beerbaron

The balance sheet is clean but the profit opportunity is low. Looking at their last 4 years, the best they did for net income was 3.24M. Which would give us at best, a PE of 10 if they could make profit like they did 4 years ago. That is not cheap for a company with no growth and with a complex product. Also, management has retained all earnings and did not give any dividends. Why do they need 22M in cash, I rather see that money in my bank account. They did buyback a few years ago which I like but they also reversed the trend in 2008. For illiquid stocks it's usually better to give dividends since a buyback reduces liquidity even more. The inventories kept raising in the last 4 years... which makes me think that we should deduce the CapEx in all the last 4 years. It most likely they will need to do a write down sooner or later. After all, it's not like their revenues have grown in proportion to their inventory. I can't really understand what they sell and how they can benefit from the recovery. I'm an electrical engineer and I work in production and I'm not sure this is in my circle in competence. So unless you are in that specific area of the business you should not feel comfortable about it. If I had to rate this investment out of 10 I would give it a 6. BeerBaron

And as the article says, nobody knows the answer to any of these questions. Really, there is only one actionable piece of intelligence I found in the article (from an investing standpoint) and that is to not invest using too much debt. Other than that, what else can you do except wait it out, whether it takes one year or ten years? Allocating capital toward companies that can withstand a second dip or inflation, have good earnings value and low debt. I'd rather cross the ocean with a galleon filled with food, sails and safety boats then cross it with a speedboat. Nobody knows what lies ahead but everybody know which vehicle they use. BeerBaron

Where do you guys go to see the lists of available Mergers and Acquisitions in the table? Regards BeerBaron

Lol I really liked that little cartoon "The secret millionaires club". The voice looks really like Warren's. BeerBaron

I own Richelieu as well I think it has even more value then what people think. The management is great and has proved that it is focused and risk averse. It is determined to add new SKUs every year, they have 55 000 SKUs right now. I see that as their moat, no other supplier could come up with 55 000 SKUs in a short period and not being a drag on inventories and operations. They can just buy other distributors for their client base, implement their software and increase the returns almost immediately with all the new SKUs added. The bonus...as said in the last conference call, they can change their pricing overnight (except with special accounts). At one point RCH represented 25% of my portfolio, I would not sell those shares for a short term profit, this is no cigar butts. I have never looked at WinPak before but I will take a peak thanks woodstove.

In Canada (interests are not deductibles) paying back your home mortgage is basically the safest way to have about a 7% return on your investment and even better it's risk free. The problem is that this is not liquid money anymore! If I were to advise someone for the best risk/rewards I would say: -Pay credit cards -RRSP -Home mortgage -TFSA -Normal Stock and bond account

BYD has a vertical integration that no other companies have. The most expensive component of any electric car will be the batteries. BYD has lots of experience with Lithium batteries and it is a main producer of LiFe batteries. I'm an electrical engineer and did extensive research about those batteries and let me tell you that those batteries are well suited for the automotive industry (much better then other Lithium batteries). Cost will be the main entry point of the electric car, without affordability, the electric car will stay on the drawing boards and showroom. So, from my point of view, BYD is in good position to be a serious player with it's low labor cost and battery business. Still, I will not invest a penny in this stock until I drive one of their car for a test ride... It took 25 for Honda to make descent cars. Guys, don't worry, if you keep an eye on the stock you'll get it cheap at a much better valuation then current stock prices. I would say, let's wait another 3-7 years until the first recall comes in (and there will be one) and then buy. BeerBaron

For those interested those insiders bough Preferred Class C shares: Cloutier, Jean 1000 shares @25$ La Selva, Vincenza 4000 shares @25$ Taylor, David Gregory 10000 shares @25$ Williamson, Marilyn Jane 1200 shares @25$

I think he's talking about macro index (GDP, Unemployment, Trade deficit, etc...) BeerBaron

I want to start looking a bit into market neutral investing, more specifically merger arbitrage. Anybody has good value investing books to recommend toward merger arbitrage? Regards BeerBaron

Amen! Deciding to take no action is an action by itself. Even better it does not cost any of this CASH and gives you some of this TIME everybody wants ;) In march I was reading 90% financial reports and 10% learning management/finance/economics. I just switched to 90% learning and 10% financial reports. Real estate has 3 key words, location location location. Investing has 3 key words, discipline discipline discipline. BeerBaron

