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JEast

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Posts posted by JEast

    For-profit Education stocks getting slammed

    in General Discussion

    Posted

    Many of the stocks in the sector were already over valued even with the year long negativity, over valued from a G&D perspective.  Strayer is/was 9x of book value. 

     

    However, who is going to educate the population if there is not help from the private sector?  The government needs these companies if they truly want to educate folks as public sectors are already over crowded.  In addition, have you seen 4-year tuition at many universities?  There is some value around and some companies are really cheap, but of course they may get cheaper :)

     

    Cheers

    JEast

    Oil Tankers -- Depression May Last a Little Longer

    in General Discussion

    Posted

    Yes, of course, and what I was attempting to say.  Cheniere was approved to build the 'import' facility in 2005 and now is approved for an 'export' facility.  Investing sometimes is a very humbling experience as Cheniere has proved as they were drastically wrong.  For NG, you just can not flip the switch as the storage facilities alone are massively different.

     

     

    Cheers

    JEast

    Oil Tankers -- Depression May Last a Little Longer

    in General Discussion

    Posted

    Nice article on the changing landscape of transported oil and also places (a least partially) the reasons for the tanker depression.  Of course this is all subject to change as we were building NG import facilities in the US.  We were also to have peak oil just around the corner so maybe we will put that off for a while too.

     

    http://www.ft.com/intl/cms/s/0/cb917324-17ce-11e2-8cbe-00144feabdc0.html#axzz2AiIjbutT

     

    Just one point, but a point and reason I like the container space better, but the shakeout may provide some savvy folks to pick up some deals.

     

     

    Cheers

    JEast

    Fairfax 3rd Q Results!

    in Fairfax Financial

    Posted

    Skeptical comment: The BMO analyst had a good point in that if you take the CAT out, results were the same as last year -- implying that even with a little premium growth not much progress on the underwriting side.  Of course there are a lot of moving parts with the Zenith addition that skews things somewhat.  Also, I am still of the opinion that we will see $50m, or more, in losses at ORH in the 4th due to crop losses.

     

    As a side note, for folks building or managing a portfolio, FFH is an excellent hedge at these current prices.  Heads you win, tails you won't lose too much.

     

     

    Cheers

    JEast

    What happened to the old shipping thread ?

    in General Discussion

    Posted

    After studying the shipping space for the last 5 years, I am of the opinion that nearly the entire industry's management groups of dry bulk, oil tanker, and containers are of the river boat gambler types.  More so for the Greek operators, maybe it is a cultural thing.

     

    With that said, this does not imply that you can not make a good investment, just be cognizant of whose team you are joining.  By far, the cream of the crop is SSW and management has proven that thru this cycle.  I am more partial to the container space due to the charter/lease aspect irrespective of the cancellation fears, just know who your counter parties are.  If we get a double dip, the Mr. Market may get moody again and some of the river boat gambler types will become real attractive.  Not yet though.

     

     

    Cheers

    JEast

    Proper treatment of Goodwill in valuation

    in General Discussion

    Posted

    Most of the time goodwill is worth squat - delete it in your evaluations.  However, sometimes and if the company has a competitive advantage and/or moat, goodwill may be worth more such as 2-3X of SG&A.  This is just a rule of thumb from a deep value G&D investor. 

     

    There are professionals on this board that may comment on the cash flow perspective for goodwill that will differ.

     

     

    Cheers

    JEast

    OdysseyRe Donates to Romney SuperPAC

    in Fairfax Financial

    Posted

    I read a good book 'What Would Ben Graham Do Now?' by Jeffery Towson where he discussed how the Middle East and much of Asia capitalism works.  Many call it 'crony' capitalism but that is just how business is done in those areas -- oops, I mean all areas.  At least for the US, we have moved more and more towards the Corporatocracy.

     

    Recall -- some guy by the name of Buffett is doing it in a big and public way but there is another guy named Munger that balances him out, somewhat. 

     

     

    Cheers

    JEast

    The Value Investors - by Ronald Chan

    in Books

    Posted

    [amazonsearch]The Value Investors:  Lessons From The World's Top Fund Managers[/amazonsearch]

     

    The Value Investors - Lessons from the World`s Top Fund Managers by Ronald Chan is a good, concise, and a nice addition to the value investor’s library.

     

    Disclosure: I received a free copy for review.

     

    Cheers

    JEast

    India opens Insurance sector to FDI

    in Fairfax Financial

    Posted

    True it is not a done deal, but at least it is going to parliament and all know the change would be good for the country via more capital, strengthen the rupee.  But then again, never underestimate what governments can and will do to shot themselves in the foot.  As for the ICICI investments, HW assists and plays the role of an advisor as they indicated a year or two ago when asked.

     

     

    Cheers

    JEast

    India opens Insurance sector to FDI

    in Fairfax Financial

    Posted

    Good news indeed and looks like the new administration is finally being constructive.  I suspect that HW will move in steps to something like increasing to 31%, 39%, then 45%, etc... over the next few years.  I held back from saying great news as ICICI Lombard has yet to write at 100CR and would not put them in the same bucket as Fairfax Asia that has been excellent/great.  Good news still as a nice place to put some of the cash only earning 0.5% to work.

