bizaro86

Great post! I've been looking at GBT - seems like they might have a bit of a moat (local scale, language barrier for national entrants) and are down substantially (on poor results) recently. I'd be curious if you've continued to follow them, and if you have any thoughts. Big risk to me seems macro - if QC housing does poorly for a few years they will struggle, but I think it is a business that probably deserves to exist.

Interesting! Any suggestions there?

Before I read the author, I though this post might have been valueyoda. I think luck and skill are at least partially independent variables, and both are important. You can control for many important luck variables (siblings have mostly the same circumstances, for example, and don't turn out the same). I think it's also interesting how small "lucky" choices can have a big impact, like being in the right place to meet a spouse as mentioned previously. I married very well, but many of the characteristics that have been a big long term benefit to my life/marriage (my wife is a very hard worker, organized, etc) weren't things that I strongly selected for when I was younger and seeking a spouse.

I think generally speaking the big banks will do so for $50-$100/trade. I do anything outside the US/Canada in my non-registered IBKR account.

Great to be late! Buy at $0.80 and get all the worthless stuff for free. And maybe they will buy back the preferred at a big discount to the $120mm some day. Optionality... Couple of decent value investors... Roumell.... Factoring in the additional common shares and the elimination of the preferred stock liability, we estimate that the reported NAV will approximate $4.58. The shares currently trade at only $1.15 giving us an attractive 75% discount to reported NAV. Even under our most conservative scenario assumption, where we take certain significant haircuts to Management’s valuations and factor in future cash expenses, we believe the shares trade at about a 50% discount to NAV. Ravensource.... Free of emotional baggage carried by existing investors, we worked to determine whether there was opportunity within the chaos. With Dundee’s portfolio of ~100 names, we first performed triage to cull the smaller and speculative investments and focused our analytical rigour on the remaining few with tangible and obvious value. Our analysis concluded Dundee’s assets were worth in excess of the face value and 3x the market value of its preferred shares. We were also attracted to the preferred shares’ 12% dividend yield, equivalent to 15.7% interest on a bond factoring in the tax advantages of dividends. In the third quarter of 2018 we began buying the Series 2 & 3 preferred shares, based on a large margin of safety, healthy yield and potential catalysts for meaningful capital appreciation. Regarding optionality - there is certainly optionality here, and I agree that cash + DPM - liabilities/prefs is a pretty hard value. However, that optionality is absolutely not free, even if it has no upfront cost. Dundee is burning cash pretty quickly with spending on G&A, prefs, and making new goofy investments. So there is a true "option premium" being paid for the potential that Chad or something else comes in, in the form of cash burn until that happens. Realistically, I can't imagine anyone thinks this is a quality business/compounder, and I think most would agree that absent a big hit (Chad is a go!) that whatever your number for NAV is it will probably be lower in a year from now. Definite melting ice cube. I'm not saying it can't go up, and I chickened out and closed my short to take a very nice short term profit, so I have no position here.

I though Benjamin Moore only sold through their own dealers?

How big a piece of land? Not-close-to-a-city makes a pretty big difference to land values in Canada, and QC has historically been cheaper.

Regulated utilities in good markets might make sense here. A regulated return of 10% (or whatever) is worth way more than book right now, which is why these trade for more than their rate base. If energy storage ends up as an opportunity for utilities to put huge extra capital into their grids, they can grow their rate base. They buy capex for $1 and the market values it > $1, so that is potentially very accretive.

Maybe low cost producers of commodities that you think the battery chemistry will require? Ie - Lithium, cobalt, etc?

That is a lot of driving for a 6 day trip, imo. Toronto to Niagara Falls is 2 hours each way, plus at least 5 hours to Montreal and then 2.5-3 hours to Quebec City. I'd probably pick less things and do them more thoroughly, but that may be a matter of personal preference.

I feel like there should be a rule about coin flip analogies on this board. Between this and the PWE thread I feel like I've stepped through the looking glass. Maybe it's just me.

Is there any logical reason why bitcoin as a store of value should have the same total value as gold though? Land ownership is a store of value, as are diamonds and rare baseball cards. None of those things have the same market cap. That seems like a logical fallacy where total addressable market is assumed to be already captured. If you think bitcoin and gold compete in the "durable store of value, non govt intervention" market, is there any reason to think BTC will take 100% market share?

I feel the same way about their valuation. But every single time I've sold something I believe to be an excellent business for that reason I've regretted it, so I'm holding for now.

FRPH?

What are the odds you are offering? 70-30. But I won't make a real bet since (a) there's no platform that I'd trust (b) if bet amount would have to be pre-deposited, it's a negative return even if I win. B isn't true if the two people betting can agree on a suitable investment to keep the funds that they would otherwise both hold. When Buffett made his hedge fund vs S&P bet, they put the money in zero coupon treasuries, and then switched to BRK after treasuries rocketed, and did very well. Surely there would be some compounder the two parties could agree on...

