Saluki

Eddie Lampert sold more than $20mm of AN stock in the past couple of months. One way to look at this is that the buybacks are great for current shareholders. Another way is that the insiders are using the cash register to keep the price high so they can sell out and leave you holding the bag. Which is it? I don't know. Olin has a similar look. They are buying back 26% of the shares but several insiders are selling hundreds of millions in stock. Why? STNG is buying back 20% of their shares, but I haven't seen insider selling, so I'm holding. But if I saw the company buying while insiders are selling, I would definitely want to understand why.

In my work provided retirement account, I have index funds so I like to think of my portfolio a little like what Nassim Taleb describes as a barbell. The SP500 is cap weighted so, regardless of whether you agree with the valuation of the high flyers, it is set up to capture the high fliers because they are added to the index as they start to get big. With that exposure to large cap growth on one end of the barbell like a ballast, I feel okay investing on the other end in small caps, special situations, and commodity shitcos that are dirt cheap. Overall, my risk weighting is moderate.

Bezos had an interesting take on the internet many years ago. He analogized it to electricity. When people got electricity into their houses, they only used it for light. Then they figured out other things they could do with it like a washing machine, then a radio, then a TV. So the internet, he said, was only in it's early innings. It's entirely possible that AI will continue to improve and do things that we can't even envision now. But like the internet, there are winners and losers. Amazon won, and arguably consumers, because by putting all the retailers online, it drove down margins and wiped out a lot of retail. So early retailers thought it was great until everyone else showed up. If you are a copyrighter or graphic designer this is scary. When Apple started using multiple fonts and automatic Kerning, the work of a lot of low level typesetters and graphic designers disappeared overnight. Instagram filters make it easier to take pictures so it's harder to be a photographer, but easier to be an influencer. Like the early internet, it may be hard to pick the winners. Where is Pets.com and where is Netscape? But like the gold rush, the people selling the picks and shovels will probably do well. So maybe not ChatGPT, but the servers (AWS, GOOG, MSFT) where the data is stored, or the chips needed to make AI work by crunching the numbers. The problem is that everyone knows this. So is it better to buy now and put it your coffee can portfolio or wait till the next tech crash like in 2000, when AMZN was selling for single digits per share?

Trimmed a little META. Facebook and Instagram are incredible sticky platforms and money makers. But I don't know anything useful about the metaverse and I don't use Twitter or Threads. If Zuckerberg thinks he can incorporate AI into his portfolio companies and make the advertising engine run better, maybe that's true, but I'm not an AI guy so I can't judge that either. I'd feel comfortable keeping about 80% of my position and deploying that sell money to areas where I have better visibility and that are more squarely in my circle of competence. And AAPL had another couple of doubles from this market cap, but I'm sure the odds of a couple of doubles are better starting from a smaller base.

I just received my copy in the mail. My thought is that Neff knocked the ball out of the park during the 70s and 80s, during a period of very high inflation. If inflation continues to be an issue, or gets worse, it might have some valuable insights into what has performed well for him, and what was his process for finding and analyzing these things. Is it better to have a company with no debt, so they don't roll over their debt into higher interest rate debt? Is it better to have a company with debt since they have locked in financing (for a time) at a lower rate? Asset light vs asset heavy? Asset heavy with little capex, like real estate, vs asset heavy with lots of capex like a refinery? Looking forward to this one.

THIS! I loved Google in the 80s, but at 120? JOE at 34 looks great to buy, at 54, not so much. VTS at 16 is a go, at 34 it's a NO. I've owned FFH since 2018 or 19 and I'd rather buy at 80% of book, but I don't have a lot of other choices, and if they are making $1.5 bln in the bond portfolio alone from rolling things over at higher interest rates, that is a huge tailwind for FFH. Among my high conviction, long term ideas, this is a good one. Some of the other cheaper stuff I'm buying are trading sardines. Some energy stuff still looks cheap, but I have a lot already. The only shares of FFH that I've sold are in my retirement account, which I threw into Fairfax India at 11. At 14, it's not as attractive. So making the best of the hands that are available, this is a pretty good bet for the medium-long term.

