ValueArb

So how long until Binance collapses? It's balance sheet appears to be as big of a scam as FTXs. https://dirtybubblemedia.substack.com/p/the-binance-scam-chain

I question how legit a $29B valuation is when it's only supported by a $300M stock sale. It sounds like OpenAI is in the eye of the current hype hurricane, and some insiders are taking advantage to reap the highest possible price by keeping supply well under demand.

Capedge.com can do that for free.

Why would a multibillion-dollar hedge fund manager buy fast food? For major profits. “We’ve been a big investor in the space,” Bill Ackman, founder and CEO of Pershing Square said of fast-food chains on Thursday. https://www.cnbc.com/id/46667568

I agree labels don't matter. But I question their valuation skills when the Twitter acquisition was done at 9 times sales and 180 times operating earnings. Revenue growth was 36% in 2021 (COVID bump?), but earnings were down and it had averaged around 20% growth the last three years. That's a speculation, not an investment, and doesn't strike me as especially smart. Basically a bet on an Elon turnaround, but even if he pulls it off, its likely they still paid well over 40 times earnings in the best possible outcome.

Apple Silicon has also given them a new competitive advantage, especially in laptops where its combination of performance and low power usage is way ahead of Intel/AMD. But it remains to be seen how long they can keep their lead, last time they went their own way with processors (PowerPC) they couldn't keep up with x86 over time. They still haven't been able to scale Apple Silicon to Mac Pros yet.

Supposedly the reason the Saudi's rolled over their $2B stake in Twitter was that they thought the $54.20 offer undervalued Twitter. That doesn't sound like value investors to me.

Supposedly PIF has a significant piece of Twitter, which is concerning given Saudi Arabia intelligence services have co-opted Twitter employees to track dissidents before. They are apparently on Elon's speed-dial to raise more money from whenever he needs.

In 100 years I agree AI will be amazing. Question is how soon that will occur and I'm firmly a skeptic so far (though ironically I created AI generated art today to discuss its implications with my daughters, who both plan careers in the arts). I believe AI will be a great tool for very focused applications, for example my current company uses this same sort of pattern matching AI to predict periods and pregancies for women who wear our sleep ring. Creating a model from tens of thousands of woman with their body temperature graphs, ages, weights, heart rates, etc, allows that model to make pretty accurate correlations of when one womans personal graph fits the model for a pregnant woman or one starting their period. But for general purpose usages it falls apart. I'd have to replay the video to better explain why I think this, but what AI should be good at (relating facts) this is very poor at. And what you want it to do, relate the actual thoughts and philosophy of a great person, I think its deceptively poor at. The Jobs bot said some things that didn't seem reflective of things he would actually say, it was mimicking him without grasping him. But again I need to play it again to give you more coherent examples.

Its a Potemkin Village, just a litany of factual errors and odd segues from the beginning. Says NeXt made three ground breaking applications that never existed. It has Rogan ask Jobs about the Newton, which he had nothing to do with. Called his wife "liz". Attributes Apples "Digital Hub" to Adobe and says their head of research was John Lasseter, who never worked at Adobe, he's the founder of Pixar! Aside from the factual errors, it doesn't even express Job's thoughts well. Also the guy who introduces it is doing the usual overblown AI promotional schtick.

Yea, I have no idea why Lambert is selling. I've had plenty of success buying when insiders are selling, but often its because they have different personal needs (buying a house, diversifying their portfolio) or might even not understand how to value the business well. But Eddie should have a similar interest to me, finding the highest return opportunities and obviously he should understand how to value things. Only explanation I can think of is that he needs cash for another investment, and maybe thinks SRG will take too long to roll out. The one thing that keeps me in here is that the executives incentives should be inverted. They are shutting things down, which means they have little incentive to pump the stock, their main goal should be to get out without getting stuck in lawsuits for years so that range should be conservative. But maybe Eddies level of massive control over the execs could cause some perverse incentives that I don't know about.

The perfect tax arbitrage!

