Ballinvarosig Investors
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Posts posted by Ballinvarosig Investors
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Unless you're Greek, or well versed in Greek property and lending standards then I would stay the hell away from any Greek banks. Remember that Warren Buffett lost $240 million on Irish banks in 2008. From his annual report.
I made some other already-recognizable errors as well. They were smaller, but unfortunately not that small. During 2008, I spent $244 million for shares of two Irish banks that appeared cheap to me. At yearend we wrote these holdings down to market: $27 million, for an 89% loss. Since then, the two stocks have declined even further. The tennis crowd would call my mistakes "unforced errors".Basically, Irish banks lied through their teeth about the quality of their loan books. The Irish Financial Regulator and the Irish Stock Exchange were complicit in condoning, and even covering up in this deception. Buffett obviously only read financial statements and wasn't aware of the political and regulatory shenanigans that were going on behind the scenes until it was too late.
Maybe NBG is fine, I'm just saying you would really want to know your stuff before you went anywhere near it.
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I think you're mad to be talking about buying opportunities when the situation is still deteriorating, falling knives and all that.
http://www.reuters.com/article/idUSTRE63R1CD20100428
So the assistance package required has now tripled from €40 billion to €120 billion.IMF chief Dominique Strauss-Kahn told policy makers the aid package for debt-crippled Greece would be worth 100-120 billion euros ($133-160 billion) over three years, against the 45 billion pledged to date by the IMF and euro zone.Germany in particular has been dragging its feet over moves to prop up crumbling Greek finances, and it was not immediately clear how governments planned to raise the additional money for Athens, or whether they could secure support for the move.
After meeting the German politicians, Strauss-Kahn declined to comment when asked if the Greek aid package could reach 120 billion euros.
However financial markets, which have fallen precipitously this week on fears of a Greek default and contagion through the EU fringes, immediately bounced on word of increased aid.
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Ok, but I think you're being pedantic. My point is that Coke has been around for an awful lot longer than Apple, has a product that's a heckuva' lot more predictable than anything Apple have and won't be going away anytime soon.I'm sorry, but you simply cannot compare the Apple moat to Coca-Cola.
Coke has been around since forever, it's simple to understand, it hasn't changed in 100 years and has been completely dominant since inception. Coca-Cola hasn't been improved upon in a century, can you honestly say that the Iphone or Ipod won't be improved upon or made obsolete in the next century?
This is flat out incorrect.
For a period after the 1930s, Coca-Cola slipped behind Pepsi in terms of sales when Pepsi decided to increase the size of their packaging while maintaining the same price. Furthermore, Coca-Cola has improved/modified their formula over the years with small iterations. The company could have been behind even more, had it not been for Roberto Goizueta. I believe Warren Buffett's own investment in Coke only occurred after the changes guided by Goizueta.
I'm reading a book about Coke at the moment and would be happy to provide you with passages and page numbers.
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The critical date for Greece is May 19th. $12 billion of maturing debt will need to be rolled-over then.
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I'm sorry, but you simply cannot compare the Apple moat to Coca-Cola.
Coke has been around since forever, it's simple to understand, it hasn't changed in 100 years and has been completely dominant since inception. Coca-Cola hasn't been improved upon in a century, can you honestly say that the Iphone or Ipod won't be improved upon or made obsolete in the next century?
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I know Greece is a small country, but I'm completely amazed at how the situation which is deteriorating so badly, hasn't even but a dent on the stock market rally.
As of last night, the yield on a 2 year Greek government bond hit a record 13.52%. I don't know of any sovereign government in the world that is currently paying those yields, let alone a Eurozone member! The serious risk in Europe at the moment is that if Europe bails out Greece, other Eurozone members like Portugal, Spain and Ireland could be further weakened, which could trigger more sovereign debt problems. If Europe does nothing, Greece will certain default, but so too might other Eurozone countries.
To me at least, it's like fall of 2007 all over again. We're seeing the first rain drops of the storm, but for some reason the markets seem to think it can all be contained. I still think that the Euro, in its current form, will no longer exist within 2 years.
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Where are the moats though?Actually, Apple is doing a pretty good job in digging moats around computing. If the iPad ends up being successful, they will essentially have a tollbooth around computers - you want to develop an application for the iPad? You have to give a cut of every sale to Apple. This is pretty powerful.
They have already had a lot of success with doing this on the iPhone and iTunes. You use the devices to control the market and then put tollbooths around the devices via your content/application markets. With iAds they are poised to get a commanding share of the advertising market that is created for mobile phones.
I'm not saying Apple is a value stock. It isn't. But calling it a bubble stock is premature. The company generates something like $10B+ in FCF per year, has $41B in net cash (more than Microsoft). It is pretty telling that Apple doesn't even consider Microsoft as much of a competitor. Apple views Google as its biggest competitor as both companies are betting on computing shifting towards mobile devices.
