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compoundinglife

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Posts posted by compoundinglife

  1. Hey valueInv.  I just wanted to say that I really respect what you say in most of your posts, but, if you're implying medium to large companies will or can switch to Macs in the near future, I don't think you're quite right here.  Enterprise isn't going to switch anytime soon, if ever.

     

    There is a shift of enterprises supporting Macs. Are people going to bail on Windows %100? No.

     

    At GOOG, AMZN, and CSCO employees can get Macs. I was in a meeting with some execs from a Fortune 500 non-tech company and they all had Macs. Granted the later point is anecdotal evidence but the shift is there.

     

    If you were to ask a Sun Microsystems engineer in 1994 if Solaris servers would be mostly replaced by Linux they would laugh you out of the room. Citing  things like support contracts, performance, reliability etc.... Linux pretty much killed most commercial Unix operating systems except for in highly specialized cases and the # of those cases is getting smaller. Not an apples to apples comparison but large scales changes can and do happen over time.

     

    First, there are too many custom legacy applications (let alone mission critical Windows specific documents!) out there for corporations to realistically make the switch.  That software running on your oil rig?  Yeah, it's not going "cloud" or Mac anytime soon.  So, Windows it is.

     

    The number of PCs on oil rigs and airplanes is nothing compared to the enterprise desktop and laptop market. Legacy Windows apps that are not hardware specific can be virtualized or used through things like remote desktop and citrix metaframe. I have experienced the legacy apps quite a bit in the telco space and aerospace industries and while there are special cases, there are always ways for people to access to these systems.

     

    Two, Macs cost too much to be deployed in scale and there's too much vendor lock in.  Battery died?  Well, send your laptop to Apple.  I hope you don't need it charged for your presentation tomorrow.

     

    In a company deploying laptops at scale, they should have ability the replace and reimage machines very quickly such that the user does not need to wait for a replacement from Apple. If they don't, they are doing it wrong. I agree replacing a laptop for a dead battery is overkill, but I don't believe the additional cost is what you make it out to be. As for vendor lock in, that is a risk with an all Apple shop. But I think enterprises will mostly end up with a uneven split of Mac and Windows.

     

    Three, Apple doesn't do pure enterprise.  Period.  What Windows offers, network management wise, just destroys what Apple offers.  There's no contest.

     

    Windows and active directory offer WAY more in the form of management I agree. It is true that your helpdesk or windows sysadmin can with a click remove the marketing departments ability to change their wallpaper or their resolution. But at the end of the day I think the tools needed to support Macs in the enterprise are coming along. They can authenticate to Active Directory, IT can have remove access to the system. You can remotely wipe them.

     

    Windows IT guys will not go down gracefully and will cite all of these reasons in response to allowing Macs on the network. But at the end of the day someone with director level approval will get an exception and that is how it starts.

     

    Four, think incentives.  Many CIOs and other IT higher ups are MCSEs or have other forms of Microsoft certification.  Think they're going to throw out their accumulate knowledge just to "go Mac" anytime soon?  My guess is no.

     

    They are not going to drive it. Their users will. It all starts with one department or group that gets an exception, they prove they can do their job with it and then it spreads. When public companies like CSCO and AMZN that are subject to SOX can pull it off, it slowly wears away the excuses CIOs have for not giving their users what they want. I have spoken to folks from an IB who mentioned they were working with Apple to do secure roll outs of apple devices. IT folks have tried to prevent this in the name of standards, compliance, security etc... They are slowly losing, at least from what I have seen.

     

    So, like kevin4u said, I don't think you understand the stickiness of Windows.  It is very, incredibly sticky!

     

    By the way, just for reference, I live in Silicon Valley, and I see all the Macs people use (and I use one myself!)  And, in a previous career, I was a Linux network software engineer for a larger networking hardware company.  So I'm not exactly a MSFT fanboy :).

     

    Oh, and sent from my iPhone :D.

