Myth465

The dilution doesnt bother me honestly. Its more the fact that its a never ending cycle. When does it end. What happens if oil falls off a cliff? We are left with tons of debt, and hopefully it recovers in 2 years before our hedges run out. Yep that will never happen, oil is nin a bull market, blah blah blah. Sounds familiar - yes same story with gas. You cant keep selling 10% of the company every few quarters to keep drilling because returns look good now.

I agree, it looks like they are cutting costs and managing the business. I would like a revaluation now, but I think we are on the right track. I agree with you on asking the right questions, but I wish FFH would ask them some hard questions.

Like I said we need the street. The returns look good but Ward has to start practicing what he says. We are down 15 percent with oil rallying and Helicopter Ben promising to significantly weaken the dollar.

Yes he did.

Lol I feel its the right business decision but its going to hammer the share price. I am a screw WS kinda guy but eventually we will get no respect and will start to trade like CHK. Ward has to lay out a plan and start to follow. I agree on the CFO, doesnt seem like such a big deal if he is willing to ride out the year.

I agree but Ward has promised to live within cash flow, and to fund things with asset sales. Now he is issuing more debt which is convertible at $7, basically when does it end. It looks great but he did the same thing with gas and the bottom feel out. Now everyone is diving into oil (much bigger pool to play in though). I dont like the converts and would prefer asset sales and non convertible debt. 50% - 100% returns look great, but I want to see some hedges. I think he can talk his way out of the selloff if he gives them some modeling data. At some point you have to stop betting the farm and have to learn to live within your CF, especially when your capital structure is all screwed up. Anyone drilling for decent oil onshore is getting greater than 30% returns. My guess is the plan is similar to ATPG. Drill your way to a decent capital structure. It looks screwed up now but add in several thousand BOE of production and market cap and it starts to look much better. Its an interesting plan but not a prudent one in my opinion, to his point no one ever said Tom Ward was prudent lol. Aside from the debt I like the quarter. I would have preferred to see $250 million in assets sold.

I would guess its the debt issue.

Thanks again, one day I will remember this.

Not sure how I feel. I was hoping the share issuing days were behind us. I wonder if the private placement was with FFH. I thought these guys finally got it, but it doesn't look so. WS wants them to live within cash flow.

Parsad, are you raising cash or do you feel the recover is real and cash is trash right now?

I think these are good ideas, but I cant play this game very well due to limited time. I prefer to find deep value with a catalyst and buy with options or shares, alternatively I hope to find good cheap companies which I can hold for quite a while.

ValueCarl this appears to be the only topic you are interested in.

Did anyone say granularity or color? Lol Its all about the model. Sometimes though they ask pretty smart questions (main drivers to watch) and I learn something.

BYD is of much lesser quality than the rest. I used to work for CGX which was a roll up of print shops started by an accountant who used to work at Aurthur Anderson. Very interesting story. Not a high quality business, but one in a mom and pop space. The guy was able to roll up a decent chunk of the industry and became filthy rich off of it. I sold BYD a few months ago for a decent gain, only to watch it move up 15% + dividends. It was sold to raise capital for doom and gloom and due to the fact that the new tax on trusts has eaten through some of the margin of safety. They have tax loss carryforwards but from a valuation perspective these will be eaten through and they will have to pay up 30% of taxes on earnings / divs. They keep buying assets though and will grow through this. I regret selling and may buy back should we see a sell off. I included it because Management owned a significant amount of stock last time I checked. Business Background Boyd Group is a multi-shop operator (MSO) of auto collision repair stores. They are the largest MSO in Canada and among the largest in North America. They are a roll up business which is something that is very easy to understand. I believe they have a lot of growth options and should do well overtime. Investment Description ○ Investment Analysis - Boyd is a growing rollup organization in a highly fragmented industry. They distribute 27% of their earnings via distributions, have very low leverage, are reasonably priced at 6 - 7 FCF, and grow a bit each year. The only major downside I can see is 30% of their earnings will soon be subject to tax due to changes in the income trust lows. Filter #3 – Does it have management I can trust? - This was written about 9 months ago. Sense then Management has grown on me. I like the way they talk about things and how they report. I also like the acquisitions they are making and the way they are being financed. Management owns 17% of the stock and appears to have built a nice little company. They have been at the company a while and had 1 slight blow up with the Gerber acquisition. They seem to have learned their lesson and now carry very modest debt. I don’t really know Management, but so far I like what I see and they have skin in the game. http://www.valueinvestorsclub.com/value2/Idea/ViewIdea/23468 http://www.boydgroup.com/i/pdf/2010AGMPresentation.pdf I heard about it on a VIC writeup and liked the idea. Accidents happen and insurance companies like for owners to go to a dealer they know. Everyone knows someone who has taken the insurance company for a ride using their own repair guy (at least I do). I like names like these and tend to collect and watch them (BOBS is another one, but its a fast food Brazilian growth story). The small cap ones get crushed when the market pulls back massively and I will be waiting to buy these owner managers. As long as they stick to their knitting. --- Right now I feel that the market will be very volatile and I want to hold onto cash. Due to this my core group of owner managers focuses on ones which are overcapitalized and can invest counter cyclically. In a pullback they can buy low. FUR (though they keep running through cash), LRE (via buybacks), L (something like $4 billion in cash), FFH (will buy back one day), SSW (strong backer), LUK (as Parsad said, the elephant gun is reloaded) are the main ones I either own or will own soon. I dont mind getting screwed. Its a part of life, but I have 2 rules - I wont to know how I got screwed so it doesnt happen again, and I would prefer for the person running the business to get screwed even more. I want him up at night worrying about not getting screwed so I can sleep peacefully. The only way that happens is if he has skin in the game. I know Prem thinks about FFH way more then I care too, and I like that. I hope to have a sable of these, 10% cash, and a handful of deep value investments. Just have to get around to writing it all up and repositioning. The problem is I like my winners.

