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COYS

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  1. I've linked an oped piece written by David Brooks back in July after the Colorado movie theater shooting. His points are, in my view, constructive and deal with identifying the behavioral patterns of people who have committed such crimes in the past. The idea would be to educate people about these patterns to identify and treat at risk individuals well before they act. http://www.nytimes.com/2012/07/24/opinion/brooks-more-treatment-programs.html
  2. Alice Schroeder sheds some light on WEB's valuation process in this video from 2009, where she discusses his 1959 private investment in Mid Continent Tab Company.
  3. Just heard that a thick envelope from OID arrived in the mail. Perhaps a new issue?
  4. In the past, shareholders could obtain credentials the Friday before the meeting at the Quest Center by presenting proof of ownership (a broker statement did the trick).
  5. "Or one could conclude that he wasn't promoted due to the fact that he takes offense to what counts as "top performance" at the firm, which was the entire basis of the article. Maybe he wasn't willing to put "axes" on clients or "rip their faces off." (GS terminology.)" Perhaps, but he was promoted through the ranks from analyst to associate to VP to ED which suggests he was viewed favorably enough for promotion, just not to MD.
  6. I think his seniority is relevant, because it provides a bit of context to his remarks. The fact that he was not a Managing Director after 12 years implies that he was not a top performer, and perhaps harbored resentment due to his lack of upward mobility. Obviously not able to conclude that definitely, but after 12 years it's likely frustrating to be at the level he was in the organization.
  7. Lin has been criticized for turning the ball over, but his turnovers are actually in line with the better point guards in the league. Rather than looking at turnovers per game, I think it's more useful to look at how many turnovers a player has per player possession. t Point guards have far more possessions per game than other players, which creates more opportunity for turnovers. Lin is also playing a lot of minutes right now (that's probably unsustainable). Currently, Lin turns the ball over on 14% of his possessions which is in line with Nash, Wall, Rondo and Rubio. It's always better to turn the ball over less, but focusing on reducing that statistic could lead to less aggressive play.
  8. Factoring firms often require retailers to provide more frequent financial information than is required by the SEC. It wouldn't surprise me if CIT's decision to withdraw support came in part from Sears refusal to comply with a request for more timely, and private, disclosure. That said, the situation needs to be managed aggressively with other trade creditors or you'll very quickly find terms tightened and once ample liquidity depleted. If you are in charge of credit extension at a supplier to Sears, and you see (a) rating agencies downgrading the credit; (b) Sears shares plummeting in price; © Sears bonds drifting lower, including the secured bonds backed by AR and Inventory (incidentally, at an 11% yield, those bonds seem quite interesting, though covenants in there debt agreements provide flexibility to add an additional $1.75bn of secured debt); (d) continuing deterioration in operating performance; and (e) one of the largest factoring firms in the industry withdrawing credit, how do you justify to your superiors that continued shipments at prevailing terms are warranted? The answer is likely that Sears is a large purchaser of goods and losing it as a client could be material to the suppliers' business, but there may come a tipping point where suppliers conclude that the once valued customer has a short lease on life. I'd also note that "less than 5% of inventory" amounts to about $400-$500bn, which is meaningful in the context of Sears ~$3.0bn of liquidity.
