Myth465

GAAP is its own little beast. Im sure they have good reasons for how they choose to account for things. Either way I just focus on cash flow, and capex. I think SD is down because it ran more than any other oil company. Even down 30%, its still up 100%. With regard to hedging in general I think you have to look at Ward's argument and the other side of the coin. When you have massive amounts of debt, you really dont want to be at the mercy of oil traders and global economic whims. As I said prior. No hedged gas, and a bankrupt or taken under company. $87 seems low, but its light years away from the $60 and $70 we were getting last year. Buffett said that basically it all evens out overtime, and by hedging inputs you sometimes win and sometimes loss. Over the long term you loss because of transaction costs. It makes sense for consumer of resources but isnt gospel and doesnt really address this situation (debt and covenants generally require hedging, banks want to be paid regardless of the price of oil).

Hey VAL9000 what other boards do you frequent. I have never seen so many value added posts. Thanks for your inputs here and in a few other threads.

Keep in mind that nat gas went from $14 to $4, where is sits today. Oil also rapidly dropped to $45 during 2008 from $140. SD would likely be bankrupt were it not for the nat gas hedges. I need to listen to the call, but I hope we have hedged a chunk of oil out 3 years or so over. Cost are fixed, debt is high, and rates of return exceed 100%. Why not hedge a bit in this jittery environment.

Thanks. I enjoyed this.

You 2 love this game ;D

The biggest issue with his thesis was the word relative value. Its such a dirty word. WMT, HD, JNJ, and a bunch of other companies feature the same story. He is right about one thing though. MSFT is an amazing company, the more I think about it. Their competitors give the products away for free and still cant win, talk about a moat.

You can do alot of things with them. The main thing you have to realize is your bet must be right with respect to time, and price. I am pretty sure ATPG will hit $25 - $30. Will it be before my options expire I dont know. You could also use puts to hedge or short, and finally you can use options to take a smaller position. You can get similar upside, with less cash out-lied if you go deep in the money. The best options situations are when there is a hard catalyst. A court case, a spin off, something. A good example is the oil and gas moratorium. Oil stocks in the gulf sold off 50% - 65%. The moratorium was 6 months. You could have bought 2 and a half year leaps on drillers, producers, and services companies and waited it out. Once it ended the prices of the stocks would reflat. You want situations like those inmo. There are probably dozens of ways to use options, but thats how I use them.

I think deflation is a nightmare for the west. Its not bad for us. We presumable have more assets than liabilities (and probably liquid assets), but it sucks for Joe inmo. It also kills the fuel which has lite the match of the US economy, Consumption. An ever growing pile of debt against a fixed income sounds terrible.

Only 2 books have added value for me. Joel Greenblatt - You Too Can Be A Stock Market Genius. Micheal Lewis - The Big Short (The intro paragraph on Cornwall Capital). I have learned quite a bit on this board as well. Also options are very danagerous. I lost a significant amount of money with options during the financial crisis. Its all been made back, and a good chunk of that using options. My advice is start small, go long term, and make sure you really understand how they work. Its really just leverage, very cheap leverage. Which makes good deals great ;D, and bad deals make you want to jump out of a building. I use an extremely simple option strategy. I buy calls on asymmetrical bets (will buy some on MBIA one of these days), and I buy calls / leaps on undervalued securities when I am sure there is a catalyst or they are too cheap to pass up. Typically deep in the money or at the money. Of your holdings the only one I own options on is ATPG. Think about where they will be in 2013, then think about the share price, then think about the risk (Management, debt, oil prices, and hurricanes). Then place your bet. If you are right with options you could make 3-4 times your money. Wrong and you might lose half vs. flat to 15%. Once you add a time factor to it, I think you are gambling. Gamble intelligently / sparingly / and carefully (I should take my own advice)....

