg - BH, the way Biglari comes across and they way he compensates himself, is a perfect example of an owner/operator who I'd stay away from. He is too hard to analyze; and seeing the lively debate on the BH forum its definitely a 50/50 risk reward, I don't invest with such crappy odds. - IEHC, I've met the owner and his son, and I saw on their shop floor a 90yr old woman who worked there for 60yrs; I doubled my position based on that visit; I can't imagine a more trustworthy owner/operator; i wrote about my trip here http://bovinebear.blogspot.com/search/label/IEHC - McRae industries, I met several of their family, they seem as american as apple pie; and I got the impression that they feel an obligation to their community, which I am not totally thrilled about, but they are not greedy self serving people; I am holding onto my position for now - Installux: I'd like to visit them but it would be too costly going from US to france, plus there is no guarantee he'll communicate with me in english; but he does publish quarterly letters talking about his business, I get a good enough feel from that; I got a position The latter 3 companies I've owned for at least 2 years, their stocks have done great, therefore their cash position relative to stock price has come down, exactly what I hoped for..... Now as you elude to, with larger companies it is easier to read the CEO? is that so? Well I worked for John Chambers of Cisco, I so wanted to trust him, he had such good press, but it is all PR. I am surprised no one has called him the worst CEO over the last 15yr period of a major company. I have seen so many other high profile CEOs that are all slick and polished, they are like politicians.

Well those companies are the companies that I like. And there are 4 possible things that the owner operators can do: 1. like you say they pay themselves egregious salary to extract cash 2. they try to expand the company and make a name for themselves 3. they sit on the cash and do nothing 4. they return the cash 4. - I have rarely seen, but one such owner told me that the IRS would scrutnize the company if they hang on to the cash and do nothing with it; the idea is that the IRS wants dividends paid out so they can get a cut; can someone confirm if this is true? 3. this is the common case, and I am ok with it because the companies that I invest in are also doing quite well minus the cash, I just expect to get the benefit from the cash either by payout or by higher stock price to reflect the cash 2. if that is the case is it really that bad? if you don't think the owner/operator is comptent then you shouldn't invest in the first place no matter how much cash 1. this doesn't make sense; lets assume the owner can do this because they own 60% of the shares of a $10M company, if he pays himself $1M bonus one year he'll get a tax hit, say his marginal rate is 40%. His take home pay is going to be $0.6M and the market cap should correspondingly drop to $9M. So now the owner has $5.4M in company stock plus $0.6M cash or a total of $6M. If he didn't pay himself the $1M bonus he would also have $6M stock. hmmmmmm, looks like the only person that benefits is the IRS...... this is not to mention that the owner will no doubt face a lawsuit......

No, the reason to invest in small caps doesn't have to be inefficiency. That isn't the point when Buffett said he can make 50% with $1M. He said he can do it by "going off the map, way off the map". The opportunities just have to be obscure, I have found all my gains are from: 1. really obscure stocks, by obscure it means that if I post it here, I will get 0 responses ( and I have done that), of course obscure stocks are almost always small caps 2. really weird contrarian thoughts (this generally applies to large caps)

To add to Jawn's point. If you rate the cheapness of all stocks in the USA say, and plot it in a probability distribution function you'll get a normal distribution. The tail at one end is what you are looking for. Suppose one stock exists at the very end. What is the proability that stock is a large cap? It is (all things being equal) no. of large cap stocks divided by total number of stocks. Say 1/2 the S&P 500 is large cap then it is 250/10000 or 2.5%. It goes along the lines of Buffett saying he can make 50% with $1M capital.

my premium is about $130 / yr

I think for me is if I own and run the company.

i'd be very interested to read about karelia. but i probably wouldn't post in its thread, because i don't think i'd have anything useful to say. Ok I started a thread..... http://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/athkare-karelia-tobacco/

BRK and FFH have no chance then... ;) Although I wonder if they have 800 pages combined across all threads... Sorry to nitpick, but FFH/Brk have a chance but it is lower than the lesser known. It is like saying china is poorer per capita than the US, so you have no chance of being a billionaire in china.

Can you be more specific? I went through your last 100 post history and all stocks mentioned there have a lot of discussion. For example, yesterday, ItsAValueTrap asked if anyone was interested in AAMC/RESI. I explained why I was not, but no one else chimed in with an opinion. AAMC is down 85% from peak and RESI is at 77% of tangible book. Even though I have my issues and reservations with both, I would think someone else would at least have an opinion. I tried to get people to look at Forestar ( an owner of energy assets, timber, and lots of real estate that is down a lot at a decent discount to book and undergoing activism), but there didn't seem to be much traction. I personally find it compelling but am waiting for a little more clarity and progress to size it up. No one cares about ACAS, a BDC at 70% of book (75%) after adjusting for full dilution, it will split into parasite co and host co (asset manager and yield pig BDC) this year. No one cares about Tetragon, 50-60% of book (undiluted and diluted), 6% dividend, decent mix of assets, No one cares about Equity Commonwealth, cheap office REIT chaired by Sam Zell The reality is that several of these are either not spectacularly cheap, have shitty or greedy (or both) management, and there isn't a ton to discuss about them so my expectations should be low. I just think the 1/10 of posts on BH and SHLD (which i still read and sometimes contribute to the problem) should maybe make it to other ideas. I will say I often don't have much to say about small cap australian companies or this or that so it's not like I'm part of the solution. EDIT: And there are much better more interesting ideas posted by others that get little discussion, didn't mean to make this a personal rant I care about these stocks. When and where were they mentioned? Maybe it got buried in the tons of daily posts so I didn't notice. I have never heard of all these stocks and will at least read their financials, starting with tetragon

I have the opposite reaction. When a stock I'm interested in doesn't have a thread already created here (or has one with few replies) I like it even more. If you want to invest in the Apples and General Motors of the world you'll never have a shortage of people to discuss your ideas with. But I thought this board is for contrarian-value investors. I read stuff on seeking-alpha and feel the way you do, the more popular it is, the more I won't invest in it. But if this board is really like that then maybe I should find another forum?

Innerscorecard, what markets are you referring to where valuation is higher? There are 60,000 stocks that a North American investor can invest. There are always pockets of cheap stocks: eg., HongKong, Russia, Greece, many stocks in these areas are not trash as I think of the word.

The problem that I've noticed is there are many posts but they are by a few. So the stocks that we talk about are the relatively few belonging to those people. Secondly, I feel (personal opinion ok) that too many people focus on known stocks and those that can make fireworks; for example, those that can double in 2-3 yrs. That is perfectly ok, but that style seems to dominate a lot of discussions. I mean, how many times do I have to hear about BH or SHLD, to me a few points and after that both sides should agree that both have legit points and it is understandable that others may feel they belong in the too hard pile. But it doesn't work that way, basically most people just repeat their points .... I personally don't mind people posting random topics, cos I have the time to filter them. But I just feel the investing focus is just so narrow on a few stocks. For example, I own SEB and I thought that is a ideal stock for this board. It is mid-cap, been around a long time, grown steadily, lots of acquisitions, but I cried out for people to comment with me, and then gave up. I finally concluded SEB just isn't sexy enough. Another example, PM is another ideal value stock, fine say there are about 200 posts, if I start one for Karelia (smallcap tobacco) I bet there will be 6 posts and most people wouldn't care cos they never heard of it.

Karelia Tobacco (Greece)