nodnub
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Posts posted by nodnub
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These comments are specific to a litigation play I owned a token amount in.
Lot of fun. Sort of like a lottery ticket if you like to gamble. Was very illiquid.
Had very large price fluctuations.
PROS
- It wasn't highly correlated during a widespread market correction like 2008/2009. So you might be able to switch into other mis-priced securities during a correction
- Huge potential gains.
- Overlooked by most investors.
- Mis-priced because of legal uncertainty and because it was a spin-off.
CONS
- Keeping on top of the court filings takes a lot of effort. If you have a small investment, the time required is probably not worth it.
- Court case and appeals can drag on for 10-15 years in some cases (or even longer)
- If you are a large investor and something goes wrong you probably need to have a lawyer on your team.
- If you are a small investor and something goes wrong, you probably will get overlooked, ignored, or screwed.
- It wasn't highly correlated during a widespread market correction like 2008/2009. So you might be able to switch into other mis-priced securities during a correction
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GDP growth in india has been flat though. And corruption is a huge problem, it does not seem to be a very business friendly place. Allthough that can have its advantages too I guess.
Why not Africa? A lot of countries there grow at double digit rates, low debt/gdp, and some of them have a better business climate then Italy even. And there is a shortage of capital there (so better asset prices).
Im more of a follower though, so ill wait untill i see some good ideas being posted in Africa, and then follow along :) . One idea I like is Conduril. Does a lot of construction in Africa and is likely to grow, and is cheap. Plus it is on a european stock exchange, so you would expect less corruption and fuckery.
I think corruption is a big problem in Africa too. As a bonus you get random warlords and refugees. Infrastructure may be worse than in India. Anyway, Africa is a pretty big place, so I'm sure some countries there have a good business climate and good growth.
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The story continues:
Owen Li, the founder of Canarsie Capital in New York, said Tuesday he had lost all but $200,000 of the firm's capital—down from the roughly $100 million it ran as of late March. -- That feat is really, really hard to do statistically without tossing the money out the window.
Maybe not too hard if overleveraged on binary outcomes. :)
Details in WSJ article. Can click through article from here. https://www.google.com/search?q=Owen+Li+Canarsie+Capital+wsj&tbm=nws
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http://www.currentmedicine.tv/2014/11/08/atul-gawandes-surgical-checklist-fails-in-real-world-study/
interesting points in this article about potential sources of bias in original study, and poor study setup.
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Karthikpm, it's an IPO which hasn't occurred yet, so you can't trade it yet. It looks like an offering for a SPAC focused on India. It's not technically a SPAC.
The Company has applied to have the Subordinate Voting Shares listed on the TSX.
The Company anticipates that its portfolio will be concentrated, provided that the Net Proceeds of the Offerings will be invested in at least six different Indian Investments, such that no single investment is expected to have an overly undue impact on the performance of the Company.
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I think in a high-quality large cap there is high tendency that they will keep performing well for a long period of time. Small companies tend to have less diversified income streams and are more sensitive to business fluctuations. I also think it's harder to identify the high-quality small companies.
From personal experience, SmallCo's seem more likely to have a rights offering, or other corporate action that you need to stay on top of (or you risk getting taken advantage of).
In a small cap it's easier for management to lead a buyout at low (unfair) price. Hard for small retail holders to fight for a fair price.
Liquidation and Restructuring can happen to any size company, but I have seen it a lot more in small/midcap.
Just my personal experience. Maybe someone with more time and better knack with small companies get do better with them.
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I would add if you're not watching your investments regularly, especially large caps, you're doing it wrong.
West, are you saying that you think large caps need to be watched more closely than small/midcaps? Seems counterintuitive to me.
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I wanted to see if anyone on the board had a recommendation for a book that really hits on some of the major concepts in The Intelligent Investor (e.g., Margin of Safety, Mr. Market) that I could get for my girlfriend with no finance or investing background. She loves when I explain these concepts to her in layman's terms and wants to learn more about investing but when she starts reading The Intelligent Investor or any other book I recommend her eyes glaze over immediately.
