zarley
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Posts posted by zarley
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Thanks for sharing. I own a bit of GOODX in a retirement account. It's a good proxy for my own approach/positions.
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Wow, that looks fantastic. Won't be able to get to reading it in full for a little bit, but thanks for sharing.
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I'm not skilled enough to value BRK...what rough BV multiple do you guys feel it's worth?
I tend not to think of BRK in terms of what is an appropriate BV multiple. Using a modified version of the two column approach, my current IV estimate for BRK is around $165,000 per A share. As a multiple of BV that is somewhere near 1.5x.
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Is Jon Bon Jovi a billionaire? :o
That seems to be implied, but that can't be right. Can it?
Seriously. Bon Jovi billionaire?
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My guess is there was an intent (probably by Combs) to buy and hold but his thesis changed. None of the triumvirate appear to be traders.
I agree. But that does raise the question of how/why did they build a significant position and then change course. I haven't looked at the timing, but perhaps related to the IBM purchase? It's not a red flag for me at this point, but there has been more turnover in the portfolio this past year than we're used to. It may settle down once Combs and Wechler have been around for a while. Or, it may be the new normal given the new guys are recent hedge fund managers and less inclined to hold indefinitely.
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Does Lifetime Member mean I can never leave? :D
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The interview is from last year, so whatever he said about hedges is likely out of date. A good interview, of course, so it's worth taking a look at if you missed it the first time.
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Everyone seems to be focusing on RIM’s past in predicting RIM’s future. Yet it seems that the future for RIM is in utilizing QNX in areas that have little or nothing to do with smartphones and tablets. They may well be working on technological breakthroughs that could lead the company to achieve the same level of success that they had in the phone business, but in entirely different areas.
Does anyone really think Prem Watsa is some idiot throwing good money after bad? He is well aware of what RIM is working on and sees the potential. Licensing the BB10 may well be an indication of RIM’s shifting focus. While phones are an important part of the business there may be much more to RIM.
If licensing QNX as the #4 mobile smartphone platform and hoping it catches on in other areas is the plan then I think RIM bulls are a little crazy. Transitioning from being a global leader in handsets and infrastructure to a niche OS developer is no small thing. How the hell do you value that? It may work out. But, how to you know what the addressable market is or what kind of license fees you might be able to demand? I'd guess they'd still be competing with android in that market anyway. It is a huge roll of the dice.
Now, Prem may be smart enough and understand RIM well enough to know that the combination of QNX and the blackberry server business have enough value that current prices reflect a significant discount to intrinsic value. But I don't think for a second that that was the vision when he was buying at $50 or $30 or $20. Buying/holding at $8 on that kind of speculative outlook may make sense, but not if you're buying at $50.
In the end, I like Fairfax enough and respect track record for the guys at Hamblin Watsa enough, to keep holding Fairfax even if I don't understand or agree with their view on RIM.
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Fairfax is my largest holding (about 29% as of right now). I have no idea why Prem wants to own even a single share of RIMM. I keep telling myself that he is smarter than I am, which is undoubtedly true, but still... Smart people can make mistakes and fall prey to logical fallacies and inconsistencies in their thinking too. I have this feeling that won't go away that he just likes RIMM because it is a local company, which hires people from a local school that he likes, that he wishes would succeed. Those are definitely not reasons to invest. Hopefully I'm way off base. Then again RIMM could go to zero and it wouldn't put a huge dent in Fairfax, which is why I still hold FFH.
This is pretty much my perspective as well. I think there's a pretty good chance that RIM is a deadman walking; but, I trust Prem and the team at Fairfax -- they get the benefit of the doubt. And, I could be wrong anyway.
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I own more RIM via Fairfax than I'd like. Otherwise, no position.
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Great read. Thanks for sharing.
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Thanks racemize. I messed around with some Yahoo Finance work arounds for about 10-15 minutes. Must have gotten some of the syntax wrong, because I didn't get that working right either.
Modifying your scripts a little bit got me what I needed. Thanks
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I've had the same problem intermittently today for Canadian quotes. Expecting it to be just a temporary glitch.
Hmmmm . . . thanks Liberty. I guess it's good news that it seems to be a general bug. Hopefully it will get fixed soon enough.
A couple days with a broken spreadsheet has been oddly irritating. How am I supposed to go about my day if I don't know my year to date relative out-performance to the second decimal? :)
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I've been using a Google spreadsheet to track my portfolio for several years. It's nice because it will automatically update prices and position sizes and my relative performance. But, I've noticed a problem with getting price data for Fairfax over the past few days. It apparently won't fetch fairfax price data, returning N/A instead of price. Obviously, this screws up my whole spreadsheet.
Questions:
Anyone else using a google spreadsheet in this way?
If so, have you experienced this problem with Fairfax or any other security?
Any workarounds for this?
Are the other options for this sort of thing?
Thanks in advance,
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A little more info from the WSJ: http://blogs.wsj.com/deals/2012/07/19/hedge-fund-t2-splits-tilson-sells-repurchases-berkshire-stake/
Well-known hedge fund T2 Partners liquidated most of its stock positions last month as the two managers parted ways, according to a letter to investors.Tilson will become the sole manager of T2 Partners while Tongue is moving on to start his own investment firm Deerhaven Capital Management, the letter says.
