bargainman

Um.. I'm not sure how many in-n-outs you've been to, but every one I've been to is packed, and it takes forever to get a seat and a burger at peak times, and even slightly off peak times... 'in-n-out' has definitely not been my experience...(unless I go early or very late) I also agree with the other comment about whitespot.. Maybe my expectations were set too high. When I first arrived in Canada everyone made such a big deal about whitespot and its 'special sauce', but I thought the burgers were mediocre at best. I didn't think much of In-n-out's burgers at first, but they grew on me. The toasted bun, and the simple menu and special items, the grilled onions too seal the deal. Plus I like the fact that I can see them slicing fresh potatoes for the fries!

I struggle a bit with this. Everyone keeps saying that Ashner is great, but what about the Concord CDO investment? They seem to have owned up to it as a mistake, but I wonder why they got into it in the first place. Is anyone else bothered by this?

Um.. maybe we can start a new thread on housing and bonds?? Would like to get back to the topic.. Cheap Large caps.. Any others out there? Thanks

Thanks for all the great comments and help analyzing this company. I've heard Bruce from FAIRX talk about this a number of times. He's said that his idea is basically just an asset play. As mentioned, he analyzed all the real estate and valued it at "conservatively.. Conservatively" (yes he said it that way, in an accent only Bruce could muster ;-) ), at above $100 a share. (before the RE crash). Then he adds in the value of the brands, and the largest appliance servicer in the country.. He's basically said that he's valued the company dead, and if Lampert fixes it, so much the better, but he's not relying on that to make his investment case. It's interesting how the emotions swing on this stock. Last quarter I remember things being quite upbeat. I think there was mention of making Diehard more available, and talk of a new service network, and focus on internet retailing and service etc.. Now it's all doom and gloom again. Still at $60 it's pretty cheap. The other thing Bruce said which I remember, is that he couldn't understand how anyone could short the stock. Lampert just needed to keep buying back shares and they'd be in big trouble. Thanks everyone, and future comments certainly welcomed and appreciated!

Wait a minute! Am I hearing this right? the several stocks I just 'picked out of thin air'.. you own 4 of them!? I'm a bit confused by your statement.. you say you've never owned them, but that you own them today? Presumably you mean you have never owned them until recently, and today? So.. is your largest position a company you'll be forced to disclose soon due to a large ownership stake? or is it large enough where that won't be a problem? come one Sanjeev, drop some hints!!! :-) I assume you're not talking about _TEX or CCLR since those have been talked about...

Bookie, maybe you could make the inheritance conditional on them understanding and taking a more active interest in investing? Or if not, you could go for the mass diversification approach. Choose a number of jockey plays, and outstanding companies, and good mutual funds and spread it all out. I think if you had put 10K in BRK 30 years ago, that investment alone would have given you a reasonably good chunk of change. If you can find several like minded companies and spread it out then maybe you can just let them work their magic. So spread it out between BRK, FFH, LUK, MKL, BAM, L, (maybe SHLD, maybe BH, Y, PICO, BIDVEST), then some mutual funds like FAIRX, the Primecap funds, dodge and cox, Sequoia, TILDX. Some in PG, JNJ, KO, WMT etc. Just thinking out loud! :-)

Ok so Bill Miller, our favorite value investor (ahem), just penned an article claiming Blue Chip large caps are as cheap as they've ever been! Who agrees, and what are some names!? Here's a quick list I came up with, would love to hear other opinions (and any opinions on this list too!) :-) XOM KFT PAYX (just took a dive, not necessarily cheap, but for the strength of it's business, historically cheap) MDT JNJ MO WMT EXC INTC GSK AMGN BR MKL (trading around book value vs 2x historically) LUK (also trading around book value vs about 2x historically) Thanks!

I think there are a few risks for external shareholders, not sure how big they are: - Eddie could take SHLD private. He owns most of the company I think, so he could just screw everyone who bought above a certain price and take it over. - Eddie is not completely synonymous with ESL. I don't know what the lockup period is, but if some partners get antsy and want out, he'd be forced to liquidate and lose control potentially or be forced to sell and drive the price down? I don't know.. maybe far fetched, but a possible risk I think...

