valuecfa

Interesting how you guys think it is was that sMAAL company. My comments on them were pretty skeptical, if i recall correctly. :-X

I think patience and multiple orders are a key to minimize market impact on an extremely illiquid stock (as in, goes about 1/4 of the year without any trading in a day). On multiple occasions i have been filled days/weeks after putting in orders at the then bid price (which saved me about 10% of the spread cost). I have slowly been building a position in a $11 million market cap company, and it has taken several months to get to 1.4% of the company's shares. One thing i recently learned is that you can also call the firm making a market in the company's shares and negotiate a price for a set amount of shares (I recently had to open a brokerage account with the market making firm to do this). It is a wonderful tiny company that a talented investor on this board actually brought to my attention. I would like to say the name to get additional thoughts on the company, but i am currently working with them to try and increase their share buybacks at the moment, and it is extremely illiquid.

Thanks for posting. I was researching this very same topic for possible candidates (that would be fair investments even without a call) several months ago when i read a journal article on Tier 1 changes going into effect. I made a short list of candidates that i saved in a folder on my desktop and then completely forgot about that folder. Thanks very much for the reminder dcollon.

While the rally has been nice, it is still not a "done deal" in stopping the leak. The integrity of the well is still in question. I think the easy money has been made. While there is still plenty of room for further upside, i don't quite like the risk/reward as much after the 33% rally of the past month. I closed 70% of my position today, and am looking to close the rest in the near future.

I caught the full documentary on HBO a few nights ago. I thought it was a great documentary, and highly recommend it. It makes you think twice before investing in (or leasing to) companies reliant on fracking. It wouldn't surprise me at all to find that everything documented is entirely 100% factual. The gas industry has attempted to retort the documentary's claims on their sponsored website: http://www.energyindepth.org/ I am not smart enough to know if the energy companies are telling the truth, yet something tells me that this documentary is going to cause enough public awareness to give reason to cause further independent investigations on fracking, and the chemicals used in the process.

I'd have to agree. For fund auditing, i would definitely prefer to hire a CPA over a CFA. Good luck on Level III results Rabbitisrich. The several month lag in finding results is gruesome. It is an amazing feeling to be able to get your life back when you are finally done with it.

you have to have an account with them, or know someone that does that will let you access through their username and password. Used to be, you could access a few of the majors for free through a little workaround, but they closed that loop about 2 years ago. You can still access price targets for all the brokerages free, but not the reports.

http://online.wsj.com/article/SB10001424052748704256304575321071084647654.html?mod=googlenews_wsj http://blogs.wsj.com/source/2010/06/21/anadarko-would-take-huge-hit-if-forced-to-pay-into-bps-20-billion-oil-spill-fund/ Anadarko Petroleum Corp. said it plans to refuse to pay its share of the cleanup costs for the Gulf of Mexico oil spill. Anadarko owned 25% of the leaking Macondo well. Could be yet another long drawn out legal battle for BP. Long BP (as of today)

There's gotta be a pony in there somewhere! :) These cumulative interest subordinated convertible debenture stock units mandatory convert into a pony in three installments ;)

Has anyone looked into the AIG-A security? Just looking over Fairholme's 13F and noticed this unusual pref. there.

The net asset value of Sandridge far exceeds it's market value. Arena is getting a very undervalued set of natural gas and other assets. I think Arena shareholders are getting a heck of deal, considering Arena is much closer to being fairly valued. Sandridge shareholders, on the other hand, are getting diversification, hedged oil production, & reduced leverage. Though Sandridge isn't in as bad a liquidity crunch as many are saying. Its debt doesn't even begin to start coming due till 2014/2015. And if it wanted to reduce costs it could JV out some of the future projects with little risk and much fewer expenses(though they would have to share the operating income on those projects). The merger is a win-win in my opinion. Long SD.

The printing presses are more of metaphor. It is typically done through an extension of credit, as opposed to physically printing money. Though there are other ways to create inflation (using the definition of inflation as a rise in prices). The most common monetary policy to manipulate inflation being lowering or raising interest rates. Some define inflation differently though. For example, the Austrian school of thought defines it as an increase in the money supply, whereas a rise in prices is a side effect. On the topic of the US govt. fudging inflation statistics....Absolutely. All governments fudge their statistics (be it CPI, GDP, unemployment, etc) including the US. Fudging CPI, in particular, saves on entitlement costs like social security, as well as other floating payments like index linked treasury debt.

