claphands22
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Posts posted by claphands22
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Charlie Munger's DCJO just released their new 10Q. DJCO has bought stock again, this time in two foreign manufacturers.
During the second quarter of fiscal 2011, the Company bought shares of common stock of two foreign manufacturing companies.http://www.sec.gov/Archives/edgar/data/783412/000143774911003184/djc_10q-033111.htm under liquidity and capital resources
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I had committed a cardinal sin: I had become a market timer. It was a slow process cataloged by a first glace at a Case-Shiller's index then by a monthly, then weekly, then daily look at GuruFocus's "Where Are We With Market Valuations." I became skittish about investing because I thought the markets were too overvalued, I figured I should be timid about my positions because of a possible market revaluation. Yet now, I see I was just being a market timer. To use the supermarket analogy of investing, I was saying no to 50 cent pound bananas because the strawberries and peaches were selling for 10 dollars a pound. I was letting the prices of other securities dictate my position size and what I invested in - not my own independent valuations.
To be clear, I'm not saying you should be fully invested 100% of the time. If you don't see a security with a large enough margin of safety, don't buy it or if a position size keeps you up in night you should trim it down. Yet, don't let the market's valuation keep you from purchasing a great idea.
Here is a comment from Buffett about investing his personal money during the 2000 Nasdaq high. Notice market valuations didn't keep him away from making a rational investment choice.
I have less than 1% of my net worth outside Berkshire and when the Nasdaq hit its high, I had nearly all of it in REITs, which were selling at a discount to their liquidation values. (BRK Annual Meeting 2005 Tilson Notes, via http://buffettfaq.com/ )Market valuations is a tool you should be careful using since they can infect your thinking. Beware of using market valuations because they might use you.
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Thanks Vinod, appreciate it.
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Anyone know of a list of all the outstanding warrants available? Some of these warrants like ROIC & BAC-W.A. have been interesting, would like to snoop around a complete list of all the available warrants? Anyone know where to find something like this?
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hey tombgrt, i agree with you. i have some smart friends who have been pounding the table about brk for a while now. i've recently purchased a small position jan 2013, 55 calls. This wasn't my idea, but an idea a friend mentioned to me. Those calls are selling for about 28, which means they break even at 83. The brk. b's are trading for 80. Brk seems cheap + the calls seem stupid cheap.
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I thought the shareholder meeting Office video was great.
Never went to a shareholder meeting but I've heard great things about these annual videos. I wonder if there is anyway to view them online.
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I'll drink my new love, a Coke lemon, in their honor.
Coca-Cola is a remarkable company....I wonder if it will one day be a wholly owned subsidiary of Berkshire.
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Hi stahleyp,
I've been trying to screen companies in Japan as well and found it pretty difficult. I watched the recent Pabrai/Columbia business video (hat tip to long term value for finding the video http://cbs360.gsb.columbia.edu:8080/ess/echo/presentation/1387110d-5627-4513-9626-2d9f16f1f8b4) and Pabrai mentions two ways to search for Japanese net-nets. (1) Buy the Japan Company Handbook (http://www.toyokeizai.net/shop/magazine/jch/) which is like a moody's manual for Japanese companies or (2) search through companies via CapitalIQ. Unfortunately, CapitalIQ is stupid expensive so unless you have access through university or a corporate account, no love.
Also one of the things I've noticed is, most of the deep value net-nets (like the one Pabrai found) are most likely located on the Osaka Exchange which is hella expensive to purchase on. At least if you have an interactive brokers account it doesn't cost an arm and a leg to buy stocks on the Tokyo Exchange, but the Osaka and Nagoya...tough luck. I called Schwarb or Fidelity once to ask them how much it would cost to purchase stock on the Osaka exchange and they said it would cost 200USD and trades had to be at least 5,000USD. You might be able to find a cheaper offer at another brokerage and if you do, please tell me.
Good luck on your search Stahleyp. I'm personally thinking of caving in and buying the Japan Company Handbook and I'm also hoping that the Tokyo Exchange and the Osaka Exchange merge soon, so I might be able to purchase stocks on the Osaka exchange without having to sell my first born son.
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http://www.simoleonsense.com/resources/ - comprehensive lists of blogs that cover investing/mental models
I personally would recommend cheap stocks, shadow stocks, brontecapital, value undercovered, whooper investments and ragnarisapirate...I'm definitely missing a lot more great value blogs out there, but you'll eventually find the blogs that suite you as time goes on. In the past three years there has been an explosion of terrific value blogs. Lot of board members also have a blog and I've never been disappointed when I checked it out.
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The Berkshire Hathaway audit committee has released their report (chaired by Tom Murphy.) http://www.berkshirehathaway.com/news/APR2711.pdf
Fleshes out the time line well and includes a revision to their corporate policy.
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Hey Myth,
I can't speak for Bargainman, but here are my thoughts.
I don't think this is a situation where a spade is a spade. If it's true Sokol told Buffett about his holdings before Buffett decided to make the acquisition then Buffett should have asked Sokol to sell his LZ to keep there from being any possible conflicts of interest.
