DCG

The only way I'd become interested in Microsoft again is if Gates returns as CEO, or at least if Balmer is replaced.

I don't try to put current or near-term values on indexes, but when I look at the 13 or so companies I own shares of, I feel like almost all of them are still a bit undervalued based on current earnings, and think their earnings will be higher a few years from now than they are now.

With the hedges, it sounds like Prem is still planning for deflation, which is sort of fighting Bernake and QE. Tough to tell if that's a good idea. It's hurting them quite a bit so far.

Haven't had the chance to listen to the call yet, but is their equity portfolio still nearly fully hedged? I understand their logic for the hedging, but seems like they're largely missing out on the rally over the last few months. I know they obviously take a long-term view with this, but a lot of the equities they've been holding for a while (that had been relatively flat for a while) are finally registering some strong gains and I'm just wondering how much of those gains are beating lost due to the hedges.

A lot of insurance companies try to use a similar model, but they are not good at investing. Look at Allstate for example. They have a lot of float to work with, and have been simply bad investors over the year. Tons of tech companies use their cash to purchase other companies, but many of them are also pretty bad at it.

So is every other online retailer selling products they don't create. Online retailers reselling products will all continue have a very hard time competing with Amazon and WalMart, as they can't match their scale. It's not like Brick & Mortar stores that can still compete with companies like WalMart with convenience. Online retailers can be successful selling their own products. Company's like Apple and Coach (and many others) will continue to do fine since they manufacture and sell their own products. Reselling products at very low margins is a very tough business model, especially when you take into account all the expenses around operating warehouse, taking on inventory risk, shipping, (and add in all the $ they poor into advertising at OSTK) etc.. I'm not saying Overstock can't have some good quarters along the way, but I think they'll continue to have a hard time building any real competitive advantage over the long term.

I just finished reading 'Delivering Happiness' by Tony Hsieh (CEO of Zappos). I read a lot of business and investing books, and this is honestly one of the best business books I've ever read, and I highly recommend it. The book is sort of a combination of Tony's life (mostly business-realted parts of his life), the history and focus of Zappos, and his overall thoughts and recommendations for businesses. I didn't know a ton about Zappos before reading this, but now I'm pretty blown away by them (and see why Amazon wanted them)(and actually even just ordered a new pair of shoes from them). I don't want to give away too much of the book, but Tony has some great stories, is a great writer, sounds like a pretty brilliant CEO/entrepreneur. Outstanding book. -Dustin

Not sure you can call it a turnaround story when they've arguably never really been successful. I just don't see how they have any long-term competitive advantage. They compete almost only on price and have little to no margins. Their fulfillment business has some value, but that's still a business with tons of competition and very little barrier to entry. They spend a lot of money on advertising, and their business would probably dry up if they stopped their heavy advertising. Lastly, I buy a lot of stuff online, and don't think I've ever found something I was looking for on their site.

Seems like just another lame way to put Buffett's name in the title just to sell books.

Good idea, Sanjeev, and thanks for everything you do for this site.

WDC is getting an afterhours bump on talk of STX going private.

yeah...that's what I was saying in my first post. Outside of a few companies, it hasn't yet translated to public companies, but the valuations being placed on private companies right now is pretty crazy. It's not to the point where it seems like anyone can move to San Francisco, start up a company with a couple friends, claim they are going to make games for mobile phones, not have any revenue whatsoever, and then have a company show up at their door with a check for $400 million. There was a good article in the WSJ on Tuesday about this type of thing.

Fine, but they make almost all their revenue as a retailer, regardless of how many beanbag chairs and pingpong tables they may have in the office.

