Patmo

This company keeps putting out press releases just to say that business is going real well. A while ago they were talking about picking up a defunct competitor's customers, now they're saying they straight up can't keep up with demand. The market believes 0 of it, could be a solid buying opportunity. What do you guys think?

Are we still talking about cash? ::) Why not both?

Also I highly doubt this ever goes through revenue, it should be a separate line item. Maybe there's exceptions, like maybe if it's the business' primary operation to hold FI's or something, I don't know.

See IAS 39 for rules on recognition of financial instruments for IFRS. http://www.iasplus.com/en/standards/ias/ias39 The following two sections are probably the most relevant to you: There are other classifications and naturally, millions of rules/exceptions, but these should be most relevant to your question. IFRS 9 will replace IAS39 in 2018, and makes things a little simpler (See http://www.iasplus.com/en/standards/ifrs/ifrs9 for full standard): And then FASB (GAAP) JUST issued an update effective sometime in 2017 in relation to this topic. I'm tired of writing this post so here are just some quick links: http://www.fasb.org/jsp/FASB/Page/SectionPage&cid=1176156316498 for a list of ASU's (accounting standard updates), the one you are looking for is the only one issued in 2016. http://www.pwc.com/us/en/cfodirect/publications/in-brief/fasb-classification-measurement-final-standard.html An explanation of this update by PWC. And then https://asc.fasb.org/ for the current standards, you can create a free account and access all of the FASB standards. For Financial Instruments go Broad Transactions -> 825 -> 10. The GAAP standards seem rough to make sense of... See this PWC quote for what it appears will happen with this new update:

Cash is king, winner takes all!

Here's a basket of commodity-influenced picks ranging from extreme cheap to pretty cheap, I own at least a little of all of them: CNX CONSOL Energy Coal/Gas Coattail Einhorn, see presentation SXC SunCoke Energy Metal Coattail COBF, see forum topic INP Input Capital Canola Reasonable price, promising business model means strong upside/low risk, well capitalized (Coattail many sources) MND Mandalay Resources Gold/Silver Value-style + low cost operation, safe, 3x EBITDA near low end of cycle KRN Karnalyte Resources Potash EXTREMELY cheap, slightly better than average project, needs large development financing (in discussions + rumored offer on the table) MCR Macro Enterprises O&G pipes Safe, growing business trading at 50% liquidation value I have a couple more but this board would be even less interested in them ideas than those in this post. Hope you guys like

I manage some family members' money, I just do the plain old vanilla value portfolio management strategy of allocating cash to equities if I think the market price is dislocated from underlying value, holding cash otherwise. It's a natural hedge against bear markets, as in an overvalued market there will be less money allocated, etc etc you know the idea. Maybe it's lazy but it works, and why not KISS. Working hard makes you look good but doesn't bring any other value as far as this topic goes imo

Don't predict anything, just study companies and buy things when they are clearly too cheap compared to their value. If stock goes down you get the option of buying more if you feel like it, simple process but not easy. An already cheap company could still go down 75%, that could mess with your head but that is why value investing is successful in the long run, it is very hard emotionally and lots of work if you are sharp/not lazy

I would invest with Michael Burry/Scion or Seth Klarman/Baupost

I own what now amounts to somewhat of a basket of commodities or commodity related companies: -A gold/silver/antimony producer -An O&G service business -A Natgas/coal producer -A canola farm financing company -A potash project -An appliance recycler (dependant on scrap metal prices) -A Mongolian RE company (indirectly dependant on Mongolian mining) I have no illusion that everything will work out but those that do should more than make up for those that don't. No special detailed analysis like the WS experts on this board, I just look at the big picture and the price I pay, if I feel comfortable with the risks in place versus potential rewards, I spare a few $ for the cause My largest commodity position (and overall) is the O&G service business so that's where my oil allocation mostly is at. 20% of portfolio, a little too heavy for my liking but I had to average down because it got nonsensically cheap and is relatively safe (a growing, well managed business trading at 1/3 of liquidation value lol)

This company is now trading at 1/3 book value and 4x the average earnings of the past 4 years, as well as near all time low territory. This business is a bit of a crapshoot, it randomly posts amazing and shit years over time. Since 2007 the company averages $450k in net income, but swings from -4mil to +4mil. At any rate, the business grew pretty well under Jack Cameron, so it might be a positive catalyst that he got the retirement jitters and threw his hat back in the ring. Reasonably positive developments would make it a 4-5bagger within the next few years. Given the risks involved I'm ready to throw the dice at this juncture, a small ball size. I may attempt to trade around on it if I see an opportunity, I've been meaning to try that out. Anybody else?

Yes it's a good proxy, but it's only a proxy. Still, chances are really high that d+a will be closer to true maintenance capex than what management might tell you or what you can conjure up with homemade gimmicks...

