KinAlberta
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Posts posted by KinAlberta
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Nothing has changed under the sun. How many have invested in oil related companies this year?
Canadian stocks? The whole cdn. market was in a bear this year, and has rebounded in kes than 6 months.
Its all about temperament. Blainehodder can stick to the magic formula. SD and I are in oil related stuff, Oddball is in banks. Somewhere soon something else will go on sale.
I agree that the small cap end of the market remains generally inefficient and poorly followed. Proliferation of ETF's, brokers putting all of their clients money into WRAP accounts and other structured products, the decline in the number of small cap funds and assets under management (at least in Canada) have all seen money move away from this space. Also the overall mantra in the markets and investing nowadays is overwhelmingly "liquidity". How many times do I mention a stock to your mainstream investor and many other managers of money and the question or refrain is "is it liquid"?
Buffett has been described as a learning machine, constantly reading and learning. He also got ideas through asking others what they were buying. Aka Scuttlebutt.
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Anyone remember George?
I once owned a bit of Source Capital because of his investing record.
Id also read about him in one of Train's books.
This one:
https://www.amazon.com/gp/product/0887306373/ref=oh_aui_detailpage_o02_s00?ie=UTF8&psc=1
Anyway found this old article:
PORTFOLIO TALK IT PAYS TO GO FIRST CLASS
(FORTUNE Magazine)
By George Michaelis and Joshua Mendes
August 15, 1988
(FORTUNE Magazine) – -- ''Bulletproof'' is the word George Michaelis uses to describe the portfolio of Source Capital, the flagship fund of Los Angeles-based First Pacific Advisors. He wins long term by avoiding short-term disasters. During the 15 years he has managed it, the $300 million closed-end fund, which trades on the New York exchange, has only once -- in early 1980 -- experienced a quarterly decline greater than that of Standard & Poor's 500-stock index. In last year's horrific fourth quarter, when the S&P stocks plunged 22.5%, the value of Source Capital dropped just 13.5%. For the past 15 years the fund's total return was over 1,200%, vs. about 400% for the market, according to Lipper Analytical Services. Only 16 of the 314 equity funds in Lipper's universe have done better. For the 12 months ended in June the fund is up 3.3%, vs. a 6.9% decline for the market as a whole. In a recent interview with FORTUNE's Joshua Mendes, Michaelis explains how he does it:
What's your secret? Ours is a strictly bottom-up approach. We don't have much talent for predicting where the economy or the market is going. We simply try to invest in good companies at cheap prices. We look for businesses that have ..."
http://archive.fortune.com/magazines/fortune/fortune_archive/1988/08/15/70905/index.htm
http://articles.latimes.com/keyword/george-h-michaelis
http://compoundmachine.blogspot.ca/2014/10/george-h-michaelis-learning-value.html
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Interesting articles. I figure they tie in nicely with today's US politics, Brexit, etc. Your thoughts?
Globalization and its New Discontents by Joseph E. Stiglitz - Project Syndicate
"In the US, Congressional Republicans even opposed assistance to those who were directly hurt by globalization. More generally, neoliberals, apparently worried about adverse incentive effects, have opposed welfare measures that would have protected the losers.
But they can’t have it both ways: if globalization is to benefit most members of society, strong social-protection measures must be in place. The Scandinavians figured this out long ago; it was part of the social contract that maintained an open society – open to globalization and changes in technology. Neoliberals elsewhere have not – and now, in elections in the US and Europe, they are having their comeuppance."
Globalization is, of course, only one part of what is going on; technological innovation is another part. But all of this openness and disruption were supposed to make us richer, and the advanced countries could have introduced policies to ensure that the gains were widely shared.
Better Than Raising the Minimum Wage
Help Americans who need it with a major, carefully crafted expansion of the Earned Income Tax Credit.
"The American Dream promises that a combination of education, hard work and good behavior can move any citizen from humble beginnings to at least reasonable success. And for many, that promise has been fulfilled. At the extreme, we have the Forbes 400, most of whom did not come from privileged backgrounds.
