dpetrescu

More GM

I've been meaning to start some new topics. Look out for these sometime this weekend. 1. Should I invest in Berkshire or GoPro? What are the pros and cons of each? 2. Where is the Dow likely headed next week/next month? (I was thinking an ongoing weekly poll with full participation required to maintain membership) 3. What are the odds of another recession in the future? 20%, 10%, or 1%, choose one. 4. What is a reasonable yet moderate bitcoin allocation as percentage of portfolio? 15% or 30%, again please chose just one. 5. I've just noticed a sudden exponential uptrend in fireworks purchases. This seems to be a growing market. Which public fireworks company ETF should I invest in?

Off-topic from value investing but has anyone been following the ongoing saga with NQ Mobile? It was down 30% Thursday on announcement audit chair/board member left for personal reasons. I have a very tiny put position but have been following this more out of interest and to learn about fraud. The company in October 2013 was accused by Muddy Waters of fraud with high publicity. However, it was really J Capital, based in China (The woman cofounder often writes for the economist and FT) were the ones to first accuse the company of fraud with a report back in 2012. So far nothing is yet certain if they did commit fraud. NQ Completed an "internal" Audit in June that did not find any wrongdoing but missed the deadline to release its yearly audited report. It is interesting what happened afterwards. They announced that a couple third parties purchased ~1% of two separate subsidiaries, at a price that implies a valuation 10x higher than what NQ paid of for the acquisitions just a year ago. This was highly suspicious. (NQ is a "platform" company so they make a lot of acquisitions). On Wednesday, NQ was up 10% on rumors over Twitter that the audited yearly report was about to be released. The next day, on a low volume day before July 4, they released the announcement. The director share sale lockout is soon about to expire.

So the single owner has 70% of the shares. Can he really unload all his shares just based on an excited, unknowing 30% before the whole thing collapses exponentially? Reminds me of a section from reminiscences of a stock operator. Seems like there should be some offshoot of the SEC that protects traders from manipulation like this.

["I would love to find a lot of overvalued stocks with implied volatilites below 20 but i have not found any." I own soma CAT and RIO long term puts as insurance. I think these are very overvalued and have very low volatilities, one had less than 20 implied volatility when I bought it so premiums are very cheap.

Reserving .COM names was the thing to do in the 90s. Right now the rush is for the generic top level domain names. So in the 90s you could have reserved weed.com. Today you might be able to get weed-bluevelvet-grass-72.com. But A few years ago you could have bought the .weed gTLD. So when someone decides to open a weed retail shop called Marley's, she might use Marleyweed.com and/or Marley.weed

I've been investing in Verisign LEAPS for a while, bought some more on recent weakness. They've done amazing and it is no surprise. They have a 100% guaranteed monopoly on .com and .net registrations with zero competition. They can increase pricing if they can document costs also increased. This is truly a one of a kind company. Of course there is one big risk. While they have 100% market share, the market itself has emerging competition. The .COM and .NET market will face competition from new generic top level domains. For now I'm sticking with Verisign. But I can't claim to know what people will be typing at the end of a web address in 5 years.

How were you able to buy these? Were they the preferreds? I know this has been the subject of a few topics but it seems there is no resolution on how to buy these aside from ver complex transactions with a bank and the weiss fund. Meanwhile prices are increasing. These Korean preferreds seems like the most obvious opportunity, I doubt we will see something as mispriced in a long time. I already regret not figuring this out and buying many months ago when I first learned about them.

There is some pretty significant and ridiculous misallocation of capital taking place in China. What they need is non-stop construction of very very low cost affordable housing. Instead, they are building expensive condos that are unaffordable even by New York standards. Instead of addressing an obvious social demand, they are inflating a speculation binge. Imagine if developers started building 50 million dollar condos in Flint, michigan. I'm worried enough about this to have purchased (losing, so far) insurance premiums via steel and mining related companies.

Interesting that American Towers is one of his largest holdings. He had a very good narrative about it in the interview: future increase in demand for cell towers with increase in speed over time (3G to 4G to....etc). Last year (and 50% ago) there was a short counter argument claiming their overseas investments are destroying value and that data usage growth will circumvent cell towers. I don't have a strong opinion personally but interesting to hear two opposing intelligent points of view. http://www.muddywatersresearch.com/research/amt/initiating-coverage-amt-full-report/

The problem with these calculators and all the stories claiming renting is more affordable than buying is the assumption that 1) people will reinvest the savings from renting vs buying and 2) for the minority that does invest, that they can generate a decent market return, also not likely. Renting is likely cheaper for most on this board but not for others. See what happens when you slide the "investment return rate" to zero or near zero. It ruins the entire premise. Meanwhile, the over 150 million Americans that don't invest (45% according to Gallop, and that includes 401k and IRAs) read articles proving that renting is cheaper than buying and they believe it and act on it, while they keep their savings in their US Bank account. Is there a name for this bias?

I know it's almost the end of the week but I have some good news. I think I found the ultimate stock that is sure to make you, according to my calculations, somewhere between 1,787% and 1,789% by end of day Friday. What's the ticker? BRK.B. According to The yahoo discussion boards, BRK is likely to double sometime between 10:45 and 10:56 AM PST, when the MACD trend line is expected by analysts to cross over the 7 minute moving average curve, and will ready for take off after 1pm. Why you ask? There are rumors on the newsletter circuits that BRK will be acquired by Salesforce (CRM) before this coming weekend with an options/LBO vehicle. Benioff has, as of 10:05 tonight, neither confirmed nor denied the rumors. Not sure if CNBC bas picked up the story yet. More to come...

His OMEX short just took a big dive a few days ago. What a great example of an overvalued stock. The challenge is knowing when the tipping point is. If it's already overvalued, it seems they can keep finding shipwrecks, issue press releases, and capture the excitement of investors while they keep losing money.