That is my feeling exactly...recognizing these macro factors are extremely difficult to predict. Have you watched the debate between Rosenburg and Grant? Jim Grant argues inflation, Rosenburg argues deflation. I follow both (get breakfast w/ dave emails, and have subscription to grants at work). VERY interesting, though I was still confused afterwards. Generally I agree with you: there are more factors that point towards deflation, but I find it hard to believe policy makers will not respond with too strong a response to avoid deflation therefore stemming significant inflation. That being said, if that is the case, bonds right now are very overvalued relative to stocks, as inflation will destroy bonds (to my earlier point). Equities in firms with lots of real assets and lots of debt will outperform (assets go up w/ inflation, debt is fixed). Think stocks like oil tankers, deep water drillers, certain real estate operators. There are even companies that own and lease construction equipment such as cranes, and operate similar to a REIT (just own assets, no real operations). I have to believe these are better bets for inflation than gold! I have breakfast with Rosie everyday. I have also been following Grant to a lesser extent recently. I don't have access to Grant's letters, so i just get snips here and there. They are a great read to balance thoughts. I also like Hoisington and Granthams' macro views for additional perspectives. The only thing i worry about is that minor deflation sits with us for a while longer (maybe even a few years), before policy effects kick in, just as a "real" recovery begins. I have a feeling it is still too early to pursue top-down investing (or hedging) for an inflationary environment. That is my hunch anyway.

I'm not necessarily advocating damodaran or BG as right or wrong, I just think it can be interesting to think about different tools and framework people have to estimate FV. Yeah, i know. Just throwing my opinion in the mix. On the whole inflation/deflation thing, it is a bit perplexing. Every economic sign (gold aside), especially excess capacity, yields, and consumer debt, points to deflation to me. However, i think the response (in a multitude of ways) thus far has been, and will continue to be, that deflation won't be allowed. This policy of avoidance of deflation at all costs we seem to be in suggests that we will have quite an inflationary period in the future, as it is very likely to be overdone. That is my macro prediction. I just don't know the time frames in which i think both scenarios play out. It may still be too early to invest for an inflationary environment. Though my macro predictions are often wrong. Another wildcard that will effect the macro environment is the China effect, in which i am in the camp that thinks it is overheating. Though it can continue to overheat for years to come.

I wouldn't put much stock in Dam's volatility based method. It just doesn't make much sense to me, except on paper. I also wouldn't base any macro valuation off the Dow index, as so few companies make up that index. I've always used Shiller's method to find a range i think S&P fair value should be. It's quick and simple, and makes sense to me. One thing it doesn't factor in much is balance sheet strength or weakness at any given time period. By my approximations, and based on the macro risks out there, i think the fair value for the S&P is about 900-950.

"IMPORTANT ADDITIONAL INFORMATION WILL BE FILED WITH THE SEC" Apparently Mad Money lighting round or whatever requires a disclosure, lol: http://sec.gov/Archives/edgar/data/1123871/000119312510127998/d425.htm

I love the company at current prices. I understand why, and like, the decision and timing (from an operational & hedging perspective) for entering the ARD deal for several reasons. However, i hate that they are swapping their stock so cheaply relative to their own NAV. It really is a fascinating company to research, in my opinion. The discovery potential is pretty large in my opinion once they get all their natty rigs going, upon a rise in prices (much of this is currently on the back burner). I own quite a bit of the OOTM 2012s, that i am currently taking a bath on (purchased about a week ago). Though i think there is a great deal of optionality over the next several years for many reasons other than just valuation as a stand alone catalyst. I would of liked to have gone to the dinner solely to share views on this company with Sam. Fairfax has a pretty sweet arrangement going on with them too. I could easily see why they traded in much of the common for the prefs. I would take that deal in a heartbeat.