Recently, however, the economic rewards flowing to people with specialized talents have grown dramatically faster than those going to equally decent men and women possessing more commonplace skills. In 1982, the first year the Forbes 400 was compiled, those listed had a combined net worth of $93 billion. Today, the 400 possess $2.3 trillion, up 2,400% in slightly more than three decades, a period in which the median household income rose only about 180%.
Meanwhile, a huge number of their fellow citizens have been living the American Nightmare—behaving well and working hard but barely getting by. ..."
http://www.wsj.com/articles/better-than-raising-the-minimum-wage-1432249927
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Interesting take from a great tech/business writer I follow:
https://stratechery.com/2016/dollar-shave-club-and-the-disruption-of-everything/
The article makes me think about our industry (investing). It is much harder these days to find lasting businesses. There are a few other examples of these disruptors.
Casper in mattresses
Blue Nile in diamond rings
Warby Parker in glasses
I just watched this documentary on Tower Records (see link below). Fascinating and very well done in my opinion. As a Canadian I had no idea of the history or 'societal' impact these young guys had on the music industry.
The last bit offers a lot of lessons to companies facing disruptive technologies, considering that Tower Records didn't completely fail and in-fact, in one 'area', seems to have thrived. - I'm trying not to be a "spoiler". The comments about the bankers coming in to reorganize - are precious. That portion is "MUST WATCH" for investors.
All Things Must Pass: The Rise and Fall of Tower Records (2015)
http://www.imdb.com/title/tt3272570/
http://www.towerrecordsmovie.com
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John (Walter) Williams'wrigings on shadowstats might be of interest to the sceptics. I'm staying an agnostic due to my preferred ignorance of the calculations and issues.
http://www.shadowstats.com/article/no-438-public-comment-on-inflation-measurement
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I think we need to approach it from at least two perspectives. The company, or more accurately the management of the company, might have some short term vested interests in seeing shares trade on another exchange. Should the sector be evidencing a "high multiple" on another exchange then bonuses may flow. An opportunity to option up and then bail out or whatever.
Shareholders? Well, short term flippers vs long term holders have very different perspectives.
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Thanks for a great reply.
Yes, OTC to a regular exchange would be good for most I'd guess. (I have a couple OTC positions - and they have limitations. Can't hold in my Canadian RRSP, etc.)
One exchange to another? I'm not sure about. Small company. You're finally seeing whatever developments come to fruition (likely having suffered past dilution). So a speculative position becomes more predictable. So, intrinsic value is more discernible. Thus its worthy of large proportions of your portfolio allocation. Now, say you feel that the 'promise' is great. The share prices starts to rise as investors come around to the same way of thinking. Then curiously those same people start wishing for an upgraded listing to a more prominent exchange.
An investor with a good idea, seeing a company that is priced under it's intrinsic value, maybe vastly so, should want to continue to built a position in the company. A less prominent exchange choice would seem to me to be the logical wish.
Now, if the investor is retired and lacks additional money, has built as large a position as they can afford or handle or feel comfortable with or some other limiting reasons, then it makes sense to want higher exposure asap and intrinsic or better valuations.
However, investors in emerging companies, one would think, would want to invest long term and maximize their long term 'resk-adjusted' returns and not pump in order to dump - to then go on the hunt for another winner (possibly, actually - likely - a suboptimal choice compared to the one they just sold).
A terse response I received included the comment that the other exchange included: "... much higher multiples " for that sector.
To me that statement reflects a desire to attain higher pricing and then dump and not hold and/or accumulate. Getting on the, right higher-multiple, bandwagon though would be great for equity issuance though wouldn't it?
The cost of debt / debt issuance I don't know enough about but wondered about. Why would the listing matter. The financials should matter hugely, but the exchange?
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Question: Why wish for a stock's listing to be 'upgraded' to a bigger exchange? Why do people hope to see a small company they own tradable shares in, have the equity listed on a larger more prominent exchange?* (I'm not considering OTC here but a move from a venture exchange, etc.)
I recently asked this question and have now come here for some expert education and opinion.
My uneducated view - so far.
- A more prominent exchange listing helps with retail investor exposure, helps with equity issues, sometimes required more stringent reporting (but at what cost in terms of listing/market data fees).
