Ross812

CHKDG The $100 note trading at $94.5 will float back to a slight $2 to $3 premium after the shock from the slide in oil wears off. The trade should make 8-9% plus dividends in the meantime. Low hanging fruit for 13% - 20% annualized ror. I made a similar trade back when CHK was running their going out of business sale.

I'm up about 7% for the year. Asps knocked me down about 3% in the past few weeks and BP hasn't done great. All in all though I can't complain. I dodged a few bullets, it just sucks to under perform the S&P.

Developing a checklist and staying away from certain industries can help you avoid some value traps. For instance, I don't invest in anything that produces a commodity good: Sugar, pot ash, paper. If the person or company consuming the product is turning it into something else, I'm not interested. Future cash flows are the only thing that matter. Cash on the balance sheet, X assets, a factory worth Y, and patent Z don't mean anything. If the company is losing money and has a lot of assets then you are betting on management being able to efficiently liquidate the company. The second management says we are going to attempt a turn around, run! Does the bear case for an investment make sense to you? Bear case - IBM is not growing anymore because their customers are transitioning away from mainframes. IBM is beginning to offer cloud solutions at lower margins. Can they curb the secular decline in their mainframe business? I don't know so I'm not going to invest. Is the companies industry in secular decline or fundamentally troubled? There is a lot of talk in the OAK thread right now. I don't think the bond market is fundamentally healthy; I don't care to bet that Marks can pull a rabbit out of his hat. I think the number one thing to remember to avoid value traps is past results are not indicative of future profits when considering a turnaround investment. I've made most of my money buying GAARP type investments and layups instead of home runs. Buy Fairfax when it gets kicked out of the international index and falls 15% in a day, Kinder Morgan at 30 when the market indiscriminately sold all pipeline companies because Boardwalk cut their dividend, Marvell when a jury awarded ridiculous damages that would never be paid, Diageo when China came out with their anti corruption charges (Diageo doesn't sell $2000 cognac!), ect... Leave anything that needs a multi-page dissertation to demonstrate how the company makes money to the pros. If you don't understand how they make money, leave it.

I'm thankful for family and friends, my wife and i went to three thanksgiving meals yesterday with both sets of parents then friends! I'm also thankful for a vacation. We are sitting in the airport on our way to Costa Rica right now.

Muscleman, You may want to check and make sure you are eligible to contribute the full amount for 2014. From the IRS: http://www.irs.gov/instructions/i8889/ch02.html http://www.irs.gov/instructions/images/37971y01.gif Your $1600 will not be tax deductible. Your max tax deductible contribution would be $4912 assuming you are were signed up for the HDHP on April 1. Your employer is withholding correctly with $545/month.

ELFCU now charges a $24 fee to wire money from your HSA at the credit union to TD. http://thefinancebuff.com/elfcu-adds-monthly-fee.html HSA Bank was the cheapest I've found with $66 in fees per year. (2.5 account fee + 3 TD acct fee). You can write off the out of pocket contributions this year to avoid state and federal taxes. The advantage of having your employer take the money out of your pay roll is to avoid SSI and medicare taxes (~7.3%). This isn't an issue if you are making more than the SSI cutoff.

ASPS as well. I almost doubled my position today. Ex. OCN and Insurance kickbacks you still have ~50M in net income. This is 21x for a business growing at 25-35% yoy, a good value. Add to this any of the 100M+ of OCN related revenue (ex insurance kickbacks) and you are paying a sliding scale of 7-21x for company with a long runway of 25%+ growth in front of it. What are the odds Erbey doesn't take ASPS private? I would hate to load up just to see a take-under from management. That's a tough question. What are the circumstances where it would make sense for Erbey to take ASPS private? 1- The reason Erbey has the OCN-ASPS setup he does is to maintain control of cash thrown off by servicing OCN's assets. About 40% of ASPS revenue does not come from OCN. So ASPS would survive if OCN were to close up shop. Erbey may use the money from an OCN runoff to buy ASPS shares at 20x non OCN net income. Certainly not a bad deal for him, but I believe he would go after another debt servicing co as it is his bread and butter, not software services. 2- If OCN stays in business, ASPS will continue to run more or less as usual. ASPS buy back ~4M shares ($200M w/ leverage) at low price. This would bring Erbey's share 35%. He could take it private with PE money at this point. I'm not sure this is in Erbey's interest, it is much easier to control ASPS when you have a bunch of dumb money holding the majority of your firm rather than concentrating ownership with investment banks. I view (1) as unlikely to happen. Why run a software company when he can buy back into a debt servicer? He could use the money generated by ASPS during an OCN runoff to repurchase shares along with leverage and increase his ownership to 35%+ and not have to answer to investment bankers and PE managers when running ASPS. I think (2) could definitely happen. If this scenario plays out, surely the share price would recover somewhat and any buyout would likely be at a 20%+ premium. To rephrase: I think ASPS minus OCN is not attractive to Erbey, and I think ASPS is too cheap if OCN stays in the picture.