     

     

    Cheers

    JEast

    Dow Theory - Any Comments?

    in General Discussion

    Posted

    Just seeing if any old school folks are out there in the hinterlands.  If so, found the recent divergence in the Dow Jones and the Transports interesting.  Maybe this is just the money being pushed into the big caps with QE.

     

    http://s7.postimage.org/jkknd9hln/Screen_Shot_2012_10_04_at_1_54_02_PM.png

     

     

    Cheers

    JEast

    Do Bonuses Change Corporate Culture??

    in General Discussion

    Posted

    Of course a bonus changes individual behavior, but interesting observation/research from UK economist Andrew Smithers on how bonuses to executives is diminishing the capital spending plans of companies.  Capital spending as a percentage of a companies cash flow, on the whole, for cap ex is near or surpassed all-time lows from the '50s.  Add to the potential cultural change and the uncertainty that exist, there is no wonder that QEn+1 is not working.

     

    FT Video:

    http://video.ft.com/v/1796071957001/Bonus-culture-eroding-investment

     

    Follow-up Article:

    http://www.independent.co.uk/news/business/comment/anthony-hilton-how-bonuses-make-bosses-reluctant-to-invest-in-the-future-8163804.html

     

     

    Cheers

    JEast

    Alchemist's Dream -- Real Gold

    in General Discussion

    Posted

    The alchemist's dream of turing lead in to gold is here - sort of.  The gold below was produced by a bacteria that, according to researchers at Michigan State University, can survive in extreme toxic environments and poop 24-karat gold nuggets. Gold standard here we come :)

     

    http://gizmodo.com/5948739/researchers-discover-bacteria-that-can-produce-pure-gold?utm_source=io9.com&utm_medium=recirculation&utm_campaign=recirculation

     

    http://s14.postimage.org/np9my571t/Screen_Shot_2012_10_03_at_10_16_03_PM.png

     

    Cheers

    JEast

    Jim Chanos on JPM, C, MSFT, DELL, HPQ, natural gas, etc

    in General Discussion

    Posted

    Though anecdotal and from one lone source, I suspect that in the heat of the moment Kynikos was using information from their colleagues.  Yes, the 'fraud' comment was out of bounds and surely did not help the situation at the time.  I still have my negative bias but I try to put that aside as I want to be bullish on DELL but I just have not gotten there yet.  May $8 will get me there a little quicker :)

     

    Cheers

    JEast

    Jim Chanos on JPM, C, MSFT, DELL, HPQ, natural gas, etc

    in General Discussion

    Posted

    1) I have a bias against Chanos for his part in the Fairfax story, but that has softened over the years as he at least backed away from the Fairfax issue.  Also (though anecdotal) was that he was outsourcing his research on Fairfax and was not involved that much.

    2) The Spring 2012 issue of Graham & Doddsville had an excellent interview with Chanos that softened my bias a little more.

    3) As such, he does have a point about serial acquisitioners in the technology space (e.g. Cisco and HP come to mind).  At the end of the day, the acquisitions need to add some value.  It is rare that a company can really change, but DELL is attempting this.

    4) For the most part, the non-manipulated market (ref: FFH, OSTK) is usually smart in these matters and may be the reason for the continued weakness in DELL.

     

     

    Cheers

    JEast

    Antarctic Sea Ice

    in General Discussion

    Posted

    O.K. guys and gales, no nasty emails - but I find this stuff interesting as I look very closely to the hurricane season (for obvious reasons) along with El Nino and La Nina episodes as I still like to snowboard.  Anyway, noticed that the Antarctic Sea Ice coverage is the largest on record (or at least for the last 33 years since satellite data started).

     

    http://hockeyschtick.blogspot.com/2012/09/antarctic-sea-ice-reaches-record-high.html

     

    Cheers

    JEast

    Crop Losses

    in Fairfax Financial

    Posted

    Updated/Enlarged the above chart.  In addition and to your comments, the business is indeed very short-tail so it is tough to use the float to any good investing purposes and another reason for the marginal business model in my view.

     

    Cheers

    JEast

    Crop Losses

    in Fairfax Financial

    Posted

    The ARMtech presentation is cherry picking with starting data in 2004.  As mentioned earlier, crop insurance is a marginal business over a 10 year period with 8 good years, 1 bad year, and 1 year that wipes people out.  On the face of it, it looks similar to CAT Re but the ratios do not shake this out in my view.  One of the reasons is the regulation is to volatile with changes in the program every couple of years.  The chart below looks like a normal CAT chart, but due to changes in the reimbursement regulation and fixed premiums, move the numbers up another 5%+. 

    http://s9.postimage.org/9go0uvcsf/MPIC.png

     

    If the chart went back to 1988, you would see another 200%+ ratio.  It takes a lot of luck to get enough 80-90% years to recover a 200% year.  Since I am long FFH, just a terrible line of business from my seat.

     

     

    Cheers

    JEast

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