“After careful consideration, we have decided to cease managing money together and will instead do so independently,” the two wrote. “The friendship and admiration we have for each other is unchanged.”
Goes on to say Tilson will keep a lower public profile. Yeah, we'll see about that.
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Muddy Waters reports: New Oriental Mojo Not Workin' --
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I saw that link to zero hedge. I tend to avoid that place whenever possible.
As for the bashing of his use of calls, in this case a lot of it was BRK calls which he probably made decent money on (particularly if he still holds them now).
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Looks like Whitney Tilson is parting ways with Glenn and T2 Partners. His bio at the VII conference site now references Kase Capital.
http://www.valueinvestorinsight.com/behindvii/whitneytilson
Whitney Tilson is the co-founder and Chairman of Value Investor Media, Inc., founder of Kase Capital, which manages value-oriented private investment partnerships, and Chairman of The Value Investing Congress.I'm pretty ambivalent about Tilson; he seems like more of a (self)promoter than an investor. But I do wonder what, if anything, happened with T2 to make the split.
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Most of his writings are also available on the Oaktree website: http://www.oaktreecapital.com/memo.aspx .
From what I read on Amazon, the book mostly repeats / contains the advise given in these memo's. I recommend reading the memo's. They give a good overview of financial markets and what value investing is all about. However, it's all a very generic (basically boils down to: don't be stupid like other market participants) and I doubt whether the book contains significant extra material.
While it's true that the book does contain a lot of excerpts from his client letters, it is organized with an overall narrative in mind and includes other relevant materials and thoughts that aren't in the letters. Sure, it might be better if there were fewer or shorter excerpts and more fresh writing. But, to dismiss the book as little more than a collection of his letters would be a mistake.
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I just saw that he wrote a book in 2011,...
The Most Important Thing: Uncommon Sense for the Thoughtful Investor (Columbia Business School Publishing)
http://www.amazon.com/The-Most-Important-Thing-Thoughtful/dp/0231153686/
The Most Important Thing is very good. If you haven't read it; it is absolutely worth the time. It's not overly technical; instead focusing on how to approach thinking about investing and risk.
That second edition sounds really interesting.
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I can bring another proof of the erosion of the moat.
I work in IT in public service. For as long as I remember renewing Windows and Offices licences was just a formality. For the first time, we have to justify and demonstrate how it will cost if we decide to go with open source or MAC. They definitively lost share of mind in that case.
What is the alternative to Office? My exposure to Open Office is a couple years old. But, at the time it struck me as not quite ready for prime time. It was sluggish and file compatibility with Office wasn't 100%. At the time I was considering going 100% open source on one of my home PC's (Ubuntu, Open Office, etc.) and after months of fiddling and finding work-arounds decided it wasn't worth the trouble. I could do 95% of what I needed with open source, but that other 5% needed windows. So, even though I still dual-boot with Linux Mint from time to time, I need windows to get all the functionality I want/need from my desktop (although I acknowledge that won't necessarily be the case for everyone).
Google Docs is fine for simple, non-sensitive document sharing, but it isn't IMO a replacement for Office.
In justifying your Windows and Office licenses, what was the final result? Did you organisation change or continue using MSFT?
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I think the problem with focusing on enterprise is the same mistake RIMM made. If consumers have Macs at home and love them that will begin to influence the enterprise. The common response to this is that the IT guys won't go for it. My experience has been the IT guys usually have Macs at home but management won't listen, this has been slowly changing. In my company the staff went from 100% PCs to about 70/30 PC/Mac. What's incredible about this number is if employees want a Mac they have to put $1k towards the cost themselves whereas the PC is "free" (employer pays). So 30% of the company decided they'd rather pay up to use something they want.
Where MSFT wins out is in their big installations. Large companies that have tens of thousands of PCs and Sharepoint etc aren't going to migrate, they aren't going to migrate quickly either. I have two work laptops (both windows) and both run XP, not my choice but the company's choice. Right now if a new piece of software is proposed it takes about a year to test it before the company will adopt it and let users install it.
Microsoft is the definition of inertia to me, they are so widespread even if they're a melting ice cube it could take 20-30 years before they melt away. I think their biggest challenge is the user base that has old software and refuses to update or upgrade. My experience has been the older the software the more hesitant someone is to upgrade, they're afraid of things breaking and want to test for years. So MSFT is saddled with these legacy systems that aren't generating any ongoing revenue (except maybe support) but are unwilling to upgrade either. The fact that I will get attachments from Office 97 from time to time tells the story.
MSFT's enterprise stickiness has a few layers. Losing desktop OS share is a threat, but it isn't everything. MSFT still has Office and the various server platforms on the back end (SQL server, Outlook, general networking, Sharepoint). Combined, the desktop and back office stuff will be very hard to displace -- not impossible, but very strongly entrenched. How many billions of dollars have been spent on installation and training for Office and MSFT's enterprise systems? Inertia indeed.