Thanks in advance,
Dan
You could ask her to just read those two chapters (I think they are Chapters 8 and 20). If she is just starting out, that might be an easier introduction than reading a whole book.
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Reading David Waters' blog (OtcAdventures.com) I found this post about the Swiss Company Bergbahnen Engelberg-Truebsee-Titlis AG (Bloomberg ticker: TIBN:SW) , and I would like to dig in financial statements of the company.
Link to the write up: http://goo.gl/FYUiSC
Anyone know what's the Swiss equivalent to the SEC in order to get info about financial statements from Swiss companies?
Thanks in advance,
can you read German?
http://www.titlis.ch/de/header/unternehmen/investor-relations#tabpaneltabs1_2
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If you look at what has been done and not what has been said, Russia has more rule of law then many places. The only takeover moves I have seen are taking of previously owned state assets whose owners are in opposition to the current regime (Yukos and Bashneft). These are in the minority of publicly traded assets in Russia and the disclosure and BoD of some firms are on par with Western firms such as Lukoil.
Packer
One that springs to mind is
http://en.wikipedia.org/wiki/Sakhalin-II
At the time, it seemed that trumped up environmental issues were used to force out Shell, in favor of Gazprom, after which Putin immediately declared those environmental issues resolved.
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It's natural for there to be a long bias in a rising market.
Other factors against shorting.
-It's harder to get the timing right.
-You pay while you wait.
-If your thesis is wrong, your losses aren't capped.
"The market can remain irrational longer than you can remain solvent".
That can apply equally to short sellers or over-leveraged longs.
Unleveraged long investors can sit on an underperforming stock and wait it out (maybe getting dividends too).
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bought some Mastercard and Visa
Hi. If I can ask, how do you think about valuation, especially for MA?
I own MA, and have owned since a month or two after the IPO. This is one of my few 'moat' companies. I am just holding on tight. Valuation might be stretched now, but if you think out 10 years the world will be increasingly digital vs cash based. MA is going to benefit from this.
I prefer MA over V because MA includes Europe whereas Visa does not. Is this an incredible value play, maybe not here, but I think I'll be happy in 5-10 years verses where shares are at now.
What do you mean by this? I think I misunderstand you as my credit card is from Visa. We have both here?
VISA Europe is separate from VISA. VISA Europe is owned by financial member institutions not public shareholders.
http://usa.visa.com/about-visa/our-business/visa-inc-and-europe.jsp
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Most concerns in media are overblown, but it does seem the index case in Texas was grossly mismanaged.
76 hospital staff had contact with him. That seems irresponsible from a containment and planning perspective. Why not have a dedicated staff and equip and train them properly? I predict workers comp lawsuits over this Texas incident.
Apparently they also sent his blood samples without additional sealing through the hospital pneumatic tube system, potentially contaminating that as well, and the exterior of every sample that goes through that system.
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I'm still betting that the flu will kill more people this year than Ebola. Maybe next year will be different.
True, but most flu viruses tend to kill the very young, the very old, or people with other health issues. So it's more of a known and expected outcome.
A new virus scares most people precisely because they dont know what to expect, how fast and far it will spread etc.
I would be very concerned if there was signs of a flu spreading with characteristics like 1918 pandemic.
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It blows my mind that anyone would commit to a 30 year locked in interest rate. The odds of that being profitable in 5 years, let alone 20 or 30 years is Nil. Only in the US. Our longest locked in, in Canada is 10 years at much much higher rates than a 5 year.
Yes, our 5-yr is at 2.75% or something, then the typical 10-year is at 4.6% or something. By some fluke/stroke of luck, I am currently locking into a 10-year at 3.6% which for Canada is a steal. (I think the rate has already move up to 3.8% or something - this is Desjardins). In any case, you are usually talking mid to upper 4s when the 5 year is below 3% which is not great.
