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claphands22

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    For All of You Sears Holdings Longs!

    in General Discussion

    Posted

    Thank you for the feedback and the detailed responses.

     

    The non-gaurantor subsidaries are profitable, but how do you know the non-gaurantor subsidaries would be profitable without the gaurantor subsidiaries being operational?

     

    It currently costs over 12% to short and there are no shares available.  Why would someone want to spend so much money to short this company, if they didn't think the long thesis was empty? There is plenty of public write ups about this company's hidden value** 

     

    http://1.bp.blogspot.com/-1p6eLoo9FJ4/Uh2x_E3pfpI/AAAAAAAAAb8/95_YJpxS3ZU/s640/SHLD+cost+to+short.jpg

     

    ** http://seekingalpha.com/article/1509142-sears-holdings-valuation-between-berkshire-hathaway-and-bankruptcy

     

    ** http://www.fairholmefunds.com/sites/default/files/120815%20SHLD%20Presentation.pdf

    For All of You Sears Holdings Longs!

    in General Discussion

    Posted

    I have been working on this and I am confused.  Here are some questions.

     

    1. How do you figure out which subs are part of the Gaurantor and which are part of the non-gaurantor?

    2. According to the bond prospects, it reads as if the only collateral they are able to call on are the inventories and receivables, not the real estate. Is that right, can a bond only have collateral from one part of a company and not the whole? (page 22. http://www.sec.gov/Archives/edgar/data/56824/000119312511205132/d424b3.htm)

    3. When looking at the separate balance sheets offered in the recent 10Q,  I am trying to figure out what the balance sheet would look like if the gaurantor subsidiaries went bankrupt and the shareholder was only left non-gaurantor and the parent.  Do you only need to factor out the intercompany loans and inter company investments?

    4. Looking at the intercompany investments, looks like the gaurantor made investments into the gaurantor, how is that so?

    5. Why is there there 4.4B in PP&E in the gaurantor and only 1.6B in the non-gaurantor? Is all the good real estate in the non-gaurantor? If so, how can that happen. Can anyone explain this?

     

     

    February 2nd 2013 Balance Sheet

    http://1.bp.blogspot.com/-eFUF8_8hkA4/UhtBkK7XfHI/AAAAAAAAAaQ/H1r3SbyKRHc/s640/Feb+2nd+2013+SHLD+balance+sheet+with+guarantor.jpg

     

    26 weeks modified income statement February 3rd

    http://2.bp.blogspot.com/-9oPlWHBf9OY/UhtCghi5ukI/AAAAAAAAAac/TtOGOolAX98/s640/modified+26+weeks+ended+august+3,+2013.jpg

     

    26 weeks modified comprehensive income statement February 3rd

    http://2.bp.blogspot.com/-UkpjtqYrR0I/UhtDvoqe_FI/AAAAAAAAAao/gxPv9eFC97A/s640/modified+26+comprehensive+income+weeks+ended+august+3,+2013.jpg

     

    26 weeks modified cash flow statement February 3rd

    http://3.bp.blogspot.com/-CA4laoYOuMg/UhtEhIHM4oI/AAAAAAAAAa0/jYn9NLgDMeY/s640/modified+26+comprehensive+cash+flow+weeks+ended+august+3,+2013.jpg

     

    Interesting SEC file. Any help would be much appreciated!

     

     

    mReits

    in General Discussion

    Posted

    I'm definitely interested in NLY, but I can't figure out how much to pay for it.

     

    How much do you pay for a bunch of levered mortgage securities that are managed by somebody else? How do you make a reasonable estimate of their EPS in the next 5 to 10 years?

     

    NLY seems to have consistent ROA of a bit over 1% which is normal for a financial institution, then you can figure out their ROE based on their leverage. Yet, what happens to them when interest rates rise? In 2005'ish they faced rising interest rates which caused trouble, imagine if interest rise much faster and in a secular fashion? They are still a financial institution that lends long and borrows short, it's not like they own a whole bunch of low cost deposits like BAC, their net interest margin would be squeezed in that environment and their assets would become worth less as YTM would need to raise with rising interest rates.

