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jtvalue

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Posts posted by jtvalue

    Amazon: When the Man Comes Around

    in General Discussion

    Posted

    That's incredible - I didn't realize BBY has done so well.  Where did you find all of that info about Best Buy?  Is there a specific article?  Makes me question the automatic death of all the retailers you mentioned.  The key point that I think is missing is that both Circuit City and Radio Shack went bankrupt over the same time frame. 

    2016 Letter

    in Berkshire Hathaway

    Posted

    Nobody is taking about this, but I'm amazed at the bet Protege Partners made. A portfolio of hundreds of hedge funds with a fee rate of 3% and 20% of profits all in was going to be an index fund??  What a terrible bet! 

    Berkshire or Facebook?

    in General Discussion

    Posted

    Somebody noted in the BRK thread that the market caps of Berkshire and Facebook are now identical - what is a better buy now and why? We know Watsa's answer to this but wondering what this board thinks.

     

    Interestingly, operating earnings (before tax) growth at facebook before taxes for full 2015 is 25% whereas it is 18% for the first nine months of 2015 for Berkshire. Per share growth is lower at facebook because of dilution at 17%.

     

    If one looks at share holder equity, FB has 44B in equity whereas BRK is at 248B after nine months of 2015 and likely crossed 250B by year end.

     

    I don't think there's an easy answer to this question.  I emailed a bunch of friends in 2007 with a similar "Berkshire vs. GOOG" comparison when they both had $220 bil market caps.  Obviously I was strongly in favor of Berkshire at the time, but ended up being dead wrong. Today:

     

    GOOG: $511 bil market cap

    BRK: $318 bil market cap

     

     

    Hang in There!

    in General Discussion

    Posted

    This has been a brutal market environment for value investors and I see parallels between the 1998-2000 timeframe.  Growth investing has now significantly outperformed value investing over the last 1, 3, 5, and 10 years.  Check out the performance of several "value" investors in 2015 below.  This is the time when we need to hold our conviction in value investing the most!  I don't know when this trend turns or what the catalyst will be, but when it does turn it will be powerful

     

    S&P 500: +1.38%

    Seth Klarman: -6.7%

    Joel Greenblatt: -10.2%

    Bruce Berkowitz: -11.5%

    Warren Buffett: -12.5%

    Longleaf Partners: -18.8%

    David Einhorn: -20.2%

    Bill Ackman: -20.5%

     

    Sources:

     

    http://www.valuewalk.com/2016/01/investment-success-forget-opponents-focus-par/

     

    http://www.valuewalk.com/2015/10/value-stocks-vs-growth/

    Your 2016 best ideas

    in General Discussion

    Posted

    Longs:

     

    AXP - great franchise selling at 12.5x EPS. In back half of 2016 people will starting looking towards 2017 when the Costco contract is lapped

     

    BEN: Trades at 7x EPS when excluding the $10 bil of cash on balance sheet. Key funds Templeton Global, Franklin Income, and Mutual Global Discovery have great long term track records despite a tough 2015. Value coming back into favor over growth will help their investment performance

     

    DISCK: Global content company with great CEO in Zaslav and Malone influence. Cord cutting fears are overblown in my opinion. Trades at 12x EPS and they are buying back a ton of stock

     

    Short NFLX: Trades at 450x EPS and is FCF negative. Developing their own content is very expensive and they will have to raise capital

     

    Morningstar US Stock Fund Managers of the Year Today

    in General Discussion

    Posted

    I'd be curious to hear the board's thoughts on this?  I went back and looked at 7 Morningstar US Stock Fund Managers of the year and their subsequent results are not inspiring.  Below I present their annualized +/- vs. S&P 500 for 1, 3, 5, and 10 year and a link to their record.

     

    What does this say about the merits of active stockpicking or the mutual fund industry in general?     

     

    2012: Mairs Power & Growth MPGFX -759 bps, +90, +46, +69

     

    http://performance.morningstar.com/fund/performance-return.action?t=MPGFX

     

    2011: Artisan Value ARTLX -953 bps, -517, -231, N/A

     

    http://performance.morningstar.com/fund/performance-return.action?t=ARTLX

     

    2010: Sequoia SEQUX -1,071 bps, -167, +68, +102

     

    http://performance.morningstar.com/fund/performance-return.action?t=SEQUX

     

    2009: Fairholme FAIRX -2,076 bps, -279 , -607, +105

     

    http://performance.morningstar.com/fund/performance-return.action?t=FAIRX

     

    2008: Royce Special Equity RSIEX -1,976 bps, -714, -407, +17 bps 

     

    http://performance.morningstar.com/fund/performance-return.action?t=RSEIX

     

    2007: Fidelity Contrafund FCNTX -230 bps, -125, -4, +225

     

    http://performance.morningstar.com/fund/performance-return.action?t=FCNTX

     

    2006: Longleaf Partners LLPFX -781 bps, -253 bps, -215 bps, -179 bps

     

    http://performance.morningstar.com/fund/performance-return.action?t=LLPFX

    The Education of a Value Investor - by Guy Spier

    in Books

    Posted

    I just finished Guy's book and loved it.  For me the book wasn't so much about investing.  It was more so about recognizing your shortcomings as an individual and adapting to them, lessons you can take from your role models & friendships, being sure to give more than you take from other people, and his overall thoughts on how to live a more rewarding life.  Highly recommended! 

