jawn619

how many billion dollar market cap net nets do you see? I've found that markets are pretty efficient on most sizes, but as you get lower in market cap there are definitely more ideas trading at lower valuations.

I've heard of people looking at amazon and saying they spend x% of their revenues as maintenance capex, everything else is "growth capex". They save a lot of taxes this way because they're booking "losses" and growing at an insane rate.

Value investing doesn't always work in the short term, and you are indistinguishable from being wrong if you under perform. If you have investors who see you under perform and don't understand how it works, you will have to answer a lot of questions. I've found that if you have investors that don't understand how it works, they almost never will no matter how much explaining you do. It's tough especially in bull markets when clients say the S&P is up X% in this short time frame, why is the portfolio not at least matching it?

5/44 from the wikipedia page, but the source link doesn't work so take that with a grain of salt http://www.jamspreader.com/wp-content/uploads/2013/03/ShutUpAndTakeMyMoney.jpg

i like annotating them myself. I felt like i learned more.

I don't think I could do it. Super disciplined.

so when do we get our money?

an interview of with Simons.

Thanks a lot! I will talk to a lawyer to get started. I should register an LLC first right? And then employ myself from the LLC and get director and officer liability insurance? How much would that cost? I don't think you need insurance, and registering as an LLC doesn't take more than $200.

I am not and I am thankful for your commentary. Just attempting to learn. Thank you for the clarity. We should be thanking you for putting up with us. Thanks. +1

those look they have some hefty fees. check for fees and pick the one with the lowest fees first. And stay away from high yield and muni bonds. I wouldn't recommend bonds though.... bonds are just yielding so little right now

Sorry that was misleading. I meant I really like Lloyd Miller as an investor and have looked extensively at his holdings. I put more weight on some of those guys than others. I haven't spoken with Lloyd but would love to understand some of his holdings...MFC industrial and SLTC for example.

I remember someone asked a question earlier about what good small and microcap funds to follow. I couldn't find the old thread so decided to post the ones I follow for everyone. I really like Lloyd Miller and have talked with a couple of the funds. There are some smart ninjas in this space. Lloyd Miller III Steel partners Cannell capital Royce & associates David Nierenberg Peter Kellogg Kinderhook Diker Capital Bandera partners Hummingbird Value Vulcan Value Brian Bares, Bares Capital Management, CIK 0001340807 Glenn Fuhrman and John Phelan, MSD Capital, CIK 0001105497 Jeffrey Gates, Gates Capital Management, CIK 0001312908 Paul O ’Leary, Raffles Associates, CIK 0001169581 Robert Robotti, Robotti & Company, CIK 0001105838 Wilbur Ross, WL Ross, CIK 0001128452 Toby Symonds, Altai Capital Management, CIK 0001478982 John Lewis, Osmium Partners. Search for CIK 0001316729 Baker Street Capital Management, LLC CIK#: 0001488207 Moab Capital Partners LLC CIK#: 0001377817 GREENWOOD INVESTMENTS, INC. CIK#: 0001121943 RUTABAGA CAPITAL MANAGEMENT LLC/MA CIK#: 0001128239 Nantahala Capital Management, LLC CIK#: 0001472322 Sagard Capital Partners, L.P. CIK#: 0001423385 Mangrove Partners Fund, L.P. CIK#: 0001486623 Schultze Asset Management, LLC CIK#: 0001297629 Raging Capital Management, LLC CIK#: 0001444376 12 West Capital Management LP CIK#: 0001540531 COGHILL CAPITAL MANAGEMENT LLC CIK#: 0001162675 Venor Capital Management LP (Filer) CIK: 0001399348 Trigran Investments, Inc. CIK#: 0001336800 Indaba Capital Management, L.P. CIK#: 0001524362 Meson Capital Partners LLC CIK#: 0001535880 Bulldog Investors CIK#: 0001462180 Candlewood Investment Group, LP CIK#: 0001531741

what are you not buying today? Stocks on sale

I haven't looked at the income statement in a while so I can't comment too much on that for now. But I know that the companies will need to raise quite a bit of capital, even assuming that sweep is used towards principle payments. So you need to account for dilution. FNMAS is one of the more expensive ones. I own FREJN, FMCCG, and FMCCN; which are $6.55, $5.51, and $5.26 as of the last tick, on a par value of $50. Those all have different coupon rates right? It looks like FNMAS has the highest of all the preferred which would explain the premium in relation to the others. Either way I can sum up this investment up. It's a speculative bet where there is a real chance of permanent capital loss though the chance is unclear. The upside seems to be asymmetric compared to the downside.

