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vince

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  1. You are using the word margin like it describes one state. Surely Munger, and us can differentiate when margin increases risk beyond prudence and where it produces no risk with some benefit. I like Buffett as much as anyone and quote him very regularly. However I believe I can think for myself as well and it's very clear to me that he contradicts himself occasionally. He uses debt in certain circumstances (significant amounts at the railroad and utility) and as another poster showed he was willing to go over 25% margin in his portfolio. But he always claims he never used any debt. What he should be saying is you give up some good risk free opportunities by never using it but you avoid using the one tool/weapon that can get a very intelligent person in trouble. He should also say it was ok for him to dabble in it when he wasn't filthy rich but now that he is he can afford to take a very rigid position that teaches others a valuable lesson by example AND separates him from the pack and helps build that perception of corporate loyalty to it's "partners" (which is absolutely genuine). If what Buffett claims about debt were an absolute certainty, then you can bet your life savings that Munger would either follow it or was the one that came up with it. Just the casual way in which Charlie claims he feels fine USING MARGIN occasionally up to 25% means that he has concluded that there is no risk in the specific situation that he is applying it to. Does anyone really think that Buffett carried Munger all these years or that now that he's 100, lol, now he potentially backed himself into a corner and he's going to let a business fail and throw away his image of genius at the last minute for a few dollars? Anyone that believes that has been studying a different Munger than I have. Buffett has been genius in convincing his loyal followers that Berkshire is 100% safe and he has many investors with all of their large net worth in Berkshire so it makes sense for him to back that up with his claims about debt...however he always claims that if there is even a 1% chance of something happening annually, that eventually it will happen. However that absolutely means that Berkshire is no safer than a dozen other companies, even some with minor amounts of debt. In other words there are events that have a very small chance annually of occurrence that would sink any business no matter their capitalization and there are NO EVENTS that would sink a fantastic business that has minor debt while leaving Berkshire intact. Buffett himself said that in 2009 if the govt didn't backstop the banks that Berkshire was going down. They would be the last to fall but fall just as surely. Anyone that thinks through that statement will see the contradiction. It's just not rational to claim that margin debt, or any debt should never be used. I'm certain that if Buffett spoke the truth when asked he would 100% claim that Munger increased his ultimate returns with no added risk. I am not trying to convince anyone to do anything but I guarantee that this Baba bet will without question improve their portfolio. I think it's hilarious that after all these years we have been given that rare opportunity where Munger swings for the fences, maybe HIS best pitch ever, practiced exactly what he preached in terms of a falling security he uses margin to do it, and any no nothing investor can buy the same asset for 40% cheaper than his average price. I think in this instance you are brain dead if you don't follow him in it. And I will conclude with this.....even if it turns out to be a negative return, you were absolutely adhering to the fundamentals of value investing with the probabilities heavily in your favor.
  2. The software business they are trying to compete in is fantastic. The problem is Tyler is winning and looks like nothing will stop them from continuing to win.
  3. Yes, I think its pretty obvious...you have a dominant business in a fast growing enormous market with somewhere around 20-40 billion of current earning power (if you shut off the growth investments and get through the regulatory challenges you are closer to the top end of that range) and at least 100 billion of cash type assets ( if you include their 33% ownership of Ant at a valuation of 100 billion which is 1/3rd of what the value was before the ipo was killed and the business forced to change). So let's do an excercise with lots of conservatism and see if Charlie has lost it or if he just sees something obvious. Let's assume Baba's margins take a beating and all their rapidly growing smaller cash consuming subs are burnt to the ground and they are left with only the commerce business, lets even get rid of the cloud which has consumed billions and is just starting to produce cash and will most certainly grow rapidly in a huge and expanding market. Let's burn it down as well. Once you strip out their initiatives their margins would have to fall further to bring them to 20 billion. Let's just assume they grow with Chinese GDP and say 5%. I think the odds are they will grow quite a bit more but we are being conservative. Additionally with a 300 billion valuation, 70 billion in cash and short term investments (it may be even more than that) and a rock bottom valuation of Ant we are really only paying 200 billion for this business. I think they have 20 billion in debt but who cares, they are paying interest to the lenders. So even after taking a flame thrower to much of their business by burning down all their subs (don't forget these are the ones they showered with cash presumably because they will get adequate returns) and impairing their margins further, we are understating the likely growth rate of their legacy business, we are also impairing their equity investment in Ant, and by a lot. After all that we are still getting a 10% fcf yield and some growth that gets us a 15% return. I'm not claiming everyone should put 30% of their capital in it there are some risks that are hard to get a handle on. But it looks to me things really have to fall apart here before your normal margin of safety is even touched. And if things move along LIKE THEY SHOULD, you have a trillion dollar valuation in 5 years without anything heroic anywhere with this business
  4. Spec, I have to respectfully disagree with this statement, haven't read further to see if anyone else responded but I studied Munger a great deal. Yes his returns were volatile but investors really have no control over this and should forget about trying to smooth this out as it will come with increased cost/lower returns. His average return over the period was fantastic and his portfolio was way less risky (true risk) than the average manager despite having a concentrated portfolio. Lastly he never goes over 25% margin and the math is such that it is almost impossible to get called. And even with a call it wouldn't take much adjustment (sell a security that has done relatively better or add some cash etc), seems like it is definitely worth it when you are skilled enough to achieve 20% plus returns over a long stretch that included one of the worst bear markets of the 20th century. I think Buffett is a better investor all around however I am certain that Munger's returns would have been higher. He concentrates more, uses a safe amount of leverage and can identify risk better than any human alive according to buffett himself. That is an extremely powerful combination. Then again Munger has never been tested with HUGE amounts of capital so it's possible his returns would be worse in those circumstances. Anyway, for my mind, assuming a 1 billion dollar portfolio, Munger and possibly Simpson (this man Simpson simply cannot be beat operating in an overvalued market) would outperform Buffett.
