Ballinvarosig Investors

Sorry to pick you out, but that statement actually gives me hope that value investing has a future if anything. I think so many folks have been so badly stung by value (whether it's through permanent capital loss or awful performance) that they're now increasingly embracing growth. It seems to me that the growth story is now so ingrained into investors, that their expectations have become detached from reality. I actually read an article a few days ago that suggested that stocks were actually cheap as their returns were favourable when measured against long term bond yields. It's like no one can conceive interest rates ever going up ever again.

Jeff Matthews wrote the following about Mattress Firm (MFRM) just two months ago, I hope he does not mind me reproducing. http://jeffmatthewsisnotmakingthisup.blogspot.com/2016/06/mattress-fire.html Yesterday, Mattress Firm was offered an all cash buyout of $64 per share; a 100% on the share price as of when Jeff wrote his blog entry. I am not having a go at Jeff (whose work is always illuminating) and I am not really suggesting value investing is actually dead. But the current investment environment has become almost totally bifurcated towards growth rather than value. Even looking at the ideas on this forum, considerable bullish argument is made unicorn stocks with the most extended valuations. You look at the traditional value funds, performance has generally lagged badly. I won't name names, but plenty of people are badly under-performing the market, especially in the 10 year period following the financial crash. With the S&P at all-time highs and the valuations of growth stocks certainly looking frothy at least. Are we finally reaching a stage where value could out-perform growth?

Buffett has a habit of going with companies that he has past history with. Naturally, he's looking to buy at a fair price. This is controversial, but what company ticks that box? Goldman Sachs ;D I am jesting, but for the reputation risk, I think it really would be his kind of company, especially at today's price.

I remember when I first started listening/reading the Fairholme conference calls over ten years ago, cash flow used to be 1, 2, and 3 on his list of priorities. For whatever reason, he seems to have abandoned this strategy by investing in cash flow poor companies like Sears and St Joe. Their performance has been dreadful, and wrecked a pretty handy record that he had up until the financial crisis. I can't help but feel if he had stayed within his circle of competence, he wouldn't be in the trouble that he is in now.

The Guardian did a good article on Vancouver property prices, apparently up 30% in just a year? Is that true? https://www.theguardian.com/cities/2016/jul/07/vancouver-chinese-city-racism-meets-real-estate-british-columbia

Hold on here, Soros only shorted Deutsche Bank the day after the Brexit vote, it's only slightly down since then.

Crikey, what a couple of days. I am absolutely delighted to have been wrong on the Brexit thing. I have been struggling to put money to work, and now at last am seeing opportunities.

Bought some Bank of Ireland at 18c. Tangible book value will be about 25c, it will earn about 2.5c for 2016, a price/earnings multiple of just over 7x. Bought some Barclays at £1.31, the Brexit will provide a short-term shock and probably hit H1 results. Selling at less than 1/2 tangible book, expecting about 15p of earnings for 2016. As the Brexit fears get shrugged off, those earnings are going one way. Bought some Aviva at about £3.60 and kicking myself I didn't have a limit order as this one went as low as £3. Trading at a forward nice multiple going into what looks like a slightly harder market.

http://www.oddschecker.com/politics/british-politics/eu-referendum/referendum-on-eu-membership-result not sure if that will work for folks in the US.

You can put a fork in Brexit, because it's done. Bookies have slashed odd for a remain down to 1/10. I suspect the result won't even be close, my guess would be 57%/43% in favour of remain.

Up until the the 16th of June, the Leave campaign had been steadily gathering momentum and at that point the vote looked to be on a knife edge. However, that day the British MP, Jo Cox was murdered by an anti-EU extremist. That was a turning point that in my opinion was decisive. Campaigning by both sides was suspended, and the wind was taken out of the sails of the Leave campaign. The fact that it was a Leave extremist that murdered the MP left a serious taint on the Leave campaign - undecided/swing voters almost certainly will jump to the Remain side because of it. With the momentum gone and only two days remaining, there is no time for the Leave vote to recapture the initiative. Remain is all but a done deal. I question how significant the murder was (especially because while the man was clearly an extremist, he also has a long history of mental illness). I think we were always going to vote remain (sadly). I've been watching this far too closely. I agree, that this murder should have no bearing upon the result whatsoever, but yet it has. Look at Sterling, look at the FTSE for the last week. Since the murder, both have strengthened significantly since the event. The same happened a few weeks back when Boris made his gaffe about the bendy bananas and the comparison of the EU to a Nazi super-state. Sterling and the FTSE went on a huge tear on the back of that as the Leave campaign faltered. It's not remotely logical, I know, but I think the swing voters will always shy away from the controversial and choose a safe option.

Up until the the 16th of June, the Leave campaign had been steadily gathering momentum and at that point the vote looked to be on a knife edge. However, that day the British MP, Jo Cox was murdered by an anti-EU extremist. That was a turning point that in my opinion was decisive. Campaigning by both sides was suspended, and the wind was taken out of the sails of the Leave campaign. The fact that it was a Leave extremist that murdered the MP left a serious taint on the Leave campaign - undecided/swing voters almost certainly will jump to the Remain side because of it. With the momentum gone and only two days remaining, there is no time for the Leave vote to recapture the initiative. Remain is all but a done deal.

