ATLValue

There is an HBR podcast where they talk about their methodology: https://hbr.org/ideacast/2015/10/the-condensed-november-2015-issue.html In a nutshell this ranking used to be entirely based on financial metrics but this year they added in an environmental, social, and governance (ESG) ESG ranking. They waited each factor based on "gut feelings" and even mentioned that they re-ran the rankings several times to see if what they had "looked right". To me it seems entirely idiotic to 1) change their yardstick of how they are measuring CEOs, 2) adding in the ESG ranking and 3) arbitrarily setting the weights to produce a type of list that "made sense". Seems like typical MBA none sense. Here is an additional article they put together to explain why Warren Buffet isn't included on the list: https://hbr.org/2015/10/wheres-warren-buffett "The second factor is Berkshire’s environmental, social, and governance (ESG) performance. On this metric, Buffett ranked #798 out of the 907 CEOs we looked at. Sustainalytics, the research firm that produces the ESG scores, says that low rank is partly due to Berkshire’s poor disclosure on its governance and social policies. Another consideration was how Berkshire incorporates ESG issues into its selection of investments. Relative to peer holding companies, Berkshire’s initiatives for addressing sustainability within its investees are weak, Sustainalytics found. Although the ESG ranking counts for only 20% of a CEO’s overall ranking, Buffett’s very low placement in it was enough to pull him out of the top 100."

Thanks I really enjoyed Bonfire of the Vanities but haven't gotten around to reading some of his other works

i think seeking alpha has pretty decent news alerts for larger companies. Smaller companies (<1B market cap) is lacking though

Jurgis, I think the idea of using the P-Score for net-nets is very interesting so I wanted to bump this thread to see if anyone else did this for net-nets

thanks

Same! I've looked around online for several years and still haven't been able to find any letters or very much other information about him or his fund

YUM Brands, Richemont

mcgraw hill?

Thanks for posting! I didn't realize that his performance had deteriorated so much! Does anyone have any other notes?

One business model that I think is really compelling is a type of business that provides a critical resource to an industry with extremely low barriers to entry. The prime example of this for me is a website like Linkedin. It is invaluable for recruiters / headhunters, a profession with extremely low barriers to entry. Another example of this is Uber, providing a critical resource to allow anyone with a car to become a taxi driver another low barrier to entry profession (made even lower by Uber).

You might want to take a look at what PGN looks like in 2016 and 2017... they have some very high priced contracts rolling off and their rigs are more likely to be scrapped than re-contracted over the investment horizon before this company goes BK I hear ya, it really does come down to what happens when these contracts expire and if the management team can find away to limit the haircuts to the rates. Speculative indeed! I did some more work on PGN, Company is a dog, definitely not a multibagger, I'm guessing they start tripping their covenants in 2Q 2016 Isn't the revolving credit facility the only debt with coverage and leverage requirements? Won't they be able to pay that off in full before 2016? Hey Moustachio, I never responded to your question but I did end up writing a few articles on Seeking Alpha about PGN that go into the details. One other thing to mention about this company is that they recently revealed that Petrobras is challenging their most profitable contracts. Things keep getting worse this this business. http://seekingalpha.com/article/3314075-paragon-offshores-imminent-bankruptcy-a-fleet-utilization-scenario-analysis http://seekingalpha.com/article/3445846-paragon-offshores-brazilian-knockout-august-fleet-status-and-second-quarter-update

Haha I was thinking the same thing! Hopefully these are friends of friends of friends

Thanks that is a really interesting perspective to come from, a few things that I never really considered but a great way to combine a hobby that you enjoy with a money making opportunity. Lending to friends and family backed by collateral is also interesting but would be difficult to originate consistently. That is a really great thread, thanks for sharing I hadn't come across it in my time on the forum. With respect to ticket scalping I always put in for the Masters ticket lotteries, I usually don't win but when I do get allocated some tickets it is a pretty easy $2000 payday!

