SlowAppreciation
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Posts posted by SlowAppreciation
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Why anyone would want to block the politics section is beyond me :P
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Thanks to all of you - it certainly is easier to find specific bits of information you are trying to remember than it used to be.
SlowAppreciation also for maintaining an also wonderful website with lots of good stuff. I like it a lot, and I'm from time to time puzzled about how some of that stuff on that site can actually be coded to full automation - especially the 13-F screener comes to mind here. It does not harm either that the name of the website calls for a smile every time, I'm visiting the site [ : - ) ].
I wish it were fully automated... ;)
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I am not so excited. I love Airbnb and use it for travel and even medium term and long term rentals..but it is very easy to just get the hosts phone number or book a few days and extend privately the remainder. Not always but I bet there is huge leakage. Still..there is no business as useful as Airbnb. It really is amazing.
I run rentals on airbnb in a major city catering towards business travel. I've never had anyone try to extend directly. I set up my own site to market independently. I put my prices 33% lower than airbnb prices, even though they only charge low single digit fees.more than 99% of my bookings come through them, even at the higher price point.
Also, a significant percentage of my customers are staying for the first time on airbnb. They are growing very quickly, and their operating leverage is likely very high. I've interacted with them only a few times and paid many thousands in fees.
Other factors: they are adding more tools for professional hosts. Their previous UI was very cludgy for managing multiple properties. Now it is much better, which should allow them to take market share in independent property managers, which is a big market in vacation areas.
I received a survey from them awhile back asking whether I'd be interested in getting an advance on my payments (paid prior to check-in) for a discount. This would essentially be a factoring arrangement. I said no, as their proposed pricing tiers were very, very high (20%+ effective rates).
However, running a hosting business eats working capital, and doesn't necessarily attract financially sophisticated people. I think there is a very good chance they will be able to deploy a few billion in float at double digit returns on that.
Similar experience when I was a host. If I had to guess, maybe 80% were first time users. But this was back in 2010 - 2015.
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I am not so excited. I love Airbnb and use it for travel and even medium term and long term rentals..but it is very easy to just get the hosts phone number or book a few days and extend privately the remainder. Not always but I bet there is huge leakage. Still..there is no business as useful as Airbnb. It really is amazing.
Out of ~500 people I hosted, this happened < 10 times.
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Does a valuation of ~$30B for Airbnb make sense? Are there any revenue and profit numbers out there for this company? The combined market cap of HLT and MAR is less than $60B and those two are doing pretty well at the moment and control a significant part of the hotel space.
The article linked above regarding their internal "hedge fund" gives some numbers.
But the financial details indicate that Airbnb is going strong: “An email to the board and other major shareholders last month [Jan 2018] helped instill further confidence in the business. Airbnb’s earnings before interest, taxes, and other expenses came to $93 million, more than double the company’s forecast of $36 million, according to the email reviewed by Bloomberg. Revenue beat expectations by about $120 million.”If their internal fund is accounting for up to $60M of that, is that sustainable given the option to now pay only half the deposit at the time of booking?
$30B seems like a lot to pay for $100M of EBITDA, probably higher now since the article is almost a year old.
Can't imagine it costs a lot to run Airbnb though. No real estate, no data centers, small sales org, no hard assets... can just rent computing from AWS or Azure. Don't have to invest in data centers like other tech cos because it's not something they compete on. If FB's gross margins are ~85%, hard to see how Airbnb's aren't either. And operating expenses are just salaries for engineers and designers, and some litigation costs.
Seems like the business would have tons of operating leverage.
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Completely agree, and I'm excited to take a look at their prospectus. I was a host for 4 years to pay off my student loans, and am a big fan of the product and the business. As you mentioned, they used to (not sure if they still do) charged users before their stay, and paid out hosts on the day after check in. So Airbnb was definitely generating good float. For what it's worth, the former CFO (from Blackstone) had apparently tried using that float: https://venturebeat.com/2018/02/07/airbnb-reportedly-built-an-internal-hedge-fund-that-makes-5-million-per-month/
That's great if you have someone who's honest and trustworthy a la Buffett... not so great if they're not as it could potentially jeopardize the business.
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COST. Has come down with the market, so just topping up my position. Long term quality holding.
Were you buying when it was at the same price earlier in 2018? Still doesn't look cheap to me, but I know it's never been "cheap" per se.
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I use the 10.5 Pro with Pencil for 10Ks and like it a lot.
I usually use Adobe Acrobat to mark them up
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Some of you are way too harsh. Plenty of highly educated 50 year olds don't understand loans and debt—let alone a 17 year old who has been told since day 1 to go to the best school they can get into. To someone who has never really worked before, and has been financially supported their entire life, the difference between a $10k and $100k future payment is just some abstract # with no real weight behind it.