- For those looking to sell, the announcement of a move to another more prominent exchange permits a selling opportunity (like a share split announcement). I guess the eventual addition to an index fund/etf. (There's also risk with being dropped from an index.)
- The increased liquidity and equity issuance potential are both double edged swords to me. However, exposure and associated liquidity could be hugely important to some emerging tech and other companies that need to rapidly expand to grab market share and so, need to massively dilute existing shareholders to survive and grow.
So, everyone: Why else? What's so great about moving "up to" a NASDAQ, NYSE, TSX listing? And why the blanket desire for this outcome among micro-cap investors no matter what the nature of their enterprise?
* I recently asked this on a small forum in regards to a small, rather unknown, emerging technology company with strong patents, positive cash flows and of course, loads of 'promise'.
I'm getting the typical; are you a moron like responses, a larger more liquid, more trustworthy exchange with the whole _{type of tech}__ sector listed there... Maybe I am a moron. :-)
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I won't name any but a few domestic seniors residences, funeral homes and age related health care services and treatments, plus some other demographic plays offer opportunity.
Over the next 10+ years aging, ailing, and dying baby boomers offer a near guaranteed, and pretty dramatic, increase in customers for some companies. Such businesses may not be wonderful companies now, but for some you could expect to double a customer base if the services (like funerals, seniors housing, kidney treatments, etc) are near unavoidable. So your downside might be somewhat protected in what seems to be a rather pricy market today. As always, with 20/20 hindsight in those circumstances, people would declare such businesses as "wonderful" when in fact, you're just following the money.
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This doesn't really belong in this thread but it is interesting...
"We are seeing ‘for sale’ tags on airports, roads, ports, ..." (see below)
The biggest ever fire sale of Indian corporate assets has begun, to tide over bad loans crisis
by PIYUSH PANDEY
The Reserve Bank of India’s (RBI) has decided to clean up the balance sheets of Indian banks, which are collectively saddled with Rs five lakh crore of bad loans, by the end of this fiscal. So, the banks have started cracking the whip on Indian companies for repayment of loans. For most affected firms and groups, this will mean they will be forced to sell prized assets to repay their ballooning debts.
We are seeing ‘for sale’ tags on airports, roads, ports, steel plants, cement units, refineries, malls, corporate parks, land banks, coal mines, oil blocks, express highways, airwaves, Formula One teams, hotels, private jets, and even status symbol corporate HQs. Substantial stakes in firms, and in some cases entire companies, are on the block.
The Hindu reviewed leading corporate houses with billion-dollar loans riding on them, and the results are startling. The top 10 business house debtors alone owe Rs 5,00,000 crore to the banks. They will be forced to sell assets worth over Rs 2,00,000 crore.
...
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It's disheartening how much 'news' is being generated on every little company and every little price movement. Just clutters up the news streams.
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And don't forget that he did somewhat retire when he was young, saying something to the effect that he wanted to do something more meaningful. If anyone can find the exact quote please post it. It was an interesting comment in light of his success to that point.
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There's also the pension, endowments and other such funds route. Not too sure why AUM is important but it does sometimes allow for a wider breath of experience. As such AIMCo in Alberta has $80+ billion in AUM, so the OP might want to look west.
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Just posting an older article about Apple's cash. I figure the cash actually is real. :-)
Netting cash against liabilities is a rather useless point too, but the point about taxes may add a bit of value to the discussion.
Why Apple's real cash pile is 99% smaller than you think
By Brett Arends, Oct 7, 2015
http://www.marketwatch.com/story/apples-real-cash-pile-is-99-smaller-than-you-think-2015-10-07
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Ilumina is currently down nearly 24% today, so when I saw what Zacks said yesterday, I just had to have some fun (at Zack's expense) and post it here.
(earnings vs revenue outlook)
Is a Surprise Coming for Illumina (ILMN) This Earnings Season?
April 18, 2016
by Zacks Equity Research Published on April 18, 2016
"Why is this Important?