You are correct, I should have been clear that they aren't net-nets yet, but that I believe these both will become net-nets this year. SRG may have sold as much as a half billion in properties in Q4, we'll see when the 10Q comes out. But it should become a net-net as soon as it disposes of about 2/3s of its properties. As a liquidation, its guaranteed to be a net-net at some point. TCI is a bit tricker. The owners could decide to put it all into crypto and take a gamble. But if it proceeds as I expect, they will continue to unload properties until net cash is greater than liabilities. They have roughly $200M in cash/investments vs. $383M in liabilities right now and the joint venture is carried at $306M on the balance sheet along with $270M in real estate, $146M in receivables, $130M in notes, so there is a lot that can convert to cash pretty quickly.

I'm a net-net guy so here are two. Seritage (SRG) - Sears real estate holdings being liquidated. Trading at $12 which is roughly book value while company distribution range is $18-$27 so they expect to sell properties for significantly over carrying values and so far looks like that is happening. Risks are it's fairly levered, if sale prices come in under book that equity disappears rapidly. And it's an Eddie Lampert play and he's been selling. TCI - A family owned apartments business, trading $44 with a $90 book value. They just unwound a big joint venture carried at way under market value, which massively increased book value. Its a complex structure, it's 80% owned by another public company that is 80% owned by the founders family, and one of their subs issued bonds on the Israeli exchange, but its simplifying. The founder died a few years ago and they've been selling properties the last few years so my thesis is they will want to sell it or break it up. Risks are the family may want to double down on new real estate or businesses, and its a value trap without a catalyst. But I don't get along that well with my siblings so that makes me bet they all have different ideas of what they'd like to do and will just find the most tax favorable way to break it up.

Thanks Greg!

Thanks, my personal portfolio is large enough to pay my bills as long as I continue my historical performance and don't have a down year. Last time I invested full time I went 7 years before my first down year. But if I do have a down year I can always go back to software development, salaries are ridiculous now.

Today I just filed my first management fee invoice to my client through Interactive Brokers. I have been managing her account for about a year and a half under a profit sharing agreement, because of my job I was too busy to figure out how to do it last year so I'm billing her all at once. She is a relative, and I also have some other friends and family interested in having me manage their accounts. I'm planning to quit my job this year in order to do investing full time for them. So some questions for any professionals out here. 1. Do I have to become an RIA? If so do I need to do it now, or can it wait until I am ready to take on clients outside of friends/family? 2. How hard is the Series 65 exam? 3. How hard is it to register in your state (I'm in Arizona). 4. Is there anything else I need to be doing while running money for friends and family? 5. How much money should I be running before it makes sense to start an investment partnership (hedge fund)? And any general advice or warnings are always appreciated, thanks!

Holy cow, I forgot Microstrategy was over $1,000. It's down more than 85% since then, that was awesome timing!

The next few months are going to be very interesting since I'm expecting volume to pick up and show us where pricing really is.

In writing my client reports I came across an interesting performance metric I didn't anticipate. One of my clients started in June 1, 2021 and her account is up 39% since then. She chose me over a Schwab broker, so I gave her a comparison to the S&P 500, which is down -10.7% in same period. But she is in her 50s so that's not a fair comparison as I would expect Schwab to put a substantial amount of her portfolio into bond funds and cash (and some international funds). That would have reduced volatility greatly over a pure SP 500 holding and obviously done much better. So I used Vanguard Target Retirement funds as my proxy, 2030 and 2035 funds and they were both down even more than the SP500 during same period, around -13%! I hadn't realized how big a shellacking bond funds had taken, or how little diversification can help during some major market moves.

I keep hearing this but employees at large housing developers keep telling me they’ve slashed development budgets to the bone. Even with prices still far higher than three years ago. Do you know why? I certainly don’t.

Cathie Woods might be getting low on dry powder.

congratulations! I love stories like UNTCW. Just rewards for paying attention!

I didn't do as much research in 2022 as I did in 2021 due to work demands, which made me feel a bit of shame, but now that I've added everything up its passed. I didn't do as poorly as I expected. 2022 My account: +10.3% Client 1: +13.9% Client 2: + 7.8% Total gains since returning to value investing in Spring 2021: My account: +33.3% Client 1: +38.7% Client 2: + 43.8% Edit: And all of my gains were microcrap net-nets, outside of some oddities like ARKK puts. I did sell all of my BRK.B lately and committed myself to putting the funds into active research.

Sounds reasonable.