     

    I realize this was in response to a different poster... but I felt the urge to respond. Yes Windows is sticky however, asserting that Apple can not make it in enterprise is foolish IMO. Apple can invest in integration with Windows Active Directory (they did it with activesync/exchange), if corporate usage increases they probably will invest some $$ in making OSX more corporate friendly. Maybe MSFT just decides that it will charge companies an additional per seat fee for every Mac they want to add on to their Active Directory. I am not trying to say that MSFT is facing certain doom. They have a really good moat, but there are ways to exploit it.

     

    Don't forget that at some point folks were using mainframes and terminals. Employees started sneaking personal computers into the mix because they felt they could their job more effectively with them. I don't think anyone back then expected we would be where we are at today. Technology trends are hard to predict over the long term.

     

     

  2. I had considered registering for level 1 in Feb. before the price increase but determined that I might not have the time required to prepare due to working at early stage startup.

     

    I took the practice exam cold and got 10 out of 20 questions, the 10 I answered incorrectly I felt I would have gotten I had read their specific course material. That was initially encouraging and motivating but then after reading about the failure rate and average prep time I decided I should wait until I have more time to dedicate. Since I do not run money outside of my own there is not a ton of career value for me in the short term except maybe networking. Although I would be interested to hear other's opinions.

     

    Out of curiosity for folks that have taken level 1, what was your background before taking it and how long did you prepare?

  3. b) the number of shares you can purchase for each warrant you hold.

     

    I was reading the FFBCW prospectus the other day and noticed that it mentioned increase in warrant shares in the context of non-ordinary divs and share repurchases:

     

    In the case of cash dividends or other distributions. If we fix a record date for making a distribution to all holders of our common stock of securities, evidences of indebtedness, assets, cash, rights or warrants (excluding ordinary cash dividends (as defined below), dividends of our common stock and other dividends or distributions referred to in the preceding bullet point), then the exercise price in effect prior to such record date will be reduced immediately thereafter to the price determined by multiplying the exercise price in effect immediately prior to the reduction by the quotient of (x) the market price (as defined below) of our common stock on the last trading day preceding the first date on which our common stock trades regular way on the principal national securities exchange on which our common stock is listed or admitted to trading without the right to receive such distribution, minus the amount of cash and/or the fair market value of the securities, evidences of indebtedness, assets, rights or warrants to be so distributed in respect of one share of our common stock (such subtracted amount and/or fair market value, the “Per Share Fair Market Value”) divided by (y) such market price on the date specified in clause (x). Any such adjustment will be made successively whenever such a record date is fixed. The number of warrant shares will be increased to the number obtained by multiplying the number of warrant shares issuable upon exercise of a warrant immediately prior to such adjustment by the quotient of (a) the exercise price in effect immediately prior to the distribution giving rise to this adjustment divided by (b) the new exercise price as determined in accordance with the immediately preceding sentence. In the case of adjustment for a cash dividend that is, or is coincident with, a regular quarterly cash dividend, the Per Share Fair Market Value would be reduced only by the per share amount of the portion of the cash dividend that would constitute an ordinary cash dividend. If, after the declaration of any such record date, the related distribution is not made, the exercise price and the number of warrant shares then in effect will be readjusted, effective as of the date when our board of directors determines not to make such distribution, to the exercise price and the number of warrant shares that would then be in effect if such record date had not been fixed.

     

    I re-read things like this 20 times and they are still so hard to follow, but if I read that correctly. In the case of FFBC, any non-ordinary divs, rights offerings etc... Would result in a reduction of exercise price in addition to an increase in the ratio of shares available for purchase per warrant.  There is similar wording in the section that covers “pro rata repurchase” of stock.

  4. Either of you have anything readily accessible to back up your statements about Icahn? A good friend has a lot of faith in Icahn so I'd like to make him aware if he's making a big mistake.

    Thanks in advance.

    -M

     

    CI is worth north of 10 Billion and is self made, so clearly he has played the game decently. I think most of the statements made about his performance are more related to following him into investments like Lions Gate, Clorox, Yahoo, Blockbuster... He has had a decent amount of battles that did not work out in his favor and while I can't back the following statement up with any facts it seems like lately most of them have not gone in his favor, but feel free to correct me if anyone has other data. When you say your friend has "a lot of faith" in Icahn, do you mean he follows Icahn into his positions? Is an owner of Icahn Enterpirses (IEP)?

