Ross812

I would pay for a stock screening program similar to the attached spreadsheet I created. Install the smf addin in excel from the yahoo groups (attached) to see how it works. Company_Evaluator-v0.3.xls RCH_Stock_Market_Functions-2.1.2010.08.02.zip

TBT is designed to track the 200% inverse of the daily performance of the Barclays Capital 20+ Year U.S. Treasury Bond Index. This causes price decay of the ETF over the long term as the futures contracts are renewed daily in a flat market. Example: In a flat market moving +/- 5% a 2x ETF moves 10%- Starting at $100 then you get: $110, $99, $108.90, $98.01. A long Put on UBT Ultra Long 20+ year Treasuries would be more prudent because the price decay caused by daily futures contract expiration and your assumption the US Treasury Bill bubble will pop are aligned. I haven’t checked the option prices of UBT and TBT but I assume TBT calls are cheaper than UBT puts because of the time decay so this effect may already be reflected in the price.

I didn't have time yesterday to write about 2011. I was down 16%. Bank of America warrants and LEAPS really hurt me in my IRA account. My largest holding (30%), Bidvest was down 8% due to the SA Rand being off 23% vs the Dollar. I really expected the dollar to start weakening due to quantitative easing. There is always 2012... I would have gotten killed, but I had a lot off cash going into the crash in September and was able to buy a lot of BACpL, and tripled my exposure to Petrobakken, and bought JEF. Does anyone have some advice on holding BAC preferred shares in addition to LEAPS and warrants? I have about 4% in warrants 2% in leaps and 18% in preferred shares right now. I think BACpL is worth $1000 a share if BAC doesn't go bankrupt, but I still have 24% of my money tied up in BAC... The preferred shares are paying 9% right now which adds contribution free cash in the roth.

Down 16% this year overall. This was not the my best year overall, but I really like what I own and my the price I paid so I'm hoping for a good 2012!

I'm down about 6% for the year. Hpq, bac, and petrobank haven't exactly been high fliers. I went into the last correction with 50% cash; I hope doubling down works out!

I remember reading a jack in the box thread. Does anyone else remember the discussion? I can't find it via search...

I'll put something together on Bidvest in the next week or two. It's been a couple of years since I really dug into the company. I now just read news releases, their magazine, and annual reports to keep up with them. I look at Bidvest like I look at BRK, FRFHF, BAM, LUK, L and other jockey companies; they may not be a deep value stocks, but they provide the opportunity to invest capital in great business (compounding machine) that can be bought at fair prices. I think Bidvest is superior to some of the other jockey stocks mentioned, because they provide staple goods and services to emerging economies. South Africa was recently added to the BRIC index and has a strong commodity based currency and economy like Canada and Australia. Bidvest operates mainly in South Africa, but has expanded to Southern China, Singapore, Brazil, and Central Europe. Think of them as a miniature Sysco that builds a food distribution network in a target economy then leverages the distribution network to provide other essential goods and services once the food service group matures. I'll just have to do a write up. I just keep going on and on about the business model if I get started...

I would diffidently take a look at Nestle, and I’m surprised no one has mentioned Total (TOT) a decent European oil major selling at a discount. I have a bit of the Spanish Media conglomerate Grupo Prisa class B shares (0.175 Euro Cumulative dividend) which are an absolute bear to value, but if I am reading the prospectus correctly I suspect the company will pay .05 Euros per share to class b share holders for 2011 and the remaining .125 Euros will boost the 2012 minimum dividend to 0.30 Euro per share. The shares of Grupo Prisa trade on the NYSE via an ADR (PRIS and PRIS.B) representing 4 shares of Prisa common stock. This is a small position 3% position for me, at my average of $6 (roughly where T2 bought their shares). My favorite non US company and my most concentrated common stock position is in South African Bidvest (BDVSY.PK). The best way to describe Bidvest is a decentralized conglomerate. The company specializes in food services but has branched out to automobiles, retail, investment, transportation, and several others. Bidvest operates much like Berkshire in the way they acquire new companies. Bidvest identifies profitable companies with skilled management and fits the company into a vertically integrated niche within the Bidvest structure to enhance the profitability of the new company. Since its inception in the 1980’s (I believe 83) Bidvest has been compounding at over 20%. It trades on the JSE at a P/E ratio of 13.5 right now and has a market cap of roughly 5.9 billion US. Over the summer management refused a ~4 billion dollar bid for their African food service division which accounts for roughly 50% of their revenue, so I’d say the whole company is worth more than the current market cap. I started buying in 2009 in the $20’s, 2010’s when the P/E ratio when to around 12, and have been recently when the Dollar strengthened against the Rand. I might do a write up on Bidvest at some point if anyone is interested. The above is just some rambling off the top of my head.

