Packer16

The 10 to 15% discount is based upon voting rights discounts. Part of the 30% is due to liquidity due to the preferreds smaller trading volume versus the common. Packer

One question I have always had about basket investors is how they tradeoff cheapness and weighting? I have a tendency to weight cheaper stocks heavier than more expensive stocks and use the Kelly Formula to provide a ceiling for my security weightings. For an enterprising investor, interested in capital growth, I have always been reluctant to reduce the weighted average cheapness of my portfolio for diversification. How do you handle this tradeoff? Packer

But I don't hold an equity mutual fund to reduce my volatility (I will hold bonds or equivalent for that). My point is that just about all of these guys when they have beaten a banchmark it is not by much and have done so by not being invested in a sector, tech in 1999/2000 for example. Do these guys deserve the 1% fees for just having me avoid an overvalued sector I would have avoided in any case? Why not by an index fund for 5bp or a value tilted one (that would have avoided the overvalued sectors) for 10bp to 30bp (VSIIX or PRF for example) and call it a day? Packer

If you look at his performance on Morningstar he is below the 50th percentile in terms of performance for the past 5, 3 and 1 years. You have a great point about fees. This guy is paying himself crazy fees for underperformance. This is not an isolated case amongst large cap managers. For these managers, I think the efficient market has caught up with them. Some of the others in this camp include Oakmark, Sequoia, Longleaf, Tweedy Browne, Mutual Shares and Davis. It is not that these folks do not have discipline and process, it is the field they are playing is filled with opponents as skilled as they are. The only way I have seen to do well in the large cap space is to concentrate like Fairholme but you also get increased volatility. If you have not, I would read some good books on mutual funds like Bogle on Mutual Funds or the Boglehead Guide to Investing to get some perspective on the challenges mutual funds face. I differentiate what mutual funds are trying to (get a return all the time) versus the more opportunistic approach practiced here. The opportunistic approach focuses on few well researched situations where most other folks are not going. The get a return all the time game is much more difficult if not impossible to game to play and win. Packer

He is in a very competitive part of the market and I am not surprised that he or most anyone else can outperform in the large cap portion of the market. Given this combined with the fees he charges, the odds of him or anyone else outperforming are slim. The efficient market hypothesis at work. Packer

I think value investing is a principle/discipline that you can apply to your own life but applying it to others in terms of relationships can cause issues. The way I look at it is what is the purpose of life. For me it is to serve others so some of the value investing principles do not apply at times. If I get great service at a restaurant I want to provide a nice tip in return for the great service versus getting the best deal. From the Old Testament there is a practice of gleaning a field, after the harvest letting others collect the harvest that is ground for free rather collecting it for yourself. I think you can practice this gleaning principle while still being a value investor. For me, the answer is what is how is value investing being used in the context of your life's mission. Packer

Especially when you are dealing with gov't folks who believe the ends justify the means. Packer

Is he going to come out with a paper edition for us dinosaurs? Packer

I have accounted for those interests and net book value is $7.52 but if the hotel properties are adjusted like Keck Seng's to the appraised value, the value per share increases to $18.39 based upon a 2013 appraisal. As a test of this appraisal, Shun Ho sold its Macau hotel for HK$900m that had a BV of HK$289m and an appraised value of HK$782m. I think most of the value of these firms is going to come from appreciation not dividends. Dividends are a signaling mechanism if you don't trust management. I trust Shun Ho based upon another HK investor holding this company who is familiar with management and the growth it has had over the past 10 years. I see growth as more of a catalyst than a dividend. Packer

Keck Seng is OK but I like Shun Ho because it has more upside at a 86% discount to appraised NAV versus about 65% for Keck Seng (adjusting for the condo sale prices in Macau). Shun Ho is also has mostly hotels versus more of Keck Seng is development (selling condos). Taeyoung is interesting in two ways. First is the majority owner of SBS Media Holdings, a depressed media content and TV operator and it has an architecture, engineering and design firm which has a JV with LG for water engineering. Both of these industries have hit soft spots in there cycles but I like there economics long-term. Packer

There are some interesting ones. I have invested in Shun Ho Resources. I think they will play out over a longer period of time that the Korean companies and the real question is what is appropriate discount to NAV and whether the appraisals supporting the NAV has some aggressive assumptions. I like Shun Ho because it is primarily HK hotels. Packer

What happens to the WACC is as the company becomes more levered the cost of equity increases to offset the cost of debt. At the optimal capital structure level (typically based upon the historical industry average), the WACC is the lowest. At higher debt level the cost of equity increases at a faster rate than the cost of debt declines. As to whether increases in debt rates will increase the WACC, is dependent the assumption of increasing interest rates. I personally do not think interest rates will go up because of huge demand from pension and retirement accounts in the developed world where most of the financial asset are. The debt rate used in WACC calculations is the LT debt rate so it is driven more by market forces versus fed actions. Packer

KIH is the Korean one and it is under Investment Ideas. The cheapest one is probably Taeyoung E&C preferred (it holds a majority stake in SBS Media - one of the largest media firms in Korea) at about a 25 cent dollar. All of these are less than 50 cent dollars. Packer

I guess folks have a different take on what the best is. Is it highest appreciation potential? If so then the large names (IBM and AMZN) probably will not be in that group. These are both $100b+ companies today. Who else is going to buy these that already hasn't? You also have some of the smartest folks on the planet analyzing these and advising big investors where the correct price is. It's like playing tennis against a pro versus your slightly overweight neighbor. I'll stick with the overweight neighbor stocks like some of the Korean preferreds (Lotte Chilsung, KIH, BYC, Daesang and Taeyoung E&C) or some of the Australian mining services firms (Boom and Emeco). Packer

For that amount PXH is probably the best. It has a dividend of about 3% and is available as an ETF via any discount brokerage. The fees are modest 50bps and its gets you exposure to some undervalued EM names. The track record of the index has been pretty good but the fund has only recently been around. Packer

What broker did you use to get access to Pharmstandard? TIA. Packer

Congrats. Packer

Does anyone know how to get quotes for Madoff claims? TIA. Packer

Fidelity and no filing process. Packer

The HK RE have always sold at a discount but there are some that are selling at much larger discounts now. I have purchase Korean preferreds directly vs. WKOF. Packer

The specific food and beverage cos in Korea include Lotte Chilsing and LG H&H. As to HK RE cos, I think it depends on the type and location of properties. I live in Rochester, NY and the great real estate bust in the US never really happened here. RE is also a very local market influenced by national trends. I think the perception of an overvalued market is what in making some of these companies cheap but a good operator will able to find the good local niches. Packer

What sectors have folks found cheap in a particular country. I have a few namely, Korean preferrreds on asset managers, food and beverage cos and media cos and HK-based real estate companies. Packer

I like Monish P.'s approach, namely, don't sell for 2 to 3 years at a loss unless you can reasonably estimate that the stock's current price is overvalued. This has happened to me on 2 occasions (sold) one with Lodgenet and the other with Oi. Packer

Thanks for the replies. I did find an interesting set of discount benchmarks of HK RE hold cos here (p. 18): http://www.csigroup.hk/investor-relations/files/pdf/June-2014_CSI-Results-Presentation--Eng--Final--Autosaved-_UmBm5cOs6c.pdf Packer

I am looking at some cheap but illiquid stocks and was wondering how folks adjust there security target price and weighting by liquidity. Also in theory, a high dividend should reduce the discount for lack of marketability. I am currently using a 35% DLOM from NAV for no dividend paying stocks, a 25% DLOM for an up to 5% yield and a 20% DLOM for a yield greater than 5%. Packer