  5. Agree with MV, Siri is a solid business, it has some pricing power, it has content that others cannot replicate, and it owns the dashboard real estate for a long time. Penetration of Siri radios into new cars is still growing and churn is still falling. Those are pretty strong indicators that the business is resilient, people have been talking about the competition for many years and although I see potential headwinds farther down the road I see quite a few tailwinds over the next 5 plus years. In a few more years there will be 200 million Siri radios in cars on the road and they will attack the used car opportunity aggressively. They have also started rolling out their new platform which will give them all the data on their customers listening habits, they have been almost blind up until recently in that regard. And Malone is quietly gaining control of the music ecosystem which could possibly be very very interesting further down the road. But the real kicker is you are able to buy Siri at a 35% discount to net asset value or roughly 12 times economic earnings. So the free cash flow yield is quite a bit higher than it looks. If Liberty can get their hands on a large cash flow and buy back lots of stock at this discount, it's going to be a safe and highly probable home run. Just my 2 cents
  6. Based on some words by Maffei I think those investors hoping for the discount to close quickly may need more patience. I don't think that 80% will necessarily close the discount or even dent it. My preference is for it to take at least a couple more years as long as Siri continues to grow at least modestly. This will produce a fantastic result and give more time to the liberty team to take advantage of that discount.
  7. I have been having same issues and right now i cannot get to the main page, only a page that shows the most recent posts under the title "info center".
  8. Having owned BAM for some time now - the major insight I picked up that I did not realize: Many competitors (large banks) have completely exited this area, which I did not realize. I've always worried about too much dumb money coming in, just like the re-insurance business. There is plenty of competition - but the exit of these banks is significant and a strong advantage in my mind. The demand side of the business is pretty obvious, but the supply side is where my concerns are.. -- This business is not as easy as it may look from the outside. The other insight - Bruce Flatt is low key, but confident, and extremely shareholder oriented. He refused to be put on the pedestal with Berkshire and Buffett as an equal - in spite of an admiring and friendly crowd. This CEO is great. One important comment: In his mind, the value of the asset management side of the business exceeds the entire market cap of the company right now. In that regard, you just have to ask yourself is - if you trust the guy and is he competent? Don't be worried. What part of the business are you referring to when you say the banks have exited this area?
  9. Spek, you picked a good year to start your hobby. I agree with and am aware of the potential negatives of "too much" analysis but in my case, at least so far, seem to support my process. At 46, I get to do this full time having resigned from Deloitte 5 years ago. After spending 10 plus years saving and investing I was heavily concentrated in one stock who's price basically went sideways from 2011-2013 while they levered their clean balance sheet and bought back loads of shares. Every quarter their per share earnings would increase 20-30 percent, the stock would go down, I would continue studying and buy more (wanna take a guess? same industry). Anyway, good ending and of course, possibly erroneously, I attribute that success and others to the amount of reading and thinking and confidence that I developed with mgmt's based on what they said and what they DID. By the way, my process is telling me that CHTR (Gliba, Lbrda) is very high probability to, within 3-4 years, deliver my next 70-100 percent (this is only 3rd stock in 10 years where I acquired that level of confidence) and I have simply allocated accordingly. Notice how the return is not dramatic. But its the high probability with very low chance (imo, and I could well be wrong) of significant impairment (in that 3 year timeframe) that allows a concentrated bet and a fantastic financial outcome.
  10. Spek, not trying to change your mind or process and not saying how I do it is better. But I think the average investor would get a WAY BETTER feeling/understanding/grasp of the specifics of the business if they spent more time on it. Again, not saying this is better but besides reading k's and q's I spend probably 40-50 hours reading transcripts of conference calls and presentations (and actually much more with Chtr cause its a large percentage of my assets). And then at least another 15-20 hours researching and drilling down into things that mgmt said during the calls. I personally could never get a proper feel, or understanding of the business, or management just from studying the filings. I do agree there is a knowledge compound effect but that really just helps me get thru all the info quicker. It does not give me that (having a hard time defining the overall grasp that I get) overall specific understanding and confidence that comes with reading lots and lots of what mgmt says. Dont take this the wrong way but I could tell you didnt do the reading on Chtr based on your questions and comments, and thats why i asked. Again, Im sure some people do extremely well and are smart enough to get it without doing the reading (maybe you are, I am definitely not) but I believe that most of my ability and pretty good results come from that aspect. Anyway, not really any of my business but just wanted to share something that others may find useful.
  11. Spek, just curious, how many hours have you spent reading/analyzing Chtr specifically?
  12. I was under the impression that you didnt like Chtr
  13. Sure is a bargain. Spek, why dont you short it ?
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