I believe so. I think the major piece of the argument though is delevering and lack of access to credit and debt which has fueled growth for the better part of 30 years. It has also masked the lack of a raise for Joe Six Pack. Joe is now paying off his debt. I believe Buffett is dealing with a failing dollar and higher import costs, which is what the Fed wants to fight deflation. Thats my 2 cents. So many inputs which all intertwine. Poppy is a pretty funny name, though I guess my name is pretty funny. Parsad, what do you read and what economists do you like? Everyone has a theory, its so tough to sort these things out, but quite interesting nonetheless.

oec2000, I agree with your comments in regards to the general public, but dont think they apply to most of the members of this board. Most people seem to call it how they see it, and appear to be well informed with regard to politics, economics, and investing. The differences seem to come down to world view / personal experiences as far as I can see it. Also we use labels to summarize, and deal with massive amounts of data. People, animals, things, hobbies, always tend to be grouped. We here are a group of Value Investors. Though it doesnt mean we hate growth, or any of the common stereotypes. Its just a way to synthesis info. A neocon has few things that they tend to do, as does an American, or a rabbit - but I dont think people expect no deviations from the basic traits for these labels. I dont think Ucc's wife actually believes Harper hates women literally, just that his policies are very anti women. I dont think Republicans literally hate the working man, I just dont think the policies really help out the working man. (Also I was referring to the developed world in my example, I think it works well enough until you reach a certain wealth, many of the developed countries feature a negative growth rate.)

I primarily see a dominate player in a market that will always be around. 5 years is a long time, and anything could happen. if I had to own a stock without trading I would want something with few competitors. I kicked the tires on it and read the VIC writeup, I also really liked another company which was similar though much smaller. I passed on both due to housing weakness, and low current but depressed FCF yields. I never did a deep dive or reviewed calls, but I liked the suite of products and comp dynamics. Mastercard is probably a better example. I prefer deep value. But there is great risk with deep value. I couldnt imagine owning FBK for 5 years as my only stock.

Myth - Isn't the transcript only for the Sokol part of the Q&A alone? Am I missing something? I havent checked it. About 4 have been posted on Guru focus. I am working my way through those. I think between the 4-5 on GF and the Berkshire site + the videos and interviews its all out there.

Damn that was rough. Obama has a good sense of humor, or some excellent writers. He looked so pissed.

Its just a word man lol. Most neocons call themselves neocons. Its not an evil thing just another ideology like Liberal (which has been turned into a dirty word lol) or Libertarian. Did someone call you a Neo con last week. I think it rubbed you the wrong way. Most of the professional left (think Nadar) would say this is simply a kindler gentler Bush Administration (I tend to agree, except for healthcare). He doesnt fall into the Neo Con label because of the way Libya was handled. Contrast Obama vs. what McCain wanted and vs. McCain's criticism. --- After watching a few news updates, it appears that it was an Historic night for you guys. Congrats Canadian members.

Coined / Embraced by the Great / Infamous Irving Kristol, who is the father of Bill Kristol a very prominent Neo Conservative. It has a sinister ring to it, but that ring is well desvered though lol. Neoconservatism in the United States is a branch of American Conservatism that focuses on foreign policy, where it proposes to use American economic and military power to bring democracy and freedom to other countries.[1] The movement emerged in the 1970s among Democrats who were angry at the party's move to the left especially in foreign policy, and played a major role in recent Republican presidential elections. It is notable for its support for Israel and its deep interest in the Middle East. ---- The first major intellectual to embrace the term, Irving Kristol is often called the founder of the neoconservative movement. Kristol wrote of his neoconservative views in the 1979 article "Confessions of a True, Self-Confessed 'Neoconservative.'"[2] His ideas have been influential since the 1950s, when he co-founded and edited Encounter magazine.[9] Another source was Norman Podhoretz, editor of Commentary magazine from 1960 to 1995. By 1982 Podhoretz was calling himself a neoconservative, in a New York Times Magazine article titled "The Neoconservative Anguish over Reagan's Foreign Policy".[10][11] Kristol's son, William Kristol, founded the neoconservative Project for the New American Century. ---- n January 2009, at the close of President George W. Bush's second term in office, Jonathan Clarke, a senior fellow at the Carnegie Council for Ethics in International Affairs, proposed the following as the "main characteristics of neoconservatism":[43] "a tendency to see the world in binary good/evil terms low tolerance for diplomacy readiness to use military force emphasis on US unilateral action disdain for multilateral organizations focus on the Middle East an us versus them mentality". ---- From what I can see, the term fits to a T, its not a bad word per say..