Hi Mungerville,
Why are those rates you are talking about so different from what I see on Desjardins website? http://www.desjardins.com/ca/rates-returns/financing/mortgage-loans/
Their website lists the 10 year fixed rate mortgage at 6.75%
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Vancouver real estate has grown at 12% CAGR from 2000 onwards - that is almost 500% gain from the levels in 2000.
Amazing indeed!
Hi Shalab,
Are these numbers sourced from somewhere in this thread? When I look at Vancouver price charts and crunch the numbers I don't see gains that high.
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Interestingly the 6% rate was also the rate that Buffet will pay LPs if they wish to send money prior to a scheduled opening. It is a form of financing for the fund. Regarding a fee structure for a fund, I spent a ton of time trying to devise a clever fee structure that would align my interest with my LPs. I thought about setting the 10 year treasury as the hurdle and let it float each year. You start running into issue with the fund admins with a floating rate fee structure. I know some individuals who use 0,6,25 and actually ran into trouble with fund raising because of the 0. From prospective LPs' perspectives, some of them want to pay the GP during lean years. Great fund managers with great moral compass tend to be easier to pick in hindsight. Most fund managers who are down 40-50% would often just close down the fund and start a new fund. Hence, the prospective LPs understand that a 0,6,25 fee structure can lead to a GP not having any cashflow for 2-3 years. Hence, having a 1,6,25 fee structure will motive the GP to work his/her way out of the hole.
If I were an LP, a 0,9, 25 would make me uncomfortable (my 2 cents). The GP can't cover expenses unless there is substantial out performance.
I was just reading the Of Permanent Value by Andy Kilpatrick (1998 edition). It referred to 6% hurdle being based on the rate available on savings at the bank. Does that seem right for that era? The book also mentioned paying 6% interest on early deposits sent by LPs before an opening.
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By the way, do you really think Treasury had to coerce FHFA to sign the PSPAs? Isn't it more plausible that FHFA believes they are doing what they're supposed to do?
I do think Treasury coerced the FHFA into violating its charter as conservator. The FHFA director has no incentive to hand the keys to Treasury. The Treasury, on the other hand, has billions and billions of reasons to enter the Third Amendment.
The problem is when you have to go to court to exercise shareholder rights. That makes it hard to estimate the time required for payoff. Even if the courts agree with the shareholders then it can be a long time before all avenues of appeal are exhausted and you see any money from it. For a good example, look at several of the lawsuits against the US Govt for their actions during the Savings and Loan crisis. Some of those cases dragged on for over 10-15 years. I think some are still ongoing.
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There are some people that claim to do this. You can google "perpetual traveler" or "permanent tourist". You might be able to get away with it but that is not to say that you should try. I think you would risk charges of tax evasion. Are you prepared to pay the penalties and back taxes if and when you get caught in the future?
Before wasting any time on it, I would recommend speaking with a reputable chartered accountant in your country that specializes in international or off-shore tax issues. Get their opinion which will be specific to your current home country and the countries you intend to travel to.
Here are some details specific to Canadians. I have read that if you leave Canada as a perpetual world traveler, and do not become a resident of another country, then you remain a Canadian resident for tax purposes.
My guess is that the only way you can achieve this legally is by moving to a country without capital gains taxes and give up residency in your home country.
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Received this reply:
Dear Mr. XXX,
While we do value our relationship with you, I do understand your conclusion. Traders should consider all factors with regard to transactions. In this case, the favorable withholding rate may not be available for your investment.
No firm can truly explain why or how other firms process some transactions. In the case of the foreign dividend processing and withholding, brokers do have various methods to choose. Whatever practice is elected, the customers feel the effects either in broker pricing or a preferential non-resident tax withholding rate.
Since dividend processing varies from one firm to the next, particularly among non-US firms and/or US firms with non-US subsidiaries, there are other factors which may allow a treaty rate to be applied. Some firms are able to request treaty waivers and do process a significant amount of manual processing. On another side, some brokers do not disclose their beneficial owners or rely on a heavy amount of manual processing.
