junto.investing
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Posts posted by junto.investing
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Apologies in advance for the morbid subject, but unfortunately, death has become a common occurrence within the family in the past year. Naturally, it's got me thinking how to best prepare in the event that I pass. Some quick facts about me - in my early 30's, wife, no kids.
In a perfect world, I'd simply have a close friend advise my wife, should something happen. But, my friends, much as I love them, don't have much interest in investing.
I don't qualify as an accredited investor, so hedge funds are out. In terms of mutual funds, I like Fairholme and Wintergreen. And of course, there's always the S&P index. So for now, I'm thinking she could just dollar cost average into these, but I'd love to hear others thoughts/opinions on the matter.
An ideal solution, would require little to no effort on her part - an automated plan, so to speak.
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I would think that MA/V should have a significant enough head start, that even if the above happened, they should be ok for a good while. I think that Paypal is a real threat in the electronic space. Paypal helped eBay considerably in their most recent earnings beat. I like eBay's halo effect plus the Paypal kicker.
I would guess that most people on paypal use it with their credit card, no? I guess over time there could be a movement to direct account linking, but for that paypal would have to make people feel as safe as CCs which protect people from most forms of frauds right now.
Liberty, this is a crucial point. V, MA, and AXP have all built global brands that are trusted and respected. This doesn't happen overnight. It will take a while for consumers and businesses to fully trust new mobile payment platforms.
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Costco
Trader Joe
Both have fanatic set of followers; you have a winning formula when the perceived value of goods/experience is far more than the price you pay.
Nice pick. Trader Joe's is a fascinating business. Extremely well run.
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MA & V would be my picks as well. They're essentially a small tax on global consumer spending. As stated above, the transition from cash to plastic will provide growth for years. Both companies will also be able to leverage their brands and technology towards mobile payments. This all requires very little in terms of capital. MA has taken advantage of this by regularly buying back shares. Eventually both will be able to pay out sizeable dividends.
I attended the recent meeting for Sequoia fund. They made an interesting comment on Visa / Mastercard (they've owned MA, IIRC, for a long time and thier past bullish comments have been posted on this board).
To paraphrase: "The mobile payment threat is potentially quite big to V and MA. Companies like Apple and Google have enormous networks of people that they could leverage to compete with V and MA. The risk of mobile payments is that they can use ACH (Automatic Clearing House) to get around the V and MA payment networks. To do so, however, they have to have bank account information and it is possible that people won't want their bank info. exposed. But, it is very possible. No one knows how it will shake out."
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Again, the above is a paraphrase. But, it got me thinking. Isn't something like American Express a much better option than V or MA. The standard -- recent -- counter argument is that Amex has credit risk. Not much...take a look at their numbers.
And, importantly on the subject above, what Amex does have that (as I understand it, V and MA don't) is a very powerful rewards program that keeps customers using their card. Obviously, other card providers have rewards programs but those are mostly banks and the banks don't have the V / MA network.
Amex has both and has the high-paying customers as well.
Just a thought when comparing V / MA to Amex when considering the mobile payments threat.
I believe mobile payments will either be their greatest threat or their greatest opportunity. Even as a threat though, I think people are often slow to change. For example, I'm stunned at the number of people that continue to use cash and checks. While the mobile payments industry holds great potential, I'm not sure people will adapt quickly enough to marginally affect V & MA's core business. While most of us no longer leave the house without a cell phone, there's still much to be said about the simplicity and usefulness of a debit/credit card.
Completely agree about AMEX. In fact, I hate myself for not pulling the trigger on AMEX in 2009. I must admit, I got too caught up in the whole credit risk. But you're absolutely right - AMEX possesses the same toll-like network. And because it's a closed loop, they see all the benefits, can charge more, etc. Their rewards program is unrivaled. Best of all, aside from Discover, AMEX has the smallest percentage of the market. Not only will they benefit from the cash-to-plastic trend, but they will also be able to chip away at V & MA's market share.
All in all, I'm a huge fan of this sector. Very difficult to replicate these networks.
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MasterCard/Visa - duopoly. on a global basis, cash still accounts for 70% of transactions, therefore their is growth opportunities. Brand recognition/trust. Inflation hedge - as dollars per transaction increases due to inflation, so does MA/V's profit as they take small portion of each of those transactions.
