KJP

Does the chart reflect actual net worth data, or simply what you get by multiplying the income by the multiplier? As for where the multipliers come from, a quick review of the links in the article suggest some financial advisor made them up as guides. The multipliers come from this article: https://www.financialsamurai.com/the-top-one-percent-net-worth-levels-by-age-group/ Here's how that article describes them: "The top 1% net worth figures are based on my latest net worth target income multiples. I believe most of us can achieve these income multiples if we meticulously track our net worth, invest our money wisely, and spend extra effort earning. One income stream is often not enough." So, they appear to be just made up "targets," not actual data.

Clarus Judges Scientific Volvere Clarke, Inc. FRP Holdings

KJP, I am curious to know why you think Indian OTA's are under earning. How do you think about competition from booking.com in that space? I think indian OTA's also don't have an agency model. They buy inventory and guarantee revenue to the hotels. This is not very capital efficient. Sometimes they sell at a loss to gain market share There are other players like ZO rooms ( Backed by Tiger Global) and OYO rooms that are competing with YTRA and MMYT. Seems like a competitive space in a nascent industry Curious to know your thought process Thanks The Indian OTAs are more of a mix with a respect to an agency model than Priceline. For example, Yatra appears to do air and hotel on an agency basis, but take primary risk on packages. See, for example, the description of "net" versus "gross" revenue recognition for the various revenue buckets on page 60 of Yatra's Form 20-F. More broadly, I think you captured why the industry as a whole is currently underearning -- right now it's a fiercely competitive land grab where companies are spending money hand over fist on marketing and promotions to get scale and, hopefully, customer loyalty. That's causing everyone to lose money right now. I don't believe the capital spigots will flow forever. So, eventually things will shake out and somebody or a few somebodies in the industry are going to make money. That's what ought to happen where you're talking about a distributor that sits in the middle, with millions of buyers on one hand and more than 100,000 hotels on the other hand. That's the basis of my belief that the industry as a whole is underearning what it should. Unlike many of the other industries mentioned on this thread, the underearning I'm suggesting is coming from the immaturity of the industry, rather than cyclicality. As for Priceline (booking.com and Agoda), do they have the stomach to throw money at India like MMYT, Yatra, et al. are doing? The commentary in Priceline's Q2 call about the difficulties public companies (particularly mature ones) have with pursuing that kind of strategy suggests it may not. Moreover, other than deep pockets, Priceline has no special advantage in India. Instead, it's got to get on the ground and build its hotel network and brand awareness just like everyone else. Even if they are correct (and they may not be), are any of the thoughts above actionable? I haven't yet invested based on them, because I'm not smart enough to figure out who will be left standing. MMYT may also spend Yatra into oblivion, forcing it to be bought out on the cheap.

Perhaps Dream deserves it's own thread, but I have followed it for several years and don't understand the capital allocation, in particular the huge amount of capital they've devoted to buying shares in what ought to be the retail-oriented REITs they manage.

Indian OTAs

I own some shares of iStar... it's an interesting asset recycling idea... My biggest concern is that they've made little/no real progress on winding down these land/development assets ($965m in 2013 and $933m today). The idea is that if they sold all these non-core/non-cash-generating properties and rolled it all into the RE finance/net lease business they could generate some $1-2+ in FFO per share. I plan to give them a bit more time to execute on this but the portfolio hasn't really been simplifying as fast as it could. The timing isn't going to get a whole lot better to start unloading some of these things. Yes, I have similar concerns. I created a thread for iStar in the Investment Ideas section.

thepupil or anyone else: Any thoughts on iStar? It's a non-dividend paying REIT that's using NOLs to avoid tax. There's a decent argument that it's trading for ~50% of asset value, but it has a large amount of "transitional" and "development" assets left over from the crisis that are currently generating costs but little to no NOI. G&A is also running ~$70-75 million a year, and it's unclear to me how much of that could be cut out once the "transitional" and "development" assets are turned over into real estate finance and triple net lease assets. Today it's basically cash flow breakeven if you put aside asset sales. The future is hazy, but you can see an outcome in which the current capital structure produces ~$125-150 million in pre-tax cash flow. The current market cap is ~$720 million. Much more detailed writeup that's over a year old is here: http://clarkstreetvalue.blogspot.com/2016/08/istar-non-dividend-paying-reit-with.html I put the basic math behind the ~$125-150 million pre-tax cash flow in one of the comments to the blog post linked to above. One major update to the blog post is that last year iStar IPO'd its ground leases into a dividend-paying vehicle called Safety Income & Growth (SAFE). It currently has 40% ownership of SAFE and a contract to manage the assets. Finally, I'm not sure about management -- will Sugarman stick to the basic blocking and tackling of running a real estate finance and triple net lease business? Will he shrink the balance sheet if that's the right thing to do (they have been buying back shares)? Also, is now the right time to be trying to recycle ~$1.5-2 billion in capital into real estate finance and triple net leases?