A positive reading for the Zacks Earnings ESP has proven to be very powerful in producing both positive surprises, and outperforming the market. Our recent 10 year backtest shows that stocks that have a positive Earnings ESP and a Zacks Rank #3 (Hold) or better show a positive surprise nearly 70% of the time, and have returned over 28% on average in annual returns (see more Top Earnings ESP stocks here). "
http://www.zacks.com/stock/news/213577/is-a-surprise-coming-for-illumina-ilmn-this-earnings-season
Illumina (ILMN): Stock Poised to Beat Q1 Earnings
by Zacks Equity Research Published on April 18, 2016
"Why a Likely Positive Surprise?
Our proven model shows that the company is likely to beat earnings because it has the right combination of two key ingredients.
Zacks ESP: Illumina has an Earnings ESP of +1.28%. That is because the Most Accurate estimate is 79 cents while the Zacks Consensus Estimate is pegged lower at 78 cents. This is a meaningful and leading indicator of a likely positive earnings surprise.
Zacks Rank: Illumina has a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating earnings estimates. Conversely, Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.
The combination of Illumina’s Zacks Rank #3 and +1.28% ESP makes us confident of an earnings beat at the company."
Today's news:
First Zacks:
Illumina (ILMN): Bleak Q1 Preliminary Results Hurt Stock
by Zacks Equity Research Published on April 19, 2016
"Finally, it is rather difficult to predict Illumina’s first-quarter 2016 performance solely based on the aforementioned preliminary figures and the company’s position as a major player in the genomics space. So, investors have to wait till May 3 to gain an insight into the actual first-quarter figures of the company.
Illumina currently carries a Zacks Rank #2 (Buy).Other favorably ranked stocks in the medical sector are..."
Illumina's stock heads for biggest-ever price drop after revenue warning
Published: Apr 19, 2016
"Illumina Inc.'s stock ILMN, -23.55% plunged in heavy volume in morning trade Tuesday, putting it on track to suffer the biggest one-day price loss in the 16 years since it went public..."
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The article below discusses the lack of justification for the current price to book value
Why Fairfax Financial is an ‘investment portfolio’ story
Jonathan Ratner | April 14, 2016
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Zacks reporting sounds like ValueLine's self promotion.
Years ago I looked at ValueLine's reported performance and found it hard to believe. Then some funds started up mimicking their #1 rankings and they sure weren't stellar performers.
The Value Line Enigma
Jul 30, 2010
My book was published in 2000, so I have updated the data (all returns are for the 10-year period ending June 30): ...
http://www.cbsnews.com/news/the-value-line-enigma/
ZACKS RANK PERFORMANCE
Following the Zacks Rank has proved to be very profitable. Since 1988, a portfolio constructed of Zacks #1 Rank stocks has generated an average annual return of 26%. Comparatively, the S&P 500 has only returned 10% over the same period.
http://www.zacks.com/help/zrankguide.php?p=7
The Zacks #1 Rank List is the best place to start your stock search. And now you can see all 220 Zacks Rank #1 (Strong Buy) stocks when you start a free trial to Zacks Premium.
This private list narrows a universe of 4,400 stocks down to 5% with the most potential. Access this exclusive roster of "best in class" picks that since 1988, has nearly tripled the S&P 500 with an average gain of more than +25% per year.
To put it another way, had you invested $10,000 into our Zacks Rank system in 1988 and rebalanced monthly, it could have compounded to nearly $6 million dollars.
The numbers don't lie. In fact, that amazing performance has been examined and attested by the independent accounting firm of Baker Tilly Virchow Krause, LLP.*
http://www.zacks.com/registration/premium/login/?continue_to=%2Fstocks%2Fbuy-list%2F
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Interesting... Zacks sell news is always popping up on the companies I'm just getting interested in. How should their ratings performance be rated?
I hope someone revisits this post in say 3, 5 maybe 10 years to compare their picks to BRK. :-)
Also, this Zacks Rank #5 (Strong Sell) stock did not witness any positive earnings estimate revision in the last 60 days. The Zacks Consensus Estimate lost 5.6% for 2016 and 7.9% for 2017 over the last 8 weeks. Additionally, shares of Berkshire Hathaway seem expensive as its P/E is 19.3% higher than the industry average of 16.2%.
