Saluki

MSCI, NTDOY and a small resting bid on TAYD that I forgot about got filled.

It's a silly show but by better half and I are watching "Girls 5 Eva" and it's funny and light.

https://pca.st/k2r011uq New interview with Todd Combs posted yesterday. I haven't listened to it yet but I figured I would mention it so people can listen to it during the break in the Berkshire meeting today.

MELI, CPRT, FFH, JOE, GOOG, SPGI, BRK, FICO.

Picked up a few shares of ENPH.

Right before the tech bubble burst in 2000, I was in a corporate finance class when someone brought up the topic of tech stocks, and how they are certainly not a bubble, but rather follow a different method of value that is unlike anything that came before it. As the tech boom in stock prices for company with no profits had continued for several years, the student thought the professor should agree that he (and the old methods of valuation) were wrong. At which point he gave the classic response that "the four most dangerous words in the English language are 'this time is different'". Contrary to the opinion of CryptoBros that I talk to, I do understand how crytpo works. I took a couple of courses in it, and I "get" the technology. But I also have always felt that 99% of the use cases are nonsense and that the price action is driven by FOMO. When everyone was talking about NFTs and how important they were going to be to everything, and were buying up JPEGs for more than a house costs, I knew it would end badly. Bored Apes are now selling for a ten cents on the dollar, and that's probably too much for them: https://www.cnbc.com/2024/05/02/bored-ape-yacht-club-nfts-floor-price-sinks-ceo-announces-layoffs.html

Took a couple big bites of MSCI yesterday and today and I'm at a 1% position. Added a little NTDOY.

Season 5 of Fargo is great. It's reimagining of the original Fargo Movie, where the characters have different personalities. Sort of like the alternate universes in The Man in the High Castle. Fargo Seasons 1 and 2 were great. Season 3 was passable, and Season 4 was so bad that I couldn't finish it, but they are back on track with the new one.

https://www.youtube.com/watch?v=x3CSmiw-1z4 Several great speakers at this event in Norway, like Howard Marks. But I particularly liked this talk by Michael Maboussin. His book "More Than You Know" is a really great book to help you think about process and connecting the dots.

It's the anchoring fallacy. When it goes down, you feel like lost even if you are still up from where you bought it. It's why Peter Lynch (and now Buffett) like to remind you that "the stock doesn't know you own it" so it won't go back to even or the high water mark just so you can sell out. I think it's mistake to also follow the strategy of "if I wouldn't buy it at this price, I should sell it." Because it tends to cause too much activity in your portfolio, which is correlated with negative returns. And also because there is a "range of reasonableness" with pricing and if you bought when it was flashing green, then held it when it's fairly priced, you shouldn't do anything unless it flashes green again to buy more or goes to red and sell. I suffer from this because as a cheapskate it looks priced to sell before it is done going up. But I'm working on it. Between anchoring and reviewing your portfolio everyday with fresh eyes, the truth lies somewhere in the middle. I think I've mentioned before, but I usually print out a 1 pager from ValueLine and take notes on the back about why I like this and what I think will happen. It keeps me from "thesis drift" or patting myself on the back when the stock goes up, but not for the reason that I thought. (for example STNG did really well this past year, but it was because the attacks on the Red Sea caused ships to take the long way, and rates spiked for vessels. My original thesis was the old fleet and low order book, which should help STNG which had the youngest fleet. So I'm up, but part of it was luck. Whereas SWBI did well for the reasons that I thought it would. So I'll happy take both wins, but I need to be honest about it, because I won't improve if I judge myself by "resulting" instead of the process.)

NTDOY. Very small adds to ATEX, BTI and FFXDF.

I picked up some ENPH and one of my resting limit orders for NTDOY got filled today

Yes, a couple of months ago a friend asked me about FFH because someone they knew was interested in it. This was right before the Muddy short attack. I mentioned that if you look at it like most insurance companies (or banks), it's above book, which is not great, but still cheaper than BRK or MKL by that metric. If you account for future growth which is probable based on history, and profits locked in due to rolling the fixed income portfolio, it's trading at a great price (based on P/E) for anything it looks like a great bet. I haven't sold any shares, but didn't have the courage to double down during the few days that the price dropped, because it's already a big position for me. I have been adding to FF India though. It's still at an inexplicable discount to book and they are making some shrewd moves buying back shares and selling things when they are fully priced, like the National Stock Exchange in India. And I appreciate that when the performance fee was due to FFH, that Prem didn't dilute us and take his fee in shares instead of cash. You wouldn't see that at Brookfield. Some of the holdings look interesting and kind of mirror each other, like buying ATCO in FFH and the Tanker company whose name I can't remember in FF India.