I had no idea James East was on this board. I owe him a thank you for a good book recommendation! His review is pretty eloquent for a Texan ;)

Butter production in Bangladesh... I really liked the book Your Money and You Brain by Jason Zweig (revised the most resent editions of The Intelligent Investor). The cover looks a little trendy and hypes how the study of neuroeconomics can make you rich (I imagine to sell the book), but the book does a great job of detailing how humans make decisions. A portion of the book explains how humans are hardwired to make order and assign patterns to events even when events are truly random or so complex they cannot be understood. One of the experiments demonstrated how a pigeon beat a person nearly every time at a probability game because the person was crippled by the belief they could outsmart the pattern. The book throws some cold water on technical analysis. An excerpt from the amazon reviewer James East: http://www.amazon.com/Your-Money-Brain-Science-Neuroeconomics/dp/0743276698/ref=sr_1_1?s=books&ie=UTF8&qid=1319488595&sr=1-1 I own BAC too though ;)

Baoxiaodao, I second the thread should be closed. Many, many holdings have the potential to increase 10x over a great enough time period. Some great investors hold ten baggers because they have a lot of money to invest and it is often hard to find better investments than the ones they already hold. Great investors do sell their long term holdings when more attractive offerings become available. Ex. Cundill selling much of their Berkshire holdings over the summer because he saw better opportunities... Ben, I understand that you like Level 3, but I think it is pretty safe to say that you are married to the company. The stock was selling for over $100 back in 2000 and hasn't gone up since its spectacular fall in 2002. The real Ben Graham said in the short term the market is a voting machine and over the long term is a weighing machine. The market, over the past 11 years, seems pretty certain that Level 3 is is worth much less than $100 or even the $20 dollars (10 bagger from today) it fell through in 2001. I agree with you that their assets are worth a lot of money but they cannot seem to make money off their assets and continue to head further and further into debt. How much is their network worth in liquidation? Right now it needs to be worth at least 10 billion to pay back their stock holders and debtors. Reading the LVLT thread it seems their network is priceless, but no one will pay for it and they cannot get enough people to use it to make any money. Right now you are speculating HD content over the web is going to save LVLT. One day the lines will be filled but I don't know if it will be LVLT that holds the rights any longer. The market seems to be pricing LVLT as very speculative because the company holding a priceless asset is only worth 3 billion...

Has anyone ever tried this strategy before? Do those of you who hold DITM leaps exercise them to collect the dividend then buy another leap?

It seems as the call nears expiration the chance of the option being exercised increases. For a 1 or two year leap though, it doesn't make much sense for someone to call the option for a dividend... If I was the buyer of the 2014 $35 dollar JNJ call option for $28, I assume all the risk of purchasing JNJ at $63 and intend to hold JNJ for its capital appreciation between the present and 2014. If the march dividend is 0.57 and I exercise my option early at say $63 (any price it doesn't really matter) the stock goes ex dividend and loses 0.57 so I really don't make any money unless the stock price appreciates. I understand why the option would be called if it expires near the ex-date but the buyers if DITM calls are looking for capital appreciation. I own DITM calls on MSFT, HPQ, JNJ, and INTC and would not exercise the leap to collect a dividend...

When writing a DITM call in the examples above. The value of the call is 100% intrinsic. In the case of AT&T bellow, you preserve your capital as long as T's stock price exceeds $15 in January 2014. You collect 8 quarters of dividends. I built a mock portfolio of KO 18%, JNJ 18%, MO 14%, VZ 14%, T 13.5%, BP 9%, INTC 9%, NLY 4.5%. Selling DITM calls on the above securities at roughly 50% their current stock price yields an annual return of 9.6%. The only way to lose capital that I am aware of right now is a decline in stock price greater than 50%. This is essentially the opposite of what Ericopoly was doing by buying DITM calls for cheap/free leverage. Essentially by selling the call, you are selling cheap leverage to a buyer seeking capital gains. This frees principal allowing you to compound your own money more quickly and protecting yourself from a 50% downward move.

Thanks Tim! I did mean a call. I corrected it!

I've been considering the idea of buying shares in dividend paying blue chips and immediately selling deep in the money 1-2 year leaps (~50% of the stock price) to increase the dividend yield. A couple examples: 100 JNJ @ 63.95 = $6395; Dividend is 2.28 per year Sell January 2014 $35 call for $2880 Outlay: 6395-2880= $3515 In January 2014 option is called: $3500 + $456 (2 years at 2.28/yr) - 3515 = $441, 6.27% annually 100 T @ 28.80 = $2880; Dividend is 1.72 per year Sell January 2014 $15 call for $13.75 Outlay: 2800-1375= $1505 In January 2014 option is called: $1500 + $344 (2 years at 1.72/yr) - 1505 = $339, 11.26% annually The only way to lose capital would be a if the equity fell below the stike of the call option or if the option is excercised prior to recieving enough dividends to cover expenses. Selling DITM options appears to be a way to collect a nice yield while maintaining a ~50% hedge and eliminating interest rate risk. Does anyone know of something I haven’t considered? Are there any other risks I should be aware of? What would cause the LEAP options to be excercised early? What are the tax implications are of selling DITM leaps ? ect…

