bmichaud

Obviously if it is the spot price the reserves are not worth anywhere near $6B - stating the obvious I'm assuming. PV10 of proved reserves in the OG industry generally works out to about $10/BOE. Roughly, this is about 10% of the current $100 Brent spot price. So applying his 10% rule of thumb to this coal company, the "PV10" of that $6B is $600MM. This is being generous too given a coal BTU is nowhere near as profitable as an oil BTU. So perhaps 5% is more appropriate? Suddenly Mr. Market doesn't look so dumb.

More on this, the spot today is $67.27 a short ton, that works out to $6,188,840,000, guess my estimate was off by $2b.. It all depends on the quality, Powder River coal is only going for $10 per ton, meaning this would only be worth $1b. I don't believe this is as easy as getting in an activist to shake things up, don't you think current management would have tried to monetize it already? They sure have a heck of an incentive, I believe they own most of the company, plus they could pull some incredible benefits. Kmukul, I'd encourage you to look into this or call the company, maybe you'll have luck where others have failed. Nate - is that $67 the spot price, i.e. where revenue is derived, or is it some type of transaction multiple on a per-ton basis?

I have a tough time having less than 20% in a single position.

+1!!

One of my fundamental flaws (among many) is that I tend to give so-called "experts" the benefit of the doubt. So with that being said upfront.... Setting aside whatever you may think of Bass's marketing tactics (and honestly is he that much worse than Berkowitz, Buffett, Ackman etc... etc...?), does his track record of appropriately "calling" the Subprime and Eurozone debt crises not give anyone pause when criticizing his Japan analysis? Could one have not said in 2007 that we would come up with "creative solutions" to such a large-scale problem as the Subprime debt bubble in order to avoid the melt-down Bass was predicting? If I remember the CNBC Subprime documentary accurately, Bass's playbook for his Japan analysis is precisely the same as his subprime analysis - rigorous analysis of the facts on his own, many meetings with key players, disgust with the lack of concern by the key players, and prediction that the problem was very large. I have no clue what will happen with Japan. Given Japan's underlying economic strength, I don't see it being a Weimer-type situation, but I do know that you can't control interest rates, inflation and the exchange rate simultaneously..... 1. They can drive up inflation (if that's even possible in a population decline-led deflationary environment) via money printing while simultaneously pinning the yield curve to 1%, but they will have zero control of the exchange rate. Currency declines massively as outside money flees a ZIRP/high-inflation malaise, and they only have a finite amount of Treasury bonds to defend the currency with. 2. They can drive up inflation via money printing, but NOT pin the yield curve so that interest rates will keep the currency in check. Best of luck those holding JGBs in a 2 to 5% inflation environment without yield curve support.... I'm not smart enough to A) figure out whether 1 or 2 will occur and B) what the economic consequences will be in either scenario. All I know is it is an monster monetary/fiscal experiment that has no real precedent - in that, debt to GDP is sky high with a declining population and interest unable to fall any further. Who knows. Though I do see a decent path to the resumption of gold's secular bull run 8)

Read again what he is saying. VaR and under-capitalization … not inflation or political feasibility. And first he was speechless. I guess nobody told him about the printing press and he thinks the Bank of Japan is just another hedge fund. Kyle Bass is the reason why the term macro tourist had to be invented. Perhaps I missed something, but his response was that the currency would collapse if the BOJ just forgave all outstanding JGBs. Is your point that Bass is underestimating the willpower of the BOJ in tackling its deflation problem?

Potentially interesting development with China and its monetary system. China_cash_crunch_deepens_as_PBOC_withholds_funding_-_FT.com.pdf

The "the market will let us know when we are monetizing the debt" response Kuroda et al gave to Bass was shocking. hahaah unreal!

http://www.zerohedge.com/news/2013-06-18/kyle-bass-next-18-months-will-redefine-economic-orthodoxy-west

Great piece by PIMCO: http://www.pimco.com/EN/Insights/Pages/Secular-View-of-Assets-2013.aspx

Sorry if already posted somewhere.... http://inn.mauldineconomics.com/event/index.php

CorpRaider, Based on your holdings it appears you have an affinity for event-driven situations. Curious what your thoughts are on OXY - recent purchase or long time holding based on the shake-up? Have you looked at HES? If so, how do you think it compares to OXY?

90% of the time I cannot see my desk such as in these pics. If I actually saved the stacks of filings and presentations from the past two years at this desk there would be no desk 8)

Gotta be **cough** Pabrai. Davita is at the top of the pile - one of the newer tailcoat ideas ;)

I'm lost - how did Fairholme help "rebuild" BAC, AIG and MBI? I understand GGP, but the others?

Ya it's a pretty consistent perma-bull theme haha

http://www.forbes.com/forbes/2007/0917/210.html http://www.forbes.com/forbes/2008/0225/108.html http://www.forbes.com/forbes/2008/0421/242.html http://www.forbes.com/forbes/2008/0929/110.html

Everyone "knows" the market won't drop while QE is in place....hence the sky-high bullishness in the market.

It will be interesting to see how the marketplace reacts when there is a large scale decline WHILE QE is in place. I assume it will throw most for a loop, as this possibility is not currently part of the majority's worldview right now. I'm really not entirely sure how the Fed's balance sheet expansion makes its way into stocks....from FYE 2008 to FYE 2012, the Fed's portfolio of securities held outright increased by approximately $2.5T, yet at the same time the total credit market expanded by over $3T. How is there possibly a "rebalancing effect" when the stock of financial assets has remained the same??!! Purely psychological. Equity market to GDP now back to 2007 levels - I'm sure this time is different...

Agreed - I'm just saying that they have unlimited fire power to stop the water coming out of a particular hole in the dyke....who knows where the water will end up going....

What happens if Kuroda pins the entire Japanese bond market at 50 bps? He has the ability to do that - for goodness sakes he can buy ETFs - and has clearly stated he will do whatever it takes.... I don't see how a bond crisis occurs there. Currency and inflation, who knows. But they will not have a Spain/Greece/Italy-type bond crisis. I also do not see how Europe has a bond crisis as long as Draghi is in place. He has proven you don't need to print a single penny of currency in order to pin down the bond market. With the US equity market at a price to GDP higher than in 2007, some type of "crisis" will come along to knock it down. I just don't think it will be a bond crisis.

How 'bout that QE flooding.....

After all this talk of "tapering" do you think they will actually be outright selling any time soon? Can't they just let the balance sheet unwind naturally through security maturation? It's too bad Moore can't find his way to a keyboard to weigh in.....

http://www.scribd.com/doc/142693311/S-P-500-2015-goldman Using GS's own effing data I get to a fair value of $1,111 on the S&P 500 using a 9% cost of equity. Goldman projects dividend per share growth of 5.9% per annum through 2022. FUNNY how low this rate is given how "robust" corporate America's aggregate buyback program is right now.... They choose to use a "fair value" diviend yield of 2.1% based on the average dividend yield since 1991....VERSUS the 50-year average of 3.2%. The graph on page 3 with ever-increasing operating EPS is just nauseating. The height of insanity. If this isn't a sign of an imminent crash a top I don't know what is (had to throw imminent crash in there for Kraven 8) ) SPX_FV_with_Goldman_Data.xls

Of course it does - how else is academia supposed to "teach" risk management? While the CFA program is a phenomenal experience and challenge, and is a good barometer for aptitude and work ethic, it pales in comparison to A) real world experience of running your own dough as well as OPM, and B) the education available right here on this board. Best of luck to those sitting this spring!