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Ballinvarosig Investors

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Posts posted by Ballinvarosig Investors

    US Regional Banks

    in General Discussion

    Posted

    I am learning more about banking.\

     

    Can someone suggest a couple of small US banks with good balance sheets and one not so good, aside from Wesco.  I have just read the ARs for USB, BAC, and WFC, and want something less complex to compare.

    There's only one bank worth reading about - Trinity Bank.

    Trying to assess value in the real estate market

    in General Discussion

    Posted

    I am still waiting for my "Necker Island" moment. For those of you that aren't aware of the story, let me quote Wikipedia.

    Branson first became aware that some of the islands in the British Virgin Islands  were for sale in 1979. In 1978 Richard Branson went to the British Virgin Islands for a holiday in order to investigate the prospective real estate. On first observing the islands, Branson envisioned using them to put up rock stars for his record label. Upon arrival, they were given a luxury villa and travelled around islands for sale by helicopter. The final island he saw was Necker Island, and after climbing the hill and being stunned by the view and wildlife, fell in love with the island. After making a lowball bid of £100,000 for the £5 million island, however, he was turned down and evicted from the island. A while later, the owner, Lord Cobham, in need of short-term capital, eventually settled for £180,000 after Richard Branson had offered his final price of £175,000 three months before the actual sale took place. However, the Government imposed a relatively common restriction on alien landholders; that the new owner had to develop a resort within five years or the island would revert to the state. Branson committed, determined to build a resort on his tropical dream island, notwithstanding his relatively modest capital at that time in his career.

    Now I'm not saying that I'm looking for a Caribbean island, but I think the time to snap up a bargain will come. Having patience and the means to act quickly will be key.

    Anyone own a kindle?

    in General Discussion

    Posted

    What do you all think of netbooks.

    I don't really see a point in them, or the ipad for that matter.

     

    For me, I have a Dell desktop PC in the office for the day to day work, lots of memory, fast cpu and dual 21" monitors.

     

    If I'm traveling, I have a 13 inch MacBook. It's just as portable, does everything the ipad does and much, much more.

     

    My phone is my personal organizer/diary/mp3 player/feed reader/internet on the go/etc. device

     

    My ipod and netbook have been demoted to dust gatherers.

    Anyone own a kindle?

    in General Discussion

    Posted

    I have had the lend of a Kindle DX and an ipad for the last few days. Two great devices, but they do different things.

     

    If you're looking for a device purely for reading, then the Kindle DX is the only way to go. The e-ink technology really is like reading off paper, I read annual reports off it for a good 5 hours on the trot with no problems whatsoever. Don't forget, when you buy a Kindle, you have free internet for life too. That is incredibly handy if you're on the move.

     

    The ipad is a more all-round device. If you're looking for a colourful, contrasty internet browsing experience with full multimedia, then it's great. You can watch films on it, muck around with apps, etc. the sky really is the limit. While reading off it is perfectly fine, my eyes just felt so much less strain with the Kindle.

     

    Personally, I have just ordered the Kindle DX for reading, and will stick with my laptop for day to day work. If you're a heavy-duty reader like me, your eyes will thank you for the Kindle ;D

     

    How did the DX handle the charts, tables, and graphs in a typical annual report? Did it read generally as smoothly as it would on paper? And, to finish my interrogation, how were the annotation capabilities?

     

    Anyone have experience with other e-book readers used for this purpose?

    The Kindle will do charts, tables and graphs just fine - no colour though.

     

    The screen really has to be seen to be believed. Just take a macro lens to both and you'll see why the Kindle is just so good.

     

    As for annotations, the Kindle lets you annotate everything but PDF.

     

    Like I said, the Kindle is a dedicated reading device and it does this very well. If you want to be able to "do more", then you should really consider a laptop/netbook/ipad.

    Anyone own a kindle?

    in General Discussion

    Posted

    I have had the lend of a Kindle DX and an ipad for the last few days. Two great devices, but they do different things.

