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beerbaron

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Posts posted by beerbaron

    Canadian Housing Bubble

    in General Discussion

    Posted

    Why do you guy see a popping of the bubble?

     

    Judging from the way Flaherty is handling the matter it looks more like a soft landing. Over here in Montreal, the prices certainly went up faster then the income for the last 12 years but I would not say it's a bubble.

     

    Vancouver is more worrysome, I have some indirect exposure to the real estate market in the west and I'm very nervous with it. What should I check very carefully to monitor the situation in the west?

     

    BeerBaron

    What's the Best Policy for a "Balance Sheet" Recession?

    in General Discussion

    Posted

    That is a nice article.

     

    Here are my toughts on this:

     

    He is right, this is most likely a balance sheet recession. The amount of wealth destroyed will need to be filled by savings or other means.

     

    I disagree with it's opposition to monetary easing, I believe it's a much more intense solution then deficit spending. When the US government buys back toxic assets, it is actually cleaning the balance sheet much faster then trough government spending, therefore has much more chance of starting lending again.

     

    Nobody knows what that monetary easing will cause in the mean term but it's funny how he praised the Chinease that apply a solution and then worry about the effect... it seems to me both are actions with unknown effect.

     

    I hate when some economist tells people we should start doing unproductive work to start consumption again. There is a billion of investments more productive to society then building bridges that lead nowhere. As stated previously, how about using the money to reduce our dependence to energy consumption?

     

    Here is a funny story from Phil Fisher. On one of it's trip to China in the beginning of the 90's he was with some government officials and they were showing him how a canal was being built. There was thousands of workers with shovels digging. So Fisher goes:

     

    Fisher: "Surely you guys have mechanical equipment to do all that digging, why do you have manual labor here?"

     

    Gov official: "This is a work program, not a building program:

     

    Fisher: "Well is it work you are trying to do or building a canal? Because if you want to do work, then they should be digging with spoons"

     

    BeerBaron

    Premier Exhibitions

    in General Discussion

    Posted

    I stumbled upon this company last week. Mark sellers is a value investor who is chairman and owns over half of the company. It is in the process of a turnaround after replacing the previous management. They own the rights to the titanic assets which is supposely worth at least a 100 million. The current market cap is roughly 60 million.  They are in court fighting for the right to sell the assets. The company has no long term debt and 10 million in cash. any opinions?

     

     

    Premier Exhibitions does the "Bodies" exhibits, seemingly educational, but when you dig deeper, you'll learn that their founder was run out of Germany because of Nazi ties and doubts about where he got the bodies.  He got a peirmit to bring his subsequent exhibit to the US, but these bodies now seem to have come from an area of China where the government had a prison where disidents were kept.  One of the bodies in the exhibit a few years ago apparently had a bullet hole in the back of the head.

     

    In my opinion,  everyone associated with this co deserves to go to the place they richly deserve to be.

     

    One of the investment newsletters I read did a write up on it.  It seemed somewhat interesting but I didn't do any personal digging into the investment idea, however I did not expect the input that I read above.  Interesting.  Some of the best opportunities I have passed up in my life where because of something I didn't agree with.  I look back and wonder whether or not I let me emotions dictate the decision to avoid a certain investment idea. 

    Along similar lines, BeerBaron recently commented that he bought easyhome.  They are a company who lease products to people who don't want to or (but more likely) can't afford to pay for them up front and we aren't talking about a car or your house (aka wants not needs).  Admittedly, I haven't done any research on the company but my first (emotional) reaction revolves around the notion that a lot of our world's financial problems stem from people wanting and buying things they can't really afford and that companies similar to easyhome contribute to the problem.  I don't want to look any further into the company because of my initial reaction.  Is this irrational?  Is it irrational to exclude an investment idea because a former owner (I assume it was a previous owner) has a dubious past? 

     

    Yeah, I had some ethical questions about buying EasyHome. But I figured that if some people can't even compute the effect of interests rate charges then they are doomed to be eternal debtors. I have personnally helped 2 friends consolidate their debts in the last few years, and the only results was that after consolidation both of them took their new "disposable income" and bought a new car. It changed completely my perspective... it's like trying to teach an alcoholic to be sober, if he doesn't want to change it won't work.

     

    On this matter, I'm a classic case of someone that distorts it's ethics reality to justify it's means. At least I'm fully conscious of it.

     

    BeerBaron

    under-covered O&G, mining Companies

    in General Discussion

    Posted

    Sorry, don't have an answer to your question but would like to ask a related question.

     

    I have been struggling with how to value O&G companies and have not been able to arrive at a satisfactory solution. Was wondering whether anyone has suggestions as to books or websites that deal with valuation of resource companies. Advice would be much appreciated.

     

    Thx.

     

    I've never figured it out either.  I understand the cost side better than the commodity price side.  I just toss the whole industry onto the "too hard" pile.  I'd love to understand it and be more confident.  But I just ain't smart enough.

     

    SJ

     

    I second that. It's out of my circle of competence.

     

    BeerBaron

    anyone (else) buying more FFH here??

    in Fairfax Financial

    Posted

     

    It's good because I have got my eye on 3 companies (including FFH) to buy right now and they are all getting close to my target. For me that's very exciting because my pipeline is usually empty most of the time.

     

    BeerBaron

     

    Care to share the other 2?

     

    Yes, as soon as I have bough what I need. It's 2 small caps.

    BeerBaron

     

    DCG, I'm done stacking up on one of the twos. I was buying  EasyHome, it's a canadian stock that leases to home consumers.