While the ultimate resolution will take 2 years or longer, there will be evidence and catalysts along the way to support one way or another, which is a positive for owning the preferreds rather than not, despite the par ceiling. I think people often miss this fact. For instance, say we have a decision in 2017 overturns the 3rd amendment. Rather than an overnight jump from $5 to $50 for the preferreds, I think it's more likely that we see a gradual rise as more transcripts, documents, briefs, etc. are released. After all, the preferreds were selling for less than $1 a few years ago. But the progress in the Claims Court case, various documents and supporting evidence has led to the rise. The ceiling does take away from the upside, but I personally haven't arrived at a valuation for the common that makes me feel like they are a substantially better bet. I used to own a mix of the two before Lamberth threw out the District Court case, but have switched everything to the preferred given that the common have rebounded substantially whereas the preferreds have remained just about where they were after the drop. I also am not sure about what sort of capital raise (dilution) will be required if and when the companies are released; this poses another risk for the common. Can you talk about what upside you see for the preferreds and the specifics you used to calculate that? TIA They're selling for about 11-12 cents on the dollar. I'm not a lawyer but I've read many of the court filings and opinions on both sides of the issue. I think if the rule of law is upheld, it's fairly obvious that the sweep is illegal. Certainly confident enough at 8 to 1 odds. If it gets to 2 to 1 or even, I will probably sell depending on the facts at that time. FNMAS trades for $3.94, with a par of $25. An upside of a little over 6 to 1. The common on the other hand is a little harder for calculate the upside but i'll try (please correct me if you see any mistakes). In 2013 they had about $19B in earnings before taxes and 2014 had about $12B. The most recent quarter they had about $2.7B in earnings which comes out to be about $11/12B if projected out on a yearly basis. There's 5.9B shares outstanding so at $12B it amounts to about $2/share in "earnings". Doing a DCF assuming no growth, 15% hurdle i get a value of $15.5. Shares trade at $2.5 now so that's also about a 6 to 1 upside from here. The preferred's are probably safer in that they get paid first but they don't seem like an extremely good deal in relation to the common, especially since the common gets to participate in the upside Fannie ever gets released. If anything, my calculations for the common are too conservative because Fannies cost of capital is probably lower than 15% and because earnings are currently understated because of the interest hedges.

While the ultimate resolution will take 2 years or longer, there will be evidence and catalysts along the way to support one way or another, which is a positive for owning the preferreds rather than not, despite the par ceiling. I think people often miss this fact. For instance, say we have a decision in 2017 overturns the 3rd amendment. Rather than an overnight jump from $5 to $50 for the preferreds, I think it's more likely that we see a gradual rise as more transcripts, documents, briefs, etc. are released. After all, the preferreds were selling for less than $1 a few years ago. But the progress in the Claims Court case, various documents and supporting evidence has led to the rise. The ceiling does take away from the upside, but I personally haven't arrived at a valuation for the common that makes me feel like they are a substantially better bet. I used to own a mix of the two before Lamberth threw out the District Court case, but have switched everything to the preferred given that the common have rebounded substantially whereas the preferreds have remained just about where they were after the drop. I also am not sure about what sort of capital raise (dilution) will be required if and when the companies are released; this poses another risk for the common. Can you talk about what upside you see for the preferreds and the specifics you used to calculate that? TIA

http://reactionimage.org/1174804810.html

No scientists in the house?

Biotechs burn cash when they go through R&D, yet R&D clearly has some economic value. Anyone have a way of estimating how R&D translates back into sales or income?

I had a discussion with a trader who does index ETF arbitrage and he showed me a theoretical opportunity where an ETF was trading $0.15 from fair value and asked me if I would trade against it and how big my position would be. I said I would trade on it but don't know how big of a margin of safety it was. He said he would put his maximum buying power in it, take out a second mortgage on his home, call his parents and take out a second mortgage on their home and put all that money into the opportunity. It just made me think of how different people's think of risk differently. What would have to happen for you to put 100% of your net worth into one position? Berkshire Hathaway trades at 0.1x book? Google trades at 4x P/E? IBM becomes a net net? Discuss

Eat the book...that way you'll really internalize it

The implied volatility on the options of social media stocks are insane. Some of them imply a 60-100% move on an annualized basis...meaning options are really expensive.

I still didn't get an answer... When you evaluate the attractiveness on an investment, you want to see what you get vs what you pay. So generally I've been using EBITDA-MCX as "what I get" and using Enterprise value for "what I pay". This differs on a case to case basis (for example if a company is capitalized hugely with debt you have to take in account that the interest charges become a big expense.) I'm asking is it more correct to use EBITDA-MCX then subtract out the tax? Even though taxes vary it is still a real expense. I don't see a lot of people accounting for it when doing DCFs or calculating intrinsic value and was wondering if someone could shed some light onto why.

no, you get 200k. Operating earnings is after tax How is operating earnings after tax? operating earnings is what you have after you pay for your cost of goods sold and your operating expenses. Don't taxes come after?