Packer16

Does anyone know the impact of PFICs on taxable and IRA accounts. I want to know the implications before I buy a potential PFUC company? TIA. Packer

I purchased LICT and am about break-even when you consider the ICTC spin-off. It is cheap on a FCF basis and hopefully has a catalyst in the ownership Mario Gabelli has. He thinks this is a buggy whip company so it will be interesting to see what he does with this. From the latest data it is trading at 3.9x EBITDA and 5.6x FCF. They are trading at a discount to the RLEC cos with the exception of HCOM. The main issue I have had is liquidity. It is easy to get in but not out. Packer

I second Eric's comments. What you want to find is an undervalued asset and use the option to get cheap non recourse financing to lever up the returns. I have never used the more complex option strategies as I don't understand how you can use them to make a bet on an undervalued asset. The one caution is that options appear to be easier than they are on the surface because when you buy options you are making both a timing and valuation bet. LEAPs and long-term warrants can reduce the amount of timing bet you are making and thus are what hear most on this board. The implied interest framework Eric mentioned is what I have found to be the most useful. Packer

A large portion of their debt is non-recourse (Only $80.5 million is recourse to WOLF). About $65.5 million is associated with Gen I resorts which is on a 25 year amoritization. WOLF could step away from this loan and have no effect on FCF and about $6.0 million on EBITDA. This is the only loan that is close to its covenants. The level of debt about 5.5x EBITDA (net cash and other investments) is at the high-end of what you see in other resort/detination-type properties but the LT amortizations and the non-recourse nature provide some protection. At its current level of operations its E/FCF multiple is 6.8 with a free option on its Anahiem development and continued growth. The have grown their EBITDA to pre-crisis levels. This group of hotels are the premium ones in this niche. I have talked with folks in my office and this place is a great and afforable place to take a family (a less expensive version of destination parks like Disney). In addition, the franchising EBITDA is about 10% of the total. With a value of only 7.1x EBITDA, it cheaper than other theme parks (FUN and SIX) and other hotels chains. Given the franchising cash flow and the option of future development, I think WOLF should trade a premium to other chains. Given the value nature of WOLF's pricing, if a downturn were to occur I would think they would not be effected to same extent as other resort destinations. The upside is with the non-recourse debt where if WOLF were trade at the same level as FUN, SIX or other hotels at 9.0x EBITDA, the stock price would double. Also, given its low EBITDA multiple it could be acquired and be very accretive to hotels (H, MAR opr HOT) cash flows. These hotels trade at 13 to 15 times EBITDA. Packer

Try SALM, SGA, TVL, FLL, WOLF or AIQ. All are are either top notch in mature market (SGA, SALM and TVL) or are unrecognized growth (FLL, WOLF and AIQ). Packer

Do you how much volume trades? That will tell you how good of market indicator it is. Some of these markets, like the Case Schiller housing market futures never had enough depth to really become a robust indicator. Packer

I get the standard version as I can get similar info as small/mid cap from Morningstar for less $ and also get bond/preferred and option info. With standard version (hard copy) I can compare companies and get a veiw on what is happening in various industries. Packer

I'm trying to figure out the significance of this as both Romney and Obama are in the 1% so what difference does it make if you have a net worth of millions versus hundreds of millions? In today's world the lifestyles would be very similar. Packer

The view of the OPAP CEO: http://www.bloomberg.com/video/86202914/ Packer

Family welfare is similar but it depends on the situation. If the family raises the kids as middle class then the resources will be used to help them achieve a level of education for the new world. I think you should comment on the specifics if you have the info as your argument is just as silly as saying everyone who is on public assistance is getting a handout versus short term assistance. BTW Obama appears to be living a lifestyle as lavious if not more than Romney (with shopping trips to Spain and all). Packer

OPAP is cheaper than its two publicly traded comps (Lottomatica and SGMS) at 1.9x EBITDA and 3.8x FCF versus about 6.6/6.7x EBITDA and 8.0/10.0 x FCF for the comps. The devaluation risk is the biggest here as the market is implying a 70% decline in Greek currency if they fall out of the Euro. This appears to be a bet on Greece and the Euro. Packer