...
Assured picks
Since insurance stocks are poised for growth no matter what the Fed chooses to do, the space is bound to attract attention. Here, we always look to maximize our return on investment, with Berkshire or Warren Buffet being the guiding star. Taking nothing away from Berkshire, we have picked some solid operators in the space that have the potential to boost one’s portfolio even more.
...
https://finance.yahoo.com/news/3-insurance-stocks-buy-instead-194507128.html
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How much selling pressure will be on the stock while the charities are constantly selling off the stock to raise required capital?
Thats good isn't it?
Like buying shares after a company cuts its dividend. The sellers often are selling based on their own cash flow needs and not on an assessment of the company's prospects.
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WJS Partnership (Walter Schloss)
o Run by one man who once worked for the Graham-Newman Fund
o Not too bright, knows little about investing.
I added the bold. "Not too bright, knows little about investing"
Wow. I didn't think WB called people out (except for David Winters, of course) ;D
I thought WJS and Buffet were friends. Buffet went to WJS' funeral too.
I think that was Buffett's dry sense of humour. Maybe Schloss was the next scheduled speaker. (Buffett praised Schloss, his detachment from companies and his investment performance on several subsequent occasions.)
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Run for the hills everyone, it may "Crash even more" !!!
:-)
Could Fairfax Financial Holdings Ltd Crash Even More? The Stock Had Another Big Decline Today
FEBRUARY 17, 2016 BY ROBIN REYES IN STOCKINESS
"...The stock of Fairfax Financial Holdings Ltd (TSE:FFH) is a huge mover today! The stock is down 0.22% or $1.68 after the news, hitting $777.15 per share. ...
The move comes after 9 months negative chart setup for the $17.58 billion company. ..."
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Just now read the RBS piece. I thought Hussman was prone to extremes. :-)
Hussman though thinks in terms of hard numeric reality - whereas the RBS piece is very 'story' based. The big bad wolf kind of thinking. As such, I wouldn't put any more credence on such fearfulness than I do on my own fearfulness. We're all prone to manic depressive behaviour and it seems that RBS analysts are as well - but they have a bigger audience.
I'd much rather follow Hussman's warnings and be conservative but with an eye towards opportunity than the knee-jerk panic behaviour RBS is proposing. (And note that I was 80%+ in cash going into the 2008/2009 collapse when none of the big money managers besides Jeremy Grantham, was proposing extreme safety.) Unlike the economy in 2007 with massive overbuilding and collapsing jobs, FASB157 and billions upon in exposed derivatives some significant amount without even collateral service agreements, today, the US economy is doing quite well, banks are well capitalized, cheapening oil will really pay off for the consumer and so many other things are reasonable. What's to fear?
An imploding China will hit sales for some US companies but Chinese goods will become even cheaper. This could just be a repeat of the 1990s implosion in Japan which hardly affected the US. Bottom line, there just doesn't seem to be any big reason to panic regarding a slowing or moderating US economy.
Now, in my home province of Alberta, Canada, things are different. Panic may be an appropriate response, though I'm buying into the local market ever so slowly. e.g.. TransAlta cut its dividend as was fully expected and the stock tanked 13% nonetheless. Interesting isn't it.
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I don't know if this was ever posted here, somewhere, but it was quite a good read...
Naked Short Put Options - Warren Buffett's Little Secret April 23, 2014
Grahamites
http://www.gurufocus.com/news/256254/naked-short-put-options--warren-buffetts-little-secret
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This site just spews out the articles and some just makes your blood boil. (Note the guy's holdings at the bottom. There should be far more disclosure and even some explanation that goes with such disclosure.)
Don’t Overthink It. Just Buy Fairfax Financial Holdings Ltd.
http://www.fool.ca/2015/12/07/dont-overthink-it-just-buy-fairfax-financial-holdings-ltd/
Buffett interview from 2005
in Berkshire Hathaway
Posted
I hadn't seen this interview before and it contains some interesting 'macro' views by Buffett
It's quite long but interesting. Just a small portion below so I'd suggest reading the whole interview.