     

    If you're looking for a device purely for reading, then the Kindle DX is the only way to go. The e-ink technology really is like reading off paper, I read annual reports off it for a good 5 hours on the trot with no problems whatsoever. Don't forget, when you buy a Kindle, you have free internet for life too. That is incredibly handy if you're on the move.

     

    The ipad is a more all-round device. If you're looking for a colourful, contrasty internet browsing experience with full multimedia, then it's great. You can watch films on it, muck around with apps, etc. the sky really is the limit. While reading off it is perfectly fine, my eyes just felt so much less strain with the Kindle.

     

    Personally, I have just ordered the Kindle DX for reading, and will stick with my laptop for day to day work. If you're a heavy-duty reader like me, your eyes will thank you for the Kindle ;D

    Good article on NFLX

    in General Discussion

    Posted

    I was mainly curious about what he interpreted as an abuse during the heated exchange from the both sides. If there was an abuse then we all can learn and avoid in future. On the other hand, extending bit of civility to fellow posters makes it for good read, irrespective of the merit of our ideas or disagreements.

    He's gotten quite a bit of castigation for not being a "value investor", which is a little ironic considering some of these people engaged in shorting, a thing that even Ben Graham gave up on.

    Good article on NFLX

    in General Discussion

    Posted

    Harry's a good guy. Even though there wasn't much in it for him, he took a few hours of his time to have a chat recently. The guy is independent, focused, and very driven - so I can see why he would clash with some folks on here. Unlike a lot of stuff out there, his ideas are original, which counts for an awful lot in my book. Things like NFLX and CRM aren't for everyone, but his writings on Fremont Michigan and on insurance were informative and quite frankly brilliant. All his stuff can be found on Google, and is a must read for anyone who has any interest in the subject. This place would be a poorer place without the debate that he generates.

    Fremont Taking a Look at BH Offer

    in General Discussion

    Posted

    The carpetbaggers have arrived! Proxy fight! Will the people pushing for the sale have enough votes? (remember, they need 66% to approve a takeover)

     

    People for the takeover

    Biglari has 9.8%

    Frank Kavanaugh has 6.7%

    Loeb now have 9.1%

     

    People against the takeover

    Dunning + Board has 15.2%

     

    Mitchell Partners, L.P. have 10% - but their intentions haven't been stated - has anyone called to find out? I'm guessing they would vote for the sale.

    Mortgage fraud and bank stocks

    in General Discussion

    Posted

    I don't know how the foreclosure issue plays out, but my bet is it is a lot less of an issue than the media is making it out to be. And I would go so far as to suggest that Wells Fargo is in better shape than Bank of America in that regard.

    I agree with you on this - Bank of America scares me, quite frankly.

    In terms of ROA/ROE, of course today they are nothing to write home about. When netting only 60% of your normal pre-provision, pre-tax profit on present business volume, you are going to see lower returns on investment. Our job is to see past that. Normalized earnings show very attractive ROA/ROE, especially for Wells Fargo (and US Bank) despite their shares outstanding having increased. The takeover of Wachovia will prove attractive. The growth by acquisition route taken by some banks during the meltdown was terrifically clever. This is not the pharma business where sellers know how precarious the value of their purchased R&D is. The reason Warren likes Wells Fargo and US Bank is because they are superior. Do a comparison of all large banks over the last 15 years, two banks will stand out as high ROA businesses with simple banking models and high net interest margin: Wells Fargo and US Bank. Unfortunately, US Bank is fairly valued, as far as I can tell. But Wells Fargo is well behind in its market valuation.
    Just to preface my comments, these are concerns, I have no idea whether they're valid or not, but they worry me enough to keep me from investing. I think there are other banks out there that are a heck of a lot safer, with (possibly) marginally less potential performance.

