SpecOps

Yesterday I posted a case study on my blog which I used to test my valuation skills. I was looking for others to weigh in with their strategies and valuations so that we (I) can hopefully improve from shared insights. Its got readers but so far no one has joined me in the challenge so I thought surely someone on this forum would stick their neck out and share their thoughts on it. I'll be posting up how my thesis turned out and an autopsy of my valuation later today. Here is the first article http://investingsidekick.com/interactive-case-study/

I just read an amazing piece by Michael Lewis, adapted from his book http://www.nytimes.com/2014/04/06/magazine/flash-boys-michael-lewis.html?hp&_r=2 I never properly understood what went on with the exchanges and HFT but this article does a brilliant job of explaining it in an entertaining way and I wanted to share it. It talks about the guys that set up the IEX - investors exchange, I hadn't come across it before but it sounds like a great step forward for investors

That reminds me of my dad, who has a store card just so he gets a free cup of coffee each day haha

I found this presentation given by Tilson interesting http://www.scribd.com/doc/215835994/Shorting-Whitney-Tilson-ValueWalk I'm not a shorter myself but his logic is interesting. I agree with him that in shorting you not only need to be right on fundamentals but timing is also important. It can take years of pain for ideas to play out. He says it allows him to be more "aggressive" on the long side which I guess means he can make more assumptions about economic growth and general market trends and gives his Netflix position as an example (but that doesn't seem like value investing to me) and sees shorts are more of an insurance against market collapse. He does say his shorting has cost him and his investors a fortune over the last 5 years.

Oh I hope Will Ferrell isn't in the movie

Carl Icahn is a jackass. Marc Andreessen is one of the most successful and respected VCs in the world, and a very smart guy. Doesn't mean ICahn is wrong though and Marc didn't screw over Ebay shareholders :p

My favourites (and mine) that haven't already been posted - Investing Sidekick - focuses mostly on UK and US http://investingsidekick.com Reminiscences of a Stock Blogger - focusses a lot on Canada and resources http://reminiscencesofastockblogger.com// Wexboy - A lot of Irish but all round mix http://wexboy.wordpress.com/ Value and opportunity - Lots of European stuff http://valueandopportunity.com/

...according to Marc Andreessen, because Buffett doesn't like Bitcoin. Perhaps he missed the 50% drop in Bitcoin? http://www.businessinsider.com/andreessen-horowitz-vs-berkshire-2014-3 I think this is the same Andreessen that is accused by Carl ICahn of screwing over EBAY shareholders in the Skype flip

I've slowly been coming to the conclusion that being "cheap" isn't always in my best interests. Like walking 30 minutes to a different shop just to save $2 on groceries isn't worth my time. I generally now just try to disregard price for the most part on things that cost less than $5, and as long as I'm frugal on the rest of it especially big ticket items, then I'm not really losing much. These days I spend far more than I did a few years ago, if I were really living frugal I could save a lot more but I'm trying to enjoy life a bit more and not obsess over money so much. Its a hard habit to break when you're wired that way though. I focus more on 'value' now. Like I buy tailored, nice shirts (ok online so they're a bit cheaper!) but I think of it as I'm paying $60 for a shirt that I wear a lot, will last me years, and that will make me look good (cheap shirts just look bad for the most part). So $60 is a good price considering the value I'm getting.

Value investors as a group have at least one thing in common, they like to get $1 for 50 cents. I've heard stories of Buffett buying hail damaged (refurbished) cars because they are at knock down value and similar stories of how the value investing philosophy extends beyond investing. Personally I would say outside investing, I have exactly the same mindset. If I see an item in a shop I like, I'll wait until its been marked down (discounts are pretty regular in the UK) before buying it. Even buying my daily sandwich at lunchtime, I know which shops offer the best value (cheap price but also accounting for how generous the filling is!). For big items I will usually buy second hand, or ex display models unless the item being brand-new affects my enjoyment of it. Like a couple of years ago I bought a new electric piano, found the model I liked, but then found the model as it had been the year before (which it had basically not changed from) and purchased it for cheap from a dealer on ebay looking to offload the "old" stock. My girlfriend thinks I'm crazy (and tight-fisted) but for me it is just a mindset and like Buffett says the philosophy either instantly resonates with you or doesn't So is anyone else like me, and has anyone got any amusing stories of how cheap they've been outside investing?