Its many of the names listed in other similar threads. What I want is a business lead by a strong capital allocator who owns a chunk of the business. Everything else is a value trade. For me he doesn't have to us float. There are 100s of businesses and as long as he is investing his capital along side mine, sees a margin of safety, understands the business, and either is Management or trusts Management then I am fine. Companies like - L, SSW (though they screwed us on the preferreds), LRE, LUK, BYD.UN (owned a bit back and may rebuy), FUR, LRE, FFH, BDVSY. Even a company like ATSG may eventually get there given how they are doing in terms of running their business. Buffett is a genius not because he uses float, but because he can understand dozens of different businesses and knows when to stay the hell away (Tech). Ashner knows realty. Why knock him because thats all he knows? LUK knows distressed. If a guy can make me money buying realty or land / distressed companies why the hell do I want them using float? If they can then great, but if not, I am not going to move on. Doesnt it all spend the same? For me I want these companies, I want them quality, and I want them Cheap. If the Management is strong and smart I will even hold them when they are slightly overvalued (if I cant find much else) because a smart Manager will use expensive stock to buy stuff. I dont care if its in Insurance or not, as long as they know what they are doing and stick to their knitting.

Just finished this. Its outstanding and should be required reading for investors and citizens. Grantham would make an awesome Fed Governor.

Interesting ATPG trades. I need to start splitting the difference on debt and shares in distressed situations. The same move worked quite well in FBK. I held common in both and got left holding the bag to some degree.

I would say the answer is liquidity. We do agree though Scorpion that most owner managers / investors are doing the same.

What are his top metrics? What does he do in a soft market, with low yield - When insurers are trading below book? Is it undersexed man on craiglist time or time for cautious? What are his thoughts on prior reserve releases, when will it end? What does he think of LRE, are we missing something?

Brox this is my major issue with the elections. It seems like we are just oscillating between a set of incompetent leaders. I dont know if David Cameron is going in the right direction or not but would support him because at least he makes sense, and is making moves. -- twacowfca / Bronco - I thought it was myopic (to view politics from an investment perspective, instead of more holistically) not irrelevant. It may happen, it may not but I dont think it will make much of a difference if our pressing long & short term issues arent hammered out.

How is China ganna buy more. They make peanuts in purchasing power and we dont excel at making cheap crap. They have to let the currency rise to increase purchasing power, but that kills their competitive advantage. Its a tight rope. They have done great at navigating the trade war (helped out by idiot free traders) but they are running out of options. China has an artificial peg which doesnt allow for market adjustments. This has to be stopped. Anything else is just selling out America for ideology inmo. How is it free trade if one country has prevented the free market pricing of its currency? Bronco - My point was that one piece of legislation is peanuts compared to the gridlock we will see on major issues such as Climate, Debt, Taxes, Spending, Entitlements, and lack of growth in a must have growth world. Its like picking up a quarter when someone is taking a $20 out of your back pocket. It feels good but is largely irrelevant compared to what else is going on.

Lol I think its a bit myopic to look at elections from an Investment perspective. I predict massive chaos and more ineffective government. We will likely get higher spending and more tax cuts. Basically more of the same. Things will change when they have too, not when they need to inmo.

I think everyone is a bit too focused on insurance. I know at least a dozen companies that have great management which allocates capital to cheap assets that they understand.

I think these things are always going to be a moving target. For me I print out tons of paper everyday and got an interesting document which was 200 pages. My eyes are killing me from being on a PC all day and having a rough weekend. I am starting to worry about killing so many trees. The ereader will allow me to read offline quite a bit more and read more at night. I doubt I buy more then 1 or 2 books. I went with the Kindle because it just seems slicker then the other devices, and will do what I need it to. My only concern is PDFs but its not really for annuals or anything like that.

I have seen all this before but he has really tied it all together nicely. Makes one wonder about allocating too much to resource plays.