Ballinvarosig Investors
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Posts posted by Ballinvarosig Investors
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I am with Parsad on this, for once. I actually held a tiny amount of stock a few years ago, but sold when they announced the deal to buy Perot Systems. Don't get me wrong, I like Michael Dell. I don't think there is a person in the world who could run the operational part of Dell as well as he can. You only need to look at his competitors margins and to see that he is running things as well as anyone possibly could. In that regard, I commend him for his skill and enthusiasm. My problem with him though is the capital allocation part of his skillset is sorely lacking. Look at the acquisition of Perot Systems for example. A massive amount of cash was spent buying a similar business but at an inflated price (1.4x sales as opposed to 0.5x sales for Dell and 30x earnings as opposed to 6x earnings for Dell). It's all well and good talking about free cash flow, but cash is no good if shareholders aren't seeing it, or it isn't being allocated properly. On the other hand, if Dell had used that $4billion and returned it to shareholders through buybacks, we might be looking at a $20 stock today.
If you ask me, Michael Dell should follow the advice that he himself gave to Apple back in 1997 - http://news.cnet.com/2100-1001-203937.html
I think when Dell build up the cash balances further, they are going to simply do another Perot System-type acquisition and yet again, shareholders will see good money thrown after bad. After all, all Michael Dell knows is how to run a computer hardware company. Given his history, it's unlikely he will ever admit that he operates in a lousy business and that he should exit it and make himself redundant.ORLANDO, Florida--When it comes to the state of Apple Computer, everyone has an opinion.And at the Gartner Symposium and ITxpo97 here today, the CEO of competitor Dell Computer added his voice to the chorus when asked what could be done to fix the Mac maker. His solution was a drastic one.
"What would I do? I'd shut it down and give the money back to the shareholders," Michael Dell said before a crowd of several thousand IT executives.
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First he he buys IBM, now GM - I am shocked at this move!
Berkshire Hathaway Inc. (BRK/A) disclosed stakes in General Motors Co. (GM) and Viacom Inc. as deputies Todd Combs and Ted Weschler, both former hedge-fund managers, built their portfolios under Chairman Warren Buffett.Buffett’s firm had 10 million shares of the automaker on March 31, the Omaha, Nebraska-based company said today in a filing disclosing U.S. stockholdings at the end of the first quarter. The stake in New York-based Viacom was about 1.59 million shares. The filing excludes some confidential data.
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You didn't mildly criticise him though, you mocked him. Also, your comments strike me as a little "gleeful".If you want to ban people for mildly criticizing and not deifying a friend of yours
I don't think Parsad has a problem with anyone attacking an investment made by anyone is is acquainted with. I know I have criticised investments made by the likes of Tim McElvaine and Fairfax here before, but I would never dream of defaming their person. These guys give a heck of a lot to the community for very little in return and just because I might think they are wrong on occasion, it doesn't give me the right to belittle them.
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The Greek stock market crash is now officially worse than the US market crash of 29-32!
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http://www.eclectica-am.com/temp/1_summary.png
His fund is the blue line, his bench mark is the MSCI World Index Total Return fund which is in red. The letter is certainly a thought provoking read.
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Oh for cryin' out loud.
Grow up.
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In most cases, Chinese companies involved in accounting scandals have real and active operations.I would stay totally away from these unless you're going to go to China to see their operations.
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Klarman incidently owns another French small cap company, a textile manufacturer called Chargeurs - http://www.bloomberg.com/quote/CRI:FPAs a side note I really like that blog, on the ground view of some French small caps.
Numbers in the last few years have been horrific and he has taken a bath.
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In today's news.
http://www.bbc.co.uk/news/business-17732910
The Argentine government will seize a controlling interest in oil company YPF owned by Spanish firm Repsol.President Cristina Fernandez said a bill will be presented to the Senate allowing the government to expropriate 51% of YPF shares.
The move, announced on national television, was welcomed by her cabinet and Argentine governors.