Makes sense, I know someone who's been trading it in his retirement account and he's made 3 "roundtrips" already where he's bought low and sold high, so he's doing better on it than I am. But as a recovering dumpster diver I've sold many times where I thought "I wouldn't buy it at these prices, so I should sell". And most people are not as cheap as me, so they keep buying and I feel like I left money on the table. I'm trying to train myself to sell at certain points (a pre-determined target price, or after earnings are out). If I sell before earnings, then I might be reacting to "mr market" which would be a mistake.

I just checked and FFH is 9% for me so I'm adding as funds become available. Out of my largest holdings (BRK, GOOG, JOE and FFH), it's the only one that still looks attractive to add to at these prices.

For those that are interested in Shipping, this is a good channel, with very few followers: https://www.youtube.com/@CapitalLinkInc You used to have to pay and travel to attend these events, but when the lockdown happened, they just posted them online for free. Some of the videos have low triple digit views so the sector is underfollowed. It's probably because they haven't made money in 10 years, but now a lot of money is being made in shipping and people are still having PTSD. My suggestion is not to binge watch, but pick a sector and then go through the videos of the conference where it's discussed. VLCCs, Product Tankers, Container Ships, Drybulk, Offshore Wind, Offshore drilling, LNG, etc.

http://openinsider.com/ I check this site every few days. It's more useful than Dataroma or the other popular sites because it will show which purchases were option exercises and which were bought using their own money. Nothing ground breaking, but if you ignore the small buys and see a large buy with an "M" for multiple next to it, that means that several insiders were buying, or one was buying on multiple days and it may warrant a further look.

Any reason you sold VTS? I'm on the fence about selling in my retirement account but figured I would wait until after the conference call in a couple of weeks. For the shares in my taxable account, I figured I would sell after 366 days to get the better tax treatment. I sold a small position that I had in Intrepid Potash for only a little more than I bought it a few months ago. There are better things to own right now and the CEO sold a couple million dollars worth, which is not a great sign.

Trimmed in my retirement account and bought a little FFH and STNG EDIT: added a little BTI in my taxable account after I sold IPI.

trimmed a little more META in my retirement account. Tomorrow the last 10% should be gone. Still keeping META in my taxable account.

Just finishing up this book which was released in paperback a couple of months ago. Very interesting read about the early days of cable and Spanish TV in the US. It focuses on Univision (started and half owned by Televisa) and Telemundo (who has been a distant second in the US until recently). I learned some things that I didn't know, like that "retransmission consent" for cable channels came about from an FCC case where Televisa sued because someone was picking up their signal and broadcasting over their cable system without paying. Interestingly, the first satellite /cable transmissions were not from US companies, they were also from Televisa. They beamed the programs to Univision's cable systems in the US where before they ferried them over from Mexico in vans every week. They innovated a lot of things that are common practices now. Univision grew immensely due to an extremely favorable deal negotiated by Televisa, because they were secretly larger owners than was permitted under US law. The Televisa founder planned on eventually taking it over so he gave them a sweetheart deal. He eventually married a US citizen and was planning on buying Univision but was double crossed when it was sold out from under him to Haim Saban, of Power Rangers fame, for $13.7 bln dollars. Lots of other double crosses in the book and people playing Telemundo and Univision against each other. If you're interested in Televisa (TV) or Telemundo (owned by Comcast), there isn't a lot of information available and this is a great source to get the history and all the players involved. And for me it's a reminder that the due diligence doesn't stop after you buy a stock. Keep digging and learning.

