premfan

i agree with mr. cooperman.

I'm working on creating a case study list of companies that made the transition from being good to great. I havent read the jim collins book and dont care too cause thats his research. I feel the best way to refine your investment approach is to reverse engineer companies and see if you can see a pattern currently taking place. My case study companies making the turn to becoming great via leveraging a product. The year of the turn : Deckers corp 2003 apple 2005 ceradyne 2002 Monster beverage ( the artist formerly known as hansens natural) early 2000's Patterns - Company earning below average roe 0-10 then a jump in roe due to new demand for product. Apple via ipod, ceradyne via body armor due to war, monster beverage due to energy drink, deckers corp due to uggs. This jump in roe last at least one business cycle. The bigger the market the longer high roe trend. - Depending on the cause of demand this trend lasts at least one business cycle (4-5 years). Ceradyne was great from 2002-2008 then demand dropped - Towards the end of the trend companies go parabolic. Questions: How is demand created? Via some external event or due to societies free choice. External event via war or gov buying money. Has competitive advantage been reached ? 1.) customer loves product 2.) economies of scale 3.) proprietary technology What are the barriers to entry? Current list of good to great : Coinstar year of the turn 2010 Watch and see list Rim ( needs a couple years of pain first probadly one business cycle) Anyone know additional companies to case study that went from good to great via a product in the past or ones that have already started the turn recently ?

another bac post. welcome to the corner of berkshire and bank of america.

Loving it! I think he's going to be big.

The type of stocks i invest in are: 1.) Compounders= Company objective is to increase bv every year ( FFH, MKL, TTT(MCAF), BRK, LUK). In this group management is key plus previous track record of at least five years of increasing SE. Constant search to find these rare companies. 2.) Asset plays= Sum of parts greater than whole. Worth more dead than alive. Downside is clearly defined so i dont care about any growth or upside. Example SHLD 3.) A franchise or brand that is in the downswing= A franchise or brand that the street hates. New management taking over or anything that only temporary affects the brand in the short term. Usually the market overly punishes these companies and under estimates the strength of the brand. I have to figure out how strong the moat and ecomonic goodwill the brand or franchise has. Example (kswiss,aeo, shld, garmin) 4.) Strong brand companies= Great companies that need little capital to grow the business. Companies that have pricing power and would thrive in an inflationary enivorment. These companies are rarely cheap. Ex (Ko, JNJ, Hans) 5.) Trend investing= Basically joining a bull market or following the trend. The key is to be in the trend early which is hard. Basically not buying in the parabolic stage most likely buying in the middle level. Example mining companies I prefer compounders over any of the other types. Ultimately price is the determining factor. So i dont pre mediate % allocation. I buy when the price is right for me. If compunders are cheap most of my capital will be in that area. Trend investing i never do more than 10 percent . I try to have at least 10 percent cash at all times.

In the tech bubble fundamentals were non existent. In the real estate bubble supply vs demand balance was off. Currently gold is fundamentally sound( Us money printing) and supply is low. Gold will be strong until gold supply outweighs gold demand or the U.S. and the world turns off there printing press. Granted gold is a speculation not an investment. Gold will be in a bubble and reach parabolic levels dont think we are in it now. I have a bit of my portfolio in mining companies understanding its speculation not an investment.

Biglari writes well but, actions speak louder than words. I agree with Myth the only way i'll ever invest is if it becomes a Graham type of stock. Or after valuing the business i'm getting Mr. Biglari for free. No way i'll ever pay a premium for Mr. Biglari's services.

Finished reading Charlie Munger's USC law commencement speech over the weekend. I got some interesting tidbits from the speech that i relate to Biglari Holdings. "In this world we have two kinds of knowledge. One is Planck knoweledge, people who really know. They've paid the dues, they have the aptitude. And then we've got the chauffeur knowledge. They have learned the talk. They may have a big head of hair, they may have fine temper in the voice, they'll make a hell of an impression. But in the end, all they have is chauffeur knowledge. I think i've just described practically every politician in the US." " Another thing, perverse incentives. You do not want to be in a perverse incentive system thats causing you to behave more and more foolishly or worse and worse- incentives are too powerful a control over human cognition or human behavior. If you're in one. I dont have a solution for you. You'll have to figure it out for yourself, but its significant problem." Munger also talks about deserved trust as the pinnacle in human achievement. When i invested in The steak and shake company and then biglari holdings i trusted biglari. Mr. Biglari had my deserved trust. Mr. Biglari broke my investing heart with the compensation package which to me showed his true intentions. He lost my deserved trust and me personally once i lose trust i'm out i wont ever trust you again. Like parsad mentioned he will find his loyal shareholder base. So if you were a shareholder before the comp package and stayed a shareholder. You are essentially saying it doesnt matter how you treat shareholders because you are a talented capital allocator. You can walk all over me and take a huge piece of the pie. I'm so lucky to find a capital allocator like you as long as you make me money you can act any way you please. Similar to being in a relationship with a extremely attractive girl( aka great capital allocator) everything is going great. Then randomly she starts acting shady and cheats on you. But, shes super hot and i will never find a girl like this again( capital allocator). You make a choice do i choose to stay with his hot girl that i dont trust or do i part ways and find a hot girl that treats me right? Definitely a personal choice but i deserve a hot girl ( capital allocator) that doesnt cheat and has my deserved trust.

