Sharad
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Posts posted by Sharad
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This is incredible:
I have determined after careful anaylsis, that everything for a
destroyed carcass at the time and carnage that is left over.
"Oh man, the BABY LAMBs are
crying for help, and the SLAUGHTER OF THEIR KNIFE!!!!!
Everything will be the SAME except for the dates, and I will triple
check, and probably still have errors.
The ACCR shareholder's MOTTO during the ONSLAUGHT: PAIN!
What the hell?? :o
It gets better...
https://www.sec.gov/Archives/edgar/data/1041588/000104158818000016/accra03092005.txt
"This filing is a technical requirement in order to bring us current.
No one is assisting Patrick J Jensen in all this hard work.
He is Human. This form is basically the same as the prior report,
except for the dates/period have changed."
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Canada is a giant landmass filled with natural resources located directly beside the largest economy in the world, and it only has ~30 million residents. No surprise the average resident will be "wealthier" than the USA, but it is also amazing how poor it is compared to other small resource rich nations.
Alpha, apart from Norway and perhaps Singapore (not a resource rich country, but a wealthy "per-capita" country), most of those countries use expats at obscenely low wages to extract the resources of their country, hence their perceived high per-capita wealth.
One simply has to look at what is happening in Saudi Arabia, as they ween off state-employment and now require S.A. citizens to have particular jobs as opposed to expats, to see how wealth has been distributed, and why high per-capita wealth looked so good. The same situation occurs in Qatar, UAE, Bahrain, Brunei, etc.
Canada just looks wealthy because we haven't seen the housing correction that the US has, and the country is more urban than the US (so perceived wealth of that cube in the sky looks better than a hundred acres in the hinterland).
Just my two cents.
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"On dairy specifically. Dairy is one of those industries prone to overproduce and destroy themselves. Countries deal with this in different ways. Canada uses supply management. The US uses huge subsidies. In fact the whole US dairy industry produces at a loss. The only thing that keeps it going are huge subsidies. Canada does not subsidies producers."
This is totally false and propaganda from dairy farmers. Same from chicken farmers or the meat that anyone in poor countries produce in their own backyards! Cheapest meat on Earth and a chicken breast sells for the same price as steak in many grocery stores in Canada!
Canadians do provide an enormous subsidy to farmers by paying double the price of the normal price for the product at the grocery store. That is the cost of supply management which gives guaranteed pricing to producers no matter what. No cyclicality. Wonderful cartel.
If you guys want to block American dairy from coming in, fine. However, supply management must go.
Cardboard
Saputo agrees with you (as do I):
https://globalnews.ca/news/4281520/canadian-dairy-saputo-inc-pricing-system-us/
Did you read the article carefully? I don't think he agrees with Cardboard. My understanding is that he's talking about ending the 2016 Class 7 agreement, not the supply-management system.
I read the article carefully, yes, but I didn't read this entire thread as carefully.
I guess I'll just post the article without any discussion or opinion next time.
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"On dairy specifically. Dairy is one of those industries prone to overproduce and destroy themselves. Countries deal with this in different ways. Canada uses supply management. The US uses huge subsidies. In fact the whole US dairy industry produces at a loss. The only thing that keeps it going are huge subsidies. Canada does not subsidies producers."
This is totally false and propaganda from dairy farmers. Same from chicken farmers or the meat that anyone in poor countries produce in their own backyards! Cheapest meat on Earth and a chicken breast sells for the same price as steak in many grocery stores in Canada!
Canadians do provide an enormous subsidy to farmers by paying double the price of the normal price for the product at the grocery store. That is the cost of supply management which gives guaranteed pricing to producers no matter what. No cyclicality. Wonderful cartel.
If you guys want to block American dairy from coming in, fine. However, supply management must go.
Cardboard
Saputo agrees with you (as do I):
https://globalnews.ca/news/4281520/canadian-dairy-saputo-inc-pricing-system-us/
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I have been accumulating a position in L Brands (NYSE: LB) over the last 2+ weeks...
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I think it's a valid point, especially for us amateurs (assuming that's what you are). Why spend the time if you can't beat the market?
People will tell you how they have beat the market and I am sure they have but when you look to audited statements, it is actually really tough. Many of the managers I followed a decade ago haven't beaten the S&P or are neck and neck with it.
I think your best bet is to focus on a very small number of stocks and use index funds for diversification. This is what I do. I don't have hard and fast rules on the weightings but if I can't find a stock that I am confident will beat the index, I just buy the index.