I keep track of my performance using Smartmoney.com free portfolio tracker. I use yahoo finance and an SMF excel spreadsheet to research companies. Interactive Brokers for trading ($1 trades) and a small Scottrade account for real time quotes (I’m too cheap to pay IB for real time quotes). I only trade a couple times a month so most of my time is spent on smartmoney watching my portfolio and watchlists. Note on Scottrade vs IB. 2 trades a month in an IRA at Scottrade cost 168/yr. At IB, if I trade 10 or less times per month it costs $120 per yr plus the $30 IRA fee. This allows me to dollar cost average/reinvest dividends without feeling like I’m being eaten alive by fees!

I bought some BAC-PL shares for $737… The preferred shares are down but on no volume. L series have traded 20k shares today. The volume has been over 100k up to 250k on big moves in the past several months.

Hi all, I was recently checking out the forums at android central and saw many people using the app "tapatalk" to post to the forum. The app can be enabled via their website (http://www.tapatalk.com/) by the forum owner. Users can then download the app from their OS's repository (ex. App store, android market) and use it to access the forum. Apparently it is pretty popular with 100-500k downloads and a 4.5+ star rating on android. Talatalk.com states the app works on SMF 2.X, so it should work with the Corner. It supports the I-phone, I-pad, Android, and BlackBerry. For some screen shots and additional information, the android market place: https://market.android.com/details?id=com.quoord.tapatalkpro.activity&hl=en I read on the "What Would You Folks Like To See?" thread that many on the forum would like a native smartphone app, and I didn't know if this had been considered. The app does cost $2.95, but it would allow those who want a native app to get one and may save Sanjeev a little work...

enoch01, You are correct, the dividend is 0.175 euro per annum. The ADR available to the U.S. market represents 4 shares of pris.b. ( 4 x 0.175 x 1.4 = $0.98) Sorry for the confusion. http://investing.money.msn.com/investments/stock-price?symbol=PRIS%2eB

Bathtime, I bought a partial position in BP in the AM at $36 and sold the October $36 calls for $2.24. BP at $36 is really nice. $33.76 is even nicer and if I make 6% in 7 weeks I'll live with that. I look at somewhere around $29 as the absolute bottom for BP (price during the spill and when the dividend was canceled, lots of dividend funds were obligated to sell), but time will tell...

BTW Tilson had 15% of his fund in PRIS and PRIS/B. He since sold the ADR and must be holding the Spanish stock.

tombgrt, The assertion I am making is the PC business is not what it once was. HPQ wants to spin off their PC business because margins are contracting and they don't see a future. I'm sure Dell knows this, but they MUST ride it out because it makes up 80% of their revenues. They are trying to get into the service business, but they have a long way to go to close the gap. Right now an investment in Dell is betting they can maintain earnings by plowing cash flow into a dying business while trying to build a new profitable service business. I agree that Dell is really cheap. Prem and Tilson think so too. I just don't understand investing in Dell when the other tech majors are selling at similar valuations, have a decent moat, and are not trying to reinvent themselves. The main difference between HPQ and Dell is the PC business makes up 80% if Dell's revenue and only 5% of HPQs revenue. I hate the Autonomy purchase, but I was happy to see HPQ get rid of the PC business. It actually amazes me how hated HPQ is right now. The spin off of the PC business was the equivalent of Berkshire spinning off two Dairy Queens by revenue. HPQ can't make a good acquisition to save their life but they are really profitable and have a 25% free cash flow yield as well. Swizzled, You read Tilson's letter. I am with Tilson and am underwater in Pris/B as well. Have you taken a look at this company? The B shares pay a ~$0.98 dividend for the next 3 years before being converted into A shares. At the current share price the return is 3*.98 - (prisa/b $6.35 - prisa 5.68) = $2.27 or 35% on dividends alone. Not to mention Prisa seems to be turning the corner and on the way to becoming profitable again. Its currently selling at .44x BV.

I'm not a fan of Dell at this point. Their business centers on providing machines for enterprise use. In the future, these machines will become less powerful on their own and will be used to access the cloud. Dell is tempting because it reminds me a little of WDC when SSDs first hit the scene and the market (and myself I might add) was confident spinning disks were obsolete. Dell still has quite a bit of life left with their current business model and may get revalued with a higher P/E, but what P/E is appropriate? I can assure you its not 15. I agree with Kraven that this is the same discussion with all the old tech guard. All can be had at a fraction of their historical P/E valuations. HPQ recently announced they were going to spin off their PC division and focus on software instead. I believe this should be a warning with respect to Dell. HPQ wants to be a software/service provider, what is the most agreed upon value stock right now? (It's a software company) http://www.dataroma.com/m/home.php The money is in software and services. IBM, HPQ and MSFT know it.

With the volatility adding to the warrants premium, would it be a good idea to trade the warrants for the common?