SharperDingaan

Seems really obvious, but a great many don't seem to recognize it ..... Every week, the business press routinely tells of company blow-ups. Maybe let the press do your 'searching' for you? Almost always the company didn't meet short-term expectations, people need a whipping boy, and it's the share price taking the beating. Nobody wants to look stupid bucking the crowds 'obvious wisdom' (fear), and the paralysis magnifies the eventual loss on sale. Yet for many of these lepers, the underlying business hasn't really changed - just the valuation; and agency risk is now working very much in your favor. Most times we've taken advantage, it's been a 2 quarter investment, and we've done very well. Will next quarter be better? If you think it will, the obvious thing is to enter a trading position today that exits next quarter; if you think it will not, exit today and buy back next quarter. If you think the next half will be better, do the same thing - but just with more shares. As you know the company well, know the 2-3 things that make it money, and know what's happening in its industries - it's not a big stretch. Most times we've entered a swing trade, it's worked out our way. If you are going to invest via 'formula' (ie: filters), your comparative is the index. And most times the index ROI will win - simply because you're spending too much time in 'analysis'. Either invest differently, or do something else. SD

Just to throw some things out .... Know what you want, and keep your eye on the prize. For most people it's family/community, business, other; and in that order. Over a 3-month period, log how many hours you are spending where, and how many hours within each bucket were 'quality time'. There is a reason why so many NA families are dysfunctional. Passion. Managing the business (CEO) or managing the cheque-book (CFO)? A key realization, because if you choose CEO; a great many livelihoods are relying on your ongoing acumen - and they deserve your full attention to the task. You may well be good at both, but you can only do one. Partners. Better decisions, division of labour, shared successes, ability to take vacation; all kinds of net benefits, but you have to be able to share leadership. With lots of other strong minded people, across genders, cultures, and demographics. You have a tribe, even if sometimes you might wonder! Sustainability. Every business textbook known to man, advocates that bigger is better; but sadly it's only true in the short-term. The reality of course, is that ultimately - the business just dies faster; yeast in a sugar solution, being the everyday example. There's a sweet spot for every business - know what it is, and whether it is for you. Most people will come to investing, either from the finance world (CFA, etc), or the business world (MBA, CPA, etc); and often they will be a hybrid of both. Great bones upon which to build something, but you have to make a decision. Choose well, and you will have both a rich and very long life. L'chaim! SD

The kind of techniques they teach at Hereford. SD

Many years ago, a few years after leaving Africa, my sister got mugged in the London Underground by a 'known' thug. At the time, she was in her mid 20's, doing a two-year internship with one of the UKs leading CPG companies, and dressed in business attire. It was an attempted bag/jewelry theft, plus a shove into the path of an oncoming train. As most women were, in a different time and place, my sister had been trained in self defense and marksmanship by experts. Uncles and boyfriends had also taught how to tumble safely out of moving vehicles. London's tube stations are often quite deep, and after the initial shock, it didn't go well. The thug was delivered to the ticket booth, near collapse, with both his RH arm and his RH leg dislocated. Attempting to pass out, he had been 're-awoken' a few times on the frog march up the stairs. The thug was taken away on a stretcher, and my sister had to appear in court a few days later. Let off with a caution, but it took forever afterwards to live it down. To this day, her boys proudly display mums caution to passing girlfriends. SD

Agreed, but it typically is reserved for volatile times no? Unless you're able to do this every year? I typically reserve those in the workout basket. We initially thought this as well ... but experience to date is significant contribution pretty much every year (albeit different overlays). Part of it very likely is just rising volatility with the changing times (2020: 1700-2000 daily DOW swings), but a good chunk of it is also knowing your holdings, and their industries, very well. The skating to where the puck is going type thing.... In a workout, an overlay success bails you out. But in everyday use - overlay successes are cocaine candy. Get the gains out of the equity portfolio asap, before you start to think that you're invincible; shove wafers into a safety deposit box, repatriate, or just give it to charity - but get rid of it. SD