     

    Here my thesis:

     

    Great cash flow machine

     

    Their collection losses have increased from about 2.3% of sales to 4.5% of sales in the third quarter + restructuring charges. Which pushed the stock price down a lot. However, the current management did a complete turnaround of the business in 2001 (and it was suffering from the same problems) and they clearly know how to repeat the same process. In the last conference call they claim to be able to reach 3-3.5% in Q4 and I believe they can. (Rent-ACenter and AAron seem to be able to maintain about 3% in todays conditions).

     

    It was a 10%-15% grower, good balance sheet. Still has room for 25% more stores in Canada. Can buy under BV.

     

    They intend to deploy their new capital into easyFinancials, which is a high return on investment business. They were really prudent with easyFinancials, it took them 3 years to fine tune their recipe.

     

    I estimate 1.5M to 2M profit in Q4.

    Nice share buyback as a bonus.

    #1 Consumer lease business in Canada by far.

     

    Hopefully I will be able to share my second idea soon with this board as well.

     

    BeerBaron

    SEC To Consider Short Sale Curbs In Coming Weeks

    in General Discussion

    Posted

    No, it is not ridiculous.

     

    You do not build statues of persons who are pessimistic on this society. To build a civilization, you need energic, ambitious, goal driven and optimistic people...not people who always think that sky will fall on their head.

     

    One of our more respected Prime Minister who funded the Caisse de Dépôt here in Quebec, when we was recently asked what when wrong with this institution, said that managers used to be driven by the "good father of a family" (I don't know how to full translate it in english) principle. Wall Street, over the last decades, forgotten this principle and we now unfortunately need to put some unperfect rules like that to kick some bu***s on Wall Street.

     

    Very respectfully submitted,

     

    Partner

     

    You are probably referring to Parizeau.... Yves Michaud said the same thing too. Both great mens.

     

    BeerBaron

     

    Who will Pay for the Burlington Acquisition?

    in Berkshire Hathaway

    Posted

     

    The dots are too far away to connect them together. As brilliant as Buffett is, he also like simple plans he can understand... because they are the ones that succeed.

     

    Interesting insight on future of railroads, especially about the wind farms.

     

    BeerBaron

    Anyone Buying Toyota Stock?

    in General Discussion

    Posted

    I started asking Toyota owners this week if what is happening influences their opinion on Toyota and all of them said they would buy another Toyota tomorrow. So I don't believe there is long term harm to the brand. I would recommend you do the same thing and ask people around, the peoples around me are not a great sampling.

     

    I work in the product production field and this kind of stuff happens one day or another. This is inevitable, the only thing you can do is reduce the odds trough good QC, Engineering, Trough Testing, etc...

     

    Now if I would buy Toyota... I have no idea. I find it hard to put a valuation on this company. Maybe others on this board have done some analysis they want to share.

     

    BeerBaron

     

    anyone (else) buying more FFH here??

    in Fairfax Financial

    Posted

     

    It's good because I have got my eye on 3 companies (including FFH) to buy right now and they are all getting close to my target. For me that's very exciting because my pipeline is usually empty most of the time.

     

    BeerBaron

     

    Care to share the other 2?

     

    Yes, as soon as I have bough what I need. It's 2 small caps.

     

    BeerBaron

    anyone (else) buying more FFH here??

    in Fairfax Financial

    Posted

    I won't buy more unless I can average down. I bough some at 365 CAD before the dividend announcement so now my minimum purchase price is 365$-10$=350$. I will reevaluate my target on feb 19th!

     

    It's good because I have got my eye on 3 companies (including FFH) to buy right now and they are all getting close to my target. For me that's very exciting because my pipeline is usually empty most of the time.

     

    BeerBaron

    A Long Squeeze in BRK?

    in Berkshire Hathaway

    Posted

    Anybody believe Buffett, played the BRK.B split to get into the S&P 500, raise it's share price and therefore reduce the amount of shares issued? It doesn't sound like a Buffett play but it would have been pretty wise to keep an this ace up it's sleeve, waiting for a huge stock acquisition to use it.

     

    What happens to the deal if the BRK.A shares pass the 120K$?

     

    BeerBaron

    Who can beat the magic formula?

    in General Discussion

    Posted

    Did anybody do a backtracking for a stock with:

     

    1- Low PE ratio (or high yield)

    2- High dividend distribution

     

    And apply the same principles then the magic formula (lowest score is the best)

     

    The way I see it the MF gives Fisher style and the other would give Graham style. In our kind of environment I would prefer Graham as past return on investment might have nothing to do with future.

     

    BeerBaron

    Pensions Look to Leverage Up

    in General Discussion

    Posted

    There is probably no difference in the borrowed money. The hedge funds were probably using high leverage as well it just did no show on their balance sheet.

     

    Anyhow, I don't understand why any pension fund would borrow money. They should be aiming at average results with the least friction costs possible.

     

    BeerBaron

    BRK to replace BNI in S&P 500

    in Berkshire Hathaway

    Posted

    Sometimes Mr. Market is really irrational. It's not like nobody saw it coming, but yet BRK stayed flat for 6 months. Efficient market theory would say "if there is a 100$ bill on the floor it isnt there because someone already picked it up". A lot of people had a lot of time to pickup this 100$ bill!

     

    BeerBaron

    John Hempton - Values and ethics expert?

    in Fairfax Financial

    Posted

    I have no problem with, Rent to own, Cash Checking, Casinos, Liquor stores, etc... In my opinion that is the responsability of everybody to manage their money intelligently. I have a friend that has an accounting degree and for some reason, cannot seem to figure out that a 20% interest on credit cards makes it's available cash a little tight. Then i tried to help him by showing him how to consolidate it's debts. We were able to reduce 1000$ a month payments to 500$ a months. A month later he was back to 1000$ a month because he bought a brand new car and a 42" LCD TV....

     

    No matter how hard you try to help others if they don't recognize there is a problem then they will not learn. I might as well profit from it.

     

    BeerBaron

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