rick_v

Twacow, I disagree. Buffet made a genius investment in Silver. His problem was he didn't hold it long enough. He bought 130m ounces at an avg cost of 4.50$ per ounce. Silver closed at 19.84. Buffet would have made 2b$ on this investment. Believer it or not, I have some theories as to why Buffet doesn't make these types of trades any more. I think he truly feels responsible to exude confidence in the system so he doesn't go for the easy trades such as buying up x% of the world's gold supply or y% of the world's silver supply as he did. If you look back to 1997 when he made this investment, he talked about the fundamentals of Silver. Buffet knows that commodities too have fundamentals. One more thing you guys may not have realized about Burry. He made about 100m$ in carry from Scion pre tax, so all these investments he is talking about now are his own with his own permanent base of capital... ie: farmland.

I am sorry Myth but Irwin has terrible performance I know first hand... Must be from being too busy building his mansion on the bridle path ;)

Josh thats why I am only getting interested in it NOW and not 8 years ago. My theory on this is probably going to revolve around one of my favourite themes when valuing a business. The replacement value IE: how much would it cost me to setup an OSTK. Further I am envisioning a world where you have AMZN , EBAY, as the leaders with OSTK serving a niche not different from Costco!? Has OSTK been carving a moat all these years? Is Mr. Byrne just good at repeating value investing quotes in interviews or is he actually able to take this thing to the next level? Still thinking about this one...

http://www3.hymarkets.com/ennews/displayallnews.hyml?methodname=link&_id=1529665 * Lender Bank of America called in the outside help * Sources close to matter say bankruptcy unlikely * Experts see brand as attractive despite company's woes

Alright guys, OSTK may be the first idea I have gotten on this board, why don't you all load me up on your research... It appears to be moderately priced but I also believe it could be a value trap just on first sight....

P/E Ratios diminishing I can't believe WSJ came out with this BS What he is basically saying is stocks are cheap lol

http://online.wsj.com/article/SB10001424052748703618504575459583913373278.html

Hyten I feel the same way thats why I am building a position. I would like to see it go lower and build an average somewhere in the low 20's. But that is a good point and the one I made originally on the Munger board. As you can see the last two days have been difficult to build a position but the prior week was easier. Now why in the world wouldn't I accumulate a position like GRMN all the way down from 28 to 20 over a few months. @ 20 this would be even more of a steal!

I am going to let you guys work on this one for a bit and then come in with my research or part of it. Its a relatively new position for us so I am probably going to hold back a lot and also want to say that I don't know how big of a position it will be. In short- I do know that in 5 years and 10 years Garmin will continue to be the rolls royce of the GPS market. From the taxi driver in dubai who I saw using one to the truck driver in Shanxi province, the theory that everyone will have smart phones is a flawed one, and the theory that every car will come with a GPS system is too flawed! I would put my money on a different theory which is that wide adoption of GPS devices such as garmins is only starting in emerging nations. Please keep in mind, there are still about 3 billion humans who have never driven a car in their life. Finally, I will give you another hint about GRMN. They have a Cayman Islands structure like GLRE so basically their 1.7B in cash and securities will compound tax free over time. And they pay me a sweet dividend to stomach the potential volatility (which I really don't mind). Also look at the quality of the insiders!

Tiddman the market cap for BOBS is 61.43m I suggest for all of you who don't have a professional system to always double check market cap's on www.bloomberg.com, what many people don't know is that when you type in a quote there even an international one, it grabs the market cap data from bloomberg which automatically calculates for multiple shares/adr's/ or any new issuances. A good example is Blackstone (BX) which if you go to finance.yahoo.com will give you an inaccurate market cap figure.

I would love to discuss GRMN! Good Luck on HLYS its an easy 50% gain in 3 years or less..