Just curious if anyone has done any work on SHLD since their announcement today? http://www.sec.gov/Archives/edgar/data/1310067/000119312510192639/dex991.htm for the last 26 weeks they reported a loss of 23 million But then have Depreciation/amortization of 442 million... They end up with EBITDA at $558 million after a number of adjustments. They also say: "capital expenditures of $168 million, and contributions to our pension and post-retirement benefit plans of $122 million." shares outstanding = 112 million... So about $5/share of EBITDA, vs negative reported earnings. So it looks like they're still earning the cash.. but I'm not sure why Lampert focuses on EBITDA and doesn't talk about owners earnings more.. shouldn't he be backing out the cap ex and maybe even the pension expenses? I mean those are real no? Any help analyzing this would be appreciated :-)

The other thing about his compensation plan is that it may make it tougher for him to make acquisitions in the future. Especially the ones that require activist style proxy battles. He won't be able to take the high ground as he has in the past any more. His compensation plan will be an easy target for incumbent management to target in their arguments. IMO not only has he diminished the future book value growth by taking it for himself, but he's diminished it by reducing his ability to win future proxy battles.

Just thought I'd point out that actually their fixed income investing is probably more impressive than their equity investing. Their outperformance there is outstanding considering the divergence of performance between the best and worst bond managers is much smaller than that between the best and worst equity managers.

Ok, for those of us who are kind of ignorant of American restaurant culture... what is the difference between a drive thru and a drive in? why would a drive in be like having 50 drive thrus? Drive thrus seem like they take up very little space, I'm not sure how something could take up less...

This is the same rationale I've heard for closed-ended funds which pay out managed 'dividends'. Often they trade for a discount to their NAV, and this way they are able to return capital at full value.

well it's not exactly what you want, but you should probably look at mint just to track everything. Gainskeeper for the taxes stuff. Not sure if gainskeeper tracks stuff across accounts, but it's pretty powerful for matching trades up...

down 6%+ this morning..

I like Zeke Ashton's take on the use of debt. This interview is worth reading, with the part about debt around page 8: http://www.scribd.com/doc/16057124/Zeke-Ashton-of-Centaur-Capital-Partners-Exclusive-Interview-with-The-Manual-of-Ideas-May-2009

This is true now... But with Android gaining 4% in one month: http://news.cnet.com/8301-17938_105-20010101-1.html?tag=newsEditorsPicksArea.0 it may not be true for long. Andriod has gone from 0-13% in basically the blink of an eye. Now if you look at the iPhone approval process. See here for a developer who stood up for Apple, and subsequently got his app, which was approved several times before, pulled! http://shiftyjelly.wordpress.com/2010/06/01/sentence-first-verdict-afterwards/ You have to ask how many companies are willing to bet 10s, 100s of thousands of $ (or millions) building an app which Apple can reject on basically a whim. Here's a list of Andriod devices out. http://en.wikipedia.org/wiki/List_of_Android_devices the list is only going to get longer. I'm sure iPhone will continue to be big and a big moneymaker, but Android will soon become the next big mobile app destination.

Before you all write MSFT off, here is an interesting blog post with numbers, and an interesting 'interpretation' of those numbers by another writer: http://blogs.technet.com/b/microsoft_blog/archive/2010/06/25/microsoft-by-the-numbers.aspx http://techcrunch.com/2010/06/26/microsoft-numbers/

I think the one thing that everyone can agree on, whether you're completely against the compensation agree or whether you're willing to tolerate it (I've not heard anyone enthused about it other than Sardar), is that Sardar has really messed up a good thing. That good thing is/was his incredibly loyal shareholder base/following. That's basically reputation and culture, and I think he's messed it up with the few bad, selfish moves(not to mention his seeming complete lack of ability to listen to any suggestions other than his own). It will be interesting if he ever gets it back. I doubt he ever will. That's the problem I had with him from the start. He's an activist investor which means that he has to like the fight, by definition. He's showing that now, except that he's fighting against the very shareholders who were loyal to him and could have been one of the best shareholder bases ever. Now instead he's got Gabelli. To read about Gabelli check this out: http://money.cnn.com/magazines/fortune/fortune_archive/2006/06/26/8379985/index.htm they'll make a great couple...

I can pretty much agree with the article. I have no problem with MTM to report income or financial statements.. But when it comes to regulatory capital requirements... you can't run a business that way. The problem is that it certainly doesn't sound like the FASB is synced up with the capital requirements regulators. If they could both do MTM accounting and change the capital requirements regs in one coordinated dance, then that'd be fine. But I doubt that will happen. From what the articles say it's going to be even more restrictive than the previous MTM fiasco. But hopefully bank's balance sheets are in better shape... I guess time will tell, but it's something to watch...