I know it's popular to beat up on ARKK, but I still wouldn't short it because the world is crazy. Buying an out of the money call option to limit your risk is probably the only way to do it and not lose sleep at night. People flocked to her when her pandemic picks went parabolic, but if you look at her process, not her results, it's terrifying. You should be able to identify a cogent theory not just look at the results. Because the number of data points is infinite you need to understand why something works, not just that it seems to work now, so it will work forever. Butter production in Bangladesh has a 99% correlation with SP500 moves. But you wouldn't bet on it, just like you wouldn't make decisions on the economy based on the outcome of the world series, because certain correlations occur by chance. https://www.bloomberg.com/news/articles/2022-10-24/bad-omen-for-us-economy-phillies-winning-the-world-series She liked to tout that her analysts were not accountants or finance majors as a feature not a bug. Is the reason that most active managers can't beat the index because they are accountants and finance guys, or is it because doing it is so hard that even highly numerate people have trouble because they are competing against each other and cancelling out their edges on average? If the odds of becoming a boxing champion by training in a boxing gym are miniscule, does that mean I have a better chance by recruiting fighters from the music school? I'm not long or short, just here for the entertainment. I hope you make some money on the trade.

@james22 I remember seeing that study in the book "Range." It's a great way to think about hedgehogs vs foxes and how it works in the real world. And yes, the diverse viewpoints and pattern recognition are the best way to solve problems that haven't been seen before. I think Range and The Innovator's Dilemma should be required reading for every business major.

The early Ben Graham type of thinking was heavily focused on asset value instead of income. The thinking was that income can go away a lot faster than the assets that support it. So in an asset heavy industrial world, a company with no income but valuable assets could be liquidated. The problem, which Munger identified, is that in terrible businesses it's not fun to sit around hoping that someone will buy out this company before it goes bankrupt. In the information age, the best companies (META, GOOG, MSFT, CRM) don't require a lot of assets, but they do spin off lots of cash. Margin of safety has to mean something different there (network effects, switching costs, patents, better products). And if margin of safety means something different with these types of companies, than value traps has to have a different meaning too. I don't know how to identify it though. There are asset heavy companies that the METAs and GOOGLes are built on, the fiber providers. But they exhibit commodity like tendencies. You care about bandwith and speed, not the brand name of the provider. So how much do those assets give you a margin of safety if the tech has to be upgraded constantly and the legacy facilities have environmental risks? And what about things like banking? If the government will bail out all depositers, regardless of the FDIC limit, then why does it matter where you put your money? You will deposit where they pay you the most, and borrow where they charge the least, which will race to the bottom and erode margins. I think Graham's idea of giving your stocks a timeframe to play out is a great idea, which I should incorporate. In a month it will be 3 years since I bought ATEX. I haven't sold a share since I think the licenses are much more valuable than the stock is trading at, but at some point they should be able to deliver the revenue that they were promising. When I bought SWBI, I didn't have a deadline in place, but I believed that within a year of the new factory opening, would be a good time for it look much better and sell. And with VTS I assumed that one year and a day would be a good time to sell the shares in my taxable account. Other companies I just bought because they were really cheap (TV) or the growth prospects look good, but I couldn't figure an end destination (FFH, JOE, GOOG). So if I have a timeframe for some stocks, why not others? Why not just set a date in my notes when I buy so that I don't talk myself into holding "until it comes back"? It seems to me that if many of my investing mistakes have been emotional/tempermental and not mathematical, then whatever safety rails I can incorporate with regard to process should improve the outcome.

trimmed a little META in my retirement account and bought some FFH and OXY.

It says "video unavailable". Did they pull it down?

Sold some META in my retirement account and deployed it to FFH, STNG and OXY.

Trimmed a good chunk of META in my retirement account. Still keeping almost all of it in my taxable account.