In a way I agree with you, but I also think that authorities need to sometimes protect people from themselves. Part of me doesn't really see the difference between this, and people like Ackman and Icahn going public on positions, which do move markets although nowhere near as much as with penny stocks. If I were to run a blog, and post a great thesis on a penny stock and its price ran up 200% as a result, I could quite legitimately sell as its reached full value, but to outsiders this looks like a pump and dump. Ethically, it is all about the intention of the one "pumping" the stock, but that's pretty hard for a court to ascertain.

The blog which mentioned German real estate funds was http://wertartcapital.com/ Good blog I recommend following http://investingsidekick.com has a few special sits among investment companies on the small AIM market in London. http://stockspinoffs.com is another great website for following spin offs which was a Greenblatt favorite for special situations

The follow up article to this is a great read too http://brooklyninvestor.blogspot.ca/2014/03/buffett-market-timer-part-1-partnership.html It is interesting to see that Buffett didn't really time the market with cash. Personally I dont do this myself but notice at times I have more cash just because there aren't enough ideas (well I havent tried hard enough) For a small investor with access to micro caps there are never really going to be too few opportunities to require large cash holdings, but obviously mere mortals like us will struggle to find them in frothy markets if we have a day job too.

I've got one, Geng Jinping. The company is now bankrupt, and the Execs were executed for their mistakes! http://news.bbc.co.uk/1/hi/8375638.stm Also Dasani, the water by Coca Cola, was launched in the UK a few years ago and a story leaked to the papers that it was just tap water. Then they had to recall them because of contamination. The brand was a complete flop after that and I think they just removed it from sale in the end. http://www.theguardian.com/business/2004/mar/20/medicineandhealth.lifeandhealth But in general I would tend to agree, reputational damage, unless very serious, usually blows over

I remember passing on Aker, although I think it was in mid 2013 so I don't feel too bad :p I can't see any of the stocks I own becoming 50 baggers, but under bullish conditions a lot could be 2-5 baggers, that's generally what I aim for but is only really possible these days with tiny stocks that no one follows.

Not sure what my highest conviction pick is, I like RCL.TO. But I also like a little investment company listed on the London Stock Exchange, CLP, has an asset on the balance sheet that has had two cash offers which value it alone at about 3x the market cap. Covered here http://investingsidekick.com/aim-project-clp/

Interesting thanks

Great informative thread, keep up the good work

You will probably find it difficult to get access to the data. These terminals usually have a limit to 1-2 users in the terms & conditions and anyone with the raw datasets will be a reseller and wont just give it out free. Your only hope is to find a library that has one of them, or to ask one of the companies sales departments for trial access, but then you might have a problem publishing figures from this data.

Very interesting analysis. It's hard to know what to make of all this doom mongering over China. I dont know enough about it and only have a small amount invested in a fund that invests in that area of the world. The Chinese markets appear cheap on basic metrics such as P/E ratios

I'm surprised that people are still willing to lend money to countries like this. From the things that the Argentinian politicians come out with I would never invest in that country.

It's an interesting thing to watch and I kind of wish I had taken a punt on it when I heard of it years ago, even $100 or so and Id be a happy man now :) I'd never put more than a token amount in it though

I read a great book on this called The Financial Numbers Game I mainly value a company based on cash flow which is much harder to manipulate and easier for auditors to check, but it has been known to be manipulated like in the case of Enron. The only way to have a chance of detecting fraud is to go through the financial statements and look out for the things this book describes.

I don't know about in Canada but in the UK pay and conditions in the finance sector have taken a real dive since 2008. I know a few people that work for banks as traders and their bonuses are only something like 10% of what they once where. The pay isn't that good either considering the hours they work. Also bear in mind the kind of work you will be doing as a trader, it is all about short term performance, I dont think the usual value investing philosophy works in most financial institutions as it usually comes with volatility in results.

I focus more on the downside than upside when weighting the portfolio. If the upside isn't large then I probably wont buy it in the first place. I also think about the likelihood of the business deteriorating, how what position would I be comfortable with if I had to hold it for 5 years.