You've missed the joke. https://en.wikipedia.org/wiki/Rickrolling

I know you could research this pretty easily for any particular model just by looking at local prices for used cars, but is there a public data source that tracks and aggregates this data for all models in one place?

Under GAAP, changes in working capital are already included in operating cash flow, so historical changes in working capital are already included in the reported cash flows. To project normalized future working capital requirements, you may be able to look at historical working capital needs as a percentage of revenue, e.g., average inventory over the year has historically averaged X% of annual revenue, average accounts receivable over the year has historically averaged Y% of revenue, and so forth. If those ratios are relatively stable over time, they can be a useful starting point for understanding likely working capital needs at various future revenue growth levels.

Is that really a typical hypothesis? Or is a typical hypothesis something like: "Company X has competitive advantage Y, which should lead to measureable good operating outcome Z," e.g., circa 1980 a hypothesis might be "Walmart has strong local economies of scale, which should lead to increasing net margins and returns on capital far in excess of its cost capital as it expands into geographically adjacent markets." Or the typical value-investor regression-to-the-mean hypothesis: "Company X is in Industry Y. Companies in Industry Y typically earn Z margins. Company X has been earning .5(Z) margins because of Fixable Issue 1. Fixable Issue 1 will be fixed, leading Company X's margins to increase to Z." The difficulty is that these are statements about the future, but all we have is data about the past, so we can't test it today.

I don't understand what point you're trying to make. I don't think it can be disputed that $1 will buy you far less milk or eggs or bacon or subway rides or movie tickets today than $1 would have bought you 100 years ago. See, e.g., https://www.bls.gov/opub/btn/volume-2/average-food-prices-a-snapshot-of-how-much-has-changed-over-a-century.htm The link illustrates why I think USD is not a good store of value. If you think it's a good store of value, then I suspect we're using "store of value" to mean different things.

The ultimate supply of BTC is fixed. Assuming BTC becomes a store of value and the human population continues to grow, then won't the value of BTC continue to increase in nominal terms? For example, would you expect a gallon of milk to cost less BTC in year 20 relative to year 1, because of the deflationary effect of a fixed supply of BTC versus a growing population of humans? If that is so, why would you ever spend BTC rather than your local fiat currency that has no fixed supply? The fixed supply of BTC (a feature, not a bug to many) is one of the reasons it's hard to see its use as a dominate currency, because I don't think people would accept the consequences of such "hard" money. The "it will be worth so much that no one will use it and that makes it worthless" argument again. Where did I say it would be "worthless"? What I said is that it won't be used as a currency in the sense that it will not be the medium of exchange for small day-to-day transactions. Just like gold today is not a day-to-day currency, but that doesn't make it worthless as a result. Also, I'm raising the point to suggest that people who are focusing on the ability to use BTC as an everyday currency may be focused on the wrong things. Oh, I agree with you then. I don't see many people who still believe that other than those who don't understand bitcoin at all. A lot of those who still want to focus on replacing cash in everyday transactions have moved onto to BCH (or LTC, DASH, XRP, etc) and have abandoned BTC. Understood. My post was in response to someone who asked "Is this going to be something where I can buy a cup of coffee with bitcoin at a sensible price." By the way, I think your posts are quite helpful in understanding why people believe in bitcoin as a store of value, particularly your comparison of its characteristics to gold's. Very useful points in a thread that started with the opposite theory -- that's an item's inherent characteristics are irrelevant to its use as a store of value.

The ultimate supply of BTC is fixed. Assuming BTC becomes a store of value and the human population continues to grow, then won't the value of BTC continue to increase in nominal terms? For example, would you expect a gallon of milk to cost less BTC in year 20 relative to year 1, because of the deflationary effect of a fixed supply of BTC versus a growing population of humans? If that is so, why would you ever spend BTC rather than your local fiat currency that has no fixed supply? The fixed supply of BTC (a feature, not a bug to many) is one of the reasons it's hard to see its use as a dominate currency, because I don't think people would accept the consequences of such "hard" money. The "it will be worth so much that no one will use it and that makes it worthless" argument again. Where did I say it would be "worthless"? What I said is that it won't be used as a currency in the sense that it will not be the medium of exchange for small day-to-day transactions. Just like gold today is not a day-to-day currency, but that doesn't make it worthless as a result. Also, I'm raising the point to suggest that people who are focusing on the ability to use BTC as an everyday currency may be focused on the wrong things.

I have to ask what you mean by "store of value". Has fiat really been a good "store of value" over decades? Even the fiats that are seen as generally stable like the dollar have not retained their value in real terms in the 20th century, e.g., look at the change in the nominal price of a gallon of milk or a subway ride in NYC. EDIT: I do note that you didn't say fiats were a "good" store of value. So, to the extent a "store of value" is anything that allows at least some preservation of value over time, then fiats would qualify, even if they're not great at it.

