Packer16

An interesting idea would be to see if we can enhance the site to track a number of "virtual" portfolios. We could run a contest where each person paid an entry fee to pay for this upgrade plus the winning portfolio would receive the remaining proceeds to go to the players charity of choice. We could keep it simple by each person choosing 5 stocks and could change them every day over a one year period. If it works then we can expand the next year to handle more complex situations like changing weights. I think we could learn alot from this and it would provide some real time performance info. Packer

You are correct but the P/E is 30% higher than the 10 for the main Brazil index. Packer

You have to be careful with the Brazil as well as the Russian P/Es as indexes are dominated by either oil & gas companies, mining companies or steel companies. I have invested in OIBR as it is a turnaround with a smart capital allocator at the helm. I have started to look at other firms but most of the large conglomerates in Brazil are privately held with a few subsidiaries traded on the stock exchange. Packer

Another way to look at Chapter 11 is the transfer of assets from poor capital allocators (who stay in charge in other systems) to better capital allocators. This can lead to a more efficient private sector if the government does not get in its way or is not large enough to crowd out the re-allocation process. Packer

What I do know about Japan is the debt situation lasted longer (and still may be going on) due to extend and pretend. The extension happened but the asset value never recovered. In the US, in most cases, banks and the regulators force the banks to incur losses and debtors are set free (funny similar to the Jewish concept of Jubilee). Just look at the number of bank failures in the US vs Japan and Japan went through a much worse cycle than the US did. What makes me optimistic on the US versus Japan and other places is the mechanism of dealing with debts. In the US you have Chapter 11, where the debt is gone and folks are free to begin again. In much of the rest of the world, you have either a liquidation upon bankruptcy or extend and pretend. That is why I think the US/Canada is different when it comes to debt. Just look at individual mortgage debt. In many places in the US it is non-recourse. This allows the debtor to move on and not be burdened with debt for the rest of his life. My understanding in Europe this is not the case. I can see how a system based upon on non-recourse debt can have a huge advantage over one that does not. Packer

Haven't countries already had election with these fridge parties (Greece, etc)? Interestingly enough I don't know how different the right from the left is in some of the countries. Take France, Hollande won and spoke a good game but how many of his "socialist" policies has he been able to implement? He raised taxes on the rich but he has had to deal with economic limits of the welfare states and has not talked about nationalization. I will be concerned when I hear of nationalization. It appears the only difference is taxes and the social issues. Packer

If you are unsure buy The Manual of Ideas books to get a sample. I recently subscribed and found some nice idea leads and value oriented concepts. Depending upon the size of your portfolio it can be expensive but if you can find an idea or two it will pay for itself. They have some nice screens and track the investments of the superinvestors and put together theses for some of the superinvestor selections. They also have interviews. I find it to be an upgrade from Value Investor Insight as there is some additional analysis on the superinvestor selections and screens. Packer

I agree there are problems but when you compare how far Europe has come in 70 years it is incredible. The US began as a loose confederation of states (1770 to 1780s), established a constitution with lots of states rights in 1780s. The country really did not congeal until after the civil war on the 1860s and even then it was a weak central gov't. So it took from the 1770s to the 1880s or about 110 years to work together as a unit with alot of people who were immigrants from other places. So if you compare Europe to the US compare it to the US in the 1840s. The US had disbanded its central bank and was being ripped apart with the slavery issue. The one thing we did not learn in the early part of our history was that compromise is the key to the US success. When compromise broke down the Civil War ensued. At least I think Europe has learned that and that will allow them to muddle through crises without war. I think what has driven much of the compromise here is the accomodation/compassion for others. I am assuming it is the same in Europe and therefore think they will muddle through without blowing up. Packer

I think the banks had a liquidity issue not a solvency one, which is what happened in the 1930s and in Japan. Even Freddie and Fannie appear to have had on a liquidity issue as they are going to pay back the gov't with interest. In Japan, the solvency issue was dragged out over 10-years thus part of the reason for the stagnation. I think a key in Europe is how they handle the solvency issues they have in Southern Europe (either through a devaluation via a S-Euro or restructure). The Swedish reference is in Irving Fisher's paper written in the 1930s on Deflations. Packer

I am sorry but I think anyone who thinks the US is going to be like Japan or the US in the 1930s is not looking closely at what is going on now or in history. In the 1930s, you had a collapse of the financial system (banks) and in Japan you had a system where zombie firms kept capital captive in unproductive firms for years. Even with the huge anchor in Japan GDP still increased. Japan was hit with two situations at once - high asset prices and the world catching up to them in terms of cost competitiveness compounded by a banking system and culture which made problems worse (no way to quickly work out debts and move on and a culture that lacks minority shareholder friendliness). Will there be low price inflation (like the 1930s and Japan)? I think so but if you examine what happened in the 1930s you had huge declines in GDP in the US. In Sweden, whose policies is similar to the US fed now had small GDP declines. That is not happening in the US. As to Japan happening in Europe, it will depend upon how flexible the financial system is. If failing firms are propped up then it will have similar issues. If they are resolved then I think it will be different. Packer