Amazon is much more of a retailer than they are a tech company. Yeah, they make the Kindle, and have some software services and are web-based, but they are mainly a retailer. They're a great company, but a tough stock to get at a good price. Regarding tech not fitting with the approach of the board, yes, tech companies can be harder to predict than some other industries, but it's also an aspect of buying what you know and understand. I'm kindof a techie; I like using and playing with all the new gadgets, read numerous tech sites/blogs daily, have worked for a couple tech companies, and follow a lot of them closely, so I do sometimes invest in them. That said, tech is a large field. I still have a hard time understanding what many tech companies out there do. I understand how companies like Apple and Google make money. While other tech companies like Cisco and IBM are very well known, their businesses are all over the place. No way can I follow and understand everything they do. They feel the need to be involved in pretty much every single aspect of IT in some form or another. I bring up those 2 companies specifically because I have friends who work at both of them and even they have a hard time understanding what the companies do outside of their departments/divisions. I have no desire to invest in companies like that.

And Here's the video of Bartz telling off Arrington: after she complained that people are expecting too much from Yahoo. She's crazy. It blows my mind that this lady is running a $21B company, and that any investors trust her making big decisions.

Did you guys read the below interview of Bartz from a few days ago? She's insane. http://www.usatoday.com/tech/news/2010-10-08-bartz08_CV_N.htm And remember when she told Techcrunch's Michael Arrington to "fuck off" a few months ago? She has no business running this company and is embarrassing the herself and the company. I think she just wants to dump the company and take the big payday and run. I have no idea how shareholders wanted Jerry Yang out but are putting up with Bartz.

What do you guys think? So far, we're mainly seeing signs of this in the private market, but as things like takeover talk increases with larger public tech companies, I can see it quickly moving more to public companies as well. Similar to a decade ago when companies with '.com' in their name were getting crazy valuations, it seems like the same thing is now happening with companies in the mobile space, with mobile apps, mobile advertising or mobile games, as well as even some companies that just add 'cloud' to their name or mission statement. Again, the private market is really where this is currently evident. Tiny startups making things like games for mobile phones that have little to no revenue, let alone profit, are getting bought out for obscene amounts of money relative to the size of the companies. We already have companies like Salesforce, Netflix and Bidu trading for pretty lofty valuations, but other large tech companies (like Apple and Google) still appear undervalued to me. Do you guys see this quickly carrying over to the public markets? Will these private purchases companies are making make sense in the long run? Is this time different?

Regarding Yahoo, I think Carol Bartz has no idea what she's doing as CEO and selling the company might be her only way to redeem herself with shareholders.

The reason I've had such a hard time valuing this company is that so many of the companies they own (or are invested in) are such volatile businesses with unpredictable revenue. As rohitc99 just mentioned, the fact that they own some businesses which "could be profitable in future" makes it tough to value some of their business/investments. They have a strong history of getting these type of companies turned around, but it's still a big unknown, especially with the 'time' aspect of those turnarounds.

;D I've been following LUK for several years and still don't see what people like about this company.

Sounds like you might be looking too far into past prices. It was not in a 'normalized economic environment' when it was selling for $70-$80 a share, it was at the peak of one arguably the largest energy bubble in decades.

USB has been one of the best run banks in the country over the last decade or so.

Banks and oil companies look cheap to me. I've bought WFC, added to my position of USB, bought RIG and added to my position of XOM recently. Deflation is a risk for banks, but many of the best run banks in the country are selling for at or less than BV.

Eddie was buying stock when it was near $160, so I wouldn't pay much attention to his purchases. I can't understand why anyone would want to own SHLD other than as a book value play. Sears and K-Mart are 2 of the most poorly run retailers in the country and are contnuing to fade at a fast pace. Spend some time walking through K-Mart and Sears stores rather than reading annual reports. Most of their stores are disasters and rarely have any customers. Lampert has done nothing but show he's not capable of managing a large retailer over the last several years.

I'd really like to see them start licensing Android, now that it's gained in popularity and is a viable contender to IOS. In other words, all the phone manufactures out there (outside of Apple) needs Google/Android more than Google needs them. The equals something Google can potentially make a lot of cash on.