For example, I would consider myself pretty financially savvy. I've (responsibly) had a credit card since I was 15, bought my first stock at 13, have had a 401k and Roth IRA since I was 17, etc. But I also took out ~$100k of student loans to go to school, because I simply had no idea how much money that was. Sure didn't seem like a lot when every school tells you that 80%+ of their graduates make $100k. In retrospect, yes, I overpaid for my education. But I also don't see how 17 year old me could have known otherwise.
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So $200 - $150/share BV = $50/share for $10/share of real operating earnings...
Seems like you are pretending that operating businesses aren't included in book value at all. Just because some of them are held at figures much lower than their current value doesn't mean you should pretend that book value doesn't include huge sums for operating businesses that produce those earnings.
Sure, though if you just look at the liquid assets like cash, stocks, and bonds, they alone are $130/share.
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And BV doesn't include AAPL's recent run up.
And look at operating earnings growth... Could be $9/share for 2018.
So $200 - $150/share BV = $50/share for $10/share of real operating earnings...
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Perhaps there is some rational thinking behind Geico's predominant use of traditional advertising as they brand their way to the #1 auto insurer in the USA. Maybe, just maybe, they figured out that paying $12 per click to Google doesn't pay off. Or even $11 or $8 or $1. Stick with real world advertising. Leave the hope-of-sales-advertising to the wannabes who are desperate for any sales.
Actually GEICO is one of the top 5 spenders on Google's DoubleClick platform (and has been for a long time). In fact, they alluded to it a bit in the 2017 shareholder meeting:
CHARLIE: Well, we avoided the tech stocks, as we felt we had no advantage there and other people did. And I think that’s a good idea not to play where the other people are better. But you know, if you ask me in retrospect, what was our worst mistake in the tech field, I think we were smart enough to figure out Google. Those ads worked so much better in the early days than anything else. So I would say that we failed you there and we were smart enough to do it and didn’t do it. We do that all the time, too.WARREN: We were their customer very early on with GEICO, for example, and we saw—these figures are way out of date—but as I remember, we were paying them $10 or $11 a click (or something like that). And any time you’re paying somebody $10 or $11 bucks every time somebody just punches a little thing where you got no cost at all, you know, that’s a good business unless somebody’s going to take it away from you.
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OK, in the boring world of BRK ownership, just thought of updating the #s for FANG versus BRK
FANG Mkt cap: $2321 Net Earnings: $31.6 Book: $257.3 P/E 73.4 P/B 9.0
BRK Mkt Cap $483 Net Earnings: $45 Book: $348 P/E 10.7 P/B 1.4
Mkt cap are today's numbers the rest are Dec 17 numbers, so the current ratios could be quite a bit off, especially for the FANG stocks. Also notable is that FB and GOOG make up 90% of the FANG's $31.6B and 85% of the book.
It's all over for BRK. The FANG's have won and they will take it all!
How are you coming up with $45B earnings for BRK?
He's taking last year's GAAP which includes the change in the DTL which is one-time in nature, which I think is what you are getting at. ($21 billion of the $45 billion for 2017 was negative tax expense)
To use a reasonable neutral third party, JP Morgan estimates ~$28 billion for 2019 ($5B investment income, $2B of underwriting = $7 Billion insureance + $29 billion operating+$4 billion investment gains +- some other crap for $34 billion of pre-tax income less $6.6 b of taxes = $28 billion of earnings), with upside in the event of deployment of excess capital.
I think Berkshire is safe and relatively cheap and it is my largest position (and my family's). $45 billion of earnings ain't happening (unless the stock portfolio zooms up, which you wouldn't capitalize those earnings)
EDIT: What I mean is that $45 billion of operating earnings ain't happening any time soon. Because of the accounting changes made recently you could get there with stock value change, but that's not the same thing. Overall, I think longinvestor just took 2017 GAAP NI and did not mean it as a representation of anything more than that, 2017 NI.
Look through earnings are ~$12b—so plus op earnings—let's call it around ~$35b total.
Berkshire is trading around 13x earnings which seems like a fair deal to me.
If excluding the 100b cash, the pe becomes around 11ish I think
Yup, even "fairer"
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OK, in the boring world of BRK ownership, just thought of updating the #s for FANG versus BRK
FANG Mkt cap: $2321 Net Earnings: $31.6 Book: $257.3 P/E 73.4 P/B 9.0
BRK Mkt Cap $483 Net Earnings: $45 Book: $348 P/E 10.7 P/B 1.4
Mkt cap are today's numbers the rest are Dec 17 numbers, so the current ratios could be quite a bit off, especially for the FANG stocks. Also notable is that FB and GOOG make up 90% of the FANG's $31.6B and 85% of the book.
It's all over for BRK. The FANG's have won and they will take it all!
How are you coming up with $45B earnings for BRK?
He's taking last year's GAAP which includes the change in the DTL which is one-time in nature, which I think is what you are getting at. ($21 billion of the $45 billion for 2017 was negative tax expense)
To use a reasonable neutral third party, JP Morgan estimates ~$28 billion for 2019 ($5B investment income, $2B of underwriting = $7 Billion insureance + $29 billion operating+$4 billion investment gains +- some other crap for $34 billion of pre-tax income less $6.6 b of taxes = $28 billion of earnings), with upside in the event of deployment of excess capital.