Spain and the EU have already expressed concern at such a state takeover of YPF, in which Repsol has a 57.4% stake.
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wondering if anyone is knowledgeable on this name and can give me the 15 second rundown on why its trading at a PE of 3x (besides the obvious of natural gas tanking and having Russian government as majority owner).
What other major risks are weighing this down?
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eircom is the former stated owned phone company that has recently filed for examinership by the way.Walter Scott, a US billionaire and Berkshire Hathaway board member, has teamed up with David McCourt, principle at Granahan McCourt Capital, in Boston, to shop for distressed assets in Ireland.McCourt said they are looking at telecommunications businesses “but not Eircom” and they’re “staying away from real estate for now".
Scott, a childhood friend of Warren Buffett’s and director at his company, Berkshire Hathaway, holds a stake in the company worth $13million (€9.75m). He also chairs the $7.5 billion-capped Level 3 Communications, which boast the Irish Internet company Servecast for $40 million.
His father started Kiewit, an Omaha based billion dollar construction company, which turned its hand to telecom, fibre-optics and the power-plant business.
He is a staple on the Forbes rich list having made billions from the Berkshire Hathaway's acquisition of MidAmerican Energy in 2000.
Scott is business partner and mentor to McCourt, the Irish American working as their emissary in Ireland. McCourt has spent two weeks meeting with representatives of several Irish banks and several companies.
The Sunday Independent reports that they may be signing on four deals.
McCourt said “Walter and I looked at Ireland. With €135bn worth of assets to be sold, it looks like there are options here. We are talking to a number of companies that have either been in default on loans or are about be, or where the banks are about to, or already have taken over.
“If they're good businesses with bad balance sheets, we could be helpful,” he said.
Some these plans involved a partnership with restructuring specialist Gores Group, which has been linked with a move for Greenstar Recycling.
He continued “We're interested in any business that we feel we would understand, where we have a view on where it's going to go and respect the management. The balance sheet can be broken but not the business.
“We like to go where there has been lots of disruption or change -- the more change the better. Incidents of change allow us to have an advantage over bigger companies. We have less baggage.”
The Boston Irish businessman first worked with Scott on Kiewit’s London venture – to design cable television and telecom networks for the European market.
McCourt is on the University College Dublin Smurfit business school advisory board and also JP Morgan Chase’s. He is also estimated to be worth $1 billion.
Read more: http://www.irishcentral.com/news/Buffet-pal-and-US-billionaires-shop-for-distressed-businesses-in-Ireland--145898895.html#ixzz1qzhUb3MR
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London, England.
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Yes, let's just dismiss her arguments as those of a hysterical old bat ::)Schroeder's critical tone is best explained by the saying, "Hell hath no fury like a woman scorned."
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Hugh Hendry is suggesting a Michael Burry-esque trade to capitalise on a Chinese slowdown by betting against Japanese shipping, banking and steel companies.A follow-up on my earlier post about Chinese real estate. GMO strategist Peter Chiappinelli is calling China the Mother of all bubbles and is shorting.
http://www.investmentnews.com/article/20120216/FREE/120219938?template=printart
http://brazilianbubble.com/gmo-is-short-china-we-are-very-concerned-all-bubbles-pop-eventually/
Cheers
JEast
I believe his short-credit strategy worked out spectacularly last year.http://online.barrons.com/article/SB50001424052748703786004577221590093305080.html?mod=BOL_twm_fs#articleTabs_article%3D1So how do you make money?
Would you believe that the AIG strategy of selling too much credit protection in risky assets like mortgage-backed securities is alive and booming today in Japan? It doesn't concern mortgages. It is credit-default swaps on individual Japanese corporations.
Do you seriously believe Japanese corporations are going to fail?
Clearly, they can and do go bust. I'm buying the CDS on investment-grade Japanese corporations because of the overpricing anomaly. Japan had a bust 20 years ago, and yet today the banking stocks, relative to [Japanese bourse] Topix, are making fresh lows.