The old legacy software is either a problem or an opportunity for MSFT. Yes, it could be long time MSFT users' opportunity to look elsewhere, or it could be a huge windows upgrade cycle waiting to happen. My own work desktop just recently got upgraded from XP to Win7. As the support for XP disappears, migrating to Win7 should be the path of least resistance for most users.
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I agree both of you that MSFT has hardly had a lost decade. They've had tremendous success over the last 10 years. But let me also point out that MSFT has a near monopoly on the OS used by businesses (and let's throw Office in there as well.) So much so that even Vista (which by any real measurement was a disaster) couldn't undo their strangehold. Let us also not forget that, depending on the metric, 30-40% of PC users still use Windows XP (software from 11 years ago.)
So, in my opinion, you essentially have a company that is coasting on a multi-decade monopoly. And by almost every objective measure, arguably even including XBOX 360, non-WinCo MSFT has been a massive failure. I include XBOX360 because it eeks out sub $50M in profits and Lord knows how much R&D was put into it. They'll probably never make their money back.
So, you are right that the House of Gates has built a franchise so strong that marketplace momentum alone all but guarantees another decade of monopolistic profitability. But the problem is that the House of Ballmer is slowly but surely eating the House of Gates from the ground up.
They recently wrote down a $6.2B acquisition. That's $6.2 BILLION. Or, to put it another way, 124 years of XBox 360 profits (assuming current profit levels.)
I think it's important to be objective here. You can praise the Xbox360's marketshare all you want, but being the best console in the industry is like being the tallest midget in the circus. MSFT nor Sony makes any real money on consoles.
My fear is that all those 30-40% of Windows XP users are going to have to upgrade one day and, according to current numbers, they are more likely to use a non-Windows PC more than any time in the last 30 years. So the House of Ballmer may be overpowering the House of Gates faster than you think.
JSArbitrage, you raise good points. We certainly need to be forward looking when thinking about MSFT. They do face real competitive threats, even to the OS and Office franchises that mint most of their money. But, MSFT is so entrenched at the enterprise level that those two pieces will be incredibly difficult to dislodge. IMO, they will continue to mint money there for the foreseeable future.
There real problems are (and really always have been) at the consumer level, and their misses in the phone and tablet space have hurt them. But, I think Win8 has the potential to really compete well. And, they are potentially the best positioned to provide a seamless linkage of PC/mobile/tablet/TV systems. They'll be able to offer a competitive OS on all those systems that is integrated and full featured. But, they need to execute, which they haven't really been able to do well enough historically. But, I think they have a lot of potential that gets written off because they're Microsoft and not as sexy as Apple.
At the risk of projecting my own experience as being representative of the general experience, let me say that I have an ipad, 2 windows PCs, one windows laptop, 3 ipods, an xbox 360, and an android smart phone. If forced to choose, I'd say you can take away everything but my windows PCs and my phone. The ipad is a great piece of consumer electronics, but to me it isn't all that useful for anything but media consumption and web surfing. From my experience windows is very nearly irreplaceable to me as a consumer. I won't be editing pictures and videos, running my media server, or storing all my files on my ipad.
I think the common perception is that MSFT has been left behind and/or is dying (how could it not be, given the lost decade) and that is reflected in the price. MSFT isn't perfect, but at current prices they don't need to be.
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Had to stop this a few times to take a breather. This guy literally knows nothing about Microsoft. At one point he says 'windows 7 is great, people who buy it love it... but its not selling.' and I just stopped watching.
Hehe, I choked a bit when I heard that part as well. The part about MSFT not being cash rich anymore was another bit of blatant stupidity.
His whole thesis is that MSFT isn't cool and so they're just irrelevant and doomed to some undescribed awful demise. Yes, MSFT missed opportunities in mobile and tablets. Yes, MSFT needs to get those right quickly to regain footing in mobile computing and offset that threat to their core businesses. And, yes, as a large organisation they are imperfect and probably suffer from ineffective bureaucracy. But, to call the last ten years at MSFT a lost decade requires you to just ignore the facts of their actual performance. But if tripling revenues per share and quintupling earnings per share over ten years is somehow a lost decade, please serve me up another one just like it.
The idea that since the stock price has been stuck at or under $30 for the last decade, so the MSFT business must suck is another common bit of nonsense he threw out. It's clear to me that in that time the business went from wildly overvalued to quite undervalued. But, that notion just never seems to occur to some critics. MSFT's peak market cap was something like $600 billion at the peak of the tech bubble. The current market cap is $250 billion. I think both of those numbers get it wrong, but $600 billion is nuts for the MSFT of more than ten years ago.
I do agree with his point that breaking down the structure of MSFT may be beneficial. I might not go so far as to break it up into separate public companies, but more of a holding company approach might allow certain businesses to be more competitive. Hell with all the cash they have and all that they throw off, Microsoft Hathaway might be a cool model to contemplate.
Disclosure -- long MSFT
Q3 2012 Earnings
in Berkshire Hathaway
Posted
Ah, thanks for the reminder dcollon; I managed to forget BRK was reporting today. At first glance, it looks like a nice quarter -- buyback price is now close to $123,000 / A and $82 / B. I'm sure Q4 will bring those back down a bit, due to Sandy, but Q3 was good.