     

    Yet, maybe rising interest rates could be not such a bad thing for NLY -- they want to be at a 12X leverage and are currently at 6.5X which means they could expand if things get better and are not as precarious if rates raise faster than normal.

     

    I am also not sure how to value their interest rate swaps and what that will mean to NLY, other than being more hedge for raising rates is good if rates rise.

     

    If anyone knows of a well written article how to think about valuing mREITs I would greatly appreciate it.

    Upgrades

    in General Discussion

    Posted

    1. Somehow get the author's name more aligned so it can be detected by Readability, or one of he text cleaning programs that can send to Kindle.

     

    2. Being able to see more posts per page, if not a "single view" option.

     

     

    Main goal. Be able to send a complete thread (or updated part) to my kindle for reading.

     

     

    Great board already, just throwing ideas out there!  :)

    "The Greatest Investment Book Ever Written"

    in General Discussion

    Posted

    In the same vein of books unrelated to investing being applied to the field, Victor Niederhoffer made all his employees read Secrets of Professional Turf Betting.

     

    Interesting book, here is a good Amazon review and a link to a copy that is public domain.

     

    -----

    By Mark Mills

    Chapter 1. Always bet against the public. Betting at a racetrack is a zero sum game from which the track takes a significant chunk of the wagers before anyone gets paid. Further, the people who know the horses best and can easily fix the race, the owners and trainers, are betting against you. At best, only a minority can ever win. The track requires the majority to lose, therefore avoid the majority play. Only bet when two situations occur simultaneously: 1) you have well considered odds in your favor. 2) The public is betting your choice is a loser. Put the two together, and be sure to have 3-1 or better odds in your favor. In other words, always think in terms of probabilities.

     

    Chapter 2. Things are easier now since the 'action' is more liquid and public opinion based on weak authorities.

     

    Chapter 3. Keep up to date on new angles: read what the professional reads.

     

    Chapter 4. The public doesn't lose their fair share. Statistically, they should only have 10% losses. Instead, many lose everything they bring to the track. They do this by allowing emotion to switch their betting style from one race to the next, and always switch at the wrong time. If they just picked 'position 6' every time, they would only lose 10%, but they bet little when they should bet much, and much when they shouldn't bet at all. It is the 'switches' that pull money from the public. Having 'guts' means sticking with your strategy in the face of losses. You can count on the public being unable to demonstrate guts.

     

    Chapter 5. Ever changing cycles: The game will only last as long as people see enough winners to convince them they have a chance. If the 'true' odds become obvious, no one would play. Therefore, there must always be long shot winners and ceaseless change in the strategies of the winners. Early in the season, the public badly assesses the odds, the pros bet them and win. Late in the season, the public loads up on the good horses, but this reduces the odds, so the long shots get undervalued and provide the winning odds.

     

    Chapter 6-7. Be aware the owners and trainers need not always focus on winning. Know what motivates the owner of the horse to enter the race. Are they building a reputation? Trying to win purses? Trying to turn the public against the horse, then win as a long shot? Understand the rules constraining owners and trainers. Know the claiming rules. Know how to read the weight reports.

     

    Chapter 8: Sum the odds. The odds are reported as 3-1, 4-1, etc, so it isn't obvious that the sum should be 100. Convert the odds to percentages and sum the list. If the sum of each horse's chance of winning is less than 100, bet on every horse and you are sure to win. If you are sure a favorite won't win, you can create a sure win by betting on everything else (less than 100 sum). The track is sure to make money if the sum is over 100.

     

    Chapter 9: Make your own price lines (100% books) and test them every day (paper workouts)

     

    Chapter 10: Pittsburgh Phil's system: buy the stuff that no one wants. It takes guts to stick with the system. It killed Pittsburgh Phil at 52. It takes guts, that is why it doesn't matter if everyone knows the system. Guts isn't the ability to ignore fear, it is the ability to stick to your original goal, process and strategy. (!!!!)