It would be easier to Gobble CRESUD which owns a subsidiary that farms in Brazil. I own some CRESUD it has been a terrible performer, Alejandro Elzstain has proven to be terrible when it comes to minimizing stock issuances. I did make a ton on IRSA though which is another Elzstain company (IRS:US). If Buffet acquired CRESUD he could inject more capital and utilize their expertise to grow the land under management. I would say though that at first glimpse this entire deal does not seem like something Buffet would do so it may just be some Brazilian characters trying to spike up interest for their lands!

As I said, Capital Allocation is key in any investment strategy but I do disagree with your round-trip theory. I have never been able to perfectly time the market. I do love building positions that go against me like APP right now: First buys were 1.40ish kept adding and adding and now have a cost average of .92 cents per share. That position is already in the green even though every day we just hear more and more bad news while the company is quiet. I would expect that there should be some type of resolution there any day, whether it involves a buyout or a debt restructuring. At 150m$ enterprise value, APP is too cheap!

The point here is that none of this stuff matters. If you find a good business trading at a fair P/E Ratio with solid returns on capital deployed and a diversified stream of income buy it hand over fist!!! From a capital allocation perspective, make sure you have enough capital to weather any potential storm but the bottom line is, sideways and down markets provide better buying opportunities than rising markets. For the last 4 years we have had a crappy market, and so naturally good opportunities should be available. I would love to see more posted on this board as that was the original reason I joined. I have provided several so far... CCME is not my type of a value play, Chinese companies traded on the US are too opaque.

Alright guys I have been traveling but just got this data from my analysts and am going to put it all together for you and walk you through the methodology. A few weeks back I promised you all that I would try to analyze the Japanese scenario that Munger believes the US could witness. The people in that camp basically argue that if the Money Supply is expanding at a slow rate or not at all it is better to sit on the sidelines than to invest given that all equity prices will surely get cheaper and cheaper. I thought it would be interesting to aggregate the Nikkei 225 but in US Dollars not Japanese yen for the following reason: The world's money supply doesn't stop growing just because Japan's does. And so I wanted to envision a scenario where I was a Japanese investor say 10 or 20 years ago and what I would have done if I were to deploy capital in that period. Surely, I would look for international companies with diversified streams of cash flows as I always do. I would obviously avoid high P/E ratios, and l would look for companies earning decent rates of return on equity while growing per share earnings. Here we go: The first graph we will look at is the Japanese Money Supply over a period of 20 years. We see very clearly as Munger has mentioned many times that Money Supply grew at a very slow rate (49% in 20 years vs 300% growth in US M2 during the same period). The next graph we see is of the Nikkei Index over that same period. And again, we can see clearly that it has declined by 77% proving what Munger mentioned that a day of reckoning was truly felt by all equity investors! So far this appears to be very cut and dry... Or is it? Was it really that simple? Corporations earned less because of deflation which caused their stock prices to consistently go down? Or was there more to this story? The next step was to figure out what type of valuations were companies trading at before and after the deflation began to take force. This is where things begin to get interesting... The next graph shows the average P/E Ratios of the Nikkei from 1990-Today. (Keep in mind that those huge spikes are errors in the data) If its hard to see, the average P/E Ratio on the Nikkei 225 Index was 43.2 in 1992. Today it's 15.40 So at this point I have to start thinking that there is more at play than just a plain vanilla deflation story, at an average P/E of 43.2 the index was clearly overpriced and any intelligent investor could have seen that! The next step was to figure out if these companies actually earned more USD each year during this period. The next attachment is an excel spreadsheet with the total USD Net income from 2000-2009 of Nikkei 225 Companies. (Not the entire 225 due to lack of data for all, Also bloomberg did not have pre 2000 data but I do not think that is so relevant given the results.) The results are very clear: good companies were able to grow their USD Earnings even during deflation. But then why did stocks go down, Why did the Nikkei decline for so long!, why did Nippon Telegraph for example which grew its USD Earnings continually decline over those decades??? The next attachment is a PDF detailing the average P/E Ratios for Nikkon Telegraph starting in 1992-Today... I don't think I need to explain this one! I have never in my life invested in a P/E ratio above 20 let alone 53 or 291. So this proves there is more at play than just a simple deflation scenario stocks were clearly overvalued! Then I started thinking... Who cares about how much they earned, what did they earn per share!! And let me look at only the companies which were trading at "normalized" P/E ratios... Did those companies also decline for 10-20 years? The next attachment is an excel spreadsheet with only the Nikkei 225 components that were trading at a P/E ratio of less than 30 in the year 2000. (I know 30 is high but for Japan it wasn't at the time!!) In addition this spreadsheet plots out the earnings per share in USD that these companies earned from 2000-2009. I then chose the easiest target, the one that had the lowest P/E Ratio in 2000: Sumitomo Realty (8830 JP) Sumitomo had a P/E Ratio of only 9.6 in the year 2000 and had USD earnings per share grow from .326 FY 2000 to .973 FY 2009. The final attachment is a graph of Sumitomo Realty Stock from the year 2000 until now. As you can see the stock is up 209% in that period or 12% a year not including DIVIDENDS!!! Further, it has declined a great deal from its peak in 2007. What this entire exercise of futility tells me is that all this Macro BS has no effect on the solid principles of value investing. The market as a weighing machine reflects the long-term value of the underlying fundamentals for good businesses! There was definitely more at play with regards to Japan than just a simple deflation scenario... The initial inflation in the 80's caused companies to trade at ridiculous valuations, valuations that I wouldn't touch with a ten foot pole. Good companies, that were being presented by Mr. Market at fair valuations, earning decent returns on capital deployed with a diversified stream of income generated solid returns for investors! Lets spend more time generating investment ideas! There are definitely more and more each day... *** I had to re-upload the Nikkei/Eps/PEunder30 file so its at the bottom of the attachments.