We small fish don't have to wade into the ocean, when there are plenty of ponds, where the trawler boats aren't in our way.
To beat the market, don't invest in the same spaces the big boys are. Find the short-term, one-off opportunities, find the small, obscure stock, and buy and hold for a really long time. Read everything you can about these investments, and know it better than everyone else. It's hard for the market to reach down to the small, obscure investments, because they are too small to move the needle. Understand the various investing accounts investors have in your country, and understand as much about tax law so you can earn returns efficiently. That's the edge smaller investors and hedge fund managers have.
Above all else, don't try to beat the market year-in and year-out. Just focus on the process and refine the process. Don't become outcome-driven.
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I would add Texas Pacific Land Trust, TPL, to the list. They are "going out of business"... It's just taking them a while. Returns are awfully good.
http://www.businessinsider.com/texas-pacific-land-trust-2014-8
Thank you for pointing us to TPL. I appreciate it.
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Did anybody actually manage to short?
Yes at IB - I'm out now, not as patient as Sharad. Thanks again!
I have fully closed this position over the last few days. It was one helluva ride.
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MO and PM
Thanks
Lance
+1
BTI as well.
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Did anybody actually manage to short?
I have been short the whole time, but not without a lot of heartburn. I guess brokers are able to define its own terms for what they'll allow to short and when they'll call the shares back (sorry, I'm very much an amateur investor, with no formal training), but I maxed out the short at every opportunity I could. I am still short, but the position is about 1/3 what I had at the maximum (the risk reward is no longer as profound as it was in February/early March). It has been a great hedge against the rest of the market turbulence. I think the price of the share will fall towards $5 (NAV per class A share is well below $5), and then I'll exit the remaining position.
I hope somebody was able to join me on this one. It has enabled my portfolio to be very green on the year...
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I look at the actions of Google and Seeking Alpha, and I slot them into the contrarian indicator that the market has reached a top.
Google is now trying to create a webpage that reaches the mass of people that have flooded the market in the last 6 months or so. Seeking Alpha is seeking to prey on the retail investors that are looking for as much information in a forum full of comment boxes.
People love to take advice from other anonymous people; it's time to build more short positions for the inevitable failure of the 200 day MA, and the fall to the 200 week MA (you see what I did there?).
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i have been looking a cheapishly looking tobacco stocks a while ago and bought a starter position and then started to do some more research and thing this business is on the cusp of a significant change from e-cigarettes. It seems that products from industry newcomers like Juul gain significant market share especially with younger folks. This makes sense to me since starters will likely not be bound by existing habits and chose the product that appears to work best. I have little doubt that smoking vaporware is much less harmful than tobacco and it certainly is less annoying to others.
My guess is that adoption of e-cigs could rapidly increase and destroy the other tradional tobacco business. the fact that a newcomer like Juul can gain almost 50% market share means that the incumbent tobacco companies don’t have that much of an advantage and market shares will be redistributed, but moreover, it is not likely that the e-cig business will have the same obscene profit margins than the tobacco products.
So get the last puff out of tobacco stocks and hope that these companies die faster than their :P
I think that these traditional tobacco companies have a lot more staying power than you think --> they have an addictive product. In addition, most of them have diversified into other business.
Yes, they is true - their product is addictive, but now you can replace it with another addictive product that works just as well and is less damaging to your health and more socially acceptable.
I compare it to LED lights replacing lightbulbs. For about a hundred years, lighting companies made bulbs and gas discharge lamps (Halogene etc) with very nice profit margins and relatively stable market shares. Then came the LED - a superior product and old market shares count for nothing and the profit margins went to hell.
The comparison of LED vs tobacco is problematic in several ways, but I think there are a lot of similarities too. The fact that an upstart in the e-cig business (JUUL) can get almost 50% market shares and beat the marketing machines or Imperial brands and BTI (and maybe MO) tells you already something.
Is MO allowed to sell IQOS in the US? My impression is they are waiting for FDA approval before selling in the US.
If one wants to see how their products will do, one simply has to see PM's performance with IQOS in Japan, where adoption is ahead of the U.S.
"In Japan—where e-cigarette sales are heavily restricted—IQOS has lured enough smokers since launching nationwide in the summer of 2016 to account for about 12% of the overall cigarette market, according to Philip Morris."