Viking: As a fun exercise add a new worksheet. One row per position, MV, MV portfolio weight, industry, geographic regions, etc. as additional columns; sort by the different columns. Build a per row data set using the last 3 yrs of quarterly data, populate it going forward from a macro, and use the data set to graph the changes over time. For sensitivity, add a spinner to the current MV in each row. In the near-term, the big drivers are the tech. The sleepers are Eurobank and Atlas - if the 'west' is exiting Covid in Q3/Q4 as everyone hopes, these two are going to be doing very well. SD

"Can anyone on this board tell me that 99% of their performance come from more than three stocks? Genuinely want to know - typically I find my best idea account for 90% of my performance, also 90% of my loss" Performance can also come from strategic overlays. Example: FFH. Cash parking spot for us, since mid December through to about the end of next week. Four trades, an entry, a short-term BB driven swing trade, and an exit. Yet our 'all in' return will be around 25-30% - on simply cash management. We prefer concentrated portfolio's, but strategic overlays are part of the return - occasionally, most of it. Sometimes it goes your way, sometimes not so much. SD

Very nice quarter. TRS: Always nice to learn from the master. We're just mindful that the updates are as at end-of-day today; have to think that similar things are buzzing around some of the recent runups, that transact AFTER today. Share price: The previous buy was at an average CAD 522, the TRS strike is at around CAD 530, yesterdays close was CAD 508. Most would argue a floor price of around CAD 530 + 2-4% for expected Q121 growth, and a few days to get there. Interesting times ;) SD

Just to add to this: With big batches, the process and precision is quite different to small batches. Your brew masters are learning from the master brewer in charge, and the topics range from ingredient control through to eventual packing and conditioning. Brewing to profile tolerances of 2-3 ppm, despite the quality of your ingredients, the practical pro's/con's of various bits of kit, etc. That's the R&D. Most craft brewers have subscription based 'growler' clubs, where members can try-out/taste the weird/wonderful first. You're looking for different flavor combinations, intensities, and brew techniques - with each batch being its own market test. Generally, the more outrageous the better, as scaling up results in compromises. The more traditional R&D. All valuable to the overall process, but next to impossible to put a valuation on. SD

The reality is that at the 'micro' level it doesn't happen ;) It is far smarter to invest the R&D as incremental working capital in more efficient P&E. In the brewing world, this is shared brew-level collaborations with other brewers, using contracted facilities. 2+ brewers sharing the incremental cost of brewing a batch at 3-4x 'normal' volume, to lower unit costs by 35%+. Licensing your brew to a local foreign brewer, rather than making locally and shipping it. Long-term is 4 years, the length of the strategic plan. For most, the focus is on operating leverage at the expense of financial, where this is R&D it's essentially self-funded small-batch experimentation. Continually prove the market as you move along, or drop it. SD

We have been in/out of FFH ever since SAC Capital took a run at it. We've done very well by FFH, and along the way, have borrowed a few pages from the masters investment book; one of which is what buy/hold really means. FFH is always going to be garbage collecting, and turning it into compost. The volatility and timing uncertainty of the process, hedged against the much larger insurance business. Very effective long term, but in the short-term (<1yr) largely a function of ever changing stars alignment. At times, everything aligns, and it's hail the hero! At other times, it's fire the bum!! Like most everything else, FFH isn't a buy and forget investment, One has to be willing to trade around future prospects, and the overall manic/depressive gyration of the market. Not an easy sell in the OPM world. Simply enjoy the ride, and let it be. SD

At any one time, most everyone is a lot more diversified that they realize. Equity portfolio, FI portfolio, house(s), partnerships, crypto, pension, interest/dividend income, etc. Equities as a % of the total asset pool, and dividends as a % of total income, are far from 100%. Most are actually TOO diversified. Draw downs of 50%+ every 5-7 years (or more often) is pretty common. Capital exists to be used, and nothing cures 'invincibility' faster than getting rid of the 'excess' money. 50% every 5-7 years, is annual compounding of 10-15% (ROE); but the actual YOY returns will of course look very different. Relying on diversification, and portfolio growth, to manage the return volatility is just not effective. Most can manage small portfolios very well, but become utter sh1te when the portfolio is 3-4x that. Different POV. SD

