merkhet
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Posts posted by merkhet
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The Lifetime Member award is worth much more to young people.
LOL
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Everyone mentions Buffett. Then they say that he has $1.2 billion coming in every year at Berkshire.
Few people mention Munger who has consistently said that he has never cared about the general level of markets when he invests.
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jtvalue, did you take into consideration dividends for KO?
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I just sat in a Model S at a local mall -- it's rather amazing. Also, I didn't know that Texas is their third largest market.
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Here's what I'm wondering -- did these people always exist and we're just throwing the spotlight on them now because the market has done particularly well?
(Availability and recency biases...)
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Interesting reading from the Journal this weekend.
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This is actually one of my favorite books. I highly recommend it.
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be careful
http://www.sec.gov/Archives/edgar/data/1549575/000154692713000077/dalalstreet132013q1v3.txt
it looks like he has swap GM common for GM warrants
which is something that i done a little while ago
GM'B warrant is a long long term option, it a better way to leverage your GM shares, most of my GM investment are in warrants
EDIT: GM is pabari's second largest holding by value
I'd like to point something out -- and I'd like to state at the outset that it's not directed at jay21 or anyone in particular, it's just that jay21's comment made me reflect on something. When the dataroma listing for Pabrai popped up, and we saw that GM had been completely sold, there were a number of things that could have happened:
(1) Pabrai is raising cash
(2) Pabrai recognized something wrong with his investment
(3) Pabrai believed GM was at fair value in the $30s
(4) Pabrai switched GM for GM warrants
(5) etc. etc.
I think that a given individual's pre-disposition might inform their choice on how they would interpret the action given the lack of guidance on the real underlying reason. Our brains like to fill in the holes in the absence of anything concrete -- and they naturally fill in those holes given our overarching world views.
jay21 immediately went to the thought that Pabrai might be raising cash.
I started wondering whether Pabrai saw something that I didn't see in GM, because I think it's very cheap.
Just an interesting (to me) observation.
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No one said imminent crash...just that prices are getting more and more speculative. And yes, the Reuters quote was out of context, but do you really need to know that, or can people figure that out rationally and what is quoted becomes irrelevant.
When I mentioned "imminent crash," it wasn't directed at you, Parsad. There are in fact a few other posters who have alluded to the fact that they are in anticipation of a correction coming soon.
Additionally, I asked for context because I just assumed that Warren was looking at his measure of Market Cap to GNP, which I believe is currently at around 100%. Neither cheap nor expensive. Of course, interest rates act as gravity (Munger mentioned this on May 3rd as well) but it's difficult to know which one Warren is referring to without context.
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Buffett is saying that stocks are not overvalued relative to the risk free rate. That doesn't mean that stocks on a historical basis, especially when considering the risk premium investors are willing to accept at the moment, aren't high. Risk premiums on both equities and corporate bonds are now at the same levels they were at in late 2007. Margin debt is as high as then. I don't think investors need to bail on stocks, but they should be careful in what they buy, and holding significant cash shouldn't feel like an anchor. Cheers!
Was the Reuter's quote out of context then? Is there some place where Buffett said that he's only talking about relative to the risk-free rate?
Additionally, I know I've asked this elsewhere before, but I'm immensely curious as to why everyone has seemingly jumped on the bandwagon of an "imminent crash" happening. Is this just because we've had a "summer selldown" in the each of the last three years? (April-June '10, July-September '11, April-June '12) Is this because people are still burned from the '08-'09 years?
Also, why does this matter when we can buy GM @ $31.42?
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People usually leave for dinner at 7pm. Tilson's event is at the Omaha Hilton.
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I'll be at Yellow BRKers tonight. Anyone else?
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It seems like recently there are a lot of people waxing philosophical about macroeconomics and/or where the stock market as a whole is going. What's the deal? Why the sudden influx?
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There must be some sarcasm that I'm missing here. The company has announced that they are retiring expensive preferred stock and buying