Don't know if it was posted before... http://www.bengrahaminvesting.ca/Resources/Interviews_Notes/2009_Berkshire_Press_Conference_Notes.pdf

Thanks for the compilation DP, I added this year's results. As they were not included in my first post. There is one trend among almost everybody... the trend is green big times. There won't be many years like that in an investor's lifetime! I hope that everybody took the opportunity to back up the truck on equities that will give ever increasing returns over the years. These are the rarest opportunities. Two thumbs up for all the ones who managed to stay green last year. Not many money managers could say the same. BeerBaron

I agree with you SJ, I'm not a doomsayer but I prefer to read bad predictions then good. It helps avoid dumb mistakes. TV news are basically saying to all investors, close your eyes and cross the street right now... that screams risk to me. Ah, by the way, I try to stay away from any media coverage of the economy. Their job is to report information not to be good at analyzing it. BeerBaron

The question is, will there be political will to stop inflation when it comes knocking on the door... It seems to me that inflation control is more a matter of politics then economics. BeerBaron

Most investors mistake the word probability with past experience. If you studied probability you should remember that to have a reliable sample data you need a sample large enough. If you take a secular market as you base unit then your sample is very (10 samples maybe) small which makes it an unreliable data. You should take past experience for what it is... an historical past. It is by no means a measure of the future. Especially with a sample rate of that size. You often hear comments in the economic media that state things like "September is historically a bear month". If you'd give that comment to a statistician he would tell you that September is no extraordinary months as it still a low standard deviation. Just like having 12 persons flipping coins 80 times, one is going to be a bigger loser then the others. BeerBaron

I did -26% from Dec 31st 2007 to Dec 31st 2008. What helped: -I had 50% of the portfolio in the SP500 index that I bought at par with the CND and sold when the CDN was around 81¢. -I had lot of cash lying around, so I could average down very often. For the results to be comparable we should all agree on the method of computing returns. For simplicity's sake I use (Value Year 2)/(Value Year 1) - External Cash Inflows. BeerBaron

Xentel DM Incorporated BeerBaron

Is there an equivalent for Canada? BeerBaron

One of my stock has been engaged in a litigation for about 6 years now. The results of this litigation in a best case scenario could result in an instant 10 bagger or in the worst case scenario about 15% losses (I didn't buy this stock for the lawsuit, the lawsuit is the kicker). I always find that when there is a legal lawsuit the information on how things are advancing are REALLY thin. You get communicates every year basically saying "we sent some documents, we are waiting". How do you guys go out and get how the legal case is really going, is there some public information that will state the requests, the full legal claims, the liabilities, how things are advancing, etc... BeerBaron

Judging from what Buffett states I would say that money management firms would do fine in inflation. Their pool of money grows at the same pace as inflation but they still keep their 1%. So putting it all together, a money management firm that has lots of preferred shares an free cash flow would be a good buy. Maybe there is still some of these available at an affordable price. BeerBaron BeerBaron

Since there is a lot of talk about upcoming inflation I tough it would be a good idea to have a discussion about which businesses valuations could resist the most to high inflation. I have listed a few of my toughs out of 10. A grade of 10 means a business that profits from inflation, 5 will absorb high inflation at par and 1 will decrease in value with high inflation. Gold & luxury metals 9 Oil & Gas 7 Non luxury metals 7 Money management 6 Restaurant 2 Cars and trucks 3 Semiconductors/tech 1 Military 2 Infrastructure 2 Retail 3 Restaurant 3 Computer science 2 Advertisement 3 Agriculture 6 Insurance 4 Health Care services 4 Banks 4 Pharmaceuticals 4 Entertainment 3 Real estate 5 Distributors 4 This is only my own thoughts and I have not made an intense study about each sector just my feel. I'd be interested to know what everybody thinks. Feel free to add industry sectors as I probably forgot lots of them.

Yes, I'm the one telling them to stay down. After all I'm the BeerBaron. BeerBaron

It think Heineken is now brewed by Molson (in Canada) while in 1991 it was imported. Big difference on the business model.

When it says probability of default, does it mean probability of default into the next year, next 5 year, next month? Are those numbers statistical from models or were they taken from field experience? Regards