     

  5. Those kind of returns in one of the most brutal 5 years in decades are impressive.

     

    Brutal 5 years? The market is up 100% since the lows of 2009. Who knows if he was even invested in anything for 2007-2008.

     

    You can look it up on SEC Edgar.  The fund's semi-annual and annual reports are all there.  At Dec 2008 the fund was 13.7% cash.  Wellpoint was largest holding (10%) and SuperValu was second (6.9%).

     

    Also on the funds website: http://www.oceanstonefund.com/shareholder.htm

     

    Skimmed over most of his annual and semi annuals, lots of turn over in his top holdings. Not a bad thing IMO, seems like very methodical buy at below IV sell at IV and move on. Will be interesting to see where he is at in another 5-10 years.

  6. If it was not for the cash burn then I can make sense of purchase which would a be buy at a discount to IV(cash) + get the pipeline for free. All their R&D is in phase II which would be high risk in my opinion. Maybe he knows something about some of these potential products.

     

    I think its a very small position ~ 1% for him.

     

    Here you have a view into his portfolio:

    http://holdings.nasdaq.com/asp/OwnerPortfolio.asp?FormType=OwnerPortfolio&CIK=0001061768&HolderName=BAUPOST+GROUP+LLC%2FMA

     

    Keep in my mind Baupost invests in debt, real estate, and basically anything they can find good bargains in. So the equities on that web page only represent ~15% of their total assets depending on what their AUM is. I think AUM is between 20-25 billion, but don't quote me on that.

     

  7. This thread has been in the back of mind and while I was catching up on it just now, I think I figured out what *really* bothered me about this article...

     

    So lets say someone new to investing comes across this article. They see the piece is written by someone who has spent a ton of time w/WEB and is the article is published on a well known financial site. They read the article and what impression do they walk away with? I believe a lot of people would potentially walk away with the impression that Buffett is just another guy on Wall St. saying one thing and doing the other and that there is nothing to learn from him. Instead they go out and buy Jim Cramer's latest book because he is really looking out for the little guy :'(

     

    Big Assumption here I know, and shame on this hypothetical person for believing everything they read and not doing more independent research if they are looking for an investment guru. 

     

    I guess I really just fail to see what value this article provides to anyone and if it were Kass or some one else I would not even give it a second thought. But the fact that someone who devoted so much time to understanding WEB can sit there and compare Apple, JPM, and Berkshire like they all the same apples with regards to use of cash and share buybacks just blows my mind. As others have echoed statements like that either 1. imply that she was not value inoculated at birth as the saying goes and just doesn't get it or 2. She wrote it to push buttons and create hype rather than to provide people with accurate information.

     

     

     

     

  8. Is this the same Schroeder who wrote "The Snowball"?

     

    According to the footer of that article it is:

     

    (Alice Schroeder, the author of “The Snowball: Warren Buffett and the Business of Life” and formerly a top-ranked insurance analyst on Wall Street, is a Bloomberg View columnist. The opinions expressed are her own.)

     

    Tongue-in-cheek

     

    I thought about that after I posted it, text does a poor job sometimes conveying sarcasm :) I was tempted to post all of my counter points to this article but I think I'll save my breathe. One question though for folks, I follow WEB fairly closely and I do not remember him ever "table pounding" telling investors to buy BRK. Anyone know of anything that backs up this statement? I assume she just using her artistic license WRT to the buybacks. If anything I think I have heard him say at the AGM that he would not buy BRK if he was a smaller investor because there are plenty of cheaper great companies out there.

     

    EDIT: The more I think about it she is probably talking about this years letter, but I guess that did not come across as a Cramer style "BUY BUY BUY" to me.

  9.  

    According to the footer of that article it is:

     

    (Alice Schroeder, the author of “The Snowball: Warren Buffett and the Business of Life” and formerly a top-ranked insurance analyst on Wall Street, is a Bloomberg View columnist. The opinions expressed are her own.)

