ExpectedValue

Nice find. It seems like there are three risks to OPAP: 1. The state could start increasing their windfall tax against the company. Greece needs tax revenues and here is one area where they are clearly getting revenues. Even though they own 30%, a windfall tax and dividend payments still result in the money going to the same place -- the Greek gov. So I don't see why they would not increase the tax from the current 10% to a higher rate. 2. The possibility of them not receiving their renewed monopoly. I will assign this a low probability, just because they seem so dependent upon tax revenues and any disruption to that could be problematic. 3. If austerity measures do not pan out for Greece, the Greek sovereign bonds on their balance sheet could fall and if Greece has to leave the EU, the currency/dividends you are paid in could severely decline due to the process from Euros to whatever the Greek currency is.

Bargainman, it is true that ESL is not synonymous with Eddie Lampert but back in 2007 he raised tried to raise an additional 3-5B in AUM at a 5 year lock up. If he was successful (and my guess is he was) -- he could probably use that new capital to fill in for any exiting investors. That could at least allow his ownership to remain stable till 2012.

I think that is one of the risks you have when you invest in a company where a fund controls so much stock. Maybe the end game is to simply extract cash from the business as it slowly winds down. Right now it is buybacks but maybe when Eddie ends up controlling the vast majority of shares he'll start to pay a dividend to himself.

Would they happen to be based out of Torrance, CA?

Rick, when I see a company that has had its last two auditors resign I get pretty cautious about what the reported financials are and start to look at the management team to determine whether or not I can trust them. The fact is, AAP is run by a pretty sketchy guy. He's got all sorts of lawsuits, related party transactions, and just poor judgement to make me queasy. How can you get any level of comfort in the company? It's great that you can quote positive EBITDA figures, here are some positive EBITDA figures from another company: http://highway6.com/images/181e28f90eaaeccbe23196c941fc80d0.png Those are from Enron. So it goes to show you that reported financials aren't everything - especially when you can't trust the management team and their accounting.

But how can you be confident about any of the values recorded for the company when the auditor has resigned? I briefly looked in APP but there just seems to be a lot of issues - related party transactions (for example contracting manufacturing work to a company controlled by the CEO and the Chief Manufacturing Officer), then you have his dad running the Canadian biz, when Endeavor filed the SPAC they noted 30 apartments being leased by the company in LA, Miami, NYC... the list kind of goes on and on. I think they have a great brand and a great product but they are being run by sketchy people and the corporate structure really doesn't help.

A debt to equity swap might dilute the heck out of existing shareholders - making this a bad buy.

American Apparel has a great brand and the clothing they sell is pretty well regarded. Most young 20-somethings prefer AA t-shirts because they have a better fit and feel. Their t-shirts are traditionally the go-to choice for most designers which is why you see them printed on for band merchandise at concerts. My issue is with the financials. The fact that their auditor dropped out and that they have had longstanding accounting issues makes me nervous about the equity. I bet this will be a good name for distressed debt guys, especially if the company defaults because like you said - they can use the debt to get control of the company, replace management, and run a really tight ship.

I think he just reduced his equity exposure by 42%

One thing to keep in mind whenever you see something like PwC or another big auditor listed is to see if they are lending their name to a smaller local audit partner. Sometimes it will say PwC XYZ - the XYZ being the name of their local Chinese audit partner. If things ever go wrong and there is a fraud they can simply shift the blame to XYZ.

I was wondering if any board members, particularly any of you in Canada could provide some perspective on BCE? Given the dividend yield and current price, the company looks pretty attractive. It is my understanding that Canada basically allows for a three-way monopoly between BCE, Rogers, and Telus. As a result they have been able to set certain pricing standards which allows them to maintain profitability. I also saw this article from a couple of years ago that said Canada's telcos were more profitable than global peers: http://www.cbc.ca/technology/story/2008/09/04/tech-profit.html

the potential for higher margins

I live near a Sonic and visit there pretty frequently. A drive in, like Sonic, benefits from not having a place to sit and eat inside. Even though we refer to other restaurants as drive thrus, almost all of them have dine in areas. The Sonic located near my house has competition from McDonalds, Jack in the Box, KFC, Taco Bell, and Burger King. So there definitely is potential for a drive in to have higher margins than a drive thru, just on the basis of not having the expenses required to have a dine in area. The way Sonic works is, there is a small box of a restaurant and on the left and right sides are parking spaces. About 8-10 per side. You pull into the parking space and on your left will be a menu board. When you wish to order, you press a button on the menu board and give your order. Someone comes out with your food, you pay them, and usually leave - some people stay and eat in their cars.