I think about it like this. I count cash collected as real cash. The company can spend it or do whatever it wants with it. Then when I look at deferred revenue, I almost ignore it. While it is a liability because the future services are owed to the customer, It's not like debt where it has to be paid off with cash. Owing services and owing interest and principal are very different. For example, take Rosetta stone. It has deferred revenue from it's software and recognizes the revenues with the memberships expiring. If the company you're talking about isn't as asset light as a software company and has service contracts that require expenses, i would probably adjust for future earnings to be lower to account for the added costs required to provide the owed services. Either way, cash up front is great for the business. For fair comparison wouldn't you have to also adjust your denominator to add the revs and remove the exps that this cash will incur? Otherwise it's like comparing apples to oranges, kind of like comparing EV to NI. It would get pretty complex when you can just add back unearned revs to your EV and call it a day, no? Then you would have to also treat prepaid expenses in opposite fashion, I guess? Probably not, for conservatism purposes?

I see you chose your name meticulously. Sounds very yummy. I tried brewing out in my teenage years, I was so bad at it the beer was nearly undrinkable. Obviously being teens we didn't waste a single drop anyway... Might I suggest you try out a Tankhouse Ale, from Mill St Brewery out of Toronto. So far I've only ever met 1 person at a beer festival who enjoyed it, like me he'd have everyone he knows try it out. It turns out nobody likes it but the both of us who think it is nature's greatest gift to the world. A very polarizing beer I guess, might be worth trying if you ever come across it.

The obvious challenge is that FASB tries to make accounting objective when it is actually subjective: -- Charlie Munger The more relevant you make your depreciation info source, the more costly and/or unreliable it becomes. Accounting bodies are just trying to make the best of an imperfect world, often having to choose the lesser of two craps. Munger's quote is an appreciation of that fact, not an attack on accounting bodies' competency. A little bit less relevance of information (not even that much, really, SL depreciation has been shown to be a pretty sturdy proxy in general AFAIK) is a small price to pay for a cheap, simple and reliable process. Keep in mind USGAAP also allows the depreciation of cap assets by units of production, which is a halfway-type compromise, but nobody uses it, and there's a reason for that. How would you personally improve on FASB's standards?

What do you mean? Bufet only takes one F?

In addition to the tax implications of going from invested back to 80% cash, is that for the first 8 years they invested mostly in T-bills so most of their returns in those years would be ordinary income (based on US tax rules). It is hard for me to understand why someone who is primarily focused on preservation of capital would choose Patient Capital over BRK. While BRK has had greater volatility, it has meaningfully outperformed PC, and after taxes would have materially outperformed. Obviously it must be the unwillingness to stomach volatility. Some very good points---tax efficiency of any fund certainly needs to be considered however perhaps this is less of an issue if the fund is held within a tax deferred account of some sort. As for simply going with BRK over the PC fund--- this is a possibilty however being a Canadian resident the added issue of the FX exposure (which I briefly touched upon earlier in this thread) adds a level of complexity that needs to be taken into consideration when considering BRK. Perhaps for a US based resident the "go with BRK" decision is much clearer. As for the ability to stomach volatilty---a very valid concern---I currently self manage my family's portfolio (my wife and me) and I can safely say it is VERY concentrated in a few select names. Volatility is truly something I do not concern myself with. Nonetheless---I raised the possibilty of potentially having my wife use Patient Capital as her investment manager should something unexpected happen to me because of that firm's focus on capital preservation and the low volatlity of its results. I help out a couple family members and a friend and I essentially have them on the same book as mine, only they are thinner. I really don't want to build up 20%+ positions on anything at all for them. I wouldn't even do that on a name like BRK. I know I can stomach the ups and downs and I know that they trust me and can handle tough roads themselves, but I would feel irresponsible to do it. The risk of my being wrong on a big position and taking a dump on their future is not worth the potential gain. It's just a different thing to handle someone else's money vs. your own, at least that's my opinion. Not that I condone hoarding 80% cash for a decade straight though....

5/44 from the wikipedia page, but the source link doesn't work so take that with a grain of salt

80% cash is nothing new for him. Damn! Can't say he didn't earn his name!

Did you see the fees they charge? Dang!

I would be more confident putting my money into Patient Capital though. If I am a forced hand when the crap hits the fan, I will not have tanked with PC. If anything they exhibit exemplary fiduciary behavior. I'm not one who shies from variance but I think it matters a great deal when you're managing OPM.

Thank you, I've had too many discussions these past few months where success is always discounted to luck. It's pretty aggravating that so many people refuse to acknowledge success of any kind anymore...

They'll keep going after him as long as Jamie Dimon acts like Jamie Dimon imo...

That depends what standards you're looking for... iasplus.com is what I would recommend...

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