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Josh4580

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    What companies do you currently own?

    in General Discussion

    Posted

    Below are my current holdings. My portfolio hasn't changed a whole lot this year; sold a couple companies (XOM and FDX), bought MA, and added to a few holdings. While a few of these are trading for higher valuations than what many of you probably look for on this board, I bought those companies at lower prices. I don't have the exact percentages, but here are my current holdings in order of weighting:

     

    AAPL

    FRFHF

    BRK/B

    BWLD

    GOOG

    V (considering lightening up on V)

    WFC

    GMCR

    CMG

    DECK

    USB

    AMZN

    MA

    BAC

     

    Options: CSCO Jan 12 calls

                  BAC: Jan 13 calls

     

    Great portfolio! DCG this portfolio seems like you buy the highest quality companies in the US.  How do you approach valuation on some of these stocks like CMG & DECK.  What has been your sell discipline?  Also are you concerned about GMCR patent expirations coming up?

    How Bad Is Europe?

    in General Discussion

    Posted

    The Topix has declined about 16 percent this year amid concern U.S. growth is sputtering and Europe’s debt crisis will damage the banking system, damping demand in two of Japan’s biggest export markets. The decline has cut the price of shares on the index to 0.91 times estimated book value, near the lowest since March 2009. -Bloomberg

     

    Wow the Japanese market is priced at .91X book value.  Thats pretty sad.  Anyone buying japanese stocks yet? What signs would one have to see to start feeling confidant in looking at these companies?

     

     

    The best read letters

    in General Discussion

    Posted

    augustabound, in that Frogs Kiss blog, I like the following statement:

     

    "People mindlessly believe share buybacks are an absolute positive, but it is really just an ordinary business decision that can turn out poorly like any other."

     

    I actually see a lot of people on this board mindlessly cheer buybacks with absolutely no regard to if they are done below intrinsic value. 

    Fund Manager Ackman Teases Investors With Mystery Trade

    in General Discussion

    Posted

    I really like this Ackman trade.  BTW if you cant get options on the HKD than you can buy the HKD using Interactive Brokers at 30:1 margin.  A 30% gain like he expects would produce a 900% gain at that leverage.  Not bad but no 100:1 gain as he projects in the options.

     

    I think his idea is even better than the Japan CDS trade that Kyle Bass has on, which actually have increase from 104bp when i posted on this thread to 124bp. 

    Fund Manager Ackman Teases Investors With Mystery Trade

    in General Discussion

    Posted

    The US is completely different from Japan as their debt ratios are no where near each other, their central banks operate differently, and both countries have completely different cultures and demographics. 

     

    Also CDS on Japanese debt have gone from 37bp 2 years ago to 105bp today.  So its been a very profitable trade for Kyle Bass and others. 

     

    I respectfully refer any Japanese bond bear to Cullen Roche's website www.pragcap.com to learn why countries such as Japan and the USA will not have a debt crisis. Japan and the USA are never revenue constrained, and as long as they issue debt in their own currency it will never happen. Einhorn purchased calls on Japanese interest rates in the 4Q of 2008 and Kyle Bass has been preaching about Japan coming to the "Keynsian End Point" for the past two years - both are incredibly smart men and both have been DEAD wrong.

     

    Theres a good chance this could be a CDS trade.  I think the most asymmetric CDS trade right now is long Japanese Government (JGB's) CDS.  The 5 year contracts go for 104 bp.  quote link here: http://www.bloomberg.com/apps/quote?ticker=CJGB1U5:IND

     

    This trade would also provide a large hedge position as Ackman suggests.  I have not found a bull case for Japanese Debt so far.  The writing is on the wall right now.

    Fund Manager Ackman Teases Investors With Mystery Trade

    in General Discussion

    Posted

    Theres a good chance this could be a CDS trade.  I think the most asymmetric CDS trade right now is long Japanese Government (JGB's) CDS.  The 5 year contracts go for 104 bp.  quote link here: http://www.bloomberg.com/apps/quote?ticker=CJGB1U5:IND

     

    This trade would also provide a large hedge position as Ackman suggests.  I have not found a bull case for Japanese Debt so far.  The writing is on the wall right now. 

    Prof. William T Ziemba introduces The Kelly Criterion (Video)

    in General Discussion

    Posted

    I think Mark Sellers used a full Kelly criteria allocation in his hedge fund which prompted him to invest like 95% of his assets into MCF.  MCF subsequently fell 50% as natural gas went from $13/mcf to $2/mcf.  This was the end of his hedge fund career.  I think this highlights the dangers of a full Kelly criteria application. 