Sounds great in theory but it just cripples your economy one way or the other. Either smart working women stop having babies due to opportunity cost and your population declines or is diluted by immigration (Northern Europe / Japan), or you lose half your talent pool via one parent staying at home. I dont plan on having kids, so its cheaper for me not to have schools, colleges, day cares, or to subsidize any of those things but it would suck for the economy / society long term. I mean the best and the brightest wouldnt have many kids or wouldnt work as much. That leaves the rift raft to populate the country. This is my major issue with Libertarianism (I used to call myself one). Its all about me, they want their person freedoms even if it imposes tyranny in externalities on everyone else (example no roads, police force, or fire force, because taxation is stealing and impeding on freedom). These things can go too far either way, but thats where common sense comes into play. Asia is using common sense. I feel like the West (mainly the US not sure about the others) is wedded to Dogma. Southern that last rant wasnt directed at you, I thought it was a good and legit question.

Bronco and you are fine with what Sokol did? Interesting stuff (and I am no fan of Hokey).

Very interesting point, and something I have neglected till now. Value is its own catalyst but......

Im not sure if I am lol, but I agree. This is funny it could go so many ways, care to elaborate. Also I have really been looking forward to this, these guys are great. Quite witty. I need some other hobbies...

Thanks T Bone. I trust Aubrey McClendon now, he has a lease on him with Ichan and Longleaf. I think you got to give guys like McClendon and Ward space to perform within reason. They have both added tremendous value. I am a natural gas bear for 5 years or so. After that all bets are off. The logical thing is to switch all coal plants to natural gas and develop natural gas as trucking and vehicle fuel, but we are still doing ethanol so ..... CHK is probably one of the most hated stocks in the value community because of McClendon. That margin call has created alot of negative goodwill lol. SD is dominating my portfolio, not sure what to do. Hopefully the 5th is a good day. I would like to see more trusts, a JV, more hedges, and more wells. Get it while the getting is good, oil wont be at this high the whole year inmo.

Split from Airborne when DHL bought Airborne. Was spun out because DHL cant own an airline. They lease plans and also fly / fix them, a pretty boring business. $200 EBITDA by end of the year vs. $500 million market cap. No taxes for a few years, ok leverage, good management, and long term contracts. I think $16 is possible based on $200 million ebitda, if they grow over 5 years who knows. --- Aside from that I would like something monopoly like - Corelogic, Mastercard; or something with a good owner manager with a huge amount of capital tied into the investment - BRK, FFH. Sleep and return of capital are more important then return on capital. FFH out side of large cats I guess is the most defensive company I can think of. If I were looking for a home run I would do SD. 5 years, no changes, 1 investment, 100%. I would aim for a single or double and just hope to stay on base.

Im enjoying this. Im so used to hearing about American crazies, its nice to know other countries have these same sort of debates.

Honestly I am sticking with Grant. I would rather get fleeced in America, Europe, the UK, and other parts of Asia then deal with the Corporate basket case that is Japan. People are going nuts because a market is down 20% or so. Good Luck guys. Value is sometimes not enough, in terms of a catalyst.

Joe is growing on me. Hes annoying, but I dont know. Over the 3 years or so I have been watching I am starting to like him. His dumb persona allows him to ask questions I would want to ask, but wouldnt because I dont want to appear dumb. I hope that makes sense. He definitely was a wedgie giver, I am guessing you were the smaller kid? I was the guy watching saying damn thats screwed up, but better him then me....