Ballinvarosig Investors

https://variantperceptions.wordpress.com/2011/08/29/charting-banking-xxii-three-years-after-lehman/ http://variantperceptions.files.wordpress.com/2011/08/screen-shot-2011-08-27-at-9-53-45-am.png http://variantperceptions.files.wordpress.com/2011/08/screen-shot-2011-08-27-at-9-54-18-am.png?w=463&h=247 http://variantperceptions.files.wordpress.com/2011/08/screen-shot-2011-08-27-at-9-54-01-am1.png?w=459&h=246 http://variantperceptions.files.wordpress.com/2011/08/screen-shot-2011-08-29-at-12-37-56-pm.png?w=457&h=242 http://variantperceptions.files.wordpress.com/2011/08/screen-shot-2011-08-27-at-9-54-38-am.png?w=466&h=254 In my opinion, there is a lot to be said for buying selected trashy financials that have just made it through this crisis.

More on ACSOI.

How many of the protesters are on $50k a year, which puts them in the global 1% bracket? http://www.globalrichlist.com/

Biglari has responded, his arrogance is breathtaking. http://www.sec.gov/Archives/edgar/data/93859/000092189511002068/prrn14a07428021_11032011.htm By the way, I can see why he is so eager to try and initiate change in Cracker Barrel. From a cost basis, he must be down by about $10-$15 million on his position from last quarter. Since BH is likely to swing into a loss for this quarter, do you think Biglari will be returning his bonus compensation for the previous quarter, Parsad ;D

How Bernie Madoff :o

St Joe hits new lows today and appears to be approaching Einhorn's valuation of the company.

In Ireland, we have all that already. The state-run electric and gas company is soon to be put on the auction block. We have been bombarded with massive tax increases (income tax is up, lower-paid workers being brought into the tax net, water charges, property taxes, etc.). There is a ban on new public sector employment and many public sector workers are been pushed into early retirement. What I have outlined isn't even the end of it for Ireland. Under the EU/IMF bailout deal, it is planned that we will have austerity budgets every year until the end of 2015, when it is expected that we finally bring our deficit to under 3%. The European crisis isn't over by a long shot and the action that has been taken this week has just introduced even more moral hazard. Nations like Portugal, Ireland, Spain and Italy, which are already teetering on the brink are now being told that if they do miss their targets and end up becoming a complete basket case, they'll have their debts written off. Also, the measures of this week do nothing to address the real issue of why Europe is a basket case (i.e. because most countries simply cannot live within their means). I'm getting really sick of hearing this phrase, but this is yet another instance of the can being kicked down the road.

Another thing, the Greek government look likely to nationalise the banking system. What sort of bodies will be found hidden in the Greek banking system? http://www.bloomberg.com/news/2011-10-27/greek-bank-investors-facing-wipeout-as-nationalization-looms.html

Not really, the Greek debt to GDP ratio is only being brought down to 120%. Meanwhile, the Greek economy is still imploding, so that figure is likely to increase as each year passes. It may very well come to pass that Greece will be forced into another default in two years time. Also, this does nothing to address the debt of the other pigs. I know that here in Ireland, people are asking why are we being asked to endure austerity and to repay all our debts (plus banking sector debt) in full?

I was chatting with a chap who has dealt with Weschler recently. Apparently Weschler is a commited Republican too ;D

I certainly would not be impressed if I was an investor. He is like making the trade through something called a currency swaption - http://en.wikipedia.org/wiki/Swaption. His risk exposure is likely to be very asymmetric.

He won't get any credit here.

Very disingenuous title. Prem Watsa has not "bailed out" The Bank of Ireland at all. The Irish taxpayer has been stung most by having to purchase billions of Euro worth of toxic land and development loans at an inflated price, also by providing liquidity (in reality, cash for trash), and also by pumping in billions of Euro more than Watsa has for an even smaller stake. The ECB is also on the hook as it provides funding at below market cost for the bank (loans/deposit ratio is over 160%). In reality, Watsa basically got a stake in a bank at a fair price. Had he not invested, the IMF would merely have provided the Irish government with the money anyway.

I have to say, I do not agree with you on this point. Over the last five years, we have had the S&P500 Index trading between an all-time high of 1,576 and and a historic low of 666. The S&P500 as you know accounts for the most liquid and most traded stocks in the entire world, it is the mainstay of the quantitative universe. If the quant systems were as good as you're saying, then they should have absolutely cleaned up in such a volatile market. Forgive my ignorance, but is that not a contradiction in your argument? Your quantitative system is basically only good for the data that you have available. If you're talking about the best opportunities being found in the nano-cap/micro-cap universe, surely these results will not even be evaluated by the system, afterall, a lot of these guys will not be on Yahoo/Fidelity/CapitalIQ/etc.? I know from personal experience, that if you wanted your system to cover the entire universe of illiquid and neglected stocks, you would need a sizeable team of folks searching under rocks for new listings and transferring the hardcopy/pdf data from existing listings into your dataset. Even if I devoted all my time, I simply could not keep up with this, so inevitably, there are bargains slipping through my fingers every day. As a matter of interest, am I the only person that maintains a personal database of statistical information on stocks not maintained on the usual channels? Since the universe of securities is simply too large for any one person, I have always wondered if you could simply split the work load with a group of like-minded individuals, sharing the information with each other. Imagine having an informational edge over just about everyone in the entire world? That would be something ;D Also on the point of the micro/nano-cap universe, it's easy to say the best priced bargains reside in this domain, but the reality of finding them is really, really hard. If you were in this area in 2007 (i.e. like Paul Sonkin or the Westwood Mighty Mites fund to name but two), you would have sustained appalling losses. Harry and Parsad, you will both be well aware of just how difficult it is working in this area from your experience with FMMH and ITEX.