That is a kind invitation, but I'll decline. I've made my points, and I'm pleased to see most people get it. As for the rest well, I'll leave it to Warren: "If it doesn't grab a person right away, I find that you can talk to him for years and show him records, and it doesn't make any difference. They just don't seem able to grasp the concept, simple as it is." Bear in mind that in the recent past Buffett also has sold put options on stock indexes in the US, UK, Euro zone, and Japan. He has quite infamously bought silver, has speculated on the Brazilian real recently, sold put options on Burlington Northern less than a year ago.

Nice catch, on today's price it's about 5.8% it's quite a nice yield for a floating. On the common I would buy GS if I could understand it... I think I just can't. This is goes into the too hard pile. On the preferred tough... I can certainly understand that GS is good for the money. BeerBaron Best part is...when you buy a floater below par you get optionality...for instance, if you buy at 70% of face, and libor goes up 1% because inflation goes up 1%, then your coupon will also increase 1% on face. HOWEVER, an increase of 1% on face equates to an increase of roughly 1.4% on your purchase price. So, if you see a spike in inflation and libor jumps, your coupon (as a % of purchase price) will increase FASTER than inflation. All of that, AND a LIBOR floor of 4% (so if LIBOR is below 4%, then 4% LIBOR is used to calculate the coupon). Hows that for an investment!!! It's not a bad investment at all. However, Libor would have to go up quite a bit to break the floor. Could be at 4%, based on face, for some time. That being said, hat tip for the idea. I may park some cash there. (so if LIBOR is below 4%, then 4% LIBOR is used to calculate the coupon) I'm sure u are already aware, but for the sake of other lurkers out there, it is .67% above libor. So a 3.5% libor would give you a little greater than 4% on the face.

Many companies do this with respect to executive compensation. It is obvious based on the unusual specific characteristics of the package, and the type of explanation (defending) to shareholders in the letter to shareholders, that the compensation package was Biglari's idea. Rarely is the recommendation of a third party truly independent, void of exec/bod influence, unbiased, or logical. I wonder what Towers Watson's incentive agreement was to approve Biglari's incentive agreement. After all, if you opine against too many compensation agreements you won't get too much business in the future.

Consider that it wasn't too long ago where for every put you sold at-the-money in SHLD you collected enough premium to purchase two calls at-the-money. This gave you 100% upside while only taking risk of 50% downside. Moral of the story: never dismiss an asset class. I recall that SHLD opportunity, and regret not entering it. I came very close to doing that transaction but decide to just nibble on the common instead. :-\

You may not see capitulation this time No. One can only hope. :D A horizontal market for a good period of time could correct an overvaluation just as easily as an immediate larger retracement. Or, the market could just as easily become even more overvalued, and who knows how far the fed is willing to go to prevent another larger downturn. There is really no way to tell. But i am hoping to see a lot of these :o :o :o in the near future. In the meantime i'm still looking for individual opportunities regardless of market valuation.

Probably right. I am still having trouble finding anything more than reasonable buys, except for a few positions. SVU is beginning to look interesting to me again, though i am not fully done researching it, and it has some hairy leverage. In my opinion the US market is only about 12-15% overvalued now. Hopefully it will become greatly undervalued sometime in the near future again, as i am pretty much market neutral. Every 5% market rise or fall, as of late, has been barley moving my portfolio 1% overall in the same direction as the market. I'm really hoping to start lighting up on these hedges in the near future. Though still making a bit of money, it wasn't fun to be so heavily hedged on the way up these past few months.

When this topic comes up here then it must be capitulation time. I think it is hardly capitulation when people are still looking for ideas of what to buy on a pull back, as always. Capitulation, is when you start seeing people say... "I'm out", "Wow", "What do i do?", "We are going into a Depression", "mother*^&*##!", or Paulson getting down on one knee & begging Pelosi to give him a trillion dollars, or Larry Kudlow turning bearish, or the government guaranteeing every asset on the face of the earth. This is just a pullback.

Is everyone else just sitting on there hands like me, right now? Haven't added anything in past 2 days, other than a tiny bit of SD. May begin to start closing 10-15% of my hedges if we get another 4% drop. I hate it that nothing is screaming "buy me" right now, that i can find, other than a few positions i already own enough of.