The ultimate supply of BTC is fixed. Assuming BTC becomes a store of value and the human population continues to grow, then won't the value of BTC continue to increase in nominal terms? For example, would you expect a gallon of milk to cost less BTC in year 20 relative to year 1, because of the deflationary effect of a fixed supply of BTC versus a growing population of humans? If that is so, why would you ever spend BTC rather than your local fiat currency that has no fixed supply? The fixed supply of BTC (a feature, not a bug to many) is one of the reasons it's hard to see its use as a dominate currency, because I don't think people would accept the consequences of such "hard" money.

Yes, exactly. And based on your posts in other threads, I take it that you believe that bitcoin has its own "intrinsic properties" that are also particularly suited for being a store of value, though those properties happen to be quite different than gold's properties.

This is a great question. I'm not a chemist, but I understand that, in addition to its relative rarity on Earth, gold has other useful properties, such as the ease with which it can be minted. I doubt granite has any of those characteristics. But your general point is well taken: Why gold rather some other relatively rare element or substance with useful properties (assuming there is one)? I suspect the answer is a combination of gold's physical properties and the social acts you mention, but I don't know. This relates to a question posted on one of the various crypto threads: Is bitcoin actually rare if you can create something that essentially identical and call it bitcoin2, and then bitcoin3 and bitcoin4 and so on? The only response I saw to this was that human society likely needs only one digital store of value, and if I recall correctly the author of the opinion referred to the long history of gold as a store of value in human societies. The point, I take it, is that once something with the sufficient characteristics (tangible or intangible) becomes entrenched through social acts, it will remain the store of value until something with substantially better characteristics comes along. EDIT: I also note that on the crypto threads the bitcoin advocates are touting its "special intrinsic properties" as the reason they are backing bitcoin over other alternatives.

What exactly do you mean by "store of value"? I understand the phrase to refer to something that does not depreciate in value over time. But you say a horse could be a store of value. The average lifespan of a horse is 25-30 years, and a 20 year old horse isn't as valuable as a 3 year old horse. So, a horse clearly depreciates over time. So, you must mean something else by the phrase "store of value." Also, is it correct to say that "What should be clear from this is that gold specifically has no special intrinsic properties that warrant it to be a store of value. The dependency is only one way. The only reason why gold is a bearer of a store of value is because of our history of social acts that led up to gold being accepted as a store of value, nothing more"? Doesn't, for example, gold's relative resistance to corrosion and many other chemical reactions (i.e., it's "special intrinsic properties") make it uniquely suited to be a store of value? EDIT: The point I'm pushing back on is idea that the fact that a tangible object has become a "store of value" in a human society has nothing to do with its physical properties. But that does not mean that an intangible object couldn't also become a store of value -- i.e., valuable across generations -- if there were sufficient social acts to make it so. But I suspect those social acts would only occur if the intangible had certain useful characteristics.

Company: Impact on my 2017 performance (not including opportunity cost) Rentech: -850 bps [permanent loss] -- too many analytical mistakes to list here; I've given them their own post in one of the Rentech threads Fortress Paper: -380 bps [remains to be seen]

~10% USD, pre-tax 2016: ~22% USD, pre-tax Biggest difference between 2016 and 2017 was a series of blunders (both analytical and portfolio management) regarding Rentech that ultimately cost me ~850 bps of performance this year. Fortress Paper also cost me ~380 bps this year. The positive returns came from several investments that appreciated 20-60%, most of which have been discussed elsewhere on this board: Command Center, PAR Technology, Parkit, QVC, EZCorp, Keck Seng, Gaia, Clarus (formerly Black Diamond).

Cambium Learning Group (ABCD)

Funny. A lot of people say it's a great book. I did not even finish it. I found it a bunch of outdated self-serving boring blah blah. Me too.

What is organic growth (or decline) after you account for all of the acquisitions? Is this really a proxy for e-commerce or, instead, a proxy for direct mail and the types of mailings that need letter-sized envelopes with little plastic windows? There is a two-year old short thesis on VIC that may interest you.

In theory, the 30th Street District would be a very good fit: https://static1.squarespace.com/static/539b050fe4b077b40b221f4f/t/5762b1a2e3df2899e111bcc7/1466085819062/District+Plan+Marketing+Book_June2016_7x9_web.pdf It has a huge footprint for new office space right next to a major rail hub (30th Street Station) that connects to downtown (subway, trolley), the suburbs (SEPTA regional rail) and the other cities on the eastern seaboard (AMTRAK), along with easy highway access to a large international airport. It's also a few blocks from from one Ivy League school (Penn) and easy driving distance or an hour train ride to two more (Princeton and Columbia). Also relatively close to two large public research universities (Penn State and Rutgers) along with loads of well-regarded liberal arts schools (e.g., Swarthmore, Haverford, Bryn Mawr). Also, right next to one of the country's leading medical research areas (e.g., UPenn Hospital, CHOP). The suburban public schools are also almost all very good. They also wouldn't have to worry about the city government enacting stuff like bathroom bills. On the other hand, there is (i) massive, de facto segregation; (ii) with a few exceptions, the city public schools are a mess; and (iii) in nearly every direction between a thriving urban core and very nice suburbs is a ring of severe and seemingly intractable poverty (e.g., large swathes of West Philly, North Philly, Chester, Camden).