Hi Everyone, I have been thinking a lot recently about different entrepreneurial ventures to pursue outside of public equity investing and my day-to-day job. I get the sense that many people on this board also think about different avenues for investing outside of equities such as commercial real estate, apartments, hotels and franchises. I'm very interested in hearing any other businesses that members of the forum have thought about or actively pursued. Thanks!

thanks

You might want to take a look at what PGN looks like in 2016 and 2017... they have some very high priced contracts rolling off and their rigs are more likely to be scrapped than re-contracted over the investment horizon before this company goes BK I hear ya, it really does come down to what happens when these contracts expire and if the management team can find away to limit the haircuts to the rates. Speculative indeed! I did some more work on PGN, Company is a dog, definitely not a multibagger, I'm guessing they start tripping their covenants in 2Q 2016

You might want to take a look at what PGN looks like in 2016 and 2017... they have some very high priced contracts rolling off and their rigs are more likely to be scrapped than re-contracted over the investment horizon before this company goes BK I hear ya, it really does come down to what happens when these contracts expire and if the management team can find away to limit the haircuts to the rates. Speculative indeed!

PGN - offshore oil driller that recently spun out of Noble. The company spun out above $10 last year and now is trading at around $1.10. In my opinion several things are causing the stocks decline, 1) fall in oil price, 2) offshore rig sector has been weak based on speculation that the market will be oversupplied for the next 2-3 years as chinese rigs come onto the market, 3) selling as a result of the spin off, 4) recent debt for equity swap by similar competitor HERO and 5) fears about bankruptcy Market cap: $95M (first quarter operating cash flow was $210M!!!) Debt covenants are 4.0x EBITDA and 3.0x Minimum Interest Coverage Ratio and only apply to the revolver. As of March 31, 2015, the covenants under the Revolving Credit Facility were a net leverage ratio of 2.39 and an interest coverage ratio of 7.90

So, what you are saying is that every investment banker and PE executive that uses EBITDA all the time don't know what they are doing??? :o The reason they use EBITDA is that it is a useful figure that serves as a proxy for the cash flow power of the business before the impact of capital structure and tax rates. Since it is part and parcel of the way professionals in the financial services industry speak, they know what EBITDA is and isn't. And as to the adjustment the CD&R guys were making, I assume that as part of their credit agreement, they needed to maintain certain leverage ratios as measured by "Adjusted EBITDA". If you worked for this company, presumably you'd prefer that they did NOT trip their debt convenants? :) Bull$hit is still bull$hit, no matter how many people speak BS language. I too have worked for and with PE / PE run companies and I'd argue that the "private" in PE is the big reason why so much BS goes on. As for those that work for the company, I'll say a prayer for them. Too bad the owners sold them out to the vultures. I'm not saying they don't know what they are doing, I think they know exactly what they are doing which is providing a manipulative measure of a company's earnings power. EBITDA is not a good proxy for cash flow. A good proxy for cash flow is.... cash flow. On a seperate note, I Luckily found a new role at a Company that actually makes money. Cheers

Non GAAP Adjusted EBITDA is definitely one of my pet peeves and one of the most misleading metrics that exists. 1) Evaluating a company using EBITDA is ridiculous because D&A are real expenses or rather they reflect real expenses that occurred in the past. Very rarely can a company operate without any capex 2) Insane EBITDA adjustments include "pro forma synergy estimates", " restructuring expense (happens every year)", "one time legal / transaction fees", "Management and Consulting Fees" and "executive stock compensation". I used to work for a company owned by private equity (CD&R) and run by ex GE executives and every single quarter end the accounting team would raid the balance sheet for accruals and find addbacks for EBITDA. If you think that publically traded companies manipulate earnings than you should really try to get a hold of PE backed private companies, it is a whole other world. For perspective, the company had a $40M operating loss and $360M of Pro Forma Adjusted EBITDA haha

They should stop issuing shares. I think Fairfax is too aggressive with their funding methods

got my print, thanks!

Have you ever heard of Maverick by Ricardo Semler? It was about his family company, the Semco Corporation, based in Brazil. It was published around the time that the 3G guys opened their partnership, and Semler talks about how bad the business environment was in Brazil in those days. Semler also started a profit sharing program for his employees which I suppose must also have been unusual for the time I think I just heard a Ted Talk from him that was really interesting: I'm working at an extremely bureaucratic company right now (run by some old GE folks) and it really resonated with me. As a side note, never invest in GE.

The more that I learn about Warren Buffett, listen to his speeches and read his letters I have come to realize that he is extremely nuanced in what he says. Coupling this with someone who is also someone who is trying to be completely rational in all situations often comes across as hypocritical when people generalize his opinions or stances.

http://www.cornerofberkshireandfairfax.ca/forum/events/berkshire-2015-annual-shareholders-meeting-qa-notes/?topicseen these are pretty good