I think Berkshire is safe and relatively cheap and it is my largest position (and my family's). $45 billion of earnings ain't happening (unless the stock portfolio zooms up, which you wouldn't capitalize those earnings)
EDIT: What I mean is that $45 billion of operating earnings ain't happening any time soon. Because of the accounting changes made recently you could get there with stock value change, but that's not the same thing. Overall, I think longinvestor just took 2017 GAAP NI and did not mean it as a representation of anything more than that, 2017 NI.
Look through earnings are ~$12b—so plus op earnings—let's call it around ~$35b total.
Berkshire is trading around 13x earnings which seems like a fair deal to me.
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Katherine Graham's autobiography is pretty good. Just finished it.
Same here
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Robert Caro's LBJ series is phenomenal
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Very interesting. I asked because I know some people who bought there in the last few years, and the story was similar to yours.
It's been a couple years since I was in Detroit, but I was going there about once a month for a few years there. Every time I came back, new things were opening and development was occurring. But there was still A LONG way to go... How are things coming along these days?
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Hey all:
My apologies for not updating this thread like I said I would. I fully plan to make some very interesting updates in the days to come.
I have learned some SHOCKING things since the last update that I made. Some things that have shaken me to the core. I will share a couple of them today, and perhaps the 3rd one at a future date.
A). When I was in high school & undergraduate, I lived in a co-op along the Detroit River. This is a high rise building that is just under 20 stories high. It is a very nice building, with a manned desk 24 hrs. a day, access to the property is controlled through a manned guard shack. The building is a "luxury" building with a heated pool, restaurant, grocery, gift shop, beauty salon, work out room in the base of the building. There is heated parking (important in Detroit) with a valet along with "regular" parking in a parking structure or lot. The building is on right on the Detroit River with spectacular views of it, Belle Isle, Canada, and downtown Detroit. My Dad lived there and owned a few units for about 20 years. He might have lost a small amount when he sold & moved back around 2006 or so...in 2008, the market collapsed and the co-op had trouble. A few years ago, the vacancy rate went to around 35% or so. This would have been 2015? It got to the point where a few units were given back to the board. The owners simply had moved on/passed away, and no longer wished to pay the monthly association fees. So they simply gave the unit(s) back and received a release from future payments. THAT IS IT! Units were worth almost nothing...
Keep in mind, that if this were in NYC or LA, or other major cities, the units might be million dollar places. The location is A+...the building is solid with luxury amenities...
Fast forward to today and the occupancy rate is close to 100%, about 98% to be exact. Units are now being resold for actual money. Prices are not high...but have come back substantially. When I heard that units were being given away in 2015, I figured there a real possibility of a death spiral in the building. With a vacancy rate of 35%+ the remaining owners monthly association fees went up SUBSTANTIALLY. It would be very unappealing to potential buyers...
HOWEVER, the market has turned, I thought there was a good chance it never would. There are vacant buildings very close to this building. It is very KRAZY that this situation even exists, as it is right on the river and about 5 minutes from downtown.
So that situation has turned around completely!!!!!!!
Situation number two is that there is now a commercial tenant in my Dad's old office building! It was sold in 2006 to a "developer" that never really managed to develop it until a couple of weeks ago. It sat vacant for 10+ years...the neighborhood has gone down TREMENDOUSLY. Many of the liquor stores have shut down. You KNOW things are bad in Detroit when even the liquor stores are shutting down! There are many burned out houses in the area. Further down the street there have been some marijuana stores opening/attempting to open. THIS IS A VERY ROUGH AREA, even for Detroit.
The tenant is a hair salon, and there are TONS of those in the area, and it is probably a low quality tenant...but they are in there and have a chance. The first tenant in 10+ years. There are still lots of vacancies and failed businesses, but there a few NEW businesses. Perhaps that neighborhood is having green shoots and starting to turn around? I never thought it would.
Finally, I saw a deal that was probably even better than the one I got...but that story is for another time.
1300 E Lafayette by chance?
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I was able to find their 13F forms, and just posted them if anyone is interested: About 50% of their portfolio is BRK
http://minesafetydisclosures.com/individual-investor-portfolio
And in case anyone needs a reminder, click on that link, pull down the Investor selection and under C you'll find Christopher Bloomstram. BRK.A = 19.1%, BRK.B = 26.4%. Combined BRK = 45.5% of their reportable holdings under 13-F. Everything other position is 6.0% or lower.
Haha thanks for clarifying, and sorry to all that it's a little clunky
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I was able to find their 13F forms, and just posted them if anyone is interested: About 50% of their portfolio is BRK
http://minesafetydisclosures.com/individual-investor-portfolio
EverArc Holdings-- a holding company with interesting directors
in General Discussion
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Howley is former Transdisgm CEO right?