The Ipod/Iphone itself has no moat, any new technologies they introduce can be copied by anyone else. Itunes has no moat - there's nothing stopping anyone buying content elsewhere. The Ipad (so far) doesn't appear to have any applications or user base that would give it a moat. Apple personal computers are still only used by a tiny fraction of PC users - ironically, the only moat Apple have is amongst designers; it's just a shame they're a flyspeck of the entire market. The Apple brand is strong - but it only takes one crappy gadget and it could irreparably be damaged.
I guess what I'm trying to get at, is that the dominance that Apple currently have could easily be fad-ish. If you want to talk about a moat - take a look at Coca-Cola. 100% years old, easy to understand and so deep that you would actually have to purposely destroy. Apple can only dream of having a moat like that.
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I wouldn't go anywhere near either stock, certainly for a buy-and-hold strategy. With the advent of free operating systems, Microsoft could easily be moving into the territory of a "buggy-whip" stock. This may, or may not have already happened, who knows. All I do know, is that you'd have far more safety holding something like JNJ, KFT or KO with all the upside that a growing economy would bring.
As for Apple, that is most definitely in bubble territory. Ok, they make neat little gadgets, but one of these days, someone will invent an UberPod and people will decide that Apple is no longer cool. When that happens (and it will happen some day), Apple certain won't have the second largest market cap in the world.
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My estimates on the intrinsic values of the above companies is mere opinion. However, when you look at tangible book value, both Berkshire & Leucadia trade at about ~1.4 times book value. Most of Leucadia's book value is held in an equity portfolio that is marked at full value. Berkshire of course has a significant number of assets that are carried on book for less than cost of replacement. So before you even consider a Buffett premium, Berkshire is already cheaper than Leucadia. Fairfax on the othehand is trading at a multiple of only ~1.1 times book value. When you consider that all three companies have come out of the recesson in decent shape and with great earnings, I really can't see why you would pay more for the likes of Leucadia & Berkshire unless you have some intuition that either will outperform Fairfax in the future."Leucadia < Berkshire Hathaway < Fairfax"
Can you post your IV estimates for the 3 stocks?
Thanks
It's probably a bit too simplistic to just look at book values when dealing with these stocks. However, when you consider that you're likely to do well from any of these stocks; surely it makes sense to just buy the cheapest one?
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In fairness, the wine investment is a flyspeck on the tapestry of Leucadia. Reading that letter though, I don't see anything that suggests that Leucadia is undervalued.
Leucadia < Berkshire Hathaway < Fairfax
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That only gives me the total volume for the day? I'm looking for a list of actual trades that were placed on a day.
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Hoping some of you guys can help me.
I need to get a list of the trades/volume that were placed on a particular stock on a day this year. I know with Google Finance chart, for recent days, it will graph each trade made on a day, but when you go back a few months, you can only get daily volume information. The stock is listed on the Nasdaq and quite thinly traded.
Any help would be fantastic.
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We repeat our standard warning. Business and human quality in place at Wesco
continues to be not nearly as good, all factors considered, as that in place at Berkshire
Hathaway. Wesco is not an equally-good-but-smaller version of Berkshire Hathaway, better
because its small size makes growth easier. Instead, each dollar of book value at Wesco
continues plainly to provide much less intrinsic value than a similar dollar of book value at
Berkshire Hathaway. Moreover, the quality disparity in book value’s intrinsic merits has, in
recent years, continued to widen in favor of Berkshire Hathaway.
Anyone here like Wesco? It looks outrageously expensive to me.
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Where do you go to view that feature?
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http://www.nytimes.com/aponline/2010/03/23/business/AP-US-Berkshire-Moodys.html
Buffett sells more Moodys stock. Berkshire still holds nearly 31 million shares though.
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Jones Soda is sold in quite a few outlets here in Ireland, so I imagine it's available elsewhere in Europe. I must say I'm rather surprised that this worldwide brand has a market cap of only $16 million. I'm even more surprised that one of the major drinks companies haven't gone for Jones, with an existing bottling facility and distribution network, they could turn Jones into a cash-cow.
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Chinese capital control goes to those, and much, much deeper levels.Can a U.S. citizen buy Chinese currency on the open market? Can I own the same shares as Chinese citizens? Is there the same level of intangible protection in China? Which country has bigger stakes in publicly traded companies?I recently read that the largest telecoms company in China (China Telecom) has taken a stake in a large Chinese bank. Considering that China Telecom is 75% owned by the Chinese government; who do you think was reasonable for this absolutely ludicrous allocation of capital?
I fear that investors who entrust their capital to the hands of the Chinese Politburo are going to sorely regret their decision in the future.