Its tough to our perform making large non consensus bets. Miller tried to do it also and did not suceed. Buffet is the only one I know that can effectively make large non consensus bets. Most others who do well do so by buying in smaller niches. I do have to stay Berkowitz is in the right neighborhood (Financials) as Buffet is there also. Packer

I use basic FCF from Morningstar as is calculated for each stock on thier website as a starting point. I will then see if there are adjustments by diving into the 10-Qs and 10-Ks. Packer

I believe WEB is letting himself be a symbol of how things work and how things should be changed so that we have a fairer system. I'm pretty sure he really does believe in the Buffett Rule, though not that putting the Buffett Rule in place will solve our debt problem. Actually, I'm not sure I have ever heard even President Obama say that the Buffett Rule will be a panacea for our problems, and I don't think it's accurate to say that Obama thinks "you can increase taxes and have little or no meaningful spending cuts." That's just the way that Republicans spin the President's position because they dislike him so much. Paul Ryan's plan is simply the wrong policy for the moment. Frankly, I believe the GOP will lose this round and put up Paul Ryan for president in 2016 -- and Ryan will be a much stronger candidate than any of the current slate of Republicans. If that is the case what meaningful spending cuts has he proposed? I have seen none other that small changes arond the edges. You can critisize the Ryan plan but at least it is a plan to begin negotiations. The Obama & co has not even put togehter a plan to negotitate with and thinks they can carry the day without one. How rationale is that. Packer

I agree with you about rationality but what I find unusual is he is allowing himself to be used in a political campaign to argue for something he stated he doesn't think is true - you can increase taxes and have little or no meaningful spending cuts. He thinks the spending cuts are political suiside and buys into the this argument (and in my opinion allows it be an excuse for Obama) but you have Paul Ryan out there talking about it and putting a plan out and Buffet is mum about support for him. He may not like the specifics but at least he has a plan with the folks Buffet supports having no plan but the status quo and tax increases. I guess Buffett is not immume to the irrationality of politics/dogma as we have seen with folks on this board (myslef included). Packer

I did do a google search and the case is more open than closed about economic mobility. The following Wikipedia link has some interesting findings: http://en.wikipedia.org/wiki/Economic_mobility A rich child only has only a 22% chance of remaining in the top 5%. The stats for the bottom are worse and it sounds like we need to spend more time/effort supporting families that can provide an encouraging environment for kids. An interesting note about the European countries noted is they were destroyed by WWII so they started from a much more equal point than we did. Another point worth mentioning is that passing on wealth does not appear to be an effective strategy to hold onto or grow wealth as what ever you are invested can lose its value. I do agree that the effect can be cumulative so the interesting question is why has not are inequality been great when our wealth has not been destroyed like the Europeans? Packer

The 2011 3rd Ave AR, has a nice summary of various Asian NAV plays. HK-based holding cos are a large number of these. In addition, the RE fund also has purchase Jan 2013 calls on the HK realty index. Has anyone looked into any of these HK-based holding cos like Wheelock or Hutchison Land? TIA. Packer

The best way to prevent the large salaries is to break up the banks/brokers into smaller firms. Each firm will incur more overhead, hire more people and diversify the risk. This is what we did to bust the trusts in the late 1800s (versus the gov't control model of Europe) in the US and it worked pretty well. The economies of scale in banking/brokerage accrue to the controlling emloyees versus the shareholders and the banking system. Packer

As for lots - many of the homebuilders have an inventory to build on once conditions improve and In Texas, you have Stratus. In California, you have HomeFed and Limoneria. In Florida, you have Avoca. As for land you have St. Joe, Consolidated Tacoma and Alico in FL, Tejon Ranch and Boswell in CA, Maui Pinapple and Land in HI, Griffin Land in CT, Texas Pacific Land in TX and Amrep in NM and CO. A related class of assets is water right west of the Mississippi. The major players there are Pico (CA, AZ, NV, CO) and Pure Cycle (CO). So there are many ways to play the housing/lamd recovery. BRP is probably the most diversified and liquid (mkt cap close to $1.0 billion) and the one that many institutional buyers will buy first. Packer