  9. Here is a link to, and excerpt from, a recent NYTimes piece on the 2004 tax holiday and its unintended consequences. In 2004, Congress enacted the American Jobs Creation Act, a tax holiday for companies to repatriate cash. The dividend tax was reduced to 5.25 percent from 35 percent. In exchange for this reduction, Congress required that any cash repatriated be invested in the United States. The cash could not be used for dividends or stock repurchases. Alas, cash is fungible. A study of this tax holiday, entitled “Watch What I Do, Not What I Say: The Unintended Consequences of the Homeland Investment Act,” found that in the year following the act, repatriations increased by $230 billion from the previous year, to $299 billion. Five companies alone — Pfizer, Merck, Hewlett-Packard, Johnson & Johnson and I.B.M. — repatriated $88 billion, But the repatriation did not result in increased investment. Instead, companies largely repatriated the money and used their current United States holdings to pay out dividends or engage in share repurchases. This was contrary to what Congress had intended. While the cash was not used for investment, this does not mean it did not have an overall positive effect on the American economy: shareholders went on to spend this cash. The study’s authors acknowledged this, stating that “presumably these shareholders either reinvested these funds or used them for consumption, thereby having indirect effects on firm investment, employment or spending.” http://dealbook.nytimes.com/2011/08/16/tax-policy-change-would-bring-cash-piles-abroad-back-home/
  10. The odds are really stacked against the retail investor when it comes to the trading of high yield bonds (unless you are an investor that can comfortably trade in $1mm increments). The best source for price information, as mentioned, is the finra website. There are several caveats. First, trade prices need to be viewed in the context of the size of a trade. The round lot trade is $1 million bonds (on Finra, you'll see $1mm+ or perhaps 1000000). Trades below that size are often at somewhat off-market prices. As a retail investor, you won't know how bad a price you've paid relative to the market until you see how your trade is processed through the finra site. For illiquid bonds (and many high yield bonds trade infrequently), the last price paid may bear little resemblance to the current price (think small cap stocks). The best source of market information is trading runs sent by brokers, but those runs are only sent to institutions. Even then, if the bond trades infrequently, it can be difficult to know where the bond would trade and you'll have to put a firm bid into the market to test the waters. The TRACE reporting system has helped a lot with regard to transparency, but it's still far from perfect. One thing to check - make certain the yield quoted by finra is a yield to worst and not a yield to maturity.
  11. The BH earnings release dates are in the annual letter to shareholders. CAW is a tough one. I looked at it several years ago after the proposed buyout fell through (price was $9.00, I think). Apparently, the buyers were unable to obtain financing (which gave me a little pause, since the financing markets were as good as they could be in 2006 though this is a very small company). My main concern was the sales concentration with WalMart. Seemed that a WalMart cold could be lethal to CCA.
  12. Thank you for your thoughts. After posting the thread, I came across a brief writeup on the 2008 DJCO annual meeting from the Motley Fool website which I've linked here. http://www.fool.com/community/pod/2008/080207.htm
  13. DJCO's annual meeting is scheduled on February 2, and I'm considering making the flight to Los Angeles to attend. To that end, has anyone attended the annual meeting in the past? Does Mr. Munger answer questions? I've never come across meeting notes. Thanks in advance.
  14. manualofideas, I share your view of Compton. Their appears to be a good amount of asset value covering you at the current stock price, but I do fear liquidity after 12 months absent higher gas prices. As such, I'm considering purchasing some Compton bonds in the low to mid 80s and allocating my expected interest payments to purchase equity. If liquidity does turn out to be an issue, the bonds will likely be the fulcrum security in a reorganization and the interest I've received will pay the cost of my presumably worthless equity. Just a thought.
  15. American Greetings is a very interesting company, though I'm a bit stale as I looked at it roughly 9 months ago. Seems to have very strong customer captivity (a greeting card company typically controls an entire retailer's category). In exchange, AM pays an upfront fee to the retailer and maintains the shelf space (an AM employee visits each location on a regular basis to freshen the display, restock and take note of slow moving items). Switching costs are somewhat burdensome, because a new card company needs to remove the old shelving and displays and replace with their own. Not a time consuming process for one store but can lead to disruption across a large chain. Plus, the frequent customer visits helps with service. As a result, the SG&A for this company is rather large because they need to support this direct shipping arrangement, leading to somewhat high fixed costs. They basically operate mini retail shops within their retail customers. Volume trends were less then stellar, and I could not get comfortable with whether those trends were more secular or cyclical (are consumers purchasing fewer greeting cards per capita or are they merely backing off during challenged economic times?). Pricing was favorable, and the Papyrus products were also very popular (I believe they sold the stores but continue to own the label and sell Papyrus through Target and their other retail customers). Capital allocation also seems reasonable to me, but I'd be interested to hear thoughts on the cyclical versus secular issue for greeting card demand.
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