goldendad

You familiar with Fermi problems? I think investing -- on both the complex and simple ends -- is just a bunch of Fermi problems.

I bought in 1991 and sold 80% of it in 1998. Basis (split adjusted) of 32 cents/share and sale price of $66.44. Two hundred bagger, so I can't really bring myself to dislike Dell. I used to buy its computers out of that sense of appreciation but after a couple lemons I stopped that practice.

Interesting idea. Wonder where it's pulling data from . . . a lot of it seems inaccurate. As a subscriber I cross-referenced it against ValueLine for a few tickers and a lot of the numbers were different. And I don't mean a little bit different -- because ValueLine does their own normalizations and adjustments -- I mean different in a way that didn't make sense. Although some numbers like debt and sales seemed to match . . . but earnings numbers were significantly different. Also it didn't render certain years when I looked at JNJ although it did render all years for the others ones I looked at. Also, one little thing it doesn't have that ValueLine does is the pension plan funding level. I like that for when I'm calculating the corporate liabilities. Looks like a good free resource . . . if you could trust the earnings numbers.

First one that comes to my mind is the sound premise that the easiest and best way to own a safe, diversified stock portfolio is to invest in an index fund (like the S&P 500). Sound premise right up until the market was distorted by so many people following that advice and mindlessly investing money into the index funds. Now many of the index funds have a huge percentage invested in fewer stocks and/or they are "market cap weighted" and thereby overinvested in obviously overvalued stocks (well, obviously overvalued to a value investor anyway). When I looked last summer at the S&P500 I think 20% of its market cap was in the top six stocks. The bottom 250 (251-500) combined were equal to the market cap of the top two I think. So operating under the "sound premise" the average person thinks they've got their money spread out among 500 companies but the reality is they are in a top-heavy stock fund.

Depending on the numbers and time period referenced, Greece amounts to something like 1-3% of Germany's trade surplus. At 13% of Greece's exports, Germany is Greece's largest export customer. At 1-2% of Germany's exports, Greece is not in the top 15 of Germany's export customers. Hans is not George's problem. George is George's problem. And George needs Hans a lot more than Hans needs George. Also BTW George lives alone (11MM pop) and Hans has seven other people in his house (82MM pop).

Bah, forget the "Ignore User" option and just give me an "Ignore Canadians Talking About Hockey or U.S. Politics" feature. :)

Part of the reason I bought my stake in CCA was that the egregious compensation plan of the elders was about to be cut in half finally at the end of 2010 since the employment agreement finally ended. Of course, now they are essentially retired "consultants" and still make half of what they did. (I think that is $1MM for the elders together -- keep in mind on a company with 3.5MM shares, that is very meaningful.) The whole compensation arrangement smelled bad to me, but I knew it when I bought and figured that was part of why I was able to buy at a discount. My biggest concern is that the kids end up taking that half of the elders compensation for themselves since the family has a record of enriching themselves at shareholders' expense. For the size and profitability of the operation, all members of the family have clearly been overpaid for a long time.

Well, he did recommend FR at one point.

Yes, Motley Fool article are totally worthless IMHO. I refrain from clicking on anything written by them/it.

Thanks for posting. Very interesting as I hadn't read this yet. A few points: (1) if he gets two board seats for having 2% of the company, I guess that means I should get one; (2) seems like an odd target for an activist, since the Class A holders control the board (4 of 7 seats) and the one family operates the company; (3) if officers and directors own 22% (sounds about right), I can tell you right now that at least 23% will be voting against Biglari; (4) his basis is higher than mine -- it looks like his purchases started (Mon 11/1) the day that mine stopped (Fri 10/29) when it crossed back over $4.50 pretty much for good; (5) if he gives up and decides to sell that could be ugly because the volume is so anemic with CAW. I like this one on valuation. Smoothed/normalized earnings are probably somewhere between 40-80 cents (call it 50 cents). Last time I checked they had no debt and a little over $2 in cash (currently trading around $5.75). They've had some bumps this past year settling a deceptive advertising case and dealing with a toothpaste recall (ineffective whitener, I believe it was). They've dealt with losing WalMart as a customer on some items, but considering that sales haven't been bad. Oh, and the very generous compensation packages for the two founders finally expired at the end of 2010 and were replaced with consulting agreements at half of the previous compensation. Assuming the company doesn't hand the difference over to the kids, that should translate into another 10-15 cents in earnings, 50 cents normalized might really be more like 60 cents. Also currently paying a 28 cent dividend, so a 5-7% yield depending on your purchase price. If it weren't for the class A issue (founders & family control the board) and the fact that the kids are taking over from the parents who were "overpaid," I'm pretty sure I would have gone over 5% on this one.