If I'm a Japanese bank and I lend money to a new business, I get 1% on 10-year paper. Then the bank gets a call from me, and I'm willing to pay 50 basis points for five-year protection on this same company. So suddenly, the yield has gone from 1% to 1½%. Compare that to five-year Japanese government bonds, yielding 30 basis points. The bank thinks: This is a great trade! Japanese steel companies are investment-grade and won't go bankrupt. So, the bank gets this huge yen yield, and thinks it is not taking any risk. You'd better believe it will sell way too much of that good thing.
One of my partners told me about Japanese steel: Here is a country with no energy, no iron ore or coal, yet it's the largest exporter of steel in the world, exports half its output. To put that in context, China manufactures 700 million tons of steel and exports perhaps 30 million. Japan produces 110 million tons and exports 40 million. As long as Asia is strong, they are fine. But if Asia hiccups or reverses, plant-utilization rates go from very high to very, very low very quickly.
Then we discovered that Warren Buffett owned shares of South Korea's Posco [5490.S. Korea], and that Korea was the biggest importer of Japanese steel, but Posco and Hyundai [5380.S. Korea] are building huge, integrated steel plants. They have a surplus of steel capacity and—guess what?—they're exporting to Japan, because the yen is so strong.
Initially, I wanted to buy a three-year, out-of-the-money put on Nippon Steel. My broker said, "I've been in a 20-year bear market; my boss will kill me." Then I thought, being long credit protection is being long volatility. I redialed his credit counterpart. I said: "I'm thinking of purchasing up to a billion yen of five-year credit-default swaps in Nippon Steel." The first thing he said was, "Would you consider 10 billion?" So one part of the bank is banned from selling volatility, and the other part is having a party. I bought reams of the stuff.
In August 2010, we set up a stand-alone fund to buy this credit protection. You no longer pay 50 basis points, you pay 130 basis points. U.S. Steel credit protection is more like 650 basis points, because in America, people are cautious on selling protection on such volatile businesses. They don't share that worry in Japan. It could make them very, very vulnerable.
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I wrote him a letter, he replied! Amazing to think what a little flattery can do.I had the pleasure of meeting Walter; even though he didn't know me from Adam, he put up with me speaking to him for nearly an hour. All that time he was incredible warm, patient and humble, and despite his years, was still very lucid. A real gentleman, and a huge loss for all.
Wow, how did you end up meeting him?
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I had the pleasure of meeting Walter; even though he didn't know me from Adam, he put up with me speaking to him for nearly an hour. All that time he was incredible warm, patient and humble, and despite his years, was still very lucid. A real gentleman, and a huge loss for all.
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ITEX is not deemed reportable by virtue of the fact that it's traded OTC. The SEC maintains a list of securities that must be filed in a 13F, see this link, might be helpful in future - http://www.sec.gov/divisions/investment/13f/13flist2011q3.pdfI don't see ITEX either. It used to be held through Western Sizzlin, but I'm not sure how they are reporting it now. There is no disclosure on any 5% filings for ITEX on EDGAR regarding Biglari Holdings, Steak'n Shake, Western Sizzlin, Biglari Capital or Sardar Biglari. So I'm not sure when they sold or what happened to it. Unless I'm blind, does anyone else see anything? Cheers!
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The Greek parliament passes the Troika bailout conditions! - http://www.telegraph.co.uk/finance/financialcrisis/9078221/Greece-passes-crucial-bailout-vote-as-country-burns.html
I have to say, I thought the bolded statement from Papademos was cute considering he is an un-elected, ECB lackey.Lucas Papademos, the embattled Prime Minister, told Parliament: "Vandalism and destruction have no place in a democracy and will not be tolerated. I call on the public to show calm. At these crucial times, we do not have the luxury of this type of protest. I think everyone is aware of how serious the situation is." -
Very quickly: some of you will have seen that Greece’s tax revenue from VAT collapsed by 18.7pc in January from a year earlier.
