Gregmal

Maybe I’m missing something but given the name of his site and blog this seems like more of a “product” selling platform than a real money management operation. Don’t judge a book by its cover, maybe, but I would never think putting money with a firm called optionseller.com or whatever was prudent. This guy got his Rolex selling product and that product blew up. Not an uncommon story on the street.

But why would it be? IIRC that was also the argument the Winklevoss dudes used and also arrived at roughly a $350K BTC price. I have no idea, ask SharperDingaan, he is the one who used this weird equivalence to argue that BTC was overpriced.

Home Depot is just plainly a great business. A chimpanzee could run it, with outsized returns. FFH IMO is a business that is what you make of it, with a very astute manager. The problem is, even great managers can make mistakes and be wrong. I don't know how you can f*ck up Home Depot...

I personally feel like if everyone says "recession" enough, it will force one to happen. Kind of like Beetlejuice. Same shit's been going on with auto now for half a decade...

A tragedy! https://www.cnbc.com/2018/11/14/michael-avenatti-stormy-daniels-attorney--reportedly-arrested-for-alleged-domestic-violence.html

I've taken another tack, and that is to limit myself to a modest update on the news for the first 7 days of each month. Ditto for Twitter & I found myself not even wanting to visit there this month because it's so full of inflammatory nonsense. Spending nearly a month with your head in the sand is liberating. I highly recommend watching re-runs of Rowan & Martin's Laugh In to see how nothing has changed since the 70's. The absurdities are pretty funny when framed by great social satirists. The Obamas thread was about divorce... and only highlighted the Obamas as a great example of a couple who makes it work. Nothing political about it.

So in summary what I get, is that just like most value investors, Berkshire is sitting on too much cash and being way too frugal and nitpicky about buying stock.... Like most value investors I'd gander they underperform going forward. A good example of the cure here would be AAPL. When did they really turn a corner? When Einhorn and Icahn forced them to start deploying excess capital.

https://www.cnbc.com/2018/11/01/einhorns-greenlight-scores-small-gain-in-october-investor.html So he got the market annihilation he's been hoping for, and to boot his top long(AFAIK), finished the month +9%. And the fund did 1%! Every month Greenlight finds new ways to surprise me.

In all fairness, they must be pretty creative to keep finding ways to get clicks and views. You'd think after a while people would get tired of it, but a lot of the networks know there is an insatiable desire from liberals for a lot of this. Like Jim Acosta for instance... let's see, how many times do we need to see the well rehearsed posturing, the grandstanding, and then predictably, without fail, 100% of the time, some anti-Trump, "gotcha" type of question or comment? That and the sound bites with no other purpose than to grab headlines. I was watching The Circus on Showtime and one of the episodes was showing the liberal mob following around Jeff Flake trying to persuade him to drop Kavanaugh. Some whackadoo granola eater runs up to him repetitiously pouting "but what do I tell my granddaughter?", "does she not matter?" and it's like "what the f*ck does any of this have to do with your grand daughter? you moron"... Or the elevator screamers, ""Tell me I don't matter!!!". Uhm.... Whatever issues you may or may not have had with sexual assault have nothing to do with this.... Crucifying a man without due process or even any legitimate evidence of ANYTHING isn't going to solve whatever mental issues you may or may not have from allegedly being assaults. But hey, all these sound bites get views and clicks and followers, so why not? My point, in relation to numbers I guess, is that they have no desire to be accurate, or get it right. They're careless on purpose...

I can't put a finger on one specifically but MSB IMO should re-rate to $40+, with $3.50+ in distributions along the way.

