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There is a site spinoffs.com that has some spinoffs. It has missed some I know of though. To search for rights offerings and tender offers I search the Yahoo Finance news with keywords "rights offering" and "tender offer". Packer

I think they can grow without deflation. They can take the hedges off whenever they want (and probably will at some point in the future). They can also grow via emerging markets insurance cos and recovery of the muni market. The deflation bet is like the CDS bet. Even a slight amount of deflation will create a large payout. They purchased notional CPI puts at a price of 0.8% cumulative deflation over the next ten years. There is an interesting book about how inflation is tied to demographics (The Great Wave: Price Revolutions and the Rythm of History) which lays out this thesis. I am ordering it and looking forward to reading it. I think this also explains why we are seeing small amounts of inflation with QE 1, 2 & 3. Packer

Based upon the current mixture of FFH's portfolio, would the portfolio underperform signifciantly if the US has moderate inflation and equity values increase? In doing some of my re-reading this appears to be what is happening. The deflationary forces are being offset by QE and low Fed interest rates. This by the way is what Fisher's debt deflation theory would is the less painful way out of a deflation (in effect reducing the value of debt). Packer

Another way top value hotels is on pre-tax NOI (similar to FFO) cap rates. There are surveys out there Korpasz and Realty Rates which can provide some current cap rates. It is also a good idea to examine comps in terms of cap rates and per room metrics. Depending on location the cap and per room rates can vary greatly but they are typically groups by type of hotel (luxury, economy, etc.). HVS also has a good bit of free market info on hotel cap rates and valuation. Packer

I like Graham's suggestion that if management wants to re-invest more than 30% of earnings they should lay out the plan to shareholders for their approval. The approval part is my addition to Graham's plan. Packer

I was re-reading the Intelligent Investor and Graham suggested an approach to finding values that I wonder if anyone follows. He suggests doing valuation based upon the past data first then have a senior analyst make adjustments to this base value for things like growth and other factors and record the results. And thus he was hoping to develop a sort of "practice guide" similar to medicine. He had developed three techniques described in the Intelligent Investor in this way. It sounds like an interesting idea but I have never heard of anyone do this explicitly. Packer

Aren't the PIMCO funds leveraged funds? So you get more potential upside if munis recover. How do you factor the leverage into the fair value premium? How do you feel comfortable with the bond insurers? As thier market is shrinking (50% to 10%) from the data I have seen and the possibility of adverse selection bias in the municipalities buying insurance. Packer

What do y'all think is the best way to play this? The PIMCO PMX, PMF and PML appear interesting as long as inflation does not roar. Packer

I agree with Parsad. In a perfect world, it is pretty stupid but in the world filled with hatred and fear you need to have some force for good. You just need to read any history of the past 100 years to realize how strong men can turn peaceful situations into killing fields. I just read a book called "Bloodlands" about how Stalin and Hilter wiped out millions of Jews and other nationalities in Eastern Europe in 10 years. After reading it, I am glad we have a civilian run force to counter balance the "other" side. I just wonder if the so-called Iraq invasion created the catalyst for the current democracy protests. Packer

Another factor is how many moated stocks are highly weighted in the S&P 500. The more moated stocks there are with high weights the higher the P/E should be. Reversion to the mean works in all markets but much slower with high moat companies. My gut feeling is there are more high moat highly valued cos todaversus in the past but I don't know for sure. Packer

For me it is too hard. I ask myself would I invest in Pheonix first? Then find something in the capital structure that is cheap. I would not invest in Pheonix (a leveraged life insurer that does not have a good track record) to begin with so investing in the bonds is no different from the company or stock. Packer

Has anyone used Ambit electricity as an alternative provider? Any feedback would be appreciated. TIA Packer

I agree you on wars. We need to decide where the US interest is trully at stake. Usually when the gov't gets involved you get a central planning solution. In some cases this is an advantage (running a war and developing infrastructure) but in most cases it results in waste. I think the problem that most have with Obama is not his goals (although some do) but his central planning approach to problems. He would be more succesful if he used a decentralized approach to solve problems versus central gov't approach so he is not fighting 2 battles at once. Another point is that I think the success of China and Brazil has little to do with social spending and more to do with cheap manufacturing (China) and high natrual resource prices (Brazil). The folks that have done most of the centralized spending (Japan and Europe) have the worst situations. I think in part this is due to centralized approach to investing (which can work well on short problems and "catching" up to others) which has not created innovation outside of the planners scope, who usually are wrong. Packer