Couple of takeaways …. There are some very good approaches (Kelly), but they almost always treat every bet as an isolated once and done transaction, settling in near real time. In the real world the bet is relative to your risk tolerance at the time, the time horizon, and familiarity with the company you’ve bet on. At most, most people can keep up with maybe 10-12 companies, and 2-4 industries. The reality is that the investor is really swing trading the same group of companies across different cycles and time horizons, and using his/her depth of knowledge to minimize the adverse risk. Risk tolerance, and time horizons changing, as personal circumstance and industry prospects change. Fewer vs more choices, higher maximum weightings, and ongoing risk mitigation. Eye on the prize, not the process. If the objective is a fully paid off house in < 25 years (via mortgage repayment), do you really need compounders? Or is an ongoing string of 3-15 baggers better? Even if it takes 15 years to do, the incremental reward is 10 years of interest savings. Risk vs reward. Human vs algo. The algo can apply mechanical formula a lot more reliably and faster than you can, you’re just a liability. Do only what you’re good at, and where you have the advantage. SD

Now that it is 'mainstream' for a manufacturer to be holding &/or accepting payment in BTC, there will be a lot more of this, and by the bigger players. Simply because if your factory is operating behind a exchange control 'wall', this is one of the few things that you can do to keep your export sales going. Ability to pay foreign suppliers, and accept foreign revenue independent of the local authority is a valuable thing. It also reduces the need to smuggle. BTC at USD 43K this am. Have to think it will not be long before it crosses 50K ;) SD I don't see how simply changing the method of payment would circumvent any regulatory oversight from "local authority" ? Also there used to be bigger retailers accepting bitcoin. At one point Starbucks did I believe, and they all seemed to back out after experimenting with brief roll outs a few years ago. Under exchange control all your foreign revenues and foreign costs have to pass through your central bank. Typically, the central bank will discount your foreign revenue to get a quicker receipt, and not give you enough FX 'quota' to pay your suppliers. You can either come up with local substitutes or go without. You can object, but do so at the risk of being 'disappeared'; you, your family, all your living relatives, and even your dead - erased. BTC can't be traced, those collecting the bribes are also using it, and it is in everyone's interests NOT to do anything stupid - exactly the 'zero trust' conditions that BTC was designed for. Better still, the local currency is devaluing, your BTC hoard is appreciating, and even if the wallet is seized - the BTC can't be accessed without the key. Smart risk management. SD

At USD 40K/BTC (assumed), USD 1.5 B is roughly 37,500 BTC. Most would expect that they were acquired via the option market, as physical delivery vs MTM cash settlement. Squeeze the supply to raise price, and suddenly put the out-of-the money calls - in the money? Good on them. SD

Now that it is 'mainstream' for a manufacturer to be holding &/or accepting payment in BTC, there will be a lot more of this, and by the bigger players. Simply because if your factory is operating behind a exchange control 'wall', this is one of the few things that you can do to keep your export sales going. Ability to pay foreign suppliers, and accept foreign revenue independent of the local authority is a valuable thing. It also reduces the need to smuggle. BTC at USD 43K this am. Have to think it will not be long before it crosses 50K ;) SD

Most of this is simply because OPM is forced to invest in paper assets. The more 'uncertain' the market becomes, the more that 'risk adverse' money flows into OPM, and the fewer investable opportunities there are. Yield continually falls, the feedback loop accelerates, and instability significantly worsens. All OPM need do is earn a few bp more than the competitor, and not blow up - 'cause the customer has nowhere else to go. Very narrow POV ;) All that you really need do is privately buy the things that people actually need. Buy the apartment block, as everyone needs a place to sleep. Buy and lease out the robots, packaging lines, CNC machines that do real things. Banks/investors, the world over, are throwing long term money at you, at ridiculously low rates. No whining shareholders, no quarterly earnings pressure to meet 'targets', and OPM works for you - for free. Down the pike, IPO your private business when you're ready, and become very, very rich. You don't make wealth trading bits of paper - you privately own the underlying businesses themselves. SD