LOL

My sense is that some of these institutional investors just love diversification so much that they will happily put a portion of their funds in almost anything as long as its returns are expected to be uncorrelated with what they already have in their portfolios. More generally I think it’s a good sign that you are asking these questions. It is IMO worth spending some time studying the behavior of these investors, as they tend to be big suppliers of market inefficiencies that good and nimble value investors can profitably exploit. This is kind of what I've been told too. That's why, as great as Jim Chanos may be, institutional managers just relentlessly throw money at him so they can call themselves long/short... Hi Greg, thanks for the reply I have got a question. So are you sayin that instituitional investors do not really have a defined plan on how they deploy capital? Like, they don't care about the quality of the investment funds they are investing in, and only care about the generalised strategy that the fund is using? It's not a one size fits all answer but the crux of a lot of them now, simply because of how easy it is to raise obscene amounts of money, is definitely more skewed toward finding something marketable. I've heard a bunch how despite Chanos's numbers actually being quite poor(IIRC someone said he's lost about 4% a year on average since the early 1990's) he continually gets allocations from funds because it allows them to claim they have a diversified or long/short strategy. That alone probably raises millions despite these people knowing if history repeats, they're allocating money to a losing venture.

My sense is that some of these institutional investors just love diversification so much that they will happily put a portion of their funds in almost anything as long as its returns are expected to be uncorrelated with what they already have in their portfolios. More generally I think it’s a good sign that you are asking these questions. It is IMO worth spending some time studying the behavior of these investors, as they tend to be big suppliers of market inefficiencies that good and nimble value investors can profitably exploit. This is kind of what I've been told too. That's why, as great as Jim Chanos may be, institutional managers just relentlessly throw money at him so they can call themselves long/short...

I can simplify it for you in a way that many here might not like. Anyone managing more then a maybe low 8 figures is a salesman or employs one. Whatever strategy will raise assets is what they sell you. They get rich not by trouncing the market but by charging fees, and by the time you get tired of the pitch they've acquired their pound of flesh.

What do you consider cheap for RE companies? Do you base in on cash flow or earnings? Most important for me is sum of part for RE, provided it's got an honest management and/or capital structure that would allow a third party to come in and take it. Cash flow is great, but can be hidden, earnings don't mean much IMO. Being able to have someone see a discount to SOTP and swing in and take it out are the margin of safety.

I'd say moving to slightly negative on a YTD basis does nothing for how expensive the U.S. market is When earnings are growing, balance sheets are in good order, and you have a stab at top notch companies it surely does. It's not like you can go to Turkey and find yourself HHC. If you're talking about just plain "cheap" investments... sure, look elsewhere. If you want high quality businesses/brands, the US is quite reasonable now compared to prior years... Earnings grow until they don't. I'm looking ahead. The tax cuts gave the U.S and extra boost, but we're likely at peak levels of profitability here. The next 2-3 years will be significantly harder for the U.S. companies to continue profit growth - especially if the USD keeps rising. Add to that the rising interest costs as record amounts of debt are rolled at higher rates, and less of actually being qualified to deduct against profits and forward profit growth becomes difficult. Then again, we went through and incredibly long earnings recession back in 2015 and no one cared so....maybe they won't this time either. I guess part of my point is that even if growth stops, buying some of these businesses at 8-10x is pretty damn reasonable. Like you said, earnings went down in 2015... as long as they don't fall off a cliff, many appear to be bargains IMO. I don't see the fed boosting rates much further from here.

I'd say moving to slightly negative on a YTD basis does nothing for how expensive the U.S. market is When earnings are growing, balance sheets are in good order, and you have a stab at top notch companies it surely does. It's not like you can go to Turkey and find yourself HHC. If you're talking about just plain "cheap" investments... sure, look elsewhere. If you want high quality businesses/brands, the US is quite reasonable now compared to prior years...

Thanks, will take a look.