  10. Buffett was asked once why he didn't invest in Real Estate. He said "the stock market is too easy".

     

    In 1998 at a Florida Univ. MBA talk he was asked about real estate and said that buying corporations that deal in real estate is not great because they get taxed and the shareholder gets taxed, when the shareholder could easily do real estate on their own and avoid the double tax. I assuming he was saying this in comparison to say something like Coke, where the corporation gets taxed and the shareholder gets taxed on the div, but its not a business you can do on your own. He also mentioned that REITs work around the double tax issue but there is still overhead, someone with $1000 to invest might be wise to go with a REIT to be in real estate but someone with 1,000,000 should probably buy real estate outright to avoid paying the management overhead of a REIT.

     

    He also mentioned that at that time (1998) there was nothing Berkshire found attractive in real estate. Thats part of the reason I found it interesting that he was talking it up on recently.

     

     

  11. my two purchases were at 5.56 and 8 (roughly equal)--doubt I will add any unless it gets under 8 again.

     

    Type              Avg. Basis      % of total BAC position based on todays value

    W.A                2.53              43.14

    W.B                0.67              29.73

    BAC                6.22              18.12

    2014 12        0.51              7.31

    2013 17.50    0.06              1.7

     

    The 2013 17.50 was basically a way to get some leverage if this thing *really* takes off (40 bagger if BAC @ 20 by end of year), but I assumed that money was gone when I laid it out. If I add anything at this point I think it will be the common under $10.

     

  12. has anyone added to position?

     

    or is this strictly a hold?

     

    it seems that folks last year were estimating earnings power of at least $2

     

    s at $10 still has a good margin of safety,no? (not as good as at $5)

     

    I have been thinking about adding with a max price of 10. I think if I had no existing position I would be buying, however between common/warrants/options its my largest position. So I am sitting back hoping for a little pull back to add some common.

     

    If it helps think in terms of what you feel the IV vs what Mr Market is selling it for. Don't worry about what it traded for last week or last month.

     

     

  13. So the warrants I guess really aren't all that risky -- by the time those warrants expire the strength and earnings power of the bank will be formidable.

     

    I disagree with this statement, you are making a ton of assumptions about what will or won't happen between now and expiration. Anything can happen and will there for IMO anytime you at the mercy of time you are introducing risk. I don't disagree with the overall BAC thesis, I own warrants, common, and 2014 $10 calls. But I would never say that the warrants aren't all that risky.

     

    I think you are correct on that.  Mohnish says that the warrants have a 7-8 year life...whereas equity has a 100-year life.  Anything is possible in that 7-8 years period...good or bad.  Cheers!

     

    Guys... come on.  I said  "aren't all that risky"

     

    Do this mean:

     

    a)  less risky than the common

    b)  same risk as the common

    c)  more risky than the common

     

    If your answer isn't "c", I'm throwing a shoe.

     

    When put that way sure. Saying I disagree with that statement was more a product of the fact that I have said the same thing to myself many times and I have been trying really hard to think about the time constraints of the warrants and not trick myself in to thinking that they offer the same safety as common over the long run.

     

    I saw a WEB interview recently where they asked him how he felt about uncertainty in the markets at the moment, and his response was basically (para-phrasing) "uncertainty always exists, it existed before the crisis and it existed before 9/11 it's just that people didn't know it was there". That was in response to one of those "how do you get the cohones to invest when there is uncertainty". Even though his statement was more of a "I don't care about uncertainty because its always there I can't change that". The same thinking applies to being cautious w/the options/warrants, the uncertainty is always there that something negative either with BAC or more Macro could happen that renders the options/warrants positions worthless because of the expiration feature. That being said its something you can assign a probability to and act accordingly.

     

    On another note go BAC!  ;D

     

  14. My accounts are w/Fidelity, Etrade and Sharebuilder and for all of those I use the website on my ipad instead of their apps because I find the apps don't display things in the way I would like to see it.  I use wiki invest to view the aggregate of my accounts and their ipad and iphone apps are decent.

     

    I have a Barron's print subscription that includes access through their app and I really enjoy reading Barrons through the app and find myself using it more than the print version. Although the app can be frustrating because sometimes in the middle of a multipage article I will accidentally touch something that takes me to a different section and I have to navigate back to the page I was on.