Now, should Buffett be thrown under the bus for not resolving this situation before the acquisition? No way and we don't know exactly how Sokol communicated his position to Buffett. Should Sokol be thrown under the bus for bringing Buffett a deal that he already had a position in? Neither of them deserve the attention people are giving them.
My guess is, in the span of time, it will be disappointing speed bump for Berkshire Hathaway, but it will be an ever lasting stain on Sokol. It's pretty sad for Sokol considering how hard he worked for Berkshire Hathaway and how immaterial the LZ deal was to his overall net worth.
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Some people might like this clip from Wall Street 2.
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bargainman,
You are not the only one who feels this way, I have a similar perspective.
I hope the brk shareholder meeting isn't dominated by Sokol, it would be a waste of precious time.
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You're looking at this all wrong.
MSFT is cheap on an earnings basis and with all there share buybacks, the stock is bound to go up.
I agree with you Bronco. Yet, I still think the rebalancing is an interesting phenomenon.
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The idea is compelling. The biggest risk seem to be speculation prior to the reweighting, but this seems to be more of a risk with INTC than MSFT.
The other thing I note is that with BRK, I think more shares were purchased (4% perhaps) than with MSFT and INTC (only approximately 0.4%). Is this enough to move the needle significantly? Are there other ETFs that track the QQQQ that will also bring buying pressure?
Was wondering the same thing. The QQQQ is just rebalancing whereas BRK was added to the S&P 500 from scratch. Also the average volume of BRK is/was much lower than MSFT so it was harder for these funds to accumulate shares without bidding up the price.
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Interesting twacofca,
Looked up the information for the reblancing, if the math and the data I got were right, the index would have to buy twice the current daily volume of MSFT to get it's target position size of 8.30%. Do you know if these funds are allowed to start purchasing their holdings before the target date? Are you purchasing the commons or the options?
QQQ size last updated 3/30/2011
49.35B
Current Holdings MFSFT
3.86%
Expected Holdings of MSFT
8.30%
Current Share price
26.19
Precent QQQ would have to increase position
2.150259067
Amount of Money QQQ has in MSFT
$1.9B USD
Amount of Money QQQ will have to pay
$4.09B USD
Amount of Shares needed to purchase
156,397,00
Average Daily Volume of MSFT
63,230,000
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Parsad, you've done a great job putting this together. Hopefully one day I'll be able join, but if the dinner keeps on compounding like it has, you'll have to hold it at a convention center =P
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Has anyone ever sold put options to increase a long position? What was your experience?
Thanks
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Analysts are generally given a bar too high to jump.
Analyst positions are very competitive, so you are probably getting intelligent and hard working people in those positions. Yes, they often ask insignificant questions during conference calls but they probably feel compelled to do so because their boss will question them if they don't, they feel they have to "do something" or their clients will question if they are doing a good enough job. Equity research is also very competitive so having additional information, even if marginal, can help make a research reports marketable since minute details can convey a sense of completeness in analysis. Price targets are also a structural problem for analysts, since they are asked to predict the market price for a company but not the company's overall valuation, which will undoubtedly cause a history of miss marks. Things become even more difficult for analysts in the tech sector, like Tavis McCourt, since these industries are hyper-competitive with innovation commonly disrupting the predictive capabilities of analysts.
I think it's best for investors to have a healthy respect for analysts but understand the profession inherently has shortcomings.
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Thanks for posting the 60 minutes video.
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Additional information from the Horizons AlphaPro North American Value ETF that Vito Maida manages.
http://jovian.transmissionmedia.ca/fundprofile_hap.aspx?f=HAV&c=&lang=en
Top Equity Holdings & Cash Weight
Data as at February 28, 2011
1 US BANCORP DEL COM NEW 6.30 %
2 IBM CORP COM 5.70 %
3 WELLPOINT INC 5.59 %
4 PFIZER INC COM STK USD0.05 5.43 %
5 DIAGEO PLC SPONSORED ADR NEW 5.35 %
6 KELLOGG CO COM 5.28 %
7 STRYKER CORP 5.26 %
8 LOWES COS INC COM 5.20 %
9 CINTAS CORP 4.96 %
10 GENERAL DYNAMICS CORP COM 4.92 %
TOTAL FOR TOP EQUITY HOLDINGS 48.8 %
CASH & EQUIVALENTS 24.2 %
Portfolio Commentary 1/31/2011North American markets continued to gain during January. The S&P /TSX Composite Index™ (“TSX”), and the S&P 500® posted gains of .99%, and 2.37% respectively for the month. In Canadian dollar terms, the S&P 500® increased 3.15%% during the month due to a slight pullback in the valuation of the Canadian dollar vs. the U.S. dollar.