I think most of my biggest mistakes were emotional / temperamental, not quantitative. Particularly in 2008. I reacted better in 2020, but still not ideal. Some of them are things like holding on to a loser until it gets back to even. Or panic selling. I think doing a post mortem is helpful to see where you went wrong. Keeping a one pager with some notes that I write on the back of a Value Line printout of a company is helpful too. Peter Lynch said that if you can add 8 plus 8 and get a number close to 16, you know enough math to be an investor, because the most important organ isn't the brain, it's the stomach. Focusing on that part has been helpful to me. Reading things like "what I learned from losing a million dollars", "the psychology of investing" and even "fearless golf" have been useful. I have a little post it note on my monitor with a quote from Dr Gio Valiante (performance coach for Steve Cohen) that says "deploy capital proportionate or the opportunity that presents itself at the moment" to remind me to follow the process, not the emotions. And I have two little rubber duckies of Warren and Charlie from the Berkshire AGM on my desk too. I don't know if it helps, but it doesn't hurt.

I agree to a point. If they had done a passive investment like they did with Alibaba and had said "instead of a billion, how about $500mm for half the company, you can get rid of your investors who want you to cash out, and you can keep running it as is until you are ready to go public. We'll be hands off like if you sold to Berkshire" That's a plausible scenario with a happy ending. I think it's useful to study some of these industry leaders who stumble so that you develop some pattern recognition and can hopefully bail on something like Google, Amazon or Apple if you see the signs. I read an incredible book on Sears once. Sears was such a dominant retailer that it had the company divided into 5 territories in the US because it was too big for one person to manage. If you broke Sears up into it's territories, it would still be the 5 biggest retailers in the US. If you think of the Sears catalog and then realize that Sears founded Prodigy internet, you realize that it's not inconceivable that they could've been Amazon. Apple credit card? Sears had Discover. They created Allstate Insurance too, think of what they could do with that float. They had so much cash lying around that they almost bought Caterpillar. So what happened? Ego. The power always rested with the retail guys and they didn't like that Allstate, Discover and the new financial stuff was so profitable because it meant that they could end up running the company eventually, so they decided it was a distraction and started casting off the pieces as the retail continued to struggle. Can you imagine if Amazon was not run by the founder and the e-commerce guys decided to spin off the cloud business because they saw it as a threat to their power? Stranger things have happened. Maybe it's because I was an M&A lawyer and I'm programmed to look for things that can go wrong and anticipate and prepare for it? Maybe these cautionary tales have instructive value? Maybe the ashes of fallen giants are good places to look for value (General Growth made Ackman his first fortune, Sam Zell wasn't called the grave dancer for nothing). Who knows?

Scott Galloway, who is an investor talking about Yahoo going public again. I think Yahoo Finance does a really great job with the Berkshire AGMs and I always said that AGMs could be their "thing" for other companies like MSFT, GOOGL, TSLA, META etc. I don't how Yahoo makes money, and how they pulled up from that nosedive before it went private but I'd curious to see their filing. I think Marissa Mayer gets a lot of hate for her disastrous run as CEO but they were a basket case before that. The previous CEO had the opportunity to buy Facebook for a billion dollars. Zuck's investors told him that if Yahoo came through with the billion dollars, that they would make him sell. The CEO, who told everyone who would listen that he was a great negotiator tried to talk Zuck down to $700mm because the market was tanking. "You're young, you'll still be rich and go live on an island surrounded by girls in bikinis". Zuck went back to the investors and said they didn't offer $1 bln so he didn't sell. Prof G does make a good point about making money in distressed companies. I remember one hired gun CEO saying that if you smell smoke, you should run towards the fire because that's where you make the big money. But the flip side of that is Peter Lynch's quip that "the problem with turnarounds is that most of the time, they never turn around."

Transshipment is the elephant in the room that no one talks about. When China boycotted US Soybeans during the Orange man's presidency, instead of shipping soybeans to the Port of Long Beach and over to China, farmers shipped them to Brazil, unloaded them, and all of a sudden they became Brazilian soybeans which picked up the slack. If the Russians are still pumping the stuff out of the ground, it's gotta go somewhere. It just can't sail direct. It's gotta do a layover somewhere to cover it's tracks. Might be bullish for VLCC rates.