Nobody can seriously blame tax evasion for this. It has happened because 60,000 small firms and family businesses have gone bankrupt since the summer.
The VAT rate for food and drink rose from 13pc to 23pc in September to comply with EU-IMF Troika demands. The revenue effect has been overwhelmed by the contraction of the economy.
Overall tax receipts fell 7pc year-on-year.
This is a damning indictment of the EU-imposed strategy. Greece is chasing its tail. The budget deficit is stuck near 8pc to 9pc of GDP because the economic base is shrinking so fast.
Let me just add that it makes little difference whether or not Lucas Papademos secures triparty agreement today – or soon – for a debt deal.
The Greek parliament still has to vote and there is a sauve qui peut mood among MPs who don’t want to be stoned to death (metaphorically) by the polloi – hoi or otherwise.
Prof Yannis Varoufakis told me this morning that PASOK suupport has dropped to 8pc in the polls from 47pc when elected. New Democracy is down to 18pc.
Where are voters going? To parties that are not very friendly to Angela Merkel. The hard Left in various forms is running at around 35pc.
So what happens in the April elections? Does anybody think that the new government will comply with the Merkel-Troika Diktat, and continue complying until 2020 when the country will still be prostrate with a public debt of 120pc of GDP – if all goes perfectly?
April is the inflexion point.
Another normal day at the Hellenic Statistical Authority.We learn that:
Greece's manufacturing output contracted by 15.5pc in December from a year earlier.
Industrial output fell 11.3pc, compared to minus 7.8pc in November.
Unemployment jumped to 20.9pc in November, up from 18.2pc a month earlier.
I have little further to add. This is what a death spiral looks like.
It is what can happen if you join a fixed exchange system, then take out very large debts in what amounts to a foreign currency, and then have simultaneous monetary and fiscal contraction imposed upon you.
Germany discovered this on the Gold Standard when it racked up external debt from 1925 to 1929 (owed to American bankers) in much the same way as Greece has done.
When the music stopped – ie, when the Fed raised rates from 1928 onwards – Germany blew apart in much the same way as Greece is blowing apart. This is not a cultural or anthropological issue. It is the mechanical consequence of capital flows into a country that cannot handle it, as Germany could not handle it in the late 1920s.
By the way, Greeks work an average 42 hours a week, one of the highest in Europe. Just want to put the record straight on that.
As Greece reaches a deal, the situation continues to deteriorate rapidly.
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Was lucky enough to have bought BAC close to their lows, RLI and PRA have also walloped it out of the park. Other positions have gone with the market. Still holding a decent cash position and dipped into it to buy TSCO. Don't think the market is cheap, but it is an election year, the Fed balance sheet is soaring and liquidity is being pumped into the system both in America and abroad, so only a fool would take a position against national governments.
http://www.ritholtz.com/blog/2012/01/living-in-a-qe-world/ - article is well worth reading
http://www.ritholtz.com/blog/wp-content/uploads/2012/01/balu1.gif
I await the torrent of abuse from those that say macro doesn't matter, and that "I only buy cheap stocks" 8)
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I am sure they will reach a deal, and the market will probably rally. But the markets are only going to start focusing their crosshairs on Portugal, which is in need of debt forgiveness. After that, it will be Ireland, and then probably back to Greece again. In the meanwhile, you have the massive Italian and Spanish economies, are are teetering on the brink, anymore bad economic data could push them over the edge very quickly.
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http://www.davidmcwilliams.ie/wp-content/uploads/2012/01/Screen-shot-2012-01-26-at-09.41.39.png
Considering the economy is projected to grow by just 0.8% next year, it's unsustainable for Ireland to even be paying 3% of their IMF bailout, let alone the 8% that 10 year debt is yielding currently on the bond market.
For You Believers in DELL
in General Discussion
Posted
30x earnings for a mediocre business?
I suspect Dell will continue to deploy free cash flow in a less than optimal way.Dell at $12.50 is cheap, and might even be worth tactically trading. I wouldn't want to make it a long-term holding though.