     

    Chapter 11: Money management: the obvious, don't spend your living expenses, but also, the important thing is your emotional balance. Without balance, you switch and that is how to lose.

     

    Chapter 12: you cannot grind, you must speculate. You can't chisel, you must gamble. Accept and expect more losers than winners.

     

    Chapter 13-15: Reading the racing publications

     

    The rest of the book is a detailed plan for seasonal betting, January through December, one chapter per month.

     

    While reading, I speculated on how to apply this to the securities markets. What is a 'race', a day of trading? In terms of stocks, what are 'claiming races'? What are weights?

     

    The notion of 'ever changing cycles' is really interesting. The 'racing game' is clearly a product of some evolutionary process that weeded out less robust 'betting markets'. By looking at the 'game' as a whole, one can see it as an activity perfectly designed, but having no designer. Most will lose, but still find it enjoyable enough to continue the playing. Further, it is impossible to investigate unemotionally, since the attraction perpetuating the games existence is entirely emotional. The opacity is central to the game's survival.

    -----

     

    http://masteroftheuniverse.wordpress.com/2010/05/11/flotsam-and-jetsam-part-v/ posted a scanned copy of the book -- the scan is really rough.

     

    http://www.videosfinder.com/stocks/books/SecretsOfProfessionlTurfBetting.pdf

     

     

     

     

    Warren Buffett's CNBC Interviews with Bill Gates

    in Berkshire Hathaway

    Posted

    Not, nicely embedded or organized but here is a link to find all the videos.

     

    http://search.cnbc.com/main.do?partnerId=2000&keywords=warren%20buffett&sort=date&minimumrelevance=0.2&type=video&pubtime=30&pubfreq=d&categories=exclude

     

    Someone will probably post something better.

    --------

     

    I thought it was interested that Buffett said he bought zero coupon bonds in the early 80s. Here is a link about zero coupon bonds in the early 80s

    http://www.marketwatch.com/story/well-need-more-bear-market

     

     

    Bonds beat stocks by factor of 11 times from 1981 to 2009

     

    Yes, and you'd have been 11 times richer. Listen closely to Shilling's analysis of the past 28 years. In his Insight newsletter he compares the performance of the S&P 500 stock index to the bond market. First he focuses on his "all-time favorite graph" comparing "the results from investing $100 in a 25-year zero-coupon Treasury bond at its yield high (and price low) in October 1981, and rolling it into another 25-year Treasury annually to maintain that 25-year maturity."

     

    His bottom line: "On March 31, 2009, that $100 was worth $16,656 with a compound annual return of 20.4%. In contrast, $100 invested in the S&P 500 at its low in July 1982 was worth $1,502 last month for a 10.7% annual return including dividend reinvestment. So Treasurys outperformed stocks by 11.1 times."

     

    Never heard of this fabulous alternative? Of course not. Wall Street can't make millions in commissions this way. Instead, during this same 28-year period, Wall Street was using high-pressure sales gimmicks to sell its losers to America's 95 million vulnerable investors.

     

    Imagine: If you were in your 20s and just out of college back in 1981, and you started adding a hundred more bucks each and every month using Shilling's zero-coupon strategy, you'd be enjoying early retirement today, instead of crying because your retirement stocks lost half their value.

     

    Shilling adds a word of caution about the future: "We've had been recommending long Treasury bonds since 1981. Back then, we forecast secular and huge declines in inflation and interest rates. So we declared that 'we're entering the bond rally of a lifetime.' Unfortunately, that rally is over." We need new strategies.

     

    Paul Lountzis Interview Transcript & Report - Miguel Barbosa

    in General Discussion

    Posted

    Miguel Barbosa at Simoleon Sense did a great video interview with Paul Lountzis that he just turned into well designed 23 page transcript & case study for $3.99.  The interview describes the kind of rigor Lountzis goes through during research and how deep research allows him conviction in times of a deep drop in share price.