I think IQOS will have huge advantages over all other competitors once FDA approves some language, any of the language, PM/MO presented for approval. And we know that the baseline is already their weakest statement, which was agreed upon by the FDA advisory board:
https://www.cnbc.com/2018/01/25/philip-morris-stock-falls-as-committee-reviews-iqos-claims.html
"Members voted unanimously (aside from one abstention) against PMI's claim that its heat-not-burn tobacco product cuts the risk of tobacco-related diseases. The panel also rejected a claim that iQOS is less risky than continuing to smoke cigarettes in a 5-4 vote.
One claim the committee voted in favor of was that iQOS reduces the body's exposure to harmful or potentially harmful chemicals. However, it voted against the idea that reductions in exposure are reasonably likely to translate to a measurable and substantial reduction in morbidity and or mortality."
The 5-4 vote by the advisory committee on the "middle ground" statement that iQos is less risky than continuing to smoke cigarettes is currently at a 5-4 vote. This isn't a cut-and-dry decision: there is a decent chance (I'd put it at 60%) that the FDA approves this statement.
Finally, the FDA needs to balance the health of current smokers with the prospects of curbing future smokers. The latest news roiling tobacco is a result of discussions on regulating flavored and menthol cigarettes, which I'm unsure MO even really sells; BTI on the other hand would get hammered on an outright ban of menthol. The FDA has also proposed reducing nicotine content in cigarettes to reduce its addictive properties, but it has also acknowledged it needs to weigh this with the potential for current smokers inhaling more cigarettes (and therefore more carcinogens) once such changes are made.
If I would venture to guess, I would believe that flavored tobacco would be banned, menthol content reduced, nicotine levels halved, and iQos products would be approved with the statement that they are less risky than cigarettes. This would not necessarily warrant a huge decline in tobacco related stocks over the long term.
Long PM, MO and BTI.
P.S. I believe big tobacco is already committing R&D to start looking at the medical properties of tobacco, to diversify away from cigarettes. This is one reason why PM/MO is embracing FDA regulation, and taking a much more cordial approach to the government than 15-20 years ago.
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If you include companies with $1 million market caps you will have stuff with almost zero liquidity and super wide bid ask spreads. If your results for example include a company where someone sells 100 shares at $0.0001 and next year there is some random trade at $0.01/share for 100 shares as well it looks like a 10,000% return that will totally skew any result. But even if you managed to get 100% of all traded volume you would have made a profit of less than a dollar. That's why if you want to run a meaningful backtest you have to add liquidity constraints and/or take into account trading inpact, bid/ask spread etc. Otherwise you just filter out this kind of noise that cannot be traded.
Yes, but rukawa is right, 50m is way to high. The average NCAV stock in my portfolio is between 5 and 50 million and i won`t include anything above 150m because these tend to have lower returns. But adding a filter like >10k daily volume and price > 0.1 should help with the noise, at least in my backtests it did.
In completing backtesting, is there a way for a screener to take the "ask" on purchase, and sell at the "bid", or is that too much for a Bloomberg screener to do? This would clean the noise that many backtests have with stocks that are illiquid, and reduce the credibility of the performance indicated.
I don't use a Bloomberg terminal, and likely will never experience the joy of using one (sarcasm).
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MO & BTI
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Novo Nordisk (though I don't want him to).
Fits every metric I believe Buffett looks at. The cash spit out to shareholders every year is absolutely mind boggling, relative to revenues.
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It's pretty easy to read into it what you want, but I did pause on the part about the four major dips, as well as the lack of attractive acquisition opportunities.
The last time I recall the letter being this short was the 1999 letter.
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Before the impact of Tax Cut Bill, Book Value Per Share increased by 12.72%.
After the Tax Cut, Berkshire's BVPS increased by 23.03%.
BVPS = $141.17 for BRK.B, $211,750 for BRK.A
Markel increased 12.74% in 2017 including the effect of the Tax Cut.
Fairfax increased 22.36% in USD in 2017 (Canada)
White Mountain Insurance increased 15.82% in USD in 2017 (Bahamas)
S&P500 TR rose 21.8% in 2017.
BRK rose 21.9% in 2017.
Did you find the letter incredibly short, and mostly devoid of the usual nuggets of wisdom? There was an incredible silence, I feel.
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It's released.
Love the discussion on the Protégé 10 year wager.
"Performance comes, performance goes. Fees never falter."
"The bet illuminated another important investment lesson: Though markets are generally rational, they
occasionally do crazy things. Seizing the opportunities then offered does not require great intelligence, a degree in
economics or a familiarity with Wall Street jargon such as alpha and beta. What investors then need instead is an
ability to both disregard mob fears or enthusiasms and to focus on a few simple fundamentals. A willingness to look
unimaginative for a sustained period – or even to look foolish – is also essential."