IB relies on electronic processing for many transactions, including dividend processing. Some of our attempts to request treaty rates for customers electronically could not be completed due to requirements for a manual format.
I hope that sheds some light on a very complex and varied system of dividend processing. We do our best to obtain the best overall services for our traders.
Regards,
Kawone H
Interactive Brokers LLC
Sounds like they have chosen an automated dividend processing method that is much cheaper (but which makes some errors with foreign withholding tax). This would greatly lowers their processing costs and allows them to provide cheaper service than other brokers. As you yourself said, the best solution may be to hold those shares at another broker.
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Yes, I've done it before on IB. I'd tell you exactly how except I can't for the life of me remember my IB password!
Here's what IB says:
What if I have a long option which I do not want exercised?
If a long option is not in-the-money by at least $0.01 at expiration it will not be automatically exercised by OCC. If it is in-the-money by at least that amount and you do not wish to have it exercised, you would need to provide IB with contrary instructions to let the option lapse. These instructions would need to be entered through the TWS Option Exercise window prior to the deadline as stated on the IB website.
^^I'm almost positive that they cancel the contracts as soon as you enter the instruction (during market hours), but I canceled mine within 3 days of expiration so it could be different if you're a month away.
Thank you very much for relaying that anecdote.
I had just ended a chat a few minutes ago where I asked the IB representative if I could pay them a fee to buy my position from me. He said "I believe what you are referring to is Cabinet Trades. We do not offer that service at IB".
So I was bummed out. You have given me a different question to ask of them now. However I'm afraid it's a different situation. I need it cancelled about 17 days before expiry -- the link you showed me merely talks about forcing them not to exercise under any circumstance.
Well, I have 2 more days to go to wait out the wash sale period. The bid is still 2 cents. Probably will be there still.
Eric,
That is strange, IB makes reference to Cabinet Trades in the footnotes of this page. https://www.interactivebrokers.com/en/index.php?f=commission&p=options1
I wonder if this page is out of date, or if you were provided with incorrect information?
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You should look into http://sirf-online.org/
They basically do investigative reporting and recently they have done a thorough article on BAM and a fraudulent hedge fund manager in Ohio.
So if you want investigative journalism to flourish then donate to this organization.
Lol, SIRF is Roddy Boyd.
Edit: based on the history here... some might suspect him of being a shill for hedge funds with short positions that dont want to get their hands dirty. I'm guessing he doesn't need our charity.
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I wonder why he disclosed the position at $3.7 billion instead of keeping it a secret. Given all the talk about size, and since he doesn't believe in making small investments, why not build it up secretly to $10-20 billion?
WEB is going for the classic pump and dump scheme. Watch out for him pumping XOM on CNBC next week. ;D
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.I would buy an ETF.
Amen, let's say you adhere to the ideology of 10 stock in a portfolio. Just buy 4500$ of index and 500$ of your best pick. As time go by and you add capital, you can have 5000$ index and 1000$ stock picks... keep increasing the ratio until the index becomes irrelevant.
BeerBaron
IMO, this is the best approach to get started! Having a $500 portion in one stock helps get you thinking as a business owner instead of a mutual fund owner. You will be far more motivated to read and learn about your stock holding. I also recommend a low fee index ETF for the remaining balance as the most appropriate for starting out. You can change it later once you've determined your personal investment philosophy.
Investing in Legal / Litigation Plays (LCY – Jubii, UCP – Unitech Corp. Parks)
in General Discussion
Posted
That is how I treated it. I put 1% of my portfolio into it at the time. It was roughly 30:1 return if successful. It ran up about 10x but I didn't sell any of it because the run-up was logical based on ongoing court decisions in related cases. Then we won the case, then it was appealed, then we won on appeal! But in 2008 WAMU went into FDIC protection and was acquired by JPM. The lawsuit was deemed an asset transferred to JPM and the tracking warrant was deemed a liability that was left with the bankrupt shell of WAMU. So I held on and wound up with about what I started with.
This goes to show that you can be right about the lawsuit but still lose your money when something unexpected happens.
Have fun!