dyow

Makes sense, thanks.....for the reasons you pointed out, i assumed mgmt/the exchange would "guide" the market initially because of the complexities in valuing 2 companies after a separation - but when trading begins the market would decide. The tax cost basis is a good point, i would assume that if mgmt gives guidance in terms of how tax basis should be allocated - this should approximate their assigned values to each business.

No, no, no. The only thing that matters is at what price people are willing to buy and sell Co A and Co B. Maybe the next day Co A opens at $1 dollar and Co B opens at $100 dollar... there is no formula, or any rule. The price of the new stock can be lower or higher than the price of the original company. Interesting, and if the case, i was completely off. i understand that the trading on that day could cause the price to fluctuate to anything. I assumed that that there was some type of mechanism/guidance on the initial spin. I noticed that there is a "when issued" market before the spin off, this might be the mechanism for the market to try and determine the potential spin off price. I need to look more into this...thanks. The let the market figure it out makes sense to me, idk why i assumed otherwise, it must be bc i have gone insane.

You are right i edited the post thanks...not thinking straight today

So I want to understand the impact of a spin. Let me know if i am correct. Company A stock price is $10. The Company will spin a B co. Every share of A will get one share of B. Before the spin, the company will assign a value to Co A (say 80%) and Co B (20%) and will notify the exchange. On the day of the spin the exchange will assign the opening trading price of Co A at $8, and Co B will trade at $2 - based on the allocation the company has specified. Is this how it works? The company i am looking at has not mentioned anywhere the value allocation so i have no idea where to find this info before the spin (i looked at all their filings/CCs etc). Even checked the OCC site for the impact on options after the spin....but i found nothing. anybody know if there is a way to get this info?.....I might have to call IR bc i can't find this anywhere, but thought i would try here first.

repurchasing equity capital doesnt create equity or regulatory capital jr preferreds are carried at par on the balance sheet. if you retire some or all at 2/3 of par, then the remaining 1/3 value drops to common equity. ie a buffer. true only if buying back debt help me out here. assume 100bn assets, 80bn debt, 5bn preferred, 15bn common on the balance sheet. the 5bn is repurchased for 3bn cash. so assets goes to 97bn. debt stays same at 80bn. doesn't common value go to 17bn? equity capital doesnt go up if no equity is issued and equity is retired In a corp that would be a gain of 2B that would hit retained earnings - so common 15 + 2 retained earnings. Retained earnings/common stock is in shareholder's equity so that would be 17B. If you buyback something at discount to the balance sheet amount the gain goes to shareholders.

Yeah, personally i always want to hear other people's views on my position, good and bad. Agree on shareholder meetings I would assume they would be a lot more open to talking there.

I probably wouldn't find someone because i like managing everything myself. Yes i think you are right and "the no benefit to us" thing might be the biggest issue - but I think i can add value so it would not be just me benefiting (but obviously we won't know this until we talk). These funds i am trying to talk to are smaller. Yeah Klarman is super secretive and the size of his fund makes the rules much more strict - i am not even sure if he explains to his investors why he buys certain securities. ...thanks.

Let's say you are not invested in a fund, have no connection to them, except that you own a specific stock position they own as well. I tried to talk to a fund that owns a stock I own - and I plan on contacting a couple more. For the fund I called I never got through to the actual fund manager. But the person that answered the phone mentioned that they don't discuss their positions because of legal issues/lawyer related stuff. They are not on the board of directors of that company. I don't know of any rules where you can't discuss your positions with other shareholders - i was under the impression that funds were able to discuss their positions freely with anybody. Also all the information discussed would be public information, nothing new, i just wanted to compare assumptions and the thesis - I am thinking this fund just doesn't want to talk, and there are no legal issues, but i don't know, i don't run a fund.

he should focus on the value investor digest, i have read a couple of issues, they were pretty good.

Beerbaron is money. I spoke with management, everything you said is pretty much right, i was looking at it the wrong way. beerbaron for president of COBF.

Thanks, you make points I did not even consider. I would assume it would be a net benefit, but who knows, implementing and executing is another story. I see what you are saying about costs, expense/cost efficiencies might really come into play if they scale the business, which makes sense. This business is is actually shrinking/maintaining stores, which makes things less clear. The more I think of it I might also be looking at it wrong in that the main benefits might actually come from employees having more free time/and more real time data to focus their energy on serving customers, which might help revenue, but is hard to quantify. Thanks for the info.

