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beerbaron

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Posts posted by beerbaron

    Proposal to eliminate some taxes on overseas profits

    in General Discussion

    Posted

    I am not sure how good of an ace this is.  It may be good on paper but not so good in practice (generates little or no re-patriation).  Why would you bring money home with this crew when in a 18 months you may have a more "business freindly" crew there.  I see his only ace as 0% taxation re-patriation given the current view of this crew by business.  I agree with Myth, a liberal trying to implement conservative policies is a loose/loose.  You need a conservative or a fiscal conservative like Clinton to get the business community on board.

     

    Packer

     

    This is a policy that will appear in page 25 of newspapers. Obama needs employments, that's the only number that matters for the next election. Trillion deficits, trillions of money printing, nobody cares except the 1% that has money. When your unemployed all you ask is to fix it, not how you fix it...

     

    BeerBaron

     

     

    The fashion store industry

    in General Discussion

    Posted

    Chou Funds cough my eye with The Gap. And I'm currently browsing the 10-k and I'm trying to understand the dynamics behind fashion stores (Aeropostale is attractive too!). Maybe some people have already sent some time thinking about this industry so it would be helpful.

     

    What does a company have to do to move a dominant player?

    -Obtain prime real estate locations

    -Effective and focused advertising

    -Create store environment that welcomes the target group

    -Pricing in line with the target group's budget

    -Superior sales force

    -Buyers that understand their market AND the trends

    -Good inventory management

     

    Now that's all the main points I can think of. But there is certainly more. Also from my point of view all the points above except the real estate cannot be considered as a durable competitive advantage. So if most of those points cannot be considered as a durable advantage how can you evaluate them? How can something as weak as good advertising campaign become a great long term asset?

     

    BeerBaron

     

    HP to Spin Off PCs, Eyes Software Purchase

    in General Discussion

    Posted

    It seems seems to make sense. Take the following scenario HPQ sell Tablet to BBY, BBY sell tablet to consumer. Before liquidation price is 500$ so what was the cost of those tablets?

     

    BBY gross margin = 33%

    HPQ gross margin = 30%

     

    500$/(1.33*1.3)=289$ which is the cost HPQ would buy the tablets from their contract manufacturers. Less S&H 2$ = 287$, assembly 25$ = 262$.

     

    So 262$ is about the parts costs.

     

    Scenario 1: Liquidate tablet at 100$

    HPQ Sell price to BBY: 75$

    Losses = 289-75 = 214$

     

    Scenario 2: Throw away all parts

    Losses = 262$

     

    Scenario 1 makes more sense.

     

    BeerBaron

     

    Time For a European TARP

    in General Discussion

    Posted

    1. Slightly overvalued as it currently stands. I think euro is being held up by Chinese for a variety of reasons and it would be much weaker otherwise. Otherwise I do not understand its current strength.

     

    2. Undervalued if any of the weak countries (PIIGS) exit. Euro would soar once the weak links are out. Theory being a chain is as strong as its weakest link and when the weak links are taken out it leaves a much stronger chain.

     

    Vinod, how exactly can you evaluate if a currency is overvalued or not?

     

    BeerBaron

    Prof. William T Ziemba introduces The Kelly Criterion (Video)

    in General Discussion

    Posted

    Return optimization is theorically good but you need to make assumptions of the payout ratio of the bet. This proves much more complicated then evaluating the price of the business.

     

    I often used 50/50 in the past, which is a bit stupid but you need to start somewhere...

     

    A good way to solve the problem would be to have a feedback that corrects your assumptions, but that feedback would become valid after a lot of data points have been made. It could take 20 years before you truly know that when you tough you had 10% chance it really met you had 5%.

     

    BeerBaron

    Mongolian Growth Group

    in General Discussion

    Posted

    That is a crazy valuation why in hell would I pay 13xNAV for a fund that just started? Yes Mongolia is prone for good growth but that does not justify that the hard work these guys have put is worth 60M$.

     

    BeerBaron

     

    Maybe it is Harris Kupperman running the fund. I would say the "Kuppy" premium is built into the stock price.

     

    You can get Dalton at Altius 20% growth for the last 11 years below NAV.

     

    You can get Watsa at FFH at BV.

     

    You can get Buffett at 1.3BV ... a lot less if you put FCF metrics on the operating businesses.

     

    In order to grow the capital from 4M to the current market cap you would need a 13 bagger!!!

     

    There is something we are missing here...

     

    BeerBaron

    Sometimes hurricane is a "good" thing

    in Fairfax Financial

    Posted

    What makes things interesting is some are suggesting that there is a high degree of variability among companies (some have excess capital and others have none) meaning another large catastrophe hit and will likely start to see who has been swimming naked.

     

    Berkley says the hard market will happen when CEO's start to fear they do not have enough capital and suddenly begin to cut back on business and raise prices (one of those 'whocoodanode'? moments).

     

    So how does one seek for excess capital?

     

    Of course you could use the statuatory ratio as a metric but it's kinda useless if the company is unreserved.

     

    BeerBaron

    Get Ready for QE3

    in General Discussion

    Posted

    I don't understand why people say there will be QE3. QE2 aimed at lowering long term bonds rate so that lending would expand, it did not do any of the desired effect as it basically raised long term bonds as people were expecting more coming inflation from QE2. I'm sure Bernanke came to the conclusion that the long term bonds are better off being left alone. QE is not a fiscal stimulus.

     

    BeerBaron

    HP to Spin Off PCs, Eyes Software Purchase

    in General Discussion

    Posted

    The applification of hardware is possible under one condition:

     

    -There is enough computing power to emulate the real device

     

    I don't see how Cisco's higher end routers could be emulated.  ASICS are 100 times more energy and speed efficient then processor based applications. Energy is an important factor when it come to routers. Processor speed acceleration has been slowing down since the beginning of the century. Complex QAM needed in routers cannot be emulated since it's pure analog signal that need to be controlled by less then 1 cycle.

     

    For lower end router, I agree the applification is possible. Then again, CSCO is capable of the same... isn't it already doing so with their linksys brands which are basically computers? It's probably doing more or less the same with their other lines.

     

    Regards

    BeerBaron

    Preferred Stocks

    in General Discussion

    Posted

    Anybody has an exhaustive list of preferred trust. I guess some of those must have gone down quite a bit with the volatility. I'm interested by Trust Preferred because they won't count as Tier 1 capital pretty soon. So even if you are buying 30Y preferred you might get the principal back much sooner.

     

    BeerBaron

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