Even with the most soundest of systems, surely there will always be a dependency on human emotion? Suppose back in 2007, we had a universe that consisted of entirely of funds run by similar performing, computer-based, systematic approaches. As investors start pulling their capital from funds (human are irrational, it won't matter to them that their systematic approach works), the systematic approach will still get clobbered in a wave of forced selling and liquidity being pulled?

Harry, are you familiar with Plato's Allegory of the Cave?

Is anyone here long PMIC? It doesn't look very interesting to me, especially considering how cheap profitable insurers are.... Have you looked at LON:BEZ by any chance? Excellent track record with prudent reserving, great combined ratio history, and a solid balance sheet. They have taken a pasting due to Japan/Aus/NZ cat losses, however, I would be inclined to think that these are likely to be one-time losses. Company is trading at just a fraction over book value. If the cat losses they have sustained actually are one-time only losses, this is trading at ~5 times earnings. Worth keeping an eye on at very least, I think. No one was keen on my ProAssurance Corp suggestion that I made nearly a year ago, they have just been knocking it out of the park for the last few quarters. Trading at a measly 1.1x book value, despite the fact they've grown book value by 20% on average over the last five years. I continue to hold until shown otherwise.

Fast-forward to 41:24 for a synopsis on this book (kudos to you, manualofideas). http://manualofideas.com/audio/henry_singleton_teledyne_by_manualofideas-dot-com.mp3

I have to say I'm with you on this, I just don't understand this investment at all. I know here in Europe, it has taken the Korean automakers nearly 20 years to try and get a toehold into the European market (they went bankrupt in the process and needed a state bailout). Even now, the likes of Kia are selling only a fraction of the vehicles that VW and Toyota sell, despite the fact they're cheaper, as reliable and in some instances even better-specced. BYD are going to have the same problem even if they can make a car as good as the likes of Toyota or VW. I reckon it would take another 10 years after continuously delivering quality cars, that people would take them seriously in the West, and that's on top of another decade they'll probably need to actually get to the level of Toyota/VW. If BYD are going to compete on price instead, then they're up against Tata, who are selling a petrol car for $2,500, and a fuel efficient diesel model for $2,700. If that's the future of the auto industry, then BYD might as well get out now, as no one will ever make any money in selling a car for so little.

Apparently the company have denied the accusation - http://www.marketwatch.com/story/byd-sales-department-restructuring-but-no-layoffs-2011-08-30 Something seriously wrong is happening at BYD for their auto sales to be collapsing when their Chinese competitors are increasing their sales. I suspect that BYD cars must be really awful if they can't even compete in the domestic market.

I don't know why everyone on this site is focusing on BAC so much. There are banks out there in much, much better shape than BAC, but in many cases are only a little more expensive. NYB is one such bank that springs to mind, great and proven management, no excessive leverage, solid and improving numbers, etc. Looking a NYB, I know I can sleep at night with the knowledge that it's cheap at these prices and it would take a financial holocaust to take them down. BAC on the otherhand scares me, my only surprise is that the Countrywide acquisition didn't take them down already.

Look guys, if you seriously think that Warren Buffet looks at the balance sheet of Wells Fargo, his second largest investment and says "I can't make any sense out of this, let's hope that everything works out for the best" then you're completely wrong. Of course Buffett can't track down every single asset, but I guarantee you that he is doing his due diligence. We know from Alice Schroeder that Buffett is absolutely paranoid above risk control, there is simply no way in the world that he is going into his second largest investment in the blind. I would suspect he is talking to managers, talking to customers, I bet he is even reading those hundred page mortgage securitisation prospectuses that Michael Burry used to short the mortgage market a few years back.

I thought this was supposed to be a value investing forum? I can assure you, when Warren Buffett invests in a financial, he certainly does not take any leaps of faith. The numbers are all out there, if you're diligent enough, you will find them.

I think some of you guys are missing the woods for the trees. The issue here really isn't the debt per se, it's the deficit. Last year, the United States spent $1.5 trillion above what it took in from taxes. $1.5 trillion is 10% of American GDP. You take that kind of money out of the economy, and you're looking at another severe recession, or possibly even a depression. The deficit spending certainly isn't sustainable, however I think that the Tea Party movement is ignoring the impact that it has made in preventing our recent great recession from becoming a great depression. My big fear at the moment is that what if this global Keynesian splurge is the only thing that is keeping the global economy ticking along.

Bill Miller's downfall were his awful investments. When you're in the middle of a crash in a market (be it housing, tech, whatever), you don't try and catch a falling knife, especially when you're dealing with leveraged companies. I can't say I ever had time for Bill Miller. While he might talk the talk of being a value investor, he certainly didn't walk the walk.