The relief rally is already here. The insurer I started buying on Thursday is up 10% already. One of the British banks I bought is up 15%. Sterling strengthened significantly.

I think the rise/gains in the stock price will be baked in before the result is announced. Today for example, the gap between the Remain/Leave sides with bookmakers is the narrowest it has ever been in the entire campaign - FTSE stocks have already tanked in the last two days on that news. The market is already pricing the Brexit in. Companies like Goodwin which don't have a heavy exposure to the UK won't go down too much regardless of what happens. On the other hand - financials and insurers are already being absolutely clobbered and are looking very interesting. Aviva is an insurer I thought I missed the boat on a few months back at £4 - the market is now giving me a second bite which I am taking.

I don't really buy that angle. No one is going to beggar themselves just to land a blow on a political rival. I think the issue is that so many of the major oil producing nations are running deficits. When you're a dictator and you've bought the support of the nation through high public spending, then you have no choice but to keep that taps on, otherwise you are literally dog meat.

The people involved in betting against sub-prime don't count. While their actions were clearly insightful and well-informed, they were none the less speculative. Anyway, as others have pointed out, many of those folks have under-performed the market since. If you're analysing performance over the decade of 2010-2019, then for the period so far, you'd probably have Warren as the benchmark. Berkshire have returned about 13-14% in the period by my rough calculations. Prem Watsa and Fairfax would be in that range too, the figure would be less if you're converting to US Dollars. I have no idea what Pabrai has done in the 10's, but I would suspect the performance is much worse - he's lost money in the last 2 years, right? I have been impressed with Patient Capital Management run by Vito Maida. He doesn't have the out performance that is sexy to a lot of investors, but he was one of the few to side-step the Financial Crisis. It's remarkable despite all the disadvantages that Berkshire have, they still manage to beat most of investors. One investor who I have never seen mentioned on here who has outperformed most in the last year is Terry Smith in the Fundsmith team. His fund is coming up to 6 years in operation now and has blown the doors off with a 17.6% CAGR.

Latest 13f is out - http://www.sec.gov/Archives/edgar/data/1649339/000114036116065328/xslForm13F_X01/form13fInfoTable.xml Financials are all gone, looks like he has shrunk his portfolio considerably.

Except it's not Buffett's pick. He has said on CNBC before (in response to the Kinder Morgan holding) that these smaller positions are likely to be made by either Ted or Todd.

I would be surprised if Buffett didn't cut a deal with the IRS at some point in his life. He's been in business over 60 years and we all know he is desperate to avoid taxation, did he not try to write off his bicycle as a business expense when he submitted his first tax return!? I would be shock it at some point in his career he didn't cross the line at some point. To cross swords with the IRS doesn't make him a crook, however at the same time you can't help but think his attitude to taxation is more of a "do as I say" rather than a "do as I do".

Late last year interest rate swaps on 10 year gilts went negative. Bloomberg wrote a story about it here - http://www.bloomberg.com/news/articles/2015-11-06/u-k-swap-spreads-sink-to-lowest-since-2014-on-fed-rate-bets A big favour to ask, but would anyone with access to a Bloomberg terminal be able to get me access to an updated chart?

Value investing at its finest! I love it.

A whole bunch of videos from his appearance on CNBC today - https://www.youtube.com/user/cnbc/videos

http://www.bloomberg.com/news/articles/2016-04-15/goldman-s-blankfein-said-to-demand-deepest-cost-cuts-in-years Interesting article. When Goldman are struggling, you know the investment banking business is in bad shape. The fact that they are trying to save money by cutting their printing bill made me laugh, that does not sound like Goldman at all!

Here's a ballsy candidate, what about one of Warren Buffett's picks - General Electric ($31.23)? Personally, I never short (let alone a WEB stock), but the valuation of GE is getting more than silly. In the last 5 years, the GE share price has went up over 55% despite the fact that free cash flow has consistently been in decline and is now down 40% in that period. Revenue is down, margins are down, EBITDA is down. I know a lot of this has to do with the forced sale of GE Capital and spinning off of Synchrony (which bizarrely the market seems to like, despite it being a decent business) - but why should the market increase the price of a shrinking business that is in a challenging sector. I think the one-off bump as a result of the sale and spin-off masked what was a very bad year for the underlying GE business in 2015 and with oil set to stay low, how will the market react when free cash flow turns negative for 2016? Another interesting one that you could go long and short on is Biglari Holdings ($361) and Shake Shack ($36). Shake Shack has 1.6/1.7x the valuation of Biglari Holdings despite having 1/4 of the revenue. Sure, Shack Shake is down quite a bit already as it looks like growth as stalled, but I would argue the closing of the valuation gap still has come nowhere near to where it should be. I know Biglari's company is utterly despised, but it is certainly undervalued even after the Biglari poison pill is taken into account.

Great article - apparently GE's annual report only got 800 downloads from Edgar :o