Sadly I'm not so sure .... Agreed, an insider cannot pump his/her company during a 'blackout' period - but outside of that? demonstration of ongoing confidence is somewhat expected. If not speaking of your own firm, then a conference speaking to the developing prospects for your sector of the industry. Tweet directly, or use a professional, you're still using social media. SD

He will be investigated but set free - 'cause he did nothing wrong. A post on a social media site is simply 'entertainment'. An 'investment recommendation', is also NOT subject to censure, as long as it is NOT made by a designated investment professional (CFA, FCSI, etc.). DFV was just good at 'promotion', and acted on his opinions, which is not illegal. Similarly, much of the daily media 'news' is entertainment, and not subject to censure, if a professional broadcaster was not involved in its production. It really just highlights how out of date the current Investment Act is. No change for a very long time, until one day the dam breaks - and its a six-sigma event. SD

FFH is just temporary parking for cash that is going to be repatriated this year, and we're private money. For the next month or so, we just think that FFH will offer a better return than CVE will. If we screw up, we'd also prefer to be holding FFH vs CVE. SD

There's lots of speculation, and 'lobbying/consultation', but we just do not know. Directionally, few expect a continuation of 'business as usual'. SD

We sold our CVE today, and are back in FFH. A round trip was not the intent, but at current price levels it is worth the adverse earnings risk. We have a both a low re-entry point, and enough of a gain on this second round trip, to allow us to sleep very well :) SD

A few research pointers, that will help towards a better decision. Research what happens when fracks are done too near the surface. Gas and chemicals migrating into town aquifers, seeping out of the land, earthquake triggers, etc. Note the locations, local farming/ranching practice, frequency and type of damage, PTD drilling in the area, well abandonment history, and how the damage is being brought to light. This is the environmental issue triggering the response. Some reservoirs stand out. The sparsely populated rural land that is marginally productive at best, the tap water that can frequently be lit, and cattle that routinely die from contaminated water. Fracks that were too close together, or where there were too many for the reservoir, they were poorly done, and wells routinely abandoned. Companies containing the damage by compensating ranchers for their dead cattle, and denigrating the odd images of flaming taps and cattle poisonings. Bully the yokels to keep it quiet, and protect the high paying o/g jobs for the rest. Every reservoir has its own hairball, some worse than others. Fracking is just another tool. As experience has accumulated, it is being better applied, and is 'safer' as a result - lot of improvement between today and even just 5 yrs ago. It is also better to frack where there is stronger regulation/environmental protection (Canada) as it minimizes the worst of the abuses. However, for legacy wells, it's too late. Most would expect much tougher US regulation, and probably reservoir specific. Most would also expect reservoir ownership to consolidate under the majors, in return for legacy cleanups and better environmental management. Less drilling for a time, less US (light oil) production, and less associated importation of Cdn heavy crude for refining. Higher heavy oil inventory at Cushing, as a production buffer. US o/g will scream, but the reality is that the industry is done with the 'shale cowboy' disruption. Not a bad thing, and well overdue. SD

Going by last year, 2019 YE results were announced Feb-13. Most would expect an update either in the MD&A, or in a related press update as soon as they exit the lock-up period. Our own thoughts are that BB tech is the preferred choice for security sensitive auto applications, and the choice of Tesla and the other high-end car makers. Sold as the standard in luxury brands, where price is not an issue. Purely speculation, but if it is correct - it is worth a great deal. SD

It will become much more fun when a sizeable hedge fund is targeted for extinction. All it needs is a quiet leak as to what the bulk of the targets long-short combo's are ;) and a competitor bites the dust by the end of the week. After all why share the market take with many? when there's an opportunity to remove a few. SD