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http://www.eurekareport.com.au/iis/iis.nsf/pages/E5935276FE03EFDDCA2576E7001A3509?OpenDocument
PORTFOLIO POINT: A trade war with the US would ruin China’s economy, and therefore Australia’s.Chinese Premier Wen Jiabao is playing a dangerous game by upping the ante in the Cold War of words with the United States over exchange rates. And it’s a game in which Australia, and Eureka Report members, are more than interested spectators: we are on the field, in danger of being trampled by elephants blinded by rage.
China seems to have persuaded itself that it’s already a superpower that doesn’t need anyone else, least of all yesterday’s superpower, America. Over the weekend Premier Wen lashed out at the world over the pressure on China to let its currency rise: “We oppose all countries engaging in mutual finger-pointing or taking strong measures to force other nations to appreciate their currencies”.
He claimed the yuan is not undervalued and accused other countries that are trying to get their currencies to fall, of “protectionism”.
This escalating conflict between the US and China is by far the most important and dangerous development for Australian investors in 2010, far more significant that the bankruptcy of Greece or the prospect of a crazy political bidding war in Australia as the 2010 election approaches (both of which are quite significant, let’s face it).
China is not as strong as it thinks, and is extremely vulnerable to a trade war with the United States. It is not, as is often believed, the financial equivalent of the Mutually Assured Destruction (MAD) that underpinned the nuclear standoff of the Cold War between the Soviet Union and America. This relationship is far more one-sided: China needs America far more than America needs China.
China’s domestic market – that is, the average wealth of its vast population – is not yet sufficiently developed to support the massive investment China has now made in production. There is massive over-capacity in China even with the American market open to it; if the US West Coast ports were closed to it, China’s economy would go into a deep recession and its demand for our iron ore and coal would collapse.
This is an especially delicate moment for Australia on this score because negotiations are getting under way for new contract benchmark prices for iron ore and coal. In each case, the spot prices are about double last year’s contract prices because of Chinese buying.
That buying has not been driven by consumer demand for products, either domestic or export. It has occurred because of debt-funded stimulus spending by the Chinese government designed to maintain GDP growth and keep its citizens employed.
In other words, the increase in iron ore and coal spot prices have been associated with the increasing over-capacity of the Chinese manufacturing sector.
BHP Billiton and Rio Tinto need to be mindful that increasing the contract price by the full extent of the spot price increases would put more pressure on the Chinese economy and worsen any crash caused by a trade war with the US.
In about a month, the US Treasury will formally rule whether China is a currency manipulator, which would trigger trade sanctions under US law. With unemployment at 9.7%, and the broader measure of unemployment, called U6, which includes the under-employed, at about 17%, the issue may not be put to one side this time, especially after Wen’s inflammatory comments at the weekend.
It is simply not true that China’s foreign currency reserves of more than $US2 trillion – an outcome of years of currency manipulation producing trade surpluses – give the Communists the strength to outmuscle the United States, and to threaten selling US government bonds and thereby destroy its economy.
This is the basis of the idea that China and America are in a Mutually Assured Destruction stand-off which means neither will do anything that turns the Cold War into a hot one.
Ambrose Evans-Pritchard, writing in the London Telegraph, points out that only two nations in history have amassed such a stash as China has now, equal to 5–6% of GDP: the US in the 1920s and Japan in the 1980s. Each time preceded a Depression.
In fact, Michael Pettis of Beijing University argues that reserves of that size are a weakness, not a strength. “The … reserves cannot be used in China. They cannot go to pay doctors’ salaries, to build bridges, to lower taxes or to subsidise consumption. They can only be used to purchase or pay for things from outside China.”
China manipulates its currency by buying and selling US dollars, not by passing a law that sets the value of the yuan and making it a crime to trade a different value. The Peoples Bank of China simply offers to buy or sell unlimited amounts of yuan at the desired rate.
This means that if it wants to set a certain value for the Chinese currency, it must take the opposite position to the market. Since the rest of the market is a net seller of US dollars, China must be a buyer – all the time.
And this means, according to Pettis, that the PBoC has a balance sheet consisting of dollar assets on one side and yuan liabilities on the other.
“Here is where things get interesting,” he says. “China’s reserves are often thought of as if they were a treasure trove available for spending. They are not. They are simply the asset side of the mismatched balance sheet. If the PBoC wanted to ‘spend’ $100, for example, to recapitalise a bank, it could do so, but this would automatically create a $100 hole in its balance sheet – it would still owe the RMB [renminbi, or yuan] that it borrowed originally to purchase the $100. To put it another way, the reserves are not a savings account, free for the PBoC to spend as it likes. Reserves are effectively borrowed money.”