ASPS as well. I almost doubled my position today. Ex. OCN and Insurance kickbacks you still have ~50M in net income. This is 21x for a business growing at 25-35% yoy, a good value. Add to this any of the 100M+ of OCN related revenue (ex insurance kickbacks) and you are paying a sliding scale of 7-21x for company with a long runway of 25%+ growth in front of it.

http://www.cornerofberkshireandfairfax.ca/forum/general-discussion/what-are-you-selling-today/msg147270/#msg147270

IB withholds foreign taxes for FRFHF in my Roth.

I follow Jeffrey Ubben of Value Act and Murray Stahl of Horizon Kinetics. Ubben is a semi activist investor who takes very concentrated bets: MSFT VRX MSI ADBE Value Act recently bought about 800M worth of Agrium which looks very interesting.

I increased my LKQ position by 50% last week.

I just realized how much Priceline was down. I've looked into it in the passed but thought a good GARP price was 25x TTM. I'm looking back through their reports now.

Super easy! and they will dechlorinate all the water! and add enough virus to be virulent when diluted millions of times! and the virus will mutate and people will happen to get infected through ingestion!

I believe the virus cant live for too long once outside a host. But, in an Airplane, every body is close to each other and air conditioning. Who knows. BTW, the way we are discussing is how panic starts. Ebola has been studied at length since the 80's. They know quite well how it is spread and it is extremely virulent, i.e. takes very little virus to cause an infection, but is only extremely contagious during the latter part an infection. Someone in the latter stages of the virus is shedding tremendous amounts of the virus through bodily fluids. It primarily is spread to family members and healthcare workers who take care of someone suffering from the virus or to people who incorrectly handle a corpse. They study the virus with monkeys who stay in cages next to each other and they purposely have to infect the monkeys. They don't pass it from sneezing or throwing crap around. Two cases is hardly alarming. The CDC has had to isolate hanta virus which is just as scary.

I think this is off the mark for both storage and bandwidth. Companies providing storage and backup (i.e. the cloud) still have to buy HDDs. These companies also have redundant arrays, something that a lot of individuals do not have the money/aptitude to setup. So and individual storing 700GBs on a 1TB drive at home is now storing 700 to 2.1TB in the cloud (mirrored 1 or two times). Projected storage needed in the future: http://www.cisco.com/c/dam/en/us/solutions/collateral/service-provider/global-cloud-index-gci/Cloud_Index_White_Paper.doc/_jcr_content/renditions/Cloud_Index_White_Paper-02.jpg Point and shoot cameras now have wifi for easy backup, smartphones, tablets… The cloud will keep growing exponentially as cloud backup and sharing gets easier and easier. Is You-Tube growing? I don’t know what is going to happen with bandwidth consumption after the majority of people are watching 4k videos on Netflix. I would not bet against further innovation in the entertainment segment. “4K is all we will every need” sounds like it’s good for 5-10 years. Also, don’t underestimate the multitude of devices that are coming online. You can now buy a washer/dryer, thermostat, lighting system, scale, printer, and refrigerator that are wifi connected. These devices may not use the bandwidth of 1 HD movie in a year together, but if everyone has these devices in the future... Smartphones are also using more and more data year by year as websites become more complex and sharing has become easier.

Although you might want to check out the following before you do: http://servowealth.com/resources/articles/vanguards-index-switch-they-still-dont-get-it The article and packers comment are right on point. MSCI or any other index provider cannot create indexes to appeal to the masses in the micro, small, and midcap spaces simply because the liquidity does not exist. Take Vanguard as an example. They have 2.86T in AUM, Vanguard cannot decide to equal weight their indexes or sectors because they are constrained by AUM. You should be able to out perform the broad market cap weighted indices by 1% a year by using a more balanced approach. I've been confronted with the same issue lately. I have a few brokerage accounts that are constrained to etf's and mutual funds while my roths and cash accounts are uninhibited at IB. I have to rely on indexes for the compounding of nearly half of our funds. I do like a couple of mutual funds, OAKBX and YACKX, but outside of them indexing makes up the majority of these accounts. VTI and VTSAX made up the rest of the majority of the accounts, but Stahl has convinced me I can do better. Some ETFs I'm considering: QUAL VLUE MOAT various Schwab/Vanguard Sector ETFs various Schwab/Vanguard Mkt Cap ETFs VIG FNDA,X,B,F,C,E Outside of ETFs/funds, I like investing in companies. I feel more confident in knowing what my 15 stock index is up to than I do about any ETF. Owner operators are a great place to start. What you want is essentially a buy and hold portfolio. There are a lot more companies outside of investor lead insurance companies out there that are owner operated or have superb management and a defensible moat.

