Jurgis

Theoretically any mutual fund can "have to shut down". If there is a run on it, they cannot do anything else except return money. Of course, for majority funds, significant number of holders don't sell even if fund underperforms/drops a lot. Now, Focused Credit had large illiquid positions. This exacerbates any run on the fund, since you can't sell these positions at any reasonable price to cover withdrawals. Think what happens if they buy distressed bond and it goes into default - liquidity may dry up until recap and prices offered may be 2-3x below purchase price even though eventual work out might be positive. I think Marty's funds played with this in the past too. They never got burned on it until now though. Like someone said on another thread, Focused Credit should have been a CEF or limited-withdrawal hedge fund. In case of panic, this does not work as a mutual fund. It's also possible that their investments were simply bad and the run was justified. We may not know in the end.

I've heard about this pub that had an ad in the window saying "Free beer tomorrow!" Same thing?

Happens a lot pre/post-market especially on illiquid stocks. Usually not 100X though lol.

Browsed through Fido's corporate bond list at least B3/B-, yield >15%. It's all the usual suspects: CHK, X, some other energy, coal, steel, mining names. Nothing very interesting. Maybe ATW - I did not realize they have levered themselves so much at the top of the cycle.

No, but it's a gas! 8) ;D :D

I decided that I will make a Brier-scorable shorter than 1 year forecast related to the stock every time I buy or sell a stock. Will figure out how to score adjusted forecasts. Will evaluate Brier score results in 2-3 years. This is not very scientific, since Brier scores are interesting mostly across forecasters. I.e. you may think that you have a great Brier score if you score softball questions. But if you compared it against other people you might discover that it's actually crappy. This is not something that I can solve if I'm the only one making forecast. But perhaps some info is better than no info. Will keep posted on the thread once in a while.

Thanks. SA article for future review and thinking: http://seekingalpha.com/article/3753506-high-yield-carnage-and-closed-end-funds Tickers for search: DHF, PHK (still trading at premium? :o ), PHT.

Jurgis, I'd be grateful and interested to hear more of your thoughts on MCB and specifically, your main criticisms of him. Thanks in advance. G. I don't have any direct criticisms about Mike's investments offhand. He did great in the past and I wish him well in the future (though obviously he could just sit happily on the pile of money he made and do nothing). I just object his deification. In particular, commodity pricing could be explained by cyclical (or supercyclical for hyperbole inclined) nature: China growth drove up demand, demand drove up pricing, a lot of projects to increase production are/were multiyear, then they come online when China is slowing, etc. Sure, there is also some fiscal, monetary, currency effects too, but that doesn't mean that a paragraph from Burry predicted yet another 100 year flood or something. I have some objections towards some thoughts and sentiments he expressed post crash. But he is entitled to his opinions - and he paid dearly for them - so I don't see a point to return to them. :) Finally, my direct interactions with Mike are now more than 10 years ago. He was nice and smart guy, though I'd say CoBF has people who seem as smart as him or smarter. And if he'd be on CoBF, he'd probably wouldn't be treated as a prophet (if we exclude hindsight bias). ;) In the end though it's the investment results that matter and not our posts on SI or CoBF. 8) Take care.

And you think BRK is at $130 why? Newsflash: BRK is at $130 exactly because its investments and its businesses are not doing so well lately. Is all the negative information already reflected in the price? Maybe, maybe not. You'll never know. What is exactly the point of ? Of course there is. BRK went to $125 this year, so within 4% of $120. Does this mean that we should sell BRK and wait to rebuy at $120? Just hold cash until it gets to $120? Buy something else? I don't find such prognostications helpful. At least if you do it, do it the superforecaster way and give the time frame + probabilities. Otherwise, it's like talking heads on TV - they are always right, since they never specify probabilities or timeframes. Take care

8)

WSJ article is a piece of crap. However, somehow this thread never complains about crappy pro-hedgie articles like the NYT piece. The definition of "fair and balanced" reporting is the reporting that supports your stock positions. I knew that.

Perhaps we should start another topic for this, but for now here it goes. I own some distressed oil bonds. I am looking for more opportunities in this space, but clearly the cheapest ones are quite risky and the better quality ones are mostly expensive. I hold some CHK, DNR, X. Looked briefly at FCX, AAUKY. Probably I should spend some time on a screener to see if something interesting pops up. I'd be interested to buy a good distressed bond fund, but that's the irony: Third Avenue Focused Credit fund was supposed to be such a fund. So now the risk is that the fund you buy won't survive the "volatility" of the high yield market, even though it could have come out with good return two-three years down the road. This seems to call for a set-duration special purpose hedge-like fund - which is probably what Howard Marks will run. I doubt I can get into these and the investment sizes are probably a bit too high for me. Individual distressed bonds also may have issuer recap risk. Even though the issuer might be fine to pay the interest and pay them off at par at maturity in couple of years, they can look at current distressed prices and decide opportunistically to recap them here and now without paying par. Anyway, I am interested in ideas, thoughts about both bonds and HY/distressed bond funds. Either on this thread or elsewhere.

