spartansaver

BIDU - Just seems cheap

I think investing in a business that would benefit from the tailwind of water conservation is a way you might be able to invest. For example Valmont Industries has an irrigation segment that supposedly makes fancy sprinklers for the ag industry. The sprinklers save water relative to current forms of irrigation. If I remember right, Valmont and another company have close to a duopoly in this segment. Just an idea, I have no money invested in Valmont.

I know it's been 4 years since this was asked, but it was never answered. This is my best guess. Merger consideration for GW shareholder was 1) 9.02 in cash per share or 2) .4225 shares of PDS (cash and shares subject to proration ** this is key) after merger announcement, shares in GW fell from $9 to $6 and PDS shares fell even further from $20-25 to $6-7 When GW shares were at $6 Denali shorted GW and hedged PDS around $6ish If the offer went through, PDS was able to prorate the offer between PDS shares and $9 in cash. Well .4225 PDS shares at this time were only worth $2.5 (.4225 x $6). So the GW shareholder was actually getting less if the shares converted to PDS. I believe the opportunity was in how likely it was that GW shares would get the $9 cash payment vs. the PDS shares. PDS financial position was not great at the time, so it seemed more likely the offer would have a greater tilt towards PDS shares. So you could short something that had a decent likelihood of being converted into something that was trading for much less.

SQBG - Very tiny position. Priced like it's going bankrupt. Sold off two significant brands for $166mn ($40mn earn out potential as well - ~12x EBITDA or ~3.9x sales). Remaining business priced at ~6x EBITDA and 3.6x sales. Brands that are remaining seem on par with brands sold (EBITDA is higher on remaining brands partly due to way sold brands were structured). SQBG still has room left on covenants. Seems like a decent probability option. Debt is termed out till about 2024.

I think 50% for 5 yrs would be very hard for Buffett or Munger today or anyone else for that matter. When he said that this year I immediately thought the odds were low it could be achieved, right now, over 5 years. The 1950's in the US were the best decade since 1950 for the stock market. 19.3% annually. But stocks were really cheap in 1950. Perhaps he remember that time. http://www.simplestockinvesting.com/SP500-historical-real-total-returns.htm This is W.E.B. we are talking about. The O of O! With the number of situations he's seen throughout his life, he would have the world as his oyster with $1mn. I'm guessing when he was up on stage answering 50% a year, he wasn't daydreaming back to 1950. I would be highly skeptical of anyone else saying 50%, but this is Grandaddy Warren.

Hahaha

The recent Bud-light commercials capture my taste on the subject (dilly dilly commercials where they make fun of fancy alternatives). I don't care much about the taste of a beer, and I'm fine with buying a cheap beer. Up to this point, I haven't had that aha moment where my taste-buds changed and I enjoy an IPA. I think that AB InBev and TAP do a decent job of capturing the market that is okay with simpler beers.

Depends on what you're looking for. Benson is trendy (e.g., nightlife). Blackstone (~3 blocks west of Kiewit Plaza) is also trendy, but more "young professional" than Benson. Downtown is expensive and convenient to the convention center (FWIW, I live here and never go Downtown). Geographically, the east/west corridor within a couple miles north/south of Dodge will be the safer part of town - though admittedly that's a big generalization (north of Cuming / south of Pacific between downtown and 480 are somewhat sketchy). Other factors? This is very helpful, scratched one AirBnb off the list.

Any areas to avoid? I'm moving around the airbnb map, and just trying to figure out if one area might be better than another. One article I found ranked the different areas and put Benson at number 1. I have no way of confirming any of this.

This will be my first time attending the Berkshire meeting. Any recommendations for a good part of town to stay in?

And you value this "cash" why? It doesn't have intrinsic value and is only "valuable" because other people value it and will give you stuff for it. Maybe in the future you will be saying that companies have intrinsic value because they have coinflow. The asset creates some form of value for its customer (ex. coke creates value for a person to enjoy a flavored drink over water, SAP allows a major organization the ability to monitor itself using SAP tools, etc.). If you believe that people will value these services long into the future, it does not matter what currency the company accepts. In this scenario you are not betting on what currency people will pay you in, simply that your company produces a value for its customers.