     

    If you are SiriusXM subscriber for an additional fee you can stream sat radio to you ipad/iphone, can be handy if you want to listen to CNBC or Bloomberg.

  15. At which point does this become a short candidate?

     

    I am curious why so many people are interested in shorting Sears (not on this board, but in general)? I have never taken a short position but I would think if I were in that game I would really want to avoid illiquid issues with, borrowing fees, high insider ownership, especially when the owners are super investors? It just seems like a really bad idea for a short, regardless of the prospects as an ongoing concern. I am really curious what the attraction is. Disclosure, long.

  16. So the warrants I guess really aren't all that risky -- by the time those warrants expire the strength and earnings power of the bank will be formidable.

     

    I disagree with this statement, you are making a ton of assumptions about what will or won't happen between now and expiration. Anything can happen and will there for IMO anytime you at the mercy of time you are introducing risk. I don't disagree with the overall BAC thesis, I own warrants, common, and 2014 $10 calls. But I would never say that the warrants aren't all that risky.

  17. For me its similar to playing chess, the more I play chess the more patterns I see for potential moves and the more potential outcomes I can map out in my mind. If the opportunity is similar to others I have seen/researched or engaged in the past then I might act very quickly.

     

    I spend as much time as I can reading about different companies, industries, investors, finance etc... and while I do research specific positions before entering them, I feel that a lot of my research is done when I am not looking at a specific opportunity. So when a "no-brainer" comes along its a "no-brainer" because it somehow falls into my circle of competence which I am always trying to expand. If an idea seems too hard for me to understand, I will pass but I might add something to my reading list about the industry they are in so I can understand it better the next time something similar comes along. 

     

    With regards to the original poster asking about investing vs speculation, I have wondered the same thing myself many times and taken Ben Graham's words on the subject to heart. The conclusion that I have come to is that if I feel confident that the odds are in my favor then I am investing intelligently and I don't let it get any more complicated than that. 

     

     

     

  18.  

    Does anyone know off hand what Berkowitz has for an average cost in BOA?

     

    Thanks Dazel

     

    As of July his average price was around $15 with the most expensive shares being around $18. He bought in the sell off as low as $6.06 according to gurufocus as of 9-30-2011. Could of been purchases after that as well.

     

  19. You've got me reminiscing.  Anyway, so that's a bit of that.  Cheers!

     

    Great story! I came across this board after attending an ITEX annual you attended as well and have really enjoyed it reading it. Thanks to you and all the contributors. Some of the best things in life manifest from actions that at the time seem very small.

  20. http://www.businessweek.com/news/2012-01-03/sears-turnaround-means-using-tech-with-store-upgrades.html

     

    This does not look good. Technology turnaround ... I do not know many of those. This quote is good though

     

    “Borders had great bathrooms but that didn’t help them because they missed the e-book revolution in their industry.”

     

    JC Penney talking about Sears, Sears talking about Borders. Bottom line, retail turnarounds are not easy.

     

    That quote cracked me up. Specifically because a year or two ago I was on a work trip and decided to check out a borders store to see how busy it was and how many staff they had, I checked out the bathroom and it looked like it hadn't been cleaned in days and thought to myself these guys are done.

  21. Enjoying the discussion. I read the 2010 10K over the weekend and the annual letter. I had a question if you guys could share your insight.

     

    Does Sears breakout absolute $ of online sales or sales from home services which includes home improvement?

     

    It would be nice to get a better feel for what parts of the business are doing good, they do provide commentary about comparables but its hard to get insight from those figures.

     

    Long time reader, first time posting...

     

    To get an idea of revenue attributable to online sales I did some crawling through linkedIn profiles and found a Sears Ecommerce manager/director that said they were responsible for around 1.5 Billion in ecom revenue. Being a tech person myself I have spent a lot of time reading through linkedin profiles for SHLD people and also reading job descriptions for the positions they have open on the Sears Holdings website. For me it helps paint of picture of whats going on behind the scenes with the online strategy. 

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