Sanjeev, I disagree. MTM was one of the sparks. Of course, like with any massive fire, there was a lot of flammable liquid around, but MTM had a spark like effect on all the massive leverage. My beef with this is the 'changing the rules in the middle of the game' aspect of what the FASB is once again proposing. Remember how Buffett was trying to get an exclusion from posting collateral against his derivatives, but Congress didn't make an exception? Then he said that "legally since the contract was written before the change, BRK won't have to post collateral anyway, but he'd rather stay out of court?" This is close to the same thing. The problem is not the MTM but the Capital ratios that are based off of those assets. Assets which are already on the balance sheet. Picture this scenario: I get a mortgage 30 year fixed on a $1 million house, I put 20% down (200K), and I agree to a certain amount of payment every year for the next 30 years. Now the price of the house on the market all of a sudden drops 40%. Well, it sucks, but I don't care cause I just keep paying my monthly payment. Now what if the FASB said.. oh, you have to *NOW* MTM your asset and post collateral on it! Well now the bank will come to me and say.. hey, it's a 800K loan, and the house is only worth 600K, so you have to give us 200K+(600K*20%)= 320K, cause you have to keep your capital ratio in balance! To which I'll say "What the? that's not what we were originally doing? How come the rules changed? I can't post that much! I'll have to raise capital.. but I can't cause the house isn't worth anything... oh I'll have to declare bankruptcy.. Or go to Uncle Sam for a bailout!" I could have continued paying the yearly payment and paid off the loan with no problem, but now that the rules changed midstream and I have to keep my capital requirements in balance I'm bankrupt! If FASB wants to have MTM for all NEW assets being acquired I'm not so opposed to that.. But they shouldn't be changing all the rules midstream for old assets. That's what caused all the banks to have to raise capital when they could least afford it, which was one of the clear factors affecting the death spiral. Also it leaves securities which don't have liquid bids in a very susceptible position, even if they are performing. Anyway, regardless of what opinion you or I or anyone has on this, that wasn't my question. My question was.. is it a disaster waiting to happen? Will this cause all the banks to have to simultaneously have to raise capital and take huge markdowns again? If it passes my guess is it will.. Especially since they are supposedly requiring it for equities and loans this time. But I'm not an accountant or a banker, so I was wondering what others with more expertise in this area thought... Ericopoly.. What is TCE?

Does anyone else think this is a disaster waiting to happen? The original MTM probably ignited the financial crisis. No one could find a bid for any of their assets so they had to mark them down to nothing. http://www.navellier.com/blogs/entry.aspx?ID=124 http://www.americanbanker.com/bulletins/-1020090-1.html http://ftalphaville.ft.com/blog/2010/05/28/246171/fasbs-mark-to-mayhem/

Well actually supposedly we do. We've been looking for oil for a long long time. http://en.wikipedia.org/wiki/Peak_oil http://en.wikipedia.org/wiki/File:PU200611_Fig1.png "This concept is based on the observed production rates of individual oil wells, and the combined production rate of a field of related oil wells. The aggregate production rate from an oil field over time usually grows exponentially until the rate peaks and then declines—sometimes rapidly—until the field is depleted" .. "M. King Hubbert created and first used the models behind peak oil in 1956 to accurately predict that United States oil production would peak between 1965 and 1970.[1] His logistic model, now called Hubbert peak theory, and its variants have described with reasonable accuracy the peak and decline of production from oil wells, fields, regions, and countries,[2] and has also proved useful in other limited-resource production-domains. According to the Hubbert model, the production rate of a limited resource will follow a roughly symmetrical logistic distribution curve (sometimes incorrectly compared to a bell-shaped curve) based on the limits of exploitability and market pressures. "

Really interesting.. Thanks for posting this. Looks like WSBase has gone down a bit more but not too drastically. Would love to see this when WSBase makes a drastic move up or down... :-)

Yes that's the thing. You can use book value + some portion of NOLs, but since the underlying securities fluctuate, there's that volatility. On the earnings and cash flow side I have a tough time evaluating it too.. Then there is also the presumed investment prowess of Ian and Joseph (and the risk that they leave). Which is why I was asking how others are evaluating IV?