It means China cannot use its reserves without increasing its indebtedness. And although China can theoretically exert influence on the US because it is its largest creditor, America’s power to shut down the Chinese economy by closing its ports to Chinese imports is far greater.
It’s true that, in general, a retreat into protectionism now would be a very bad thing. The common wisdom is that the protectionist Smoot-Hawley tariff in 1933 worsened the 1930s Depression and made it Great. That may be true, but tariffs have a far worse effect on surplus countries than deficit countries; it just happens that the surplus country then was the United States, and tariff did, indeed, devastate its economy.
A trade war now between America and China could ruin China’s economy, and therefore Australia’s.
This is no longer a distant theoretical threat, but an increasingly real one because after the weekend display from China’s leadership it’s clear that they are becoming deluded.
Wen Jiabao said China’s biggest threat is inflation and that the survival of the Chinese Communist Party is at stake. “If there is inflation plus unfair income distribution and corruption, it will be strong enough to affect our social stability and even affect the stability of state power,” he told yesterday’s press conference.
He is, typically for a politician, taking a narrow view based on his own party’s interests. Inflation is not a serious problem for China and given the overcapacity built up over the past 12 months is very unlikely to become one.
The biggest problem is the Communist Party’s increasing arrogance and belligerence.
Human psychology is a funny thing. Things that seem ridiculous in hindsight can be perfectly acceptable at the time they're occurring to the mainstream. Honestly though; what are investors thinking when they place their fate in a fascist, centrally planned dictatorship driving economic growth? Do they not remember the Soviet Union? 50 years ago Nikita Khruschev took off his shoe and banged it on the table at the UN General Assembly, proclaiming to the United States; "We will bury you", referring to 10%+ growth rates in the Soviet Union. 30 years after those comments, the Soviet Union was in collapse.
Today, we have an investment community that has an almost singular outcome for China - the next superpower. I'm certainly not convinced ;D
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http://whereiszemoola.blogspot.com/2008/12/bruce-berkowitz-tips-pfizer-and-sells.html
The AIG annual reports are just as complicated as when he said the above.Or take American International Group. If you looked at an AIG annual report six or seven years ago, you saw one paragraph on derivatives. You look at an AIG annual report today and you see 15 pages on derivatives. I don't think company insiders fully understand what's going on, let alone outsiders. So if I don't understand something, I've learned to walk away.Maybe Berkowitz is going to prove everyone wrong again, but I simply can't see why he's so bullish on trash.
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Bill Gates' dining room is bigger than my entire house.
Not sure what to make of that ;D
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Prag has partnered Puritt before on other investments (Inferx for one), so I imagine he has the scuttlebutt on Chanticleer directly from the horses mouth, or so to speak. As Chanticleer is dominated by several large shareholders who would be familiar with each other, it's likely that Prag bought directly from another shareholder through a non-open market acquisition.How was he able to get all those shares?
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This thread is no good without people suggesting a few ideas!
For my part, I have recently bought a little United American Indemnity (INDM), a profitable insurer which is trading at 60% (!) of book value.
http://www.sec.gov/Archives/edgar/data/1263813/000095012309059469/c92081e10vq.htm
I admit I don't have the depth of knowledge that many of you would have on insurance, but surely the margin of safety (improving combined ratio and strong balance sheet) here makes this a bargain?
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I don't know nearly as much about Tim McElvaine as you guys do, but it seems to me that he's simply been fishing from the same pond for too long (high concentration in small-cap equities). Nothing wrong with this per se, however if you concentrate your portfolio in one area, there will be times when you underperform the market simply because your niche is out of vogue (small-cap has been frankly a disaster in the past two years). However, because small-cap has been so lousy and looks relatively cheap these days, I think McElvaine is making a mistake by talking about moving into larger-cap equities.
Applause for Our Board's Host, Mr. Parsad!
in General Discussion
Posted
I've never been on the Biglari bandwagon, but that's not fair at all.
On point 1, what Biglari does with his own money is his own business. Even if he decides to blow cocaine up his nose with $1,000 bills, that's his perogative and not my concern.
Point 2 is fair enough.
On point 3, Buffett was certainly guilty of using Ben Graham as a marketing tool, when his style was anything but Graham-like for the majority of his career.
In point 4, Buffett has managers that work for him for less than what they could get outside of Berkshire, and we've already seen Biglari design a compensation package that was extremely generous for Western Sizzlin' CEO, so he's not completely self-serving (mention in the NFI letter to Biglari - http://www.noisefreeinvesting.com/blog/?p=112).
Finally on point 5, have you taken a look at the Berkshire board? It's filled with family members, old cronies and certainly a few sycophants.
Anyway, we're completely off-topic on this thread, maybe the Biglari stuff should be split off so we can keep this the Parsad love-in going. I certainly don't agree with everything he says, but that's probably why he's a much more successful investor than me ;D