Putting money into a uranium junior. https://www.globenewswire.com/news-release/2019/06/03/1863599/0/en/Acquisition-of-Shares-of-ALX-Uranium-Corp.html

Did anyone have the prefs in a Canadian big bank brokerage? Have they converted you to tradeable shares? While the price action has been down (as I would expect) I haven't seen the volume increase I would have expected from such a huge slug of new shares coming available. I'm getting antsy to close the rest of my short (I bought some in at $0.94) but don't want to buy this aggressively, especially as it seems volume has been weak.

Great point, but careful again here. The figures you quote are the average for NYC residential, not super luxury. For example it shows the current number (2010s) as $1,070/sq ft. That would be $3.2 million for a 3,000 sq ft apartment. The truly high end apartments (the ones that might cost $47 million) are more like $5,000 per sq ft. So the comparable number in 1976 might have been $250/sq ft or something. That might imply closer to 50 luxury apartments - for current earning power in the area of perhaps $100 million. Regardless, I think the order of magnitude is what’s important. And that was buying during a time of near depression in NYC real estate, as you mentioned. coc, Are you an accountant? [ : - ) ] -I ask because you think about this exactly like I do. - - - o 0 o - - - Edit: Geico - Financial Information. There was here on CoBF a similar discussion about NICO a few years back [for NICO, similar information is available at the NICO website], with some very good elaborations and explanations provided by gfp about how to interpret the numbers - they must still be laying around here in the Berkshire forum somewhere. How dare you accuse me of being an accountant. :D No, no. Good points, although I wonder about the assumption that the multiple between regular and super luxury apartments has remained constant. My guess would be that from a NYC real estate depression until now the super luxury has done better than the pedestrian in appreciation (perhaps at the expense of cash flow). I recalled a passage in a book about the near give away of luxury apartments in the mid 70s. I'm pretty sure it was 740 Park Avenue. That's a top tier address, and I found some comps in the press. Saul Steinberg paid $275k for a 34 room triplex in 740 Park in 1971, which he sold in 2001 for $37 MM. https://www-vanityfair-com.cdn.ampproject.org/v/s/www.vanityfair.com/news/2001/01/saul-gayfryd-steinberg-200101/amp?amp_js_v=a2&amp_gsa=1&usqp=mq331AQA#aoh=15588315521740&csi=1&referrer=https%3A%2F%2Fwww.google.com&amp_tf=From%20%251%24s&ampshare=https%3A%2F%2Fwww.vanityfair.com%2Fnews%2F2001%2F01%2Fsaul-gayfryd-steinberg-200101 By the end of the decade the French government paid $600,000 for a 18 room place in the same building, which they sold for $70 MM in 2014. I think 500k for a super luxury apartment in 1975 is a very generous number, implying Buffett could have gotten 100 or so of them for his money. It's all hypothetical of course, because I doubt there were 100 apartments of that nature for sale at the time. But if it was possible, using that same French comp from 2014 would get you to approximately $7 B.

I don't disagree with you particularly, but I would note that 20 luxury apartments isn't the right comparison. New York City nearly went bankrupt in 1975. In 1976, luxury apartments were selling for peanuts because the monthly fees were approximately equal to or even exceeded the rental value. I think its very likely that a clever buyer could have bought more like 235 luxury apartments in New York City at the time, which closes the gap considerably. I couldn't find a source for luxury apartment prices in 1976, but I did find a source for an average price per square foot by decade. The 1970s was $45. https://web.archive.org/web/20130509123604/http://matrix.millersamuel.com/?p=12300 That implies $47 MM would have bought just over a million square feet of NYC residential real estate. I suspect someone who had done that with their money would be pretty happy with the outcome today as well, although it may only be worth a few billion.

I wrote 197.50 BRK.B puts for the first Friday in June. I used the premium to buy September 220 calls

I have as big of a short as I am comfortable with right now, but if it gets down to $0.43 I'll definitely use some of those profits to take a long position.

Down 7.5% on a multiple of the usual volume. I'd expect Monday to be down as well as retail holders notice the new shares on the weekend.

Why isn't breaking up BRK an option eventually? It wouldn't be possible until WEB dies, as he would never do so and has control. But once his stock gets sold by the foundations however many years after his death it could happen. It would require a huge discount to IV, because of the huge amount of capital required. The structure around the assets being held in insurance companies would also make it take a long time. Although if the insurance commissioner is letting them use $X for the value of a railroad in their statutory accounts, presumably they'd still be fine if they sold the railroad for $X in cash... Spinoffs would be much less likely.

I'm tempted to try leap puts in stocks that are highly valued and highly exposed to economic conditions. One example would be VAC. It was down ~40% from its 52 week high to its Dec 2018 low, and has made that up again. Super cyclical industry. I feel like there should be some industrials that would be good macro hedges as well. I also have a very small % in IWM puts well out of the money. I think it makes sense for me to be fully invested, and having a percent or two in hedges after a long bull run helps me sleep better.

I wonder who the new partner is. My guesses would be either Brookfield or Morguard, but could be someone private.