@Jaygo almost done with The Wager, thanks for the recommendation. Besides the great writing, I enjoyed the history. The Wager mutiny happened when they were on their way to attack Valdivia, my ancestral homeland. At the time it was the southernmost outpost of the Spanish empire. No one lived below that, which is why the British were interested in it and how they ended up owning the Falkland's. One of my ancestors had arrived from Spain a few years before to be in charge of one of the forts that guard the mouth of the river that leads to Valdivia. So if the Wager and the others had succeeded they would've literally crossed swords with him. At the time, it was basically a penal colony. The forts had been destroyed by an Indian uprising, helped by the Dutch supplying weapons, and was being rebuilt by convicts who were offered freedom in exchange for a set amount of military service (the same way Russia emptied it's prisoners into Ukraine). So he was the commander or warden, depending on how you look at it.

small adds to BTI, NTDOY, FFXDF and ENVX

@AzCactus you may be well served by paying an estate planning or elder care attorney for an hour or two of their time and asking them a bunch of questions. If your grandma needs to be hospitalized or put in a nursing home, typically Medicaid doesn't kick in until their funds dry up. I am told some facilities will let you sign over their assets in exchange for caring for them for life, wherein they take the risk if the person lives longer than expected. I don't know how it works, but many people try to transfer a person's assets to the relatives before they need medicaid (medicare?) and apparently they have some kind of look back where they can claw back the assets. So knowing what the rules are may have an effect on your decision making and it may provide cover if the others who were expecting to receive something from your grandma's assets decide to point the finger at you.

Trimmed some SWBI and added to NTDOY and BTI.

Sorry about your grandma. If her life expectancy is 4 years, then preserving the capital/income should probably take priority over the highest possible return. Even index funds hit potholes and 90% of the time will return to positive within 5 years, but you don't want to be selling at a downturn, which is when she may need it, regardless of what the market it doing. A CD ladder will probably give you the best return (higher interest because you are locking it in for a while, and ability to access it because by laddering it they become due and roll over periodically). This is FDIC guaranteed and will protect the income stream if interest rates go down. If you are worried about locking in money if interest rates go up, you can put some of the money in the opposite bet. You can Treasury bonds directly from the government that are indexed to inflation (must hold for 2 years) for a portion of that and you will have a small hedge in the other direction.

I enjoyed reading Francis Chou's annual letters. It's where I first heard of CRAP (Can't Realize A Profit) companies.

@kodiak, Congrats. This was a shrewd call. I'm looking at NN and Ondas now as they came on my radar because a press release mentioned one of my holdings that does something similar, Anterix. Why don't you start a post on this?

Small adds to FRPH, BTI and NTDOY.

Speaking of good management, @Gregmal's favorite stock JOE had Bruce Berkowitz managing their portfolio for free, even though that's his day job and other people pay for it. Compare that to WeWork's Adam Neuman who would buy buildings himself and lease them to WeWork. Good managers are rare and even rarer are legitimate turn around guys. Look at how Thurman Rodgers took Enpase from trading for less than a dollar to $200+. And I think I've recommended Tony Griffiths (FFH Director) book Corporate Catalyst on the Book post. If you read the book and put yourself in his position in some of those turnarounds and ask how you would handle it, you will realize that you probably don't have what it takes to be a turnaround guy. It's okay, neither do I. A good management can do wonders with a terrible business. Compare Walmart under Sam Walton and Costco to other retailers, or Tesla under Elon to Ford or GM. But if you have a good business and good management (BRK and Warren and FFH and Prem) then you can get that lollapolooza the Charlie mentions.

If you look at TYCO before the CEO went to jail, you can see how easy it is for management to line their pockets at shareholders expense. One of the easiest ways to see this is to look for related party transactions which are usually a huge red flag, such as with Enron. Some recent ones that I've seen are POWW which built a new production facility which was built by the brother of one of the insiders. UHAL which buys manages self storage facilities for themselves and well as the ones that the controlling family buys. And just yesterday I came across SOWG which leases a factory from the CEO. Sometimes even a good company has some of these, such as FFH which has Prem's son managing some money for them, but it should be the incredibly rare exception. With a big company, it's a problem, but in a profitable businesses they can absorb that waste and graft. In smaller cap companies, there isn't enough meat on the bone for both you and the vultures. EDITED to add Stock based compensation and dilution is a huge red flag too. In companies like BRK and CPNG, you don't see ridiculous pay packages like you would at some tech companies like TSLA.

Yes, I'm glad I double dipped. FRFHF is my 4th biggest position and I have a mid size position in Fairfax India.

This came on my radar from looking at Form 4s. Two years ago this was trading at $300. For entertainment purposes, imagine you had bought it and coffee canned it until last month when it was about $20. https://finance.yahoo.com/quote/PGY?.tsrc=fin-srch Now imagine that last month, after waiting for it to come back 150x so you can get back to break even, they dilute you and your shares drop in half again. Then you see that the SEC filings show that insiders bought on the dilution after the price drop. There's probably a lesson in there somewhere.