For those that have found significant value out of reading Value Line, what was your method? I recently ordered it and I find it slightly daunting. With 130 companies each week, I'm not sure if I'm retaining much.

John, Nothing profound about what I am doing. I am a LTBH investor. First, I use writing puts to enter positions. All my current positions were entered that way. It gives me the discipline to wait for my price. I don’t have that patience with just limit orders. Besides I get paid while waiting to be exercised, probably why I am more patient, and it lowers my basis by the put premium. A criticism would be not acquiring a position because you don’t get put to. This has only happened to me once. I wanted to acquire some MCD at $50 and was never put to. So, I missed out on a three-bagger so far. Secondly, I use puts to do some trading. Usually stocks I already own and at prices I would not mind if I were put to. 80% of my positions are written when the expiration is a few days to about a month out. For the other 20% the expiration is 1-2 months out when I write the put. I am selling insurance and collecting very nice premiums, but unlike insurance, if I have to pay a claim I end up with a stock I don’t mind owning at the price I am put to. Third, it is also a way to be margined in the sense if I would be exercised on all my outstanding puts I would be on margin. From 2008-2016, if I were put to on all my outstanding puts, I would have been around 25% on margin. I only ended up slightly on margin a couple times and by writing covered calls (equivalent to writing a put) I was quickly off of margin. Since about January, I have been writing puts where I would be just slightly on margin if put to on everything. Currently I am short puts on BRKB with strike prices of 200, 205, 207.50, and 210; BK with strike prices of 50; WFC with strike prices of 54; BAC with strike prices of 29, 29.50, and 30; and GILD with strike prices of 70. Fourth, I also like to write puts to play risk arbitrage. For instance, when BRK was acquiring BNI I was writing at-the-money puts on BNI. If I outright bought BNI, I would have to wait till the acquisition closed to know my return. By writing puts I was setting the date when my play would be completed and what my return would be. I then followed an expiration with writing more puts. I did this till BRK closed on BNI. Mike How long have you been following this approach? Are there any other circumstances where it was detrimental?

I really enjoyed Billion Dollar Lessons, especially the first 2/3rds of the book. I felt the last third on how CEOs can better prepare was beyond the scope of the book, but I really enjoyed the jam packed history of all the poor strategic/capital allocation decision that led business failures. What I Learned had some great insight on the psychology of losing trades. I've been thinking about some of my losers and how spot on the book is in its assessment of internalizing and becoming emotional when an investment goes against you. Both were fun reads. Thanks for the recommendations.

Every Berkshire meeting back to 1994 is on CNBC's website (with transcripts). https://buffett.cnbc.com/

Thanks for the recommendations Saluki. I've added What I Learned, Collapse and Discovery to the list. I enjoyed Diamond's Guns Germs and Steel.

Do you have a favorite "mistake" book among history, military, memories etc.? I will add the Halo Effect to my list. I'm excited to start on Billion Dollar Lessons. I'm just about finished with Business Adventures, which is good, but dense.

Hi Liberty, I have a similar appreciation of failures, and was wondering if you have any additional book recommendations in the category? I have read through a few business failure books in the past year including: Losing the Signal (Blackberry's story) Good to Great to Gone (Circuit City's story) Flameout: The Rise and Fall of Burger Chef How the Mighty Fall: And Why Some Companies Never Give In (Jim Collins followup to Good to Great) Business Adventures (Includes a few stories on failure) I'm about to start on Billion Dollar Lessons.

Extremely tough without working in the industry to break in. Maybe through an MBA, but breaking in directly as an analyst might be near impossible.

Sure you do, Jurgis. The point here is that you're not not anywhere near up 19 percent this year. - Please remember, I'm the only guy reading your investment blog! [i really could not help it here! [ ; - D]] Why the hate?

What would you say is the best way to learn how the world presents opportunities? And how to evaluate those opportunities?

"Regulatory moats seem more stable when they deal with B2B stuff rather than B2C." Why? Can you give example of stable B2B?

NRIFF

Thank you so much guys! Greatly appreciated!

Hi rb, Would you mind either posting them or sending them over? It would be greatly appreciated :)