I saw your post on NVR, which I'm looking at now after looking at the single-family building materials companies (BLDR and BMCH) and concluding that they are poor businesses (and in BLDR's case, over-levered). I've also seen you post about FRPH, which I've followed for some time. Any others that you believe are particularly attractive right now? Will open up the book a bit because I've found you to be a high quality contributor to a few ideas I also follow. In no specific order or size; NVR, FRPH (as you've seen) MSG, GM(glutton for punishment), CTO, NXPI, BX, GOOG, XPLT(not really down a lot but GARP IMO), IBKR, AAL(sub in an airline of your choice, I happen to like the shittiest one), CLF(holy f*cking future cash flow machine w/ DTA's)+MSB, and MX... Can get into more detail later but didn't want to write a book write now... Thanks for sharing. I've owned XPLT for years and agree it seems reasonably priced despite the run up over the last year. Given your interest in FRPH and CTO, have you looked at Howard Hughes? It's been written up enough that I'm sure you know the story. I own it for the underlying asset quality (Ward Village and the Seaport in particular, but also the Texas and Las Vegas MPCs, which I believe is a business model that improves over time as the development matures). I don't know whether it's cheap right now, but Old Dominion Freight Lines (ODFL) has long interested me as a high quality, well run business, and it's also down significantly from its highs. HHC is probably front and center on the buy list. I always seem to have an over-concentration in RE stuff and as a result have put off buying it. I have also felt it was a tad overrated(maybe ahead of itself is a better choice of words) the past couple years but do agree; as of right now it's served it's time in the penalty box and should do well from here. More broadly speaking though, it just seems everywhere I look you can find good businesses now trading at low-mid teens multiple and many in the single digits. The tax cuts are a big reason, but even rolling them back, I see many opportunities to own things that years ago traded much higher. Coming back to HHC, 5 years ago it traded around 110... GM ex-Cruise trades at like 2-3x. NXP 8x despite being square in the middle of some major trends. GOOG now looks like AAPL a few years ago. It just seems like the market is saying all these things are going to hell. If things stay the same or even tail off moderately I think there's outsized gains to be had. I could always be wrong though.

I saw your post on NVR, which I'm looking at now after looking at the single-family building materials companies (BLDR and BMCH) and concluding that they are poor businesses (and in BLDR's case, over-levered). I've also seen you post about FRPH, which I've followed for some time. Any others that you believe are particularly attractive right now? Will open up the book a bit because I've found you to be a high quality contributor to a few ideas I also follow. In no specific order or size; NVR, FRPH (as you've seen) MSG, GM(glutton for punishment), CTO, NXPI, BX, GOOG, XPLT(not really down a lot but GARP IMO), IBKR, AAL(sub in an airline of your choice, I happen to like the shittiest one), CLF(holy f*cking future cash flow machine w/ DTA's)+MSB, and MX... Can get into more detail later but didn't want to write a book write now...

At some point Musk will have to decide whether it values having a real business, versus a temporary valuation on it's shares. One is sustainable if managed right, one isn't.

A lot of carnage, but there definitely isn't much IMO for the "stocks are expensive" crowd to whine about anymore. Obviously this is predicated upon the tax cuts staying in place, but there is more high quality stuff for sale right now than I've seen in a LONG time. Valuations probably on par with 2010-2012, if not better in many areas.

I've always thought TSLA would be wise to buy a real automaker if nothing else for the synergies, distribution network, and oh yea, profits. Doing so would all but eliminate most of the major risks Tesla faces. That said, I understand they seem to be allergic to profits, so they continue to choose the path most perilous.

The interest rate whining is absurd. Trump is right that it's cooling the economy a bit, but that's the whole point. But there's a lot of stupidity out there otherwise. People sent the real estate market through the roof a decade plus ago buying homes at 6% rates. A decade earlier they were over 8%. So yea, the bozos bidding down homebuilders to 5x earnings because of 5% mortgages? Pure stupidity. Otherwise, this is largely IMO the product of the people at CNBC needing something to talk about. Also, god forbid savers finally get some interest! It's been pretty well documented that the Fed really doesn't have a clue what it's doing, and that people claiming to be calling a top, or "peak cycle" are full of shit.

BX, FRPH