You are overascribing godlike qualities to Mike while doing selective reading and interpretation of his writings. He wasn't God and he isn't.

Or pick up some Oaktree Maybe I'd buy distressed bond fund run by Marks, however, I'm not sure I'd buy OAK. Asset manager is not the same as the underlying funds and IMO people make a fallacy when they buy one when they think that the other may do well.

Might be getting to be good time to pick HY bonds.

So. :) Anyone want to do a startup/fund (or service ala oddballstock's https://www.completebankdata.com/ ) based on superforecasting? Get Philip Tetlock as a partner, potentially get his superforecasting team(s) (or build your own - from CoBF participants haha?), make predictions, ..., PROFIT! There are some organizational and methodological questions to be resolved, so this is not commodity-trivial (i.e. you might get competition, but not immediately and possibly not very competitive if you solve some of the issues well). Of course, if you go fund route, money raising would also be interesting challenge. If you go service route, then https://www.completebankdata.com/ might be a good blueprint on how to do it... Fund would probably do much better if this really works. Service is more inline with what Tetlock does now and perhaps easier to implement / get running. In best case, you could do https://en.wikipedia.org/wiki/Renaissance_Technologies 8)

Theoretically: milk the cash cow then return capital to shareholders. If management is great capital allocator (haha), then buy other businesses from cash flow (see Berkshire haha). If management is not a great capital allocator, then divvie-and/or-share-buybacks (not getting into religious war here). In practice, most managements diworsify or spend cash on crap (or on themselves - but then I'm repeating myself ;D ) Weren't tobacco people one of the best in this? And even they bought some overpriced crap IIRC. Buffett (Berkshire haha) and Munger (DJCO) might be best at this. But obviously Buffett had other businesses and DJCO is study in progress ( I am not so sure it will ultimately end very well ).

IMO there's no way there's gonna be a political resolution before elections. IMHO government will also try to push any lawsuit progress out until after elections. How much they can succeed is a question to a lawyer (merkhet?). Just saying that don't expect a resolution before 2017 (or late 2016).

Joined. 8) I wish they had more business/economics questions. I'm definitely not an expert in world affairs and I'm not sure I'd become a better investor if I try to predict political events. 8) We'll see how this works out. 8)

I sold some o&g holdings yesterday/today, so probably we are. Unfortunately, I also bought some, so... possibly not. 8) Overall, my current holdings are down 50% on the prices paid. That includes all gains/losses/divvies/interest/etc since I started buying ~Jan 2015 (one position is way older, but that's immaterial). I don't count losses on somewhat-oil-related stocks (e.g. CFX, etc.).

This is correct. Especially if you talk something less than couple years time frame.

If I did not have oil co positions, I'd be filled with hubris that my 11 month returns are better than theirs. Now, not so much. 8) Peace.

Some of them are. All of them? Not really. There are bunch of oil cos with great balance sheets. They are also not cheap though. It will all depend on oil production decline. On days like today, you'd think production decline will never come. But it will. And not only from shale. Demand is also going to grow absent global recession. Sure if USA goes into recession + China/etc continue to disappoint, then yeah, oil can go to $20. There are no guarantees.

You can look at the profile of most recent hydrocarbon discoveries and wells. Apart from expensive oil sands, most of them are nat gas rich. For all of the claims of shale oil overcapacity, we've been swimming in shale gas for years. Heck, nat gas is still being flared in some places since it's not economic to capture/transport/sell. It is very unlikely that nat gas can recover significantly without oil recovery. Even if oil recovers, nat gas likely won't. The only argument for nat gas is local inefficiencies - if you could buy a company that does shale gas in nat gas importing area (assuming no country risk, exploration risk, regulation risk), you might do well. Also nat gas might swing a lot based on winter temperatures, since a large portion is used for heating. But that wouldn't be a secular swing. LNG even if it delivers will just drive global prices to the bottom that we currently see in nat gas rich areas. E.g. Russia is not going to just roll over and stop selling nat gas if Europe gets cheaper LNG. It will just lower the price to compete. Oil is much more likely to go up when/if big projects get delayed/mothballed/cancelled. Its demand is also based on transportation and not energy/heating. So if China/India/etc. continues to drive more, the demand goes up. If China/India/etc. consumes more heating/electricity, that's split between nuclear/coal/solar with only part being nat gas. With all that said, there might be some nat gas companies that will do OKish. Caveat: I'm almost ready to throw in the towel on both oil and natgas. Sign of the bottom perhaps. ;)

Oil