MA & V would be my picks as well. They're essentially a small tax on global consumer spending. As stated above, the transition from cash to plastic will provide growth for years. Both companies will also be able to leverage their brands and technology towards mobile payments. This all requires very little in terms of capital. MA has taken advantage of this by regularly buying back shares. Eventually both will be able to pay out sizeable dividends.
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Margin of Safety is impossible to find in physical form unless you want to pay a few thousand bucks, but I found a PDF pretty easily online. I'm halfway through, but it's great.
care to share what your google search was?
How about the obvious one "Margin of Safety pdf", I googled it and the first two hits had links to the book in a pdf format. Did you try searching at all?
Clearly, I didn't. Plus, I'm not one to open up any PDF that google turns up, which is why I was asking.... but thank you for stating the obvious.
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Margin of Safety is impossible to find in physical form unless you want to pay a few thousand bucks, but I found a PDF pretty easily online. I'm halfway through, but it's great.
care to share what your google search was?
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It is both an attractive standalone investment and one that offers significant hedging benefits for our portfolio. For a modest amount of capital commitment, this investment offers the potential for extraordinary profits.
I'm curious what he means here...perhaps a gold miner? What long position would provide a hedge to a portfolio already so heavily tied to a healthy economy (sans FDO perhaps)?
Can't figure that out either. However, I don't think it's a gold miner, as he's been pretty vocal against investing in gold. And from what I can remember, hasn't ever made an investment in commodities.
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fannie / freddie prefs?
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I think AIG has bottomed (everybody gets to guess for fun every now and then). Can't believe how many warrants I have now.
You mentioned several ways to play this one... do you mind me asking which option(s) you ultimately went with?
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The latest one is only PACER, but my understanding is that the only difference with the one submitted for voting is that insiders (Meruelo and Maddux) are being forced to sell all their shares at $0.45 instead of $0.35 as was the original Charlestown plan. The judge made that decision for a control premium (read the whole thread to see the reasons) to ease the approval. Insiders are still battling trying to oppose the plan but now on appeal court.
Do you know when the new shares will begin trading? And what will the new ticker be?
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POR becomes effective today!
Mon Jul 25, 2011 4:26pm EDT
Plan of Reorganization for Meruelo Maddux Properties, Inc. Has Become Effective
Company Appoints New CEO Marty Caverly
Meruelo Maddux Properties, Inc. (“MMPI”) (OTC: MMPIQ.PK) announced today that the Charlestown Capital Advisors, LLC’s and Hartland Asset Management Corporation’s plan of reorganization (the “Plan”) for MMPI and its subsidiaries, which was previously confirmed by the United States Bankruptcy Court for the Central District of California, became effective today.
Under the terms of the Plan, MMPI Acquisition, LLC has acquired 55% of the outstanding shares of common stock of MMPI, and the non-insider shareholders of MMPI are receiving $0.35 per share in exchange for approximately 52.838% of their shares (except for those shareholders who previously elected to sell all of their shares) . Subsequent to this transfer of shares, under the terms of the Plan, the shares of MMPI common stock will undergo a 5-to-1 reverse stock split in which any fractional shares that result will be cancelled and receive $0.35 per pre-reverse stock split share.
The company also announced that Marty Caverly has been appointed as Chief Executive Officer, effective immediately. Caverly is a seasoned real estate professional with more than 20 years of experience. Most recently, he ran the acquisitions department at Hackman Capital and he also is founder of 2120 Partners, a real estate consulting, advisory and principal investing firm. Prior experience includes serving as Principal at real estate private equity firm O’Connor Capital Partners, and head of European acquisitions for both core and opportunistic funds for Tishman Speyer. Caverly began his career at Citigroup Real Estate in New York. He is a graduate of Harvard College and Northwestern University’s Kellogg Graduate School of Management.
Caverly stated: “I am pleased to take the reins at this pivotal time. I want to thank our employees and our many partners who supported the Company throughout this process. We look forward to moving ahead under the plan of reorganization.”
Caverly noted that the Company will likely be renamed in the near future.
Plan, where can I find the POR? Is it only up on PACER?
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Can someone remind me what happens to the value of a call option, post spinoff? I believe the price should reflect the market value of both companies, no?
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I think maybe it's time American's realized they have a President who is actually working his ass off for the country, and got behind him and supported him instead of casting aspersions on his ethnicity, patriotism or loyalty. You want him out of office and all he's done is stave off a Depression, regain global respect for the United States and caught the number one person on America's most wanted list. Cheers!
Well said.