Bought some Verizon and GM LEAPS recently. VZ LEAPS are very attractive, I was able to get 10% OTM 2 years out at 17% volatility. I'd love to buy more if VZ happens to fall double digits. I'm now waiting to increase my stakes in Toyota an Verisign IMOS and Liberty Global.

Oh yeah I didn't notice it. I watch every new Walthtrack interview like a new episode of Breaking Bad.

Home of the soon to be NBA western conference champions....yes, Portland.

I'm fairly sure I will be investing into my 90s. I make just a few buys/sells a year but still look every day passively. Why not invest in a fundamentally weighed index? There is a lot of research that any fundamental indicator will perform better than market cap. http://wealthtrack.com/recent-programs/robert-arnott/ You could also invest in a magic formula type basket or fund.

Selling Nothing. I think there are a ridiculous amount of companies trading at ridiculously high prices. But the selling is across the board so the few baraings that previously existed are even more of a bargain. FIAT and Corning have held up well, at least for now. I have a lot of cash and I'm seeing more opportunities emerging. I'm interested in buying soon, Specifically GM and Toyota. I've been watching Korean preferred stocks like Hyundai and Samsung but they are actually a bit higher in price, but still ridiculously cheap. If we have another few days in the red I'll likely make a few buys.

So really? No one voted for GM? It's 15% off! is everyone waiting for Black Friday deals?

On second thought there is a ratings system for topics....number of views.

I agree about no ratings for individual posts. Imagine if everything that someone said at a bar or over dinner was constantly rated, it would influence the conversation. I think that ratings for conversations would very a very good idea. It would be nice to prioritize which old topics to read. The challenge is how to set it up so it is a positive likes rating only (agree this is better that number of stars or negative ratings) and at the same time avoid the bias of a long thread compared to a small one.

My positions: 18% - GLW Corning long calls. Not my #1 conviction but it has moved dramatically. I will leave it and live with the volatility for a while 10% - IMOS shares. Very low capex required today after over investment resulting in great cash flow 7%. - MEG. Warren, my pro bono consultant, recommended these two small media companies 6%. - LEE 5% - GM calls. Waiting to buy more 4%. - Toyota calls. Part undervalued, part Abenomics 4%. - Fiat. Thanks to this board. 3%. - VRSN calls 2% - GME Gamestop long puts. Brick and mortar in age of streaming. Recently, Walmart announced itself as a competitor. 2% - CAT/RIO puts. China construction bubble insurance policy 2%. - misc 37% cash. This is my short bitcoin position. All my options were purchased as 2 year LEAPS options. My biggest conviction right now are the auto companies. I'm hoping to increase positions in my 3 if they fall more.

Someday in the future, who knows when, bitcoin will be worth zero. Until then, who knows what happens.

I own shares of GM and in light of the recent recall issue, I was thinking about reputational risk. Bruce Greenwald talked about this in an interview a couple years ago. Can anyone name a few (non fraudulent) companies that suffered long term from reputation risk from big mistakes? I can't. All that is left behind is a forgotten "U" or "V" in their stock charts. Some of the mistakes are small and were great buying opportunities, others mostly are atrocious and it just does not seem right that they're reaching record valuations. Why is it that there is very little reputational risk for companies? 1. Dow Chemical in the 80s. Union Carbide is a subsidiary of Dow. A gas leak at a UC India plant resulted in the death of almost 4,000 people. It is criminal they got away with it for just a few hundred million settlement. Value of Dow is today at an all time high 1000% greater than when the incident took place in the 80s. I've personally tried to always avoid specifying their products on construction products. 2. AIG - seller of credit protection. It turned out the entire foundation of the company - selling credit protection was flawed. They received 85 billion bailout and a few months later announced more than a billion dollars in bonuses. Today it is valued at 73 billion and still selling insurance like 2008 never happened. Today it is at 30% of its pre crisis market cap (although not all time high, I am still greatly amazed). The stock has tripled since 2009. 3. Moody's - Not only was this company's business proven to be of no value for its clients. It actually caused extensive damage to the entire economy and it's clients that relied on its ratings. In 2010, Einhorn made a short case that Moody's would suffer reputational damage and no one would rely on their ratings in the future. What a rational and smart, common sense theory. I almost took action on this idea. So what happened? The market cap is up 500% and the stock it at an all time high. 4 salad oil scandal. In this case one could say American Express was the victim of fraud - invisible oil backed loans. It's stock dropped 50% in early 1970s. I'm going to run out of zeros if I write how many tens of thousands of percent American Express increased since then. 5. Exxon - we all know the damaging spill in the late 80s. 10 to 30 million gallons spilled. After numerous appeals over many decades they have still not paid pay only 500 million in damages (originally a few billion), 500 million is just 10% of a quarter's profits. They paid a few billion in cleanup costs. Are they suffering now financially from reputational damage? Nope. BP spilled half as many or less, a stock chart would indicate they're doing OK. 6 News Corp and the phone hacking scandal...what scandal? I could go on...

I think extreme mispricing on a massive scale might not be as rare as one would expect if the market was rational. Isn't that the reason we have 20% crashes and 50% market recoveries approximately every seven years for the last century? Let's invert this thought. Today I can more easily name potential reverse multibaggers than potential multibaggers. Salesforce, Tesla, Gamestop and other tech/internet usual suspects are likely 5x or more overvalued. I don't think someone that bought Tesla shares last week had different information than others. They don't know less about it, in fact the buyer last week likely knows more about batteries and car manufacturing facilities and progress in direct selling state regulations. But that 5x gap is based on future expectations, not knowledge of facts. In a few years during the middle of the next recession, the long multibaggers might be as obvious and more numerous than the short reverse multibaggers are today.