Rare exceptions such as a certified 1956 Mickey Mantle card . . . Too funny you used this example since I own one of these (with an inherited basis of 5 cents or whatever the pack of cards cost back then). Another obvious bubble not mentioned above was the Nifty Fifty. And U.S. farmland had a bubble in the 80's as well I think.

Only time I *listen* now is if seekingalpha doesn't have a transcript. It is so much faster to read. Also depends on the portfolio composition. I don't bother listening to the big blue-chip ones as I don't get anything out of a J&J call. Plus, I've heard so much puffery and flat-out lies from cheerleader CEO's on calls, that I heavily discount their value. I put much more weight on the content of the 10-Ks and 10-Qs.

Off the top of my head Olin and National Presto come to mind for publicly traded ammo companies. And Ruger and Smith & Wesson for firearm manufacturers. But the gun/ammo market already peaked (short-term anyway). Shortly after Obama's election, the demand for black rifles (i.e. AR-15's and the like) skyrocketed and many/most were selling for $1500 or so. Demand has been satisfied and now the prices are more like $1000 for them (roughly speaking on the numbers). Ammo is similar. Supply was limited and prices were high, but supply has reached most stores now. After a year-and-a-half of bare shelves at WalMart, for the last few months my local WalMarts now have a decent supply of most calibers in stock. And most things are in stock and ready to ship from Cabelas and other ammo shops. And prices have dropped some as well. I've seen in-stock, name brand 9mm ammo for $12/box now, whereas during the shortage it was a few bucks more. FWIW, even during the shortage I didn't have any problems ordering 1000+ rounds from Cabelas, although certainly certain brands were out of stock from time to time. As for gold, I'm of the mindset that a very small amount is a reasonable idea as a different kind of insurance . . . once you own your property free and clear, and have all of the cars, tools, food, fuel, weapons and other personal property you need. But intellectually, WEB is right -- gold doesn't create income and I'd rather own an income producing asset. Also, I would personally choose silver over gold, because there is a lot more industrial use for silver so there is more of a real value with silver (IMHO) and it has a similar historic role as money as does gold, so to me silver makes more sense if choosing a precious metal.

Well, I've thought about this sector a fair bit. First, the companies you identified are not particularly cheap compared to peers. I've eyeballed the P&C insurers in Value Line (standard and small/mid-cap) and there are a lot of them (dozens and dozens) with 5-9 PE's with P/BV in the 0.5-1.0 range. I think this is result of: (1) a recognition that insurers have the vast majority of their assets in bonds and as we all know the yields on bonds are very low these days, so I think the market is assigning a lot less earnings power to the float, and (2) a soft insurance market where a lot of companies have capacity to write more business so it is a competitive market (i.e. pricing power is weak for insurers right now). Reason #2 jives with my personal experience on rates for my business insurance and personal lines. My dad always says that when an insurer is trading below book that it means that people don't trust the book value. Here I think it means people are discounting the value of assets because of the anemic bond returns on the float. I also think since so many bonds are trading above par now and insurers (well, life insurers anyway) buy so many long term bonds to match-up with their liabilities, the market is mentally calculating and incorporating the risk of what will happen to the book value when someday rates rise again. That would knock a lot of the book values down. One insurer I've seen mentioned quite a bit on another board is ASI. (No position for me.) It trades at $16, earns $2/sh, BV=$29. Is it too low because book is so much higher? Maybe, but the earnings power has been consistently low . . . at book it would be at 15x which would be way to high for an insurer. (Let alone a Bermuda reinsurer, which I have a distaste for myself, both because of the difficulty in trusting a Bermuda company and the fact that everything is great for reinsurers right up until a catastrophic event occurs). Anyway, just my thoughts on the matter. I don't own an insurance equity these days, just some of the exchange traded debt that I picked up during the crisis that I am still holding.