     

    You can purchase the transcript & case study here: http://www.simoleonsense.com/paul-lountzis-interview-transcript-report-available-for-purchase/

     

    Lountzis talks about his experience getting into value investment firms, research into Freddie & Fannie, Progressive, United Health Care and Nike.

     

    Lountzis' bio:

     

    Prior to forming Lountzis Asset Management, LLC, Mr. Lountzis was employed by Ruane, Cunniff & Company, Inc., New York, NY, a registered investment adviser managing the Sequoia Mutual Fund as well as private accounts, from 1990 through 1999 as an analyst, and as a partner from 1995 through 1999.

    Mr. Lountzis was an analyst at Royce & Associates, Inc., New York, NY from 1989 through 1990 where he evaluated small and mid-cap stocks for purchase in institutional accounts as well as various mutual funds including the Pennsylvania Mutual Fund.

     

    You can check out the hour and fifteen video for free here: http://www.simoleonsense.com/conversation-with-paul-lountzis-investing-scuttlebutt-research/

     

    I've watched the video and bought the report. The 4 bucks is definitely worth it for convenience and time savings.

     

    http://www.simoleonsense.com/paul-lountzis-interview-transcript-report-available-for-purchase/

    looking for old Buffett videos -- link included

    in Berkshire Hathaway

    Posted

    Found this link http://futile.free.fr/videous.html that showed some old Warren Buffett videos I haven't watched.

     

    I am looking for two of them in particular:

     

    1. ""The Oracle of Omaha" (60 min Video). Recorded in the spring of 1999."

     

    and

     

    2. ""WARREN BUFFETT VIDEO - Omaha 2002" (released 01/2003) (59 min Video). PAL (Europe) or Video CD-rom (US)"

     

     

    If anyone knows how to get access to these I would greatly appreciate!

    Going Concern Qualifications - past companies, how do auditors decide, HNR?

    in General Discussion

    Posted

    1. How do auditors decide if a company deserves a going concern qualification? Is there a standardized test or is it due to their best judgement? Based more on liquidity or solvency, or does it depend more on the situation?

     

    2. What experience do you have with investing with companies with a going concern qualification? What made you decide the qualification wasn't necessary?

     

     

    ----

    Been thinking about HNR's going concern qualification. Must be because the Indonesian deal fell through, but I wonder, if they were wiling to pay 750MM than someone would be willing to pay at least half. Maybe there is no way of getting a new deal off in time so they'll inevitably have liquidity issues.

     

    Anyways, going concern qualifications seems like a reasonable place for investors to fish. I wonder if anyone here has experience with investing in these situations. What were lessons learned?

    ----

     

    Thanks!

    Tesla Model S Named Automobile's "Car of the Year"

    in General Discussion

    Posted

    Elon Musk is offering a personal guarantee backed by his personal wealth for the buyback value at the end of 3 years.  Same deprecation as a Mercedes S class.

     

    At least he's so confident in the car that he's willing to put his money where his mouth is.

     

     

    How much wealth does he have outside of his businesses which are all unprofitable from what I can tell? It costs over 80% to borrow TSLA shares -- people are spending lots of money betting TSLA will probably be a zero.

     

    Most of his business are remarkable and he is doing a great job trying to carrying human progress along, but I worry that in ten years (if not sooner) there will be articles turtles "The rise and fall of Elon Musk"

     

    huh? He's a billionaire - Forbes lists his net worth at $2.7 Billion. Paypal is not profitable?

     

    I don't think he owns any eBay shares anymore. I kind of thought he got super lucky with Paypal rrrr I guess I should keep my comments to myself. Musk is essentially hero worshipped by most people, but I think people are over looking the lack of a sustainable competitive advantage of his new companies.

     

    Nothing wrong with hero worshipping Musk. He is doing 1000X more for humanity than I will and I hope to have my own Tesla one day. Yet, I get really anxious about the future value of his companies.

     

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