    Is your Alpha Big Enough to Cover Your Taxes?

    in General Discussion

    Posted

    I saw a reference to these white papers in the book the "Warren Buffett Portfolio" by Robert Hagstrom.  As the papers (links below) by Robert Arnott state "Taxes are the biggest expense investors face - more than commissions and more than management fees".  "Approximately 2/3rd's fo the marketable portfolio assets in the United States have owners for who taxes are a major consideration."

     

    The role of taxes in portfolio management receives far too little attention in my opinion     

     

    http://www.ifaarchive.com/media/images/pdf%20files/isyouralphabigenough.pdf

     

    http://www.researchaffiliates.com/Production%20content%20library/IWM_Jan_Feb_2011_Is_Your_Alpha_Big_Enough_to_Cover_Its_Taxes_Revisted.pdf

    Your best long-term idea today?

    in General Discussion

    Posted

    I guess folks have a different take on what the best is.  Is it highest appreciation potential?  If so then the large names (IBM and AMZN) probably will not be in that group.  These are both $100b+ companies today.  Who else is going to buy these that already hasn't?  You also have some of the smartest folks on the planet analyzing these and advising big investors where the correct price is.  It's like playing tennis against a pro versus your slightly overweight neighbor.  I'll stick with the overweight neighbor stocks like some of the Korean preferreds (Lotte Chilsung, KIH, BYC, Daesang  and Taeyoung E&C) or some of the Australian mining services firms (Boom and Emeco).

     

    Packer

     

    it seems a lot of people blindly follow buffett though, without asking themselves why he says something. You should wonder why he says it and nto blindly copy it.

     

    They have the buy and never sell attitude, which is very suboptimal. Only reason Buffett never sells is because he is on board of directors like KO or he bought the entire company. They fail to see that buffett would have a different style of investing if he had a small amount of capital today.

     

    And a lot of things he says are geared towards the daytrading crowd to get them to stop pissing away money to brokers basicly. So then it is better to take a somewhat opposite extreme point of view to educate them

     

    Also investing in megacaps like he does with small amounts of capital is stupid at worst, suboptimal at best, unless they are very mispriced like BAC. You are handicapping yourself. For some reason a lot of buffett followers miss that. Both Munger and Buffett say that they would focus on small and microcaps if they would be investing today with little capital.

     

    Well, this topic is about the long term. Long term means 5+, ideally 10+ years to me. For the TS, it was a minimum of 3-5 years. Maybe it's a shorter time frame for you guys, that's ok.

     

    You're returns will be much smaller with IBM than if you buy and sell various undervalued small caps over that "long term" time span but that was not how I understood the question personally. I'm not really capable of picking small caps and not looking at them for 5+ years so if I had to do it, I would lean towards IBM as a 70 cent dollar, forgoing some return but keeping my sleep. While large caps get less mispriced than small caps, I think they can still offer decent potential if your goal is simply buying and forgetting.

     

    edit: That being said and after thinking about it a bit more, maybe I should go with the JPM warrants.  ;)

     

    Btw, my personal portfolio mainly consists of small caps.  ;)

     

    I agree that Small Caps are generally the best place to find value, but I don't believe that's the case today.  In recent interviews Greenblatt has talked about Small Caps being this expensive only 5% of the time compared to Large Caps only 40% of the time.  He states that he sees most of the value in the 50 largest market cap names today (specifically cites AAPL, GOOGL, MSFT).  I agree with him

     

    Maybe it's a sign of the times, but I'm also going through a change in my investment philosophy.  Back in the 2005-2012 timeframe my portfolio consisted of mostly Small Caps and I turned it over 50% per year.  With the recent changes in US tax laws I now have an approximate 33% rate on long-term capital gains and dividends, making the pre-tax return hurdle that much higher. Therefore I'm looking for undervalued wide moat companies (usually they are larger in market capitalization) or compounding machines that I can hold for years.  As mentioned, MKL perfectly fits that bill

     

       

     

     

    Your best long-term idea today?

    in General Discussion

    Posted

    Admittedly it's a tough market, but I am trying to find some new long-term ideas (minimum 3-5 year holding period). Any suggestions?

     

    My favorite is Markel but it's already a full position for me.  Simplistically, I have a high level of confidence the company can compound BVPS at 13-15% over the long-term.  At 1.25x book today, that means it trades at 8.3x - 9.6x economic earnings.

     

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