With some O&G firms there it would be interesting to hear their views on how the huge difference between US and WW gas prices are going to be resolved. Will US prices go up or the WW prices go down? Packer

You are correct it is very difficult to find a inefficiencies in large cap stocks. When you find one you are most likely finding a value trap unless there is a constraint preventing others from entering. It is interesting that Longleaf is going into BRK while Sequoia is leaving due to underperformance in the last few downturns. Packer

It could be their competitive advantage was Cummings & Stienberg and since they are no longer actively involved in the business that edge is reduced until Sandler & co prove they have the same turnaround expertise. Packer

Interesting viewpoint on stock versus bond values going back to the 1950s and how they are planning on improving investment process to reduce the number of mistakes they have made such as Dell, Chesapeake, HRT and Level 3. http://www.longleafpartners.com/quarterly_reports/Longleaf063013.pdf Packer

The problem is that the even focused portfolios are diversified. The only true focus fund out there is Fairholme. Buffett typically has 50 to 60% of his portfolio in his top 5 positions. The idea is to choose to focus the value investors best ideas (similar to Rodriguez' experience is the exception or the rule). Packer

Amore Group has announced a buyback of common and preferred shares but I do have to admit it is the exception. Packer

It may be but if we get a large enough sample and compare to the NAV return I think we can test whether if someone was to invest in a concentrated value portfolio they would do better than a more diversified portfolio. We have observed that in a few cases it will work but if we do a MF test I think we may be able to be more confident that the excess return is from concentration and not other factors. Packer

Examining the top 5 holding of value investors over time would be an interesting exercise. Given the large amount of spreadheet and data feed talent here, is there an easy way to do this if we can identify the holding from old quarterly reports of there managers? If so, maybe we can each take a few and see what results we get. TIA. Packer

I tested somthing like this with Buffet's portfolio and it did not work put too well as the premiums paid for the calls ate up most of the portfolio over time. I like the idea of just buying the stocks though. Packer

What you could do is for example get the quarterly reports for FPA Capital and buy the top 5 holdings after the report are released (45 days after the Q) then replace any of the top 5 with the new top 5 every Q. You can also do this any other good value manager (like Buffett, Fairholme, Longleaf, etc.). It would be interesting to see in FPA's case how much slippage there would be due to the delayed timing and how much value add would occur with other value funds. Packer

Just as an FYI. Rochester is much closer to midwest type of culture and is closer to Cleveland than NYC even though it is in NY. Packer

I think one of the keys is to find a strategy/volatility level you are comfortable with. It is not worth getting high returns if it ruins your life due to stress. I would think that most would not like the type of volatility I have experienced (down over 50%) in 2008. I try to find value stocks which upon first inspection folks say: yikes!. Very uncomfortable stocks to own - that is part of the reason it is cheap. Cinedigm is an example. Howard Marks has heavily influenced the way I look at securities - the way outperform is to hold non-consensus view and be correct. I can find the non-consensus securities but the correct part does not always work out (NTL and Delta Financial) and the earlier you can see it the better - Lodgenet was one where I left before the ship went down when the firms recovery did not happen and EBITDA went down. Levine (author of How to Make Money With Junk Bonds) has stated and provides an example of the EBITDA trend being more important the the EBITDA coverage for high yield investing. The concentration piece is a more recent focus - from both ERICOPOLY, Fairholme, Buffet and a guy a knew about 20 years ago who retired on DELL computer. He focused on one stock and his son was the firms ad agency so he was able to do well with only one stock. Packer

Yeh, I think Eric probably even beat Greenblatt's 10-yr 50% per year run. He definately has a focused style. Given your size, you have provided more value add then me. I would be more than happy if I get close to your 27% for the next 13.5 years. It appears that concentration is part of the secret sauce of outperformance. This forum has been great to get a good "second" look at some of my more offbeat selections. Thanks. Packer

You can look at Rochester, NY we have a great med community and finance jobs located in money management firms, corporate finance and specialty firms such as ours. You have to get used to weather but other than that it is reasonably priced for NY state. Packer

I do enjoy my job but most of the investments are in IRA accounts so I can't touch them for another ten years without paying taxes or penalties. I still have 2 kids to put through college so I will probably need employment until they are out of college. I am surprised at the portfolio results so far but I know the next 10 years will not be like the last 10 years, not even close. At some point I would like to invest more on a full time basis but given the timing of my future expenses with college and all it will be a few years before I go solo. I am interested in peoples results in whether concentration has helped or hurt performance. It may be somewhat self selecting but from the responses so far it appears to have helped. Packer