The real macro question is are we at a sustainable demand level? I would think we are but I am not sure. The one thing I know for sure is that further "investment" spending by the gov't in theory is good but in practice is going to be a disaster. Maintenance is fine but the large "investment" projects that billions is being spent on have dubious economnc rationale at best and appear to be a collasal waste of money. The direct transfer payment (tax custs) may help demand if they can be made permanent by cutting some of the wasteful "investment" projects like high speed rail in areas that cannot sustain a viable train link now (like upstate NY) and biofeuls, where the gov't is subsidizing the production cost to the tune of $1.00 per gallon, requiring mixture with gasoliine and the only way new plants are being built is with gov't guarenteed loans and grants. For the biofeuls to be viable (in the open market) you need over $100 per barrel oil for a long time. Why is the US subsidizing this uneconmic production? I can understand R&D support but commercial production? The amounts being spent are on the order of $15 billion per year for biofeuls alone with much more on other "alternative" sources. This is the worse kind of malinvestment because it not only wastes taxpayer money but it also diverts resources from other engineering/science problems that have a higher economic value. Packer

I agree but there are other insurance cos with better BV growth conservative underwriting and are selling for a lower MV/BV ratio including FFH, WRB and Lancashire. Each of these has lower than 100% combined ratios, conservative underwriting per thier reserve triangles 17% to 19% BV growth over the past 5 years and are selling at a slight premium to book less than 10%. RLI has grown book by about 13% per year over the same period and sells a 33% premium to book. Good quality but a little expensive when compared to the other items on the shelf. Packer

In terms of options if you look at the average over the past 3 years it averages like 2.2%. In addition some of the options have performance conditions (see the 2010 Proxy - DEF14A). The option grant #s are in the historical 10-Ks. They do appear cheap when compared to the other operators as the MVIC/Unlevered FCF (FCF plus interest expense) is 4.9x for CKEC versus 10.4x and 8.8x for Cinemark and Regal and 7.7x for Reading. But Reading does have RE development (which I don't know how to value). Packer

The 20% average may not be an anomoly. You need to find out how that 20% was achieved. If it was via a diversified group of large/mid caps, I would agree but I think 20% is possible by concentration and with small more neglected firms (where the funds cannot compete). The two people that I knew who made enough money to retire with stocks both took concentrated/leveraged positions in stocks they knew well. I like Ellis' tennis analogy. You are playing tennis and player who gets the most point wins. What you are saying it is impossible for the average person beat Andre Aggasi (a good value oriented hedge fund manager) over the long term and I agree. But what if an individual had the choice of playing Aggasi or the beer "bumb" nest door (the compeition for small or neglected stocks). In addition, your professional opponent cannot use the same swing too many times he has to mix things up even though he knows that using the same swing would be the best thing to do (diversification). The huge advantage the individual investor has is playing against "bumbs" to get points (positions in small stocks can have a significant impact on performance) and he doesn't have play by the different swings rule. I think this is why Buffett ssid he would get much higher returns (50%) with a smalller pot of money and how personally I have been able to outperform by about 19% per year over the past 10 years. I am surprised by how may "wipe-outs" I have had and still performed well. If could avoid just half of my "wipe-outs" (typically highly levered financial firms), I would have done better. My 5 year average of 26% hopefully is indicative of this. But comparing my funds to others managing money is comparing apples and oranges as I don't think many clients would be willing to deal with the odd small securities (many of my holdings trade less than amount I hold in the account) and LEAPs and I know I don't have liquidity and could not provide immediate redemption with many of these. If these techniques of concentration and neglect cannot be implemented by professionals then the only folks left are individuals that are the "do-it-yourself" types which would attracted to this board. Maybe someday this inefficiency will be arbitraged away when there are enough "do-it-yourselfers" doing this. I do enjoy the experts and academics who make our job easier by discouraging the "do-it-yourselfers". Finally, these techniques are not rocket science and do not require a high IQ (a high IQ may be a handicap) to implement. What suprises is that small investors have no idea of the advantages they are giving up by sending their money to mutual fund managers who are playing Andre Aggasi versus thier option to play the "bumb" next door. Packer

Sanjeev, How do you make payment via PayPal? I tried clicking on link and all I got was an e-mail to Corner Capital Market. Thx. Packer