     

    With regard to Wells having a high interest rate margin, part of this stems from just how aggresively they are actually making loans, almost every penny they have on deposit is lent out. Now, this is all well and good during boom times, but when the business environment is poor and there are bad loans everywhere, then you've got to be absolutely sure that the loans you're making won't default. Given that Wells' NPA's are still rising - I have serious concerns here. While net interest rate margin is important, I think that the level of loans to deposits as to be looked at in tandem with this. In my opinion, sometimes it's best to be safe, rather than sorry. If you can't find suitable credit risks, then it's best to simply take the hit to the net interest rate margin and invest in lower yielding investment securities.

     

    Secondly, you talk about Wells returning to normalized earnings. When will we see this happening, months, years, will they ever? I have no idea, but I think it's silly for anyone to take a stab at guessing. With that said though, instead of investing now for the turnaround, why not look at other banks out there that are doing better ROA and ROE than what Wells are doing?

    Why are so many of us still fighting the last war?
    Who said the war ended? ;D There's still a heck of a lot of bad loans out there and more deleveraging to come.

    Mortgage fraud and bank stocks

    in General Discussion

    Posted

    At $23 and change, what's not to like?

    Non-performing loans are still increasing.

    Dec 2009: 3.53%

    Mar 2010: 4.03%

    Jun 2010: 4.30%

     

    Efficiency ratio is creeping higher.

    ROA/ROE is nothing to write home about.

    Free cash flow has been static when we're supposed to be in recovery mode.

    There has been share dilution.

    I do not like the growth by acquisition model for banks, you mix turds with anything and you just end up with turds.

    High loan/deposit ratio.

     

    But hey, Warren says Wells is a wonderful bank, so pile in.

    Some BYD Factories Confiscated

    in Berkshire Hathaway

    Posted

    I watched the clip.  What was disgusting regarding what Munger said about China?  Did I miss something or is there some deeper fundamental meaning there or do you have some sort of personal connection to China?  Munger was complimentary to how China is managing their growth using a combination of Communism and Capitalism.  IMO, nothing in the clip that Charlie said struck me as "...frankly disgusting."  What am I missing?  Is it a human rights issue, communism issue, suggesting that China is doing a better job than America or do you hate engineers  :)

    Munger has fallen for the propaganda of the Chinese government, hook, line and sinker. Centrally planned economies run by politicians are always going to fail, as a student of history, I am surprised that Munger has neglected this.

     

    Anyway, Vitaliy Katsenelson has recently written about his impressions on China, I agree with a lot of what he has said. http://www.marketoracle.co.uk/Article23491.html

    Einhorn Flogs St. Joe

    in General Discussion

    Posted

    This is why I love investing.

     

    You have two people, one of the greatest mutual fund manager of the decade, the other (arguably) the greatest hedge fund manager of the decade. Both have done extensive research on the same company. One comes up with a valuation of $0, the other comes up with at least $40.

    Biglari trying to buy Fremont (Again)

    in General Discussion

    Posted

    As of yesterday, the stock was barely worth more than $20

    Here was me thinking that the Efficient Market Hypothesis was dead in its grave.

    I don't know why you are throwing around $24 - I said $29.  That is a fair premium to the current stock price.  As I said, some shareholders will get Yanged on this this (i.e. screwed).  Unless you bought at $30, I think most shareholders would be happy with cash, which is as good as money.

    $24.50 was the original tender offer made back in December 2009.

    Biglari trying to buy Fremont (Again)

    in General Discussion

    Posted

    If you have something worth $20 and someone offers you $29, you would be a fool not to take it.

    Are you out of your mind? The initial $24.50 offer was an insult. He wasn't even offering book value for a highly profitable operation with good underwriting and prudent reserving. Even in today's market, the offer was ridiculous. Since the initial offer, the business has grown and book value has correspondingly increased; the business is clearly worth more now, than it was 9 months ago.

     

    Just because Dick Dunning is trying to save his own skin, it doesn't mean that he's incompetent or that the operation that he's running is useless.

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