Shane

There are a lot of blogs I like to follow that discuss investing in Net-Nets. I was wondering if anyone knows of someone with a solid track record that invests heavily in these over the past 10-20 years? Do most of you all seek out net-net's? The world has changed and I wanted to hear other's opinion of whether the strategy is still worth the effort!

erp good point about the dilution, I was missing some zero's.

I'm not buying right now, but understand that Pruitt has a lot of the outstanding shares of the company... he does not want to dilute his own wealth if he doesn't have to. Individual Restaurant Estimates: HOA owns roughly 435 Hooters restaurants HOA states annual revenue $275,000,000 Revenue per store ~ $632,000 Net Income assumptions: 20% profit margin = $126,400 10% profit margin = $63,200 5% profit margin = $31,600 Let's say each restaurant brings in $100,000 in earnings. What multiple would the business deserve? 10X = $31 million 15X = $46.5 million 20X = $62 million Parsad - Care to comment on these estimates? It seems as if they are moving away from their other businesses, is the asset management company going to be closed down?

I find it hard to analyze, however, I believe there is enough upside potential to validate a position. I haven't become comfortable enough to make it a full sized position.

You don't know of a single company that can't get high ROIC even though it produces tons of cash?? Are you kidding me?

Moore_Capital54 I read nearly all of your posts because I think you have some intelligent things to say and I agree what some of your beliefs. I am a bit confused on some of these points you bring up. At school I am engaged with a lot of foreign exchange students (Business school) and I am not at all impressed with most of their work ethic. This is not a result of language barriers as most of fluent. I don't know if I would say North America has gotten lazy at all. We work more hours than our counterparts elsewhere. The outsourcing is due to the fact that globalization has made it more profitable for companies to pay the lower wage countries to do the work. That seems like the major driver of this movement. We take on the debt as a result of globalization than to maintain a lazy lifestyle. The unskilled worker just doesn't have a job here for the most part. It might be harsh but if we want free trade we just have to accept that we are spreading wealth across the world, making it hard for our own unskilled labor to live.

He stated he was moving the fund to have a few 2-3% positions, majority 5% positions, and when exceptions appear 10% + positions. It appears he is finding very compelling investments or he has more AUM than we expect and has quite a bit on foreign exchanges.

They add loads of salt to coke? Coke only has 35 mg per serving, not a lot. Also sucrose is 1 part fructose and 1 part glucose, in water they disassociate... meaning that the glucose and fructose will be individual molecules in solution.

I struggled with picking a major quite a bit, I agree with what's been said in this thread. I am graduating with my M.S. in December and had a very tough time identifying a career and major. The notion of studying what you have a passion for IMO is a bad idea most of the time. My father ran an agronomic consulting company so I majored in Horticulture and soil science - I thought the subject was very intriguing. There are very few jobs in the career and they are low paying, my dad was probably the only person in the state making what I would call a good income! I'd say I am very frustrated by how long it took me to realize what I wanted to do. Both my parents own their own businesses and haven't worked for someone in 30 years, I basically had no real direction. After 4 years of undergraduate, 1 year of a M.S. in science, and finally a 1 year business program I finally have my start. If I had been more logical and had more direction I could have been working for 2 years making 60+ and contributing to my savings! I will make sure my children study a useful major. Ultimately college has really become pre-professional training - all of the people I know who graduated with soft degree's are in sales or jobless. None of them are doing what they are passionate about.

Shane - It is a fallacy to consider just dividends is the point. I believe Buffett once said that you could create your own dividend stream by selling shares. Assuming you find the next Berkshire (when it was trading at say 19 or so) and put it 100 shares into your Roth, you could take over 9% every year just selling shares at book value and still be left with one A share after 46 years. Well of course, I didn't think that point needed to be expressed. Nobody said anything about ignoring fundamentals and business dynamics for the sake of dividends.

Who on this thread said dividends limit downside? Hester - I think there is a lot of value in that post, thanks. What I am talking about here is starting young to pick some winning stocks that could grow distributions over time. I would argue there is some value in knowing a steady stream of cash was coming as it would allow you to invest a little more heavily. I am thinking from an individuals perspective not a portfolio manager though. We are agreeing but talking from two different perspectives. I am thinking of things as someone without a job (student). The income would be of value in the future, investment returns are lumpy unless you are a PM or have a salary.