To what extent was the Sprott performance to making an energy/commodities bet? The return of energy index funds (VGENX) has been about 15% over the past 10 years. How does he compare to this index if this is his area of focus? Packer

I think a number of these guys are cheap due to neglect (SALM, SGA), changing business model (SURW), higher debt (LNET, CKEC) tie to NG prices (NRG). I did hold Reading for awhile then based upon discussions on this board about Australian RE prices (relatively high) and their tie to the whole China story I decided to stick to the US players. I don't know much about Australian RE but based upon data I have been able to gather it looks like another bubble. CKEC has a high but supportable amount of debt and will receive $30 million distribution in Q1 for its in-theatre advertising partner. The MVIC/EBITDA is 50% less than Regal and Cinemark and FCF yield in about 2x these competitors. I also like the downsizing theme with movies retaining or potentially growing share. But if they just hold revenues flat the stock should sell for double. There are risks but I don't think this industry and CKEC are going away and they are valued cheaper than other entertainment venus like amusement parks and car race tracks. GCA did lose the Harrah's contract but the business is a duopoly with Global Payments so I would expect some back and forth with customers. It is not like the business is going away. GPN is trading at 8x EBITDA while GCA is only 5.0x times. The guys running the business are from First Data and they have good amount owned by a PE firm Summit Pertners who has expertise in these types of RR businesses. At this poin both of these are half positions (2%) with the other firms in the 4 to 10% range. Packer

At this point pretty high (about 60%) but I have a long time horizon (over 10 years) and am willing to take some downside (In the last crash, my portfolio was down 50% but it increased 109% the next year and more than overcame the loss). These names will be volaltile. That portfolio also had some subprime lenders and a larger allocation to O&G. I have transitioned to higher FCF stocks since the 2008 crash. With the China bubble potential I may stay more focused on cheap US ideas versus resource plays. Packer

How about selected media, gaming and electricity sectors? Radio still appears cheap (SALM, SGA) along with some cable cos (LNET, SURW) and theatres (CKEC). Gaming machine makers (MGAM) and smaller operators (FLL) and service providers (GCA). Electricity provider NRG is also cheap and call on NG prices. Game developer Gravity (GRVY) sell for less than cash. All of these are selling for less than 5x FCF. I was also looking at AM (American Greetings) who is also selling for less than 5x FCF. A media co that is lumped in the printing cos. These are the deepest value I can find in the US market. Packer

This brings up a interesting thesis (still cheaper goods and more overcapacity in low-tech markets). Will all of China's reserves be used to cover this loss hole? I was watching Milton Friedman's 'Free to Choose' developed in the 1980's and the debate back then was do we put tarriffs on foregin subsidized goods because in effect foreign tax money is being used to subsidize US consumption. Sound familar. In any case interesting slides and considerations for natrual resource investors. BTW I was reading Montier's "Value Investing" and the only strategy that worked in Japan's bear market was a value strategy. That strategy actually made money from 1990 (a return of 4% versus a market return of -3%). It appears a sideways market is a value investors best friend. Packer

He has done a very good job but Chou has done even better (13.7% annualized) in USD or an increase of 361% versus the S&P 500. The small cap value index fund also did very good (8.4% annualized) or an increase of 224%. Packer

Clearly the bargians are not falling out of the sky like they were at a bottom of the bear market in 2009 but Graham said as much (at market bottoms all stocks are cheap but at other times only secondary stocka are cheap). I agree with you about Seagate (there is technological obsolesecne risk which has turned many a tech stock into a value trap) however there are many other smaller firms where there is considerable value. Take media/entertainment as an example. You have part a declining part (primarily newspapars - but even here you have some flat/growing niches like DJCO and GVC.TO and portions of telecom - pagers and ISP), slow growth parts (gaming, movie theatres, radio stations, TV stations, incumbant telco and wireless) and growing parts (cable and portions of internet). Clearly the declining portion is going to cheap because is declining, the trick here is to determine the correct decline rate. I have tendancy to stay away because this is too hard for me. The flat/slow growth part is where I have focused and found many shares selling for less than 5x FCF and all less than 7-8x FCF. Some of these include SALM, SGA, SURW, MGAM, CKEC and LNET. Screening is good initial tool but I doubt you would find some of these firms in a screen. You have to dig into an industry, understand the competitive advantages then dig their financials. I have found some stocks via screening but only after understading the industry and re-calcing the FCF. Packer