Very general question. Let's say we have a retail company with smaller type 1000 stores, makes 2 Billion in revenue and net margins of the business are slim 1-3% (after selling and admin and cost of goods sold). About 1500-2000 employees, max 100 work at head office. The company currently has a very dated system and uses old systems and outsources back office work to a 3rd party. It looks very inefficient. They are overhauling the whole IT system (new system provided by Netsuite Inc.), cloud computing. They are also putting in new point of sale systems in all the stores. They expect to have better control of information and make processes more efficient. They will use the new system to buy directly from suppliers which they have not been able to do in the past. They are calling the new system "new and state of the art". So my question is what the hell does this mean? I know very little about this stuff but am trying to learn and mgmt has not provided guidance. When looking from the outside it is very difficult to assess this, especially if you know very little about IT. How much money can be saved here (I don't need a number obviously, but I am trying to quantify this as best I can). Does anybody here have experience with something like this at a high level? Does this impact costs throughout the value chain? Thanks in advance

I will have a short on-line university course out in the next 4-6 weeks, that is designed with very much this in mind. Amongst other things the expectation is that it will take the learner through the block chain due diligence process from vision through to implementation, demonstrate via a case study - implementation of clear token in a charity application; demonstrate via a case study - implementation of colored token in a bond issuance application, and conclude with a project where the learner tries it out him/herself under guidance. If you then wish to do it 'for real' afterwards ... I know a great consultant who can help you - at a very reasonable rate net of a COBF 'friends and family' discount ;) SD Where do I sign up?

I will look into this, thanks for the heads up! My technology skills are horrendous.

I mostly do this. Great. Do you have examples...more is better. No. Examples or evidence won't change your mind, you will block it out and look for evidence that aligns with your view. A bunch of bullshit. You do not have an example to share. Edit: i don't mind getting called out.........he is right for all he knows i could be lying. We need more confrontation on this board. Better to get your feelings hurt than to lose your life savings on an investment mistake.

I don't want to hijack this thread but here below is an example of something ludicrous. from the sears hometown 2015 10K. Sears and sears hometown are both controlled by the same person. Yet both companies are beefing with each other?? I would not have known without looking at the 10K, and nobody brought this up in the hometown thread, probably bc nobody looked at the 10K - i have not seen this pointed out anywhere on the web either. I would consider this to be pretty material information hidden in the 10K . Several of our agreements with Sears Holdings, such as the Services Agreement, the Store License Agreements, the Trademark License Agreement, and the Merchandising Agreement, were agreed to in the context of a parent-subsidiary relationship and in the overall context of the Separation. Since the Separation a number of disputes have arisen with respect to these agreements. We are currently in negotiations with Sears Holdings regarding a number of disputes, which include the following, among others: • our ability in accordance with the Merchandising Agreement to buy KCD Products from Sears Holdings at rates for Sears Holdings-supplied consumer warranties that result from negotiations required by the terms of the Merchandising Agreement; • the extent to which we and Sears Holdings are sharing with each other vendor subsidies in accordance with the Merchandising Agreement; • whether Sears Holdings owes SHO reimbursement for repair over-billings and mis-billings at our ORDCs; • Sears Holdings' refusal to process some "SHO-unique" vendors and products; • Sears Holdings' refusal to promptly perform IT development and enhancement projects requested by SHO in accordance with the Services Agreement; • Sears Holdings' refusal to permit searsoutlet.com to sell new in-box products sourced from SHO's Hometown Stores in accordance with the Merchandising Agreement; • Sears Holdings' unwillingness to enable us to pay directly Sears Holdings' vendors for merchandise that Sears Holdings purchases for us; • Our ability, and the ability of our dealers and franchisees, to make bulk sales of our merchandise; • Sears Holdings' refusal to sell to us all of Sears Holdings' distressed, refurbished, and marked-out-of-stock merchandise in accordance with the Merchandising Agreement; Sears Holdings' refusal to enable web-to-store and store-to-home transaction capability at all of our locations in accordance with the Services Agreement; • our ability to use our employees to perform all repairs at our ORDCs; and • availability and allocation of merchandise and subsidies from Sears Holdings and from third-party suppliers; Our rights to engage in our own online initiatives that would leverage www.sears.com, and our rights to engage on our own terms and conditions in our own online initiatives that would be independent of www.sears.com, are constrained by our agreements with Sears Holdings and by actions that Sears Holdings has taken that we believe are not in compliance with the Merchandising Agreement and the Services Agreements and as to which we have objected. We believe that these constraints and actions likely affected our ability to conduct, and grow, our online business in 2015 and, as a consequence, likely adversely affected our results of operations for our 2015 fiscal year. These adverse effects likely will increase over time. We have, for some time, been engaging in negotiations with Sears Holdings regarding the elimination of these constraints and the cessation of actions, but we are unable to determine the outcome of these negotiations. We have been taking action to reduce our dependence on Sears Holdings to enable us to take advantage of what we believe are lower costs from alternative vendors (for example reducing our reliance on KCD Products) and alternative service providers, for example with respect to IT infrastructure services and local delivery services. We have also been taking action to reduce our reliance on Sears Holdings by performing services ourselves , for example making repairs in our Outlet Repair and Distribution Centers ("ORDCs") using our own employees. We believe that we are entitled by the terms of the SHO-Sears Holdings Agreements to take all of these actions, and many similar actions, and we will continue to evaluate the actions that will enable us to reduce our costs by reducing our dependence on Sears Holdings. Sears Holdings has objected to several of the actions that we have taken, and Sears Holdings could object to, and could seek to block, actions that we could take in the future to reduce our reliance on Sears Holdings, each of which may have the effect of hampering or frustrating our efforts to reduce our costs and improve our results of operations.