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Interesting thread. Thoughts on selecting an appropriate expiry date when writing such puts?
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The price action for the last few days and today was suggestive of a bubble, so we were able to sell most of our positions into the dramatically increased liquidity. If there should be a pullback, we may jump back in with all the apparently favorable developments behind the scenes suggesting light at the end of the tunnel. However, we may instead wait to see what the administration's plan is and how well it's received by Congress before making a long term commitment.
:)
When's the admin's plan again? Feb 13th?
No official date, but probably after the budget is presented the week after next.
Thoughts on this latest piece of news?
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The price action for the last few days and today was suggestive of a bubble, so we were able to sell most of our positions into the dramatically increased liquidity. If there should be a pull back, we may jump back in with all the apparently favorable developments behind the scenes suggesting light at the end of the tunnel. However, we may instead wait to see what the administration's plan is and how well it's received by congress before making a long term commitment.
:)
When's the admin's plan again? Feb 13th?
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Just noticed BYD has hit its 52 week low. Anyone been following this closely?
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FYI - Here is a chart showing all of the FNMA and FMCC Preferred issues that are generally traded on the pink sheets. :)
Did you buy a basket of these? Or are there particular ones that you're focusing on?
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These are trading today in volume.
c-wta and c-wtb on Yahoo
initial thoughts?
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Read a little bit more detail. The series B “C WS B." are pretty far out of the money.
"The United States Department of the Treasury, referred to in this prospectus supplement as the selling security holder or Treasury, is offering to sell 210,084,034 warrants, each of which represents the right to purchase one share of Citigroup common stock, par value $0.01 per share, referred to in this prospectus supplement as the Common Stock, at an initial exercise price of $17.85 per share. Both the exercise price and the number of shares that will be acquired upon the exercise of a warrant are subject to adjustment from time to time as described in this prospectus supplement. Citigroup will not receive any of the proceeds from the sale of the warrants offered by the selling security holder. The warrants expire on October 28, 2018."
Quarterly dividends need to be in excess of $0.16 in order to get a reduction in the strike price.
The other set (Class A) are also out of the money, but not nearly as far.
The United States Department of the Treasury, referred to in this prospectus supplement as the selling security holder or Treasury, is offering to sell 255,033,142 warrants, each of which represents the right to purchase one share of Citigroup common stock, par value $0.01 per share, referred to in this prospectus supplement as the Common Stock, at an initial exercise price of $10.61 per share. Both the exercise price and the number of shares that will be acquired upon the exercise of a warrant are subject to adjustment from time to time as described in this prospectus supplement. Citigroup will not receive any of the proceeds from the sale of the warrants offered by the selling security holder. The warrants expire on January 4, 2019.
Citigroup originally issued 188,501,414 warrants to Treasury in a private placement in connection with Citigroup’s participation in the Targeted Investment Program, or TIP, under the Emergency Economic Stabilization Act of 2008, or EESA, and issued 66,531,728 warrants to Treasury in a private placement in connection with a loss-sharing agreement among Citigroup, Treasury and the Federal Deposit Insurance Corporation, or FDIC. Prior to this offering, there has been no public market for the warrants. Citigroup has applied to list the warrants on the New York Stock Exchange under the symbol “C WS A.” The Common Stock is listed on the New York Stock Exchange under the symbol “C.” On January 21, 2011, the last reported sale price of the Common Stock on the New York Stock Exchange was $4.89 per share.
Additionally, the exercise price of, and the number of shares underlying, the warrants will not be adjusted for any regular quarterly cash dividends that are in the aggregate less than or equal to $0.01 per share of Common Stock, which is the amount of the last dividend per share declared prior to the date on which the warrants were originally issued to Treasury
Thanks Hamilton. It will be interesting to see where these things trade in the secondary market...
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Just came across this article:
Has anyone been following this? If so, do you know if the warrants will be available to retail investors?
Thanks in advance.
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Are you doing it through work or on your own?
On my own. Eric & dcollon, thanks for the suggestions.
Death and the Aftermath
in General Discussion
Posted
folks, thanks for all the solid suggestions. ev, i will certainly contact you with regards to RIA's in my state.
really like the brk idea, especially with some sort of instructions/restrictions in place.
finally, never really gave thought to insurance. always thoughts it'd make more sense once we started having kids. but i'll have to look into premiums, etc to see if it's something that makes sense. the way you've described it, certainly seems like a viable and prudent option.
thanks again