One way to get leveraged exposure to the US housing recovery is to buy lots. BRP is large lot owner in Canada, California, Colorado and Texas. Other land/lot firms in Texas include STRS. Packer

I think what rubs people the wrong way is not Buffet's opinion or trying to get others join his movement to reduce inequality but using the gov't to do this as there is very little flexability and the gov't has a tendancy to be arbitrary with no recourse if something doesn't go right. He does realize that spending has to come down (he has so in his statements) but he has not provided specifics or lobbies Obama for spending cuts only tax increases. He also has allowed himself to be used by Obama for this one-sided argument rather than also insisting that Obama link spending custs to the tax increases before he will get involved. I think the one sided effort to date is what folks are reacting to not a disagreement with his point of view. Packer

One thing those graphs do not show but imply is the top 1% 10, 20 or 30 years ago are the same folks as today. I know many dot-com millionares are no longer with us. So I think that top 1% is very fluid. If that is the case, then riots in the streets will not happen. The other aspect is does the top 1% live like royalty versus the 99%? Many in the 1% live like the other 99%. (This is an Amrican tradition going back to de Toqueville's time) I think not except some of the Hollywood folks which to be fair there should be an Occupy Hollywood as they are the ones who have the wealth and show it and may be that is why they support OWS versus the normal folks who think it may good but is not effecting thier lives. Overall, I think this is a distraction from solving the big problems we face and Obama is using this issue to avoid taking a stand on the more difficult issues of entitlement reform. I think unless he comes up with a plan other than the status quo and tax the rich, he will be out of office. Just my 2 cents. Packer

I think the statement that most of the benefits of society have all gone to the rich is wrong. If that was the case you would have rioting in the street not just a pretend OWS protest that is a bunch of progressives trying to tax their fellow citizens. That is why ows has not caught on outside the progressive press. Is there a problem with investment bankers getting overpaid? Yes and the answer is happening before our eyes - bankers salaries are going down and some of them may soon be our value investing competition. I think the key question is not are working class folks working hard for thier wages (most folks are) but would you like to live today or 30 years ago? I think today is the overwhelming answer. 30 years ago folks dead earlier. How many of you knew your great gransparents growing up? I didn't but my kids do. Is this a benefit only available to the rich? How about something closer to home, the ease of value investing. 30 years to collect the info we can assemble via the internet to make an informed value investing decision would be much more difficult and any of the working class folks can do value investing as a sideline. I think alot of people try to explain the differences in wealth based upon factors that are not changable (how smart you are, the home you grew up in, etc.) without mentioning the factors we do have control over. It is like saying when describing the equity market that there are too many uncontrollable factors in equity valuation therefore I should index and not even try value investing. Lets look at the factors that wealthy folks have that we do have control over: saving by living below your salary, getting educated on a savings vehicles, the decision to stay together with a spouse, the decision to get an education in a field where you will recoup the cost of the education and the willingness to contantly learn new things. This has been the path to wealth for the Millionare Next Door and I don't see this changing. What has changed is the last factor; you will not be able to be in the same job for life. An interesting sidenote is the divorce and out of wedlock birthrate amonst the middle class has been devistating to their wealth. This factor get little press but can have a huge impact on wealth. In the 1960s, this rate was about equal between the top 5% and the rest was below 7%. But by 2011, the rate was 40% for the top 95% and 6% for the top 5%. This is based upon a research from a recent book about the middle class. Packer

I think this cherry picking of Regean's position on taxes misses the point of his overall impact. His tax rates were lower than past history and this led to more dollars being in folks hands to invest, spend etc. Today doing this in isolation (which is what I think Obama's proposal is) is just raising more revenue to sustain more spending on projects the gov't thinks are better than folks spending their own money (high speed rail, biofeuls, etc). If this was linked to a serious cost cutting proposal (Simpon-Bowles) including reductions in low impact high cost porjects like high speed rail and biofuels, I think it would hard to refute but it is not. Obama has painted himself into a corner because in his mind he cannot make these nice to have but uneconomic project cuts. I have a hard time seeing how Buffett thinks Obama is effective but he backed Jimmy Carter to so maybe in politics he is not as objective as he is in investing. Packer

It would be nice if was in the Fall. Then we could have a mid- year event to meet at. Packer