Partner - Because on a Macro Thread nobody has to own up to anything. The posts are completely arbitrary and even in Munger's case no matter how things turn out he will somehow rationalize that his theory was the correct one. I never took part in such waste of time. We are all here because we understand pretty well the concept of Margin of Safety, however some of you here are obviously newer to investing then the rest, and then from the ones that have been investors for a I am not too sure quite frankly how many have made millions or tens of millions or even hundreds of millions in the market over the years. You can see how quickly and easily the market reverses on a day like today, its almost impossible to build a good position in an up market its a lot easier when things are sideways or to the downside as they have been for the most part of the YEAR! I would like to hear an investment idea from Munger. Its obvious he is very intelligent and has soaked up a ton of information but how does all that make him a better investor. It doesn't even have to be something that is available today it can be a hypothetical scenario within a reasonable range of today's market. But saying "I will buy KO @ 5x FCF" is a complete pipe dream as if everything plays out in the fashion Munger proposes KO will have a lot of shitty quarters and so the 5X he will be attributing will have to be for past cash flows which he will be unsure if they will ever return. So again this is not a practical investment thesis. Here is another company I see little reason NOT to accumulate in this environment: US:MIM Sorry it was MIM

Two words for you guys: Orient Paper (ONP)

Not going to go into the rest of my research on Garmin. You all have missed the point. This was a market call though and you can hold me to this one. I suggest you take a good look at Garmin as an example of a business that would ordinarily not be available at such valuations if the market were not bad. A perfect convergence of multiples going from one extreme to the next burning most investors in the last 7 years, all the while the business keeps getting more and more profitable and the brand increasing its intrinsic value.

Unless we are going to figure out a way to hook up our brains to the GPS system we will continue to buy more and more Garmins. Take some more time to learn about GRMN you will like what you see I promise! Tell my why even if I think GRMN could go to 13 I wouldn't start to build a position today. Do you know what type of a valuation such a company will receive from Mr. Market during economic prosperity!!! even in 10 years and in the interim I get paid almost 6% to wait!