January’s positive performance reflected a continued improvement in both consumer and business confidence that the U.S. economy would continue its slow expansion translating into improved revenue and earnings for equities. Investors continued to react positively to the Federal Reserve’s quantitative easing program in the anticipation that increased liquidity would spur equity markets upward. Markets seem to be ignoring the negative consequences of the Federal Reserve’s policies, namely inflation. Euro zone consumer prices rose by 2.4% in January, well above the European Central Bank’s preferred 2% ceiling. U.K. inflation rose to 3.7% in December, almost double the Bank of England’s target. China’s December inflation rate of 4.6% has prompted authorities to increase banks’ reserve requirements, the seventh time since the beginning of 2010.
Increased inflation will inevitably lead to higher interest rates which will slow down economic growth. Another possible drag on growth is further government fiscal restraint as governments try to repair stretched balance sheets which resulted from the massive fiscal stimulus spending over the past two of years. State governments in the U.S. are slashing their spending and starting to consider increasing taxes as a way to repair their finances. Both actions act as a drag on economic growth. We continue to believe that we may experience some volatility as some of these issues attract investor attention over the next few months.
During January several of the companies in the portfolio contributed to the positive performance. IBM Corp., Stryker Corporation and General Dynamics Corporation all had gains in their share prices during the month. We also reestablished positions in Nokia Corporation, Hewlett-Packard Corporation, Wellpoint Inc., and Pfizer Inc. which we sold in December to offset substantial capital gains in the portfolio. We believe each of these companies offer substantial value.
We are very optimistic for the Horizons AlphaPro North American Value ETF’s long term prospects. The companies in the portfolio have strong business franchises supported by very strong balance sheets and continue to trade at prices well below their intrinsic value.
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Not directly related, but I think it's relevant.
http://www.cnbc.com/id/37759560/Now_Hiring_Fake_Executives_in_China_No_Experience_Required
If fake execs don't have to do much work maybe a person could hold down 3 or 4 such positions at a time and earn the corresponding multiple in salary:)
When I was investigating these microcaps, it irked me they always had a token foreigner on the board of directors. The foreigner would get paid something like 30K a year and I'm sure he never actually went to the board meeting because of the language/geographic barrier. I actually tried to get in contact with one of these foreigner-directors but it was impossible. Even when I talked to an IR firm who said he knew the director, the IR guy wouldn't give me any contact information and got really upset with me when I tried to pursue it further. It was a nutty experience.
When I first came upon these microcaps I thought having a basket of these securities would be the best bet, analogous to what Buffett did with Korean stocks. Yet, as time went by and I got better at finding discrepancies in financial statements, noticing misdirection of management and generally getting a better "feel" for these companies, I realized the law of large numbers wasn't going to help me mitigate scams in these chinese small caps. It wasn't the individual companies that were corrupt per se, but the system itself of the chinese RTO space. Even non-chinese RTOs like DJSP turned out to be bad apples.
I wasn't smart enough to bypass all these chinese microcaps, but I was lucky enough to learn my mistakes early on to watch the overall decline the chinese microcap sector as I was walking way. Overall I made money on these companies but it was purely dumb luck.
There probably are a few legit chinese microcaps but it's like searching for gold in a field littered with land mines.
CCME is like the Berlin wall for these chinese small caps. I think smart speculators were probably buying puts on other RTO listed chinese small caps as the wall was crumbling down.
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Congrats to all the shorts! I wonder when all the shares will start trading again. What would happen if you bought puts in March but the shares don't start trading until April?
It's going to be hectic for all the other Chinese small caps from here on out.
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CCME shares have been halted due to a pending new announcement.
http://www.thestreet.com/story/11040973/1/china-mediaexpress-shares-halted.html
Been watching this story for ages...would appreciate some closure =P
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hedges are for gardeners. The best hedge is time and intelligence.
I'm not sure I'd dismiss hedging so easily. Fairfax use of equity hedging has been beneficial for them. I know some people believe they hedge their portfolio because they are an insurance company and hedges may proffer better credit ratings, but I also think they do it because they believe their returns will be better in the long run. I've attached a picture of a page from their 2010 Annual AGM slide where they show an additional gain of 4% percentage points in a fifteen year time frame with their equity hedges.
Maybe I'm deluding myself, but intelligent hedging based on valuation might not only help to relax portfolio volatility but also increase overall returns.
link to the 2010 Annual Report: page 23 http://www.fairfax.ca/Assets/Downloads/2010_AGM_Slide_Presentation.pdf
Bair - US Money Funds Highly Unstable in Crisis
in General Discussion
Posted
from the article...
This argument doesn't sound reasonable to me. If investors choose not to put their cash in money market funds they will put their cash in other deposit taking institutions that will inevitably have to invest the cash in interest bearing assets such as financing US companies and municipalities. Granted less money might flow into these areas due to restrictions in traditional deposit taking institutions, but the system will become more robust which is more important than decreasing commercial interest rates by a couple of basis points. (I have no idea how much it will increase commercial funding, but I'd like to know)
Floating money market funds sounds like a good idea...I wonder what would be another way to regulate the money market funds so they don't cause a liquidity crisis in a panic.