     

    I think the Kelly criteria is good to think about in the abstract than in actual practice.  Position sizing should not be an exact science as it is impossible to calculate the upside/downside exactly.  Kelly should be used as a guide to being vaguely right in your position size than thinking some position needs to be 25.4324% of your portfolio. 

     

    Example with DIMEQ (see DIMEQ thread for more info)

     

    I know that the downside is zero.

    I know that the upside is 3.5-4 to 1 odds at the current price of 65 cents.

    I believe the odds of achieving that upside is around 80%

     

    Using the Kelly formula on http://www.albionresearch.com site it says to put 74.81% of my capital into DIMEQ.  Now if I were running a hedge fund I would only put 3% of my capital in DIMEQ, which using the Kelly formula means I am only betting that there is a 22-23% chance of winning. 

     

    By allocating 3% into DIMEQ being pretty sure of a win (80%), means if they do win, that would be a gain of 9% for my fund, or equivalent to an average years worth of gain in the S&P 500. If I lose and am still sure my probabilities were correct, I could live with the 3% loss of capital.  Thats the art of position sizing versus the science of the Kelly criteria. 

     

    If I used the Kelly criteria and lost, meaning a 75% capital loss in my fund, I would quit and start opening up bars across the country. 

    Bruce Berkowitz on BAC

    in General Discussion

    Posted

    I wish I was in that club too, however Brian's rap sheet means his net worth should be much higher than $3.5mm.  He was probably making $1mm-$2mm a year in salary. 

     

    Straight from the Proxy Statement

     

    Prior to his appointment as Chief Executive Officer and President, he served in various leadership positions at our company: President, Consumer and Small Business Banking (August 2009 to December 2009); President, Global Banking and Global Wealth Management (January 2009 to August 2009); General Counsel (December 2008 to January 2009); President, Global Corporate and Investment Banking (October 2007 to December 2008); and President, Global Wealth and Investment Management (April 2004 to October 2007).

    -  Prior to Bank of America’s acquisition of FleetBoston Financial Corporation, he served as Executive Vice President of FleetBoston from 1999 to April 2004, with responsibility for Brokerage and Wealth Management from 2000 and Regional Commercial Financial Services and Investment Management from May 2003.

    Joseph Steinberg (LUK/Berkadia), B.Ackman & Myron Scholes - VideoLecture (90min)

    in General Discussion

    Posted

    Why is Ackman & Steinberg wasting time talking to Myron Scholes

     

    http://en.wikipedia.org/wiki/Myron_Scholes

     

    Investment activity

    In 1990 Scholes decided to get involved more directly with the financial markets and he went to Salomon Brothers as a special consultant, then becoming a managing director and co-head of its fixed-income-derivative group. In 1994, Scholes joined several colleagues, including John Meriwether, the former vice-chairman and head of bond trading at Salomon Brothers, and his future Nobel Prize co-winner Robert C. Merton, and co-founded a hedge fund called Long-Term Capital Management. The fund, which started operations with $1 billion of investor capital, was extremely successful in the first years, with annualized returns of over 40%. However, following the 1997 East Asian financial crisis and the Russian Financial Crises the highly leveraged fund in 1998 lost $4.6 billion in less than four months and failed, becoming one of the most prominent examples of risk potential in the investment industry.

    LTCM brought more problems for Scholes in 2005, when he was implicated in the case of Long-Term Capital Holdings v. United States, being accused of having used an illegal tax shelter in order to avoid having to pay taxes on profits from company investments. It was found that Scholes and his partners were not eligible for $40 million tax savings resulting from $106 million accounting losses that had no economic substance.[3][4]

    Scholes is currently the chairman of Platinum Grove Asset Management, a hedge fund, which he started with former LTCM partner Chi-fu Huang. The company managed $4.5 billion and had an average annual return of 9.4 percent prior to 2007.[5] Then Platinum Grove Contingent Master fund suffered a 38 percent loss from the beginning of 2008 through October 15. The decline caused Platinum Grove to temporarily halt investor withdrawals from its largest fund.[6] He also serves on the boards[7] of various organisations, such as the Chicago Mercantile Exchange and Dimensional Fund Advisors, a pioneer of passive investing which manages $100 billion.[8]

     

     

    Myron Scholes this one is for YOU..

     

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