Ross, thanks very much for this. I've indeed read quite a few of those papers. So what you're basically saying is that to reduce exposure to the importance of companies with high market cap on the total index returns, it might be a better approach to diversify away to small cap, EM, etc ETFs? My current portfolio has a large overlap with the companies you hold, thinking of setting up 'rules' to buy more, eg. 13x earnings for bidvest, 1.2 book for MKL, 1.25 for BRK etc. I'd think that over the long term, it is difficult to go wrong with that kind of approach. Yeah, you are on the right path. The problem with VTI is its 72% large/giant cap. Also healthcare, financials, and tech make up the majority of the index. You could ballance VTI with a small and mid cap etf then add in sector etf's where you are lacking: consumer staples, maybe energy, communication, realestate, industrials, utilities....

I would try to create your own equal weight index with ETFs. Read up on the pit falls of market cap weighted indexes by Stahl at Horizon Kinetics (available on FRMO's website). You could build a more balanced portfolio with market cap weighted sector specific, small cap, midcap, international, and EM ETFs. Maybe put 20% in VTI and fill in the gaps with this approach. I've read enough of Horizon Kinetics papers that I'm on the look out for a day of reckoning as indexes become evermore popular.

It looks like GE, MCD, BP, and VZ are dividend picks. Are you doing a drip to avoid taxes, do you need the income? I would diversify a little more. Add some small caps, perhaps PRFZ as a diversified ETF? BH and MCD are in a related industry and GE and BP are sensitive to the macro environment. KMI has the same dividend as BP and should be less volatile being pipelines, I would choose another recession resistant co in place of BH or MCD if you are going to stay as concentrated as you are. Some other industries: Defense - BAH, Healthcare - large insurance or big pharma, Retail - WMT, Kroger, TJX, maybe housing - Lowes or HD, Transportation - CHRW or EXPD. You have GE for manufacturing, DHR and TDG are good as well Owner operators - MKL, TPRE or GLRE, FFH. I would be inclined to put 15% in a small cap etf like PRFZ, 25% in a large high quality EFT like VLUE, QUAL, VIG possibly MOAT. Then doll out the other 60% equally spread amongst companies that are at the top of their industry.

Personal Capital (www.personalcapital.com) is my favorite tool and its free. It includes net worth, investment tracking, investment analyzers, spending tracking, and income. http://dreamscashtrue.com/wp-content/uploads/personal-capital-review-dashboard.jpg http://www.moneyunder30.com/images/2013/05/personal-capital-cash.jpg http://dreamscashtrue.com/wp-content/uploads/personal-capital-review-performance.jpg

It is far better to learn about one industry in depth and build your circle of competence. There is no magic screen that returned companies that would allow you to compound at 15% a year. Value investing today requires that you understand something about a business that the market is missing. The market doesn't miss data that shows in a few clicks of a mouse. The reason there are so many piggy back value investors or value investors that troll for insider buying is its much easier to focus on companies where management is confident the company's value is increasing, or where an institutional investor with a small army of analysts has found something. Go look at the new buys on dataroma. There are about 50 new buys to keep you busy. If you choose to focus on one industry within your circle of competence, there may only be a name or two to check out. spending time learning an industry in-depth is actually detrimental to returns. You become over-confident about your ability to predict the future and essentially force yourself to buy things because of all the time you've invested. In reality there are only two kinds of businesses - Return on Capital Businesses, and Margin businesses. Figure out how to look at those and you can look at anything. At the end of the day research itself is a commodity. No one consistently gets paid for knowing businesses better then someone else. If you are a basket type investor who is going to buy 50 names that you turn up with a screen I would agree with you. If you choose a more concentrated approach you need to understand the relevant metrics within a company's given industry. Maybe I implied too much by saying "in depth knowledge" as I was not talking about anything remotely close to becoming a consultant of some sort. I am referring to having the knowledge of an industry to at least understand what is important. You may screen for two energy companies with low P/B ratios. Which one is better? Does one have more implied reserves than the other? At what stage are they allowed to count oil in the ground into their BV? How much does an efficient producer pay to extract oil per barrel? This is not particularly in depth knowledge. You could teach yourself most of it in a day or two of reading.

It is far better to learn about one industry in depth and build your circle of competence. There is no magic screen that returned companies that would allow you to compound at 15% a year. Value investing today requires that you understand something about a business that the market is missing. The market doesn't miss data that shows in a few clicks of a mouse. The reason there are so many piggy back value investors or value investors that troll for insider buying is its much easier to focus on companies where management is confident the company's value is increasing, or where an institutional investor with a small army of analysts has found something. Go look at the new buys on dataroma. There are about 50 new buys to keep you busy. If you choose to focus on one industry within your circle of competence, there may only be a name or two to check out.

Brian Joffe - Bidvest - 17% CAGR for 23 years - food service and vertical distribution

Sold 2/3 of my Petsmart today because I went on a buying binge when it was in the mid 50's a few weeks ago. Bought a partial position in TJX.