They make most of there earnings in the 4th quarter but, still its a horrendous quarter.

Wow the gold discussion could go on forever. My take is buy gold if you think the government will continue to debase the dollar. Dont buy gold as inflation hedge. In inflation enivornment everyone loses. The winners are companies that have pricing power even in a flat demand enivornment. Also companies that are not asset heavy and have low capex that have the ability to increase volume of product without much capital injection. Buy gold as a hedge against government policies. Currently supply/demand dynamics of gold is favorable. It will take some time until the supply catches up with the demand. Gold is not in a bubble yet. We are not in the europhic period yet.

Great post Tariq!

+3

I'm looking to broaden my base in financial statement interpretation. Any recommendations?

I didnt find a website. Only info i have is from seeking alpha articles, yahoo message board, and random forum posts. Stumbled upon this company two days ago while looking for a farmland play after seeing dr burry's recent interview. Wanted to get the boards feedback on the company.

Cant Biglari be similar to buffet with an inflated salary? Only thing that has changed since last year when there was biglari mania is the comp plan. His returns are still pretty stellar.

Trades under BWEL.PK -Largest semi private farming operation in U.S. -Company owns 142,000 acres in Cali + 30,000 acres in Australia -hidden asset = owns massive amounts of water under land(40,000-200,000 acre feet of water). -U.S. largest producer of cotton -One of nations largest producers of tomato - Stock rarely ever trades -Shares outstanding= 983K

Hahaha bronco! I see value in Loews cause i like the long term trend of there companies. Loews is not exactly an unknown company so if the past and the present hasnt shown a valuation where Loews is not trading at a discount. I wouldnt base my thesis on no discount in the future. The long term trend of there companies is a massive +. In the future most likely there will be still a discount but, it shouldnt matter cause there companies are in the right sector. More companies: GLRE CET

Check out Hallmark Fininical Services impressive bv creation since new management.

I dont think Loews has ever traded equal to its parts. They always have a discount.

Hey guys, i have been thinking lately what exactly determines the value of an asset. An asset is basically anything in this world. So why is something considered valuable compared to something that is not valubale? An ideal asset would be something in low supply and in low demand= low asset price. My thinking is if the supply is low. The demand will ultimately be high because of the low supply. After major wars or natural disasters the supply is low and demand is low. Depending on the geopoliticial risk involved the supply and demand will ultimately catch up. So my thinking is countries that are finishing a war that have a democracy and practice capitalism will ultimately in the future result in higher asset prices. That is the best asset to buy when supply is low and demand is low. I guess what i'm trying to say is demand for any asset will be high if the supply is low. Also when the supply cant be manipulated or created out of thin air. So our job as value investors are to find assets that in the future will be in higher demand and that have a low supply. My current list 1.) gold 2.) physical land The greatest asset will always and forever be a human being. Demand is always high and supply is always low(Only one of you). Create more demand for yourself and society will give you a higher value.

Omg there is no right or wrong way to do anything. It comes down to personal choice/time/effort. I absolutely agree with all of rick's points though. Its defining what your expections are . Once you have a expection use any framework + keep improving your process to get the desired result. Rick is throwing his own personal expection about finding multi baggers on people that dont want to give the effort to find them. The limiting belief is that i cant get outsized gains because i'm not smarter than prem, buffet or etc. Put the work in and keep improving your process and get there. Or copy prem/buffet/ or etc's holdings and go play golf. No worries its a personal choice.

Hey plan, i read your thesis on premier exhibition back in the day and decided to invest in the situation. I cant imagine a downside worse than 3 dollars a share. Whats your take on the current situation?

O % as of now.

Good anaylsis partner. Based off his track record and shareholder letters i tend to agree with the first point you made. One thing i look for in a shareholder letter is a clear thinking process. I hate ceos who only focus on the outcome and not give a process for the desired outcome. Mr. Smith's shareholder letters although short are very informative and get straight to the point. All the essential info is layed out clearly with a process of things to do for the following year. Again just cause he doesnt write a 10 page letter like markel, ffh, brk, and etc doesnt mean hes not being transparent. I agree he is secretive as a person no pictures or many articles. I view that as a massive positive because he's hidden from wall street. There is little to no edge because of his secret nature. Which means we are all on equal playing fields. I believe he wrote one long letter in 2005 because of the company name change. Very transparent and layed out his thinking process very well. Being secretive ( as a person) + awesome track record= Lecuadia circa 1990's.

Awesome write up maxprogram. Thanks