Ballinvarosig Investors
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Posts posted by Ballinvarosig Investors
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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.
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The Guardian did a good article on Vancouver property prices, apparently up 30% in just a year? Is that true?
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Soros also has become more astute politically over time. instead of shorting the pound, he targeted DB and ancillary securities, and made an absolute killing. and without the arrows that came his way last time when he took down the pound sterling.
Hold on here, Soros only shorted Deutsche Bank the day after the Brexit vote, it's only slightly down since then.
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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.
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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.
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not sure if that will work for folks in the US.
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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.
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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'm really confused why the polls and the better's market are so far apart. What is going on with that?
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.
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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'm really confused why the polls and the better's market are so far apart. What is going on with that?
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I am thinking of buying a relatively long term (Jan 2017) put spread to protect my portfolio ahead of this event and to avoid paying too much for volatility. The SPY seems to be best based on this:
Seems to me that we will get a relief rally if Brexit does not pass and a sharp selloff if it does or common thinking. However, Yellen's discussion around tightening will come back right away if it does not pass with a July rate hike and related fear ahead of time should bail my position.
What do you guys think?
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.
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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.There is a longish thread on the pros and cons of Brexit, but I did not see anything addressing more market or stock specific discussions.
This is one of those unpredictable, but widely anticipated events. With an exit, the English stocks particularly those that need access to Europe will probably drop sharply. My thinking is to have a watchlist of those companies that are not dependent on European exports from the UK that may fall in sympathy.
(Of course there is a wild card that this could be turn into a Lehman type of moment, I doubt it, but it is of course a possibility. As is a surge of the FTSE.)
London real estate looks particularly vulnerable.
Specific companies to keep in mind: Lancashire (LRE.L) and Goodwin, with some EU exposure though.
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.
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You have to add in mental models from game theory.
There are political and economic factors at work here.
- First of all it is pretty hard to cooperate with your fellow cartel members when you are in a proxy war with one of them in Yemen and you believe that they are fomenting a fifth column in your country (Saudi Arabia) or you believe that the other country is oppressing your co-religious (Iran). Whether true or not, that is what the ruling princes and mullahs believe.)
- Given that background the Saudis do not want a post sanctions Iran, their regional rival, benefiting from maximum oil revenues
- Saudi Arabia used to be the swing producer willing to throttle their own production but for the first two reasons and their own exploding population and budgetary needs do not want to be that producer
- Without a swing producer and no enforcement mechanism, the incentives are to produce the incremental barrel. Classic problem similar to the prisoner's dilemma.
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.
- First of all it is pretty hard to cooperate with your fellow cartel members when you are in a proxy war with one of them in Yemen and you believe that they are fomenting a fifth column in your country (Saudi Arabia) or you believe that the other country is oppressing your co-religious (Iran). Whether true or not, that is what the ruling princes and mullahs believe.)
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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.
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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.
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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.
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The IRS cuts deals all the time. I just watched the documentary on Scientology. The scientologists pretty much bullied the IRS into cutting a deal with them. And that was the 90s. Imagine decades earlier.
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".
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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?
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Oh, and if buying 1 B-share to attend the meeting sounds pathetic, here's an extract from an actual conversation I had at the Borsheim's reception:
Me: Hi there
Guy in suit: Hi!
Me: [brave stab at conversation] So what brings you to the meeting?
GIS: Oh, well I'm a student at Creighton College.
Me: Oh really, so why do you own Berkshire?
GIS: I don't, they sell the tickets on campus for $5 so we just come for the free drinks.
Me: Oh really, so is that - er - popular?
GIS: Oh yeah, most of the people here are in college.
Me: [politely] Don't you have anything better to do than gate-crash the annual meeting for a top-10 insurer?
GIS: Not really. There's not much to do in Omaha.
He was NOT lying. Most of the people I talked with were Omaha natives and seemed about as happy to talk about Berkshire as the local temperance society. Rather than the world's largest congregation of value investors, it felt like Omaha's largest frat party.
Value investing at its finest! I love it.
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A whole bunch of videos from his appearance on CNBC today - https://www.youtube.com/user/cnbc/videos
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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!
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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.
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Great article - apparently GE's annual report only got 800 downloads from Edgar :o
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There is a prevailing view today that common shares are great long term investments, irrespective of price. This is a
great example of long term investing gone astray. Of course, there is no country more entrepreneurial than the
United States, with the rule of law and deep capital markets that are the envy of the whole world. But as history
shows, being bullish in 1929, when the Dow Jones hit 400, meant you had to wait 25 years (until 1954) before the
Dow Jones saw 400 again. In the meantime you had to survive a 90% decrease in the index. More recently in Japan,
the Nikkei has yet to hit the 40,000 level it traded at in 1989 – almost 27 years ago. It is still over 50% below its all-
time high in 1989. As they say, caveat emptor!
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I hope so. I've been waiting with the elephant gun poised for the best part of a year and a half now.Fabulous...
annual report 2013: "...these losses are significant but we consider them unrealized and expect both of them to reverse when the grand disconnect disappears-perhaps sooner than you think..."
annual report 2014: :"...these losses are significant but we consider them unrealized and expect both of them to reverse when the grand disconnect disappears-perhaps sooner than you think..."
annual report 2015: "...these losses are significant but we consider them unrealized and expect both of them to reverse when the grand disconnect disappears-perhaps sooner than you think..."
annual report 2016: "...we have warned you many times in our annual reports of the many risks that we see and the great disconnect between the markets and the economic fundamentals. These risks may be coming to a head in early 2016..."
Berkshire Hathway: Second Quarter Financial Results
in Berkshire Hathaway
Posted
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.