I should repeat this to myself early and often.
"I want to quickly acknowledge that in any upcoming day, week or even year, stocks will be riskier – far
riskier – than short-term U.S. bonds. As an investor’s investment horizon lengthens, however, a diversified portfolio
of U.S. equities becomes progressively less risky than bonds, assuming that the stocks are purchased at a sensible
multiple of earnings relative to then-prevailing interest rates.
It is a terrible mistake for investors with long-term horizons – among them, pension funds, college
endowments and savings-minded individuals – to measure their investment “risk” by their portfolio’s ratio of bonds
to stocks. Often, high-grade bonds in an investment portfolio increase its risk."
No wonder he's trading shorter term bills.
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It's released.
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Interesting. I have asked for shares available to short and nothing at my broker. Maybe that there is a supply/demand game going on.
Cardboard
I agree there's gaming probably happening. I'm pretty sure fiduciary rules are different here in Canada than in the US, and Chinese walls are paper thin. Can't say for sure, but it sure feels like it.
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Where are you shorting this? No availability at IB? Do the Canadian brokers have it available?
Questrade and TD had shares available to short when I started shorting this a few weeks ago, and I was able to short more this week.
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Please note that this is a short term opportunity, based on a short-term catalyst that was triggered earlier this week
I'm shorting a split share, Dividend 15 Split Corp II, ticker symbol DF on the TSX. The premise is simple. Currently the premium to NAV is about 50-55%. While split shares always have some premium to NAV, the price usually collapses when the dividend is halted. This is exactly what happened this month, as NAV fell below $5 for the class A share, DF. For some reason, the stock remains up, but past history shows, the premium quickly closes towards NAV (i.e. the stock drops precipitously when investors realize no dividend is coming). This should happen at some point in the next week or two. If you take a look at LFE on the TSX, its NAV is about the same as DF, and yet its stock trades a full $2 below DF. It's unbelievable.
I'd like anyone's comments on this one. I have seen that in the past split shares are taken behind the woodshed whenever they halt dividends. Why shouldn't that be the case this time?
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I'm shorting a split share, Dividend 15 Split Corp II, ticker symbol DF on the TSX. The premise is simple. Currently the premium to NAV is about 50-55%. While split shares always have some premium to NAV, the price usually collapses when the dividend is halted. This is exactly what happened this month, as NAV fell below $5 for the class A share, DF. For some reason, the stock remains up, but past history shows, the premium quickly closes towards NAV (i.e. the stock drops precipitously when investors realize no dividend is coming). This should happen at some point in the next week or two. If you take a look at LFE on the TSX, its NAV is about the same as DF, and yet its stock trades a full $2 below DF. It's unbelievable.
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Surprised I haven't heard of this one before. Thanks for adding a new company to the conversation.
Where did you learn about this company?
I honestly can't remember where I learned about the company, but I like companies in obscure businesses, running roll-up businesses where they don't load the business up with debt. I think I kept seeing stupid ads for Acorn stairlifts, and I read a few books about the moat that escalator/elevator businesses (once you install the elevator/escalator the municipal government mandates maintenance every year (and that usually goes back to the original supplier)), that I looked up elevator/escalator businesses. This company popped up, and it looked good from a balance sheet perspective, though I wish it was a little cheaper. I also like companies that have a good amount of cash flow being distributed back to shareholders every year, without degrading the balance sheet.
This one feels like CCL.B and PBH did 5-7 years ago for me, though both CCL.B and PBH had lower P/E ratios when I started buying them.
Visualization Exercises
in General Discussion
Posted
In my opinion, until you've experienced a washout of an investment, or seen your portfolio decline 25% or more, you honestly won't know how you would react to such a change in market values. Drops in value can be fast and extremely frightening (think 2008-2009) or slow and painful (like 2000-2003). Your psychology in each can be vastly different.
In some cases, the long, slow, painful decline becomes too much to bear, and you'll exit at or near the bottom. In many, many other cases, an investor's belief that their investing prowess is superior to the market will lead them to a permanent loss that feels similar to the 2000-2003 decline.
Personally, I've gone through both of the bear markets of the early 2000s, and I don't know how I will react to another one, which is bound to happen soon enough. I hope the martial arts discipline you espouse will help you maintain a steady hand and stable mind during the next big drop for the market. Like you, I personally try to visualize large drops, and I usually evaluate my portfolio for a 50% decline, to see how I would fare. It usually makes me want to vomit, and I adjust my portfolio accordingly; I just don't know if I'm adjusting my portfolio for the better.