I believe the plan is to still have what, 3 or 4 different CIOs? To me that already is Buffett hedging his bets.

But, Buffett has said on multiple occasions that Henry Singleton of Teledyne is one of the greatest capital allocators in history and should be studied. Singleton was really successful in using a combination of buybacks and issuing shares to take advantage of when his stock was undervalued / use his stock as currency for deals when it was overvalued.

I didn't think his temper got out of hand. He was just disappointed. The students were given a homework assignment to read up on a case (which they did not) and he asked them to do a few mental math calculations for figuring out the market cap. They were unwilling to do so and came off pretty lazy which is sad when you consider that it is a class of Columbia MBAs.

Thanks, yeah I think it is an interesting mental exercise. Even if it is hypothetical, it gets you thinking about which businesses in your portfolio have the strongest kinds of competitive advantages that will enable them to at least preserve wealth. Ideally you want a company with great competitive advantages and then hopefully a good capital allocator at the helm. I think Berkshire is a good choice because even without Warren, the company has so many diverse business lines that are run by really talented people. It should be able to withstand the test of time. To be honest, I have not researched DreamWorks too much, but I do think that if this 3d movie trend continues, it will be a major boon for studios, especially studios that produce animated films for children (e.g.: DreamWorks with Shrek).

http://streetcapitalist.com/2010/07/29/my-interview-with-zeke-ashton-of-centaur-capital-and-the-tilson-dividend-fund/ I recently did this interview with Zeke Ashton of Centaur Capital who also manages the Tilson Dividend Fund. I think you guys are going to enjoy it - Zeke mentions a number of companies that come up frequently on this board. He mentions Fairfax Financial, Berkshire Hathaway, and even Michael Smith's Mass Financial Corp.

Pof, What I would suggest is try to start at simple but useful apps. For example, a watchlist app could be cool. It would mostly consist of entering text (Company name, Ticker, exchange, your intrinsic value estimate, notes on the company) and then storing it. Then you could start implementing some higher level functions such as using javascript and the Google Finance API to call price checks on every stock on your watch list. This is all stuff that can be done in a Google Docs spreadsheet, but the idea here would be to come up with something a little more slick.

So is there a reason why you think Visa is the better buy than Mastercard? Is it a quality thing: buy the best vs buy the cheapest?

I must be a really sMAAL company..

I'm a huge fan of both Klarman and Grantham. I wonder what Klarman's stance is on the type of "high quality" companies that Grantham refers to. You don't really see Baupost investing in quality large cap US stocks, really ever. At least not thematically. They seem to stick to their knitting with more special situation type plays (FACT is a recent example)

Looks like a double for LUK.

The best argument that I've read, which is in favor of the deal, is that this is great because it represents players figuring out a way to work outside of the league's ownership/regulatory structure and make their own decisions. I don't think this was a financial decision but a "championship" decision. The three players have enjoyed playing with each other for years and wanted to figure out a way to do it all under one roof. They did that by signing relatively short 3 year contracts which would allow them to be free agents at the same time and then move to a team that could support the cap space. So instantly, this kind of maneuvering has created the best team in the NBA. The people of Cleveland are mad and they think he turned his back on them. I agree, his 1 hr special was a bit on the egotistical side, but I think most of all, Lebron just wanted a championship ring and that was not going to happen with Cleveland. They simply could not build a good enough team. Basketball is a finite sport, as you age, your ability to perform wears down. Lebron could not afford to stay in Cleveland and hope the rest of the team got better in order to get him to a championship.

Yeah, I think the hold up with iTunes "Cloud" has to do with licensing rights. MobileMe might need the help of an acquisition, some people think DropBox would be appropriate as it syncs files better than MobileMe right now. To me, LBS looks like a pretty tough market. You have Loopt and FourSquare (I think FourSquare is beating Loopt atm) but then you also have the potential of incumbents like Facebook and Twitter coming in.