Take a look at GRMN I want you all to do some quick analysis. Tell me as a long term investor with permanent capital why building a position in GRMN today would be a bad idea?

I still can't figure out Prem's stake in Fairfax, it says he "controls" The Sixty Two investment co which owns the 1,548,000 the other shares too are owned by corporations which he "controls" it does not say what his economic interest is. And if you look back to 1986 the FFH Annual Report states that Sixty Two invested 5m$ into Fairfax, of which was attributed to well known businessmen, an insurance company and finally PREM. So how much of that is owned by PREM? Is the Sixty Two an LP type structure where PREM's compensation could have compounded to the point where he is in control?

Parsad great response! RE: Coca Cola What Munger refuses to understand is that mathematics lead to an unequivocal situation where every year there is more money in the system. Call it inflation, Call it whatever you want. Buffet realized this early on, hell his father invented the TIPS!!! And for Long-Term investors with permanent capital buying KO @ 5x or buying say BP today at 5X makes no difference we just look at different rocks. But what will surely happen to investors like Munger, UNLESS THEY ARE PLACING A HUGE BET TO THE DOWNSIDE, is they will NEVER and I repeat NEVER catch the perfect bottom, and they will walk away from the bottom and subsequent reversal feeling dissatisfied as though they didn't buy enough or didn't make enough. Its a young investor mistake to think that there is really a point where society comes to a screeching halt!!! I have a wonderful book, its the New York Times Front Pages from 1800's until today. I love flipping towards the 1929-1935 pages. Its great to see things in real context on a daily basis reported by local newspapers. Parties, Sales, Entertainment reports, Top Salary Earners (Edsel Ford $5m+) life still goes on. We are all human wake up the next day and charge. And we have an ability to be extremely flexible. The value of money can disappear but not the value of top enterprises earning decent rates of return on capital deployed. Bottom line, you can't be a long investor wasting anytime in the thought process that Munger has. You can be a short investor, or you can say pull back your long positions in anticipation of the day of reckoning. But it's a pipe dream to sit and wait for years until valuations reach the golden margin of safety that is stuck so far up in your head! Give me a short Idea or something, own up to an investment thesis not Macro Dreams!

I thought this would be a good thread that can be updated over time. Why not make a list of all available known Value Investors and their known AUM if it's available. It would be an interesting exercise to ascertain what percentage of large AUM is managed according to the principles of Graham & Dodd. Here are the ones I can think of: 1) Warren Buffet - Berkshire Hathaway - $200B Market Cap 2) Bruce Berkowitz - Fairholme Fund - $15B AUM 3) Seth Klarman - Baupost Group - ?? AUM 4) Joel Greenblatt - 5) Michael Burry - 6) Prem Watsa - Fairfax Financial 7) Mohnish Pabrai 8) Sardar Biglari 9) David Einhorn? 10) Bill Ackman?? 11) David Gottesman 12) J.P Guerin 13) Bill Ruane 14) Whitney Tilson ?? 15) Eddie Lampert - Sears Holding/ESL 16) Li Lu - LL Partners/Himalaya 17) Zhao Danyang - Pure Heart Fund 18) David Tepper? 19) Irving Kahn 20) Charles Brandes 21) Michael F. Price 22) Martin J. Whitman 23) Christopher Browne - Tweedy Browne 24) Charlie Munger! Lets keep the numbering going it will serve as a good point in the end :) Also if you can fill in the AUM's that would be wonderful. These are the ones I came up with just now. Lets be super selective and not put guys like Daniel Loeb who will say they are Value Investors at times but really are a different breed of investor. I think we should also place their age!

What is Prem's exact ownership in FFH? Wasn't it something like 1.85m shares? How many of the shares are options on shares.

Great Article out today about Tom Kaplan one of my favorite gold investors of all time! http://www.businessweek.com/magazine/content/10_36/b4193058839907.htm