You and I look at things the same Ourkid8. Being young and poor I usually try to focus on things which have limited downside and big upside potential (Something that might go up 3-5x in a moderate timespan). I'm considering accepting lower upside potential on some purchases from this point onward if I think the income will grow and downside is limited. Maybe 20-30% of the total portfolio on this. This won't be a lot of money now, but over time It could provide a nice income stream.

Sorry I missed a lot of these posts - Vacation. I would look at the dividend portion of my portfolio as income generation. Total return of course is the metric that should be used to evaluate success. The reason I bring up initial cost is just for the sake of the point I was trying to make. I fantasize about the day I could live off of my investments!

I know it isn't a novel idea, but I was looking at the price of WFC at it's low in 2009 - less than $10. I think WFC could grow to distribute $2.00 in dividends in 5 years. That means a $200,000 purchase of WFC stock at $10 could pay an individual $40,000 a year... and likely to grow. I know Buffett makes more than his original investment on washington post and probably KO too. Does anyone on the forum's here focus a portion of their portfolio on stock's that could allow you to sit back and relax from here on out? One huge advantage I see of starting early with a few stocks likely to grow dividends rapidly in the future would be to poise yourself for another special situation like 2009 when there are lots of fat pitches.

I don't think he was calling a market bottom here. There is economic data that is coming out which points to predictions being too low, GDP growth was recently upgraded. Buffett has said he doesn't see a recession either, he has excellent foresight into the economy given his diverse businesses and in-depth knowledge of their operations. I agree that this could be real buying, but who knows if it will prove to be a bottom. I hope it isn't a bottom, two companies I'd love to own were just close to getting cheap enough for me!

A major concern I have with MSFT is their acquisitions, I just don't see most of them adding value. Maybe I'm missing something but it appears to me that they focus on competing with google too much, and not enough on their dominate software business.

The positive economic data didn't hurt either

I tend to agree with the notion that it is immoral to not address the waste problem (Which I think almost everyone can agree there is a large amount of waste) and then demand more money in taxes. The government does a poor job distributing that money and that should be the first goal. However, I do recognize that the tax system has problems that should be addressed immediately. Those with the means are able to reduce their tax payments with the current system more than is fair IMO.

I've been reading into this. The global flight to treasuries results in an increasing dollar, gold is priced in dollars. Also, apparently a number of large hedge funds are selling their shares in gold, this could be from forced selling to cover losses as this is likely a major source of positive gains. This pattern isn't unusual actually, Gold usually initially drops then recovers due to the aforementioned factors. In my mind gold is still not a short candidate.

Interesting. I live in FLA and Miami is a very different place than the panhandle where Joe owns a lot of their property. In florida we call the panhandle southern alabama! The weather is much colder, the water murky, the waves milder, etc... It does have a natural beauty IMO though. JOE needs to go up by quite a bit and quickly in order for Berkowitz to get a good IRR on this though. I just can't see it happening for a long time. Huge areas in florida with empty developments in much 'nicer' and warmer areas than the panhandle!

Ben - Fairfax has much more long-term debt than berkshire. Wouldn't you have to factor that into your calculation of intrinsic value?

Does anyone have a historical chart of FFH's combined ratio?

moore_capital54 - Thank you for your perspective. It is so easy to take everything a great investor like Buffett says as fact, it is always worthwhile to hear an intelligent argument.

You can try shorting the ETF's. The reasons for gold climb still persist, so I dunno if it's really a good candidate.

Alwaysinvert - Everyone is entitled to their own viewpoints. You apparently don't approve of my viewpoints. I simply recognize that the market is not cheap and serious economic issues will be dealt with in the coming years... I hope that the market drops so I can pick up great investments, and therefore prefer cash to being fully invested. Anyways please understand I do own BRK, a pretty significant amount. I agree it's cheap. I just don't see it offering tremendous upside like I hope to see in a large position.