You assume that my purpose was to put a burden of proof on you. But that wasn't it at all!!!! I actually wanted you to give examples so I could make a checklist of things to check. In a way your right you would not have changed my point of view...there is no way I would ever read everything in disclosures. I have better and more important things to do with my life. I was hoping, though, that I could profit from the hard work you had already done and narrow things down to a few things to watch out for. After all isn't that what this board is all about...mutually profiting from the work of each other. OK....honestly i dont consider myself smart enough to know what to look for i just read and read and try to find anything i can. I don't have a checklist. It is impossible to provide a checklist but here is a couple i noticed, - going through past 10Ks and CCs and checking what management has said in the past (including "forecasts" in the 10K) and whether they followed through with it (i didn't appreciate this enough when i started investing, good management is super key). - checking the financials and determining GAAP financials vs economic reality (example during the energy crash there was a stock with 35% short interest that everyone was convinced was going bk....the accounting made it look like they were losing tons of money but their cash flows were positive through the whole cycle, and they had tons of assets). You had to deconstruct their I/S and B/S to get a good feel for what was going on (they had 2 different businesses)......and to do this you had to go through the 10K and separate out the two businesses that were lumped together in the financial statements. - just to add another, a few weeks ago i read proxy statement (schedule 14A) for a company i owned, just bc i was bored. The proxy statement showed exactly how mgmt was to be paid.....besides salary/options a very big chunk of what they would earn would be based on bonuses based on free cash flows generated and also the share price performance....which is essentially aligned with the interests of shareholders. I already owned this co but decided to add more when i saw this, i already knew this but just reading it and seeing it gave me more confidence. - also rukawa brought up a good one with related party transactions....if anybody looks at cheniere energy they have a bunch of RPT transactions between parent and subs that provides a misleading picture if not backed out. anyways there are more but if we start listing them all we will put the board to sleep.

I mostly do this. Great. Do you have examples...more is better. No. Examples or evidence won't change your mind, you will block it out and look for evidence that aligns with your view. Unless you understand & acknowledge anchoring bias... This is the hardest thing of them all. This is what Makes Buffett and George Soros great the lacking in path dependence. It is best to try and avoid it with a good process than to think you can have such power of clarity. I agree with the bias statement. I am biased as well. One of the reasons i like looking at 10Ks is bc it forces you to reconsider your biases. even less relevant information can spark something in your brain, a new thought process, that might help you look at the investment a different way (and maybe change the thesis).

I mostly do this. Great. Do you have examples...more is better. No. Examples or evidence won't change your mind, you will block it out and look for evidence that aligns with your view.

Also this isn't about whether you are right or wrong on any given stock. It is about having a good process you consistently apply to all your investments. But this doesn't even really matter....the truth nobody is going to change their process, i think a lot of investing is genetics...people who look at filings are the type of people who enjoy it, and enjoy doing detective work (i enjoy doing this it does not feel like work to me)....people who don't simply like doing other things (their brains are wired different).

This applies to concentrated bets. If you are diversified than i consider this closer to indexing and not investing - then i get it. But I don't understand how anyone can call a holding "an investment" and not look at all the filings, and at the least, go through every page of the 10K. You find things hidden in 10Ks, sometimes ludicrous things , things you don't expect and weren't looking for, that could make, break or make your thesis a lot more fuzzy. To me this is a crazy question, it is like asking whether i should put on a parachute if i go sky diving. but hey that is just me.

You guys better keep hoping this bull market saves you. "in any sort of contest – financial, mental or physical – it’s an enormous advantage to have opponents who have been taught that it’s useless to even try."

and bubbles....dirty oil, tree juice, and bubbles......

I don't think you need anything from China to set off Kanada. The Kanadian economy is built on real estate, oil, and financial institutions. Kanada doesn't really create anything. Kanadians are the patsy's are the poker table. The foreigners/locals buying real estate are weak hands, I have talked to them, they will flip quickly if things turn the other way. They are momentum traders. They have no conviction, they just look at the price and follow like sheep. PS Anything can set off a decline, including say a stock market decline in kanada that causes a loss of confidence that spreads. Not gonna lie, I wouldn't mind if the nevada turkeys who bear raided valeant, and others, did a full on raid on the TSX. I think the fundamentals justify going short most of the country.

The other question is, how do you distinguish real demand, as in families living in houses, from speculative demand, buying to flip? There really is no clear way to distinguish that, but I would argue that speculation in the Toronto market is way less than what many perceive it to be. Home sales activity isn’t all that much above its 10-year average and actually pretty low compared to the demand that we’re seeing. And the number of active listings is at historic lows. If speculation is indeed rampant and driving market mania, you would see substantial transaction volumes and listings – but the data doesn’t bear that out. House prices in Toronto are going up bc of speculation. I look at this very simply. Too many morons are feeling wealthy bc their house prices went up. There is no free lunch though. Canadians are waaaaaaaaay more sheep like than americans (especially toronto and vancouver), they are followers, when housing turns its gonna turn for a loooooong time. If you own a house now, and you have the option, you should sell and rent. It doesn't matter if house prices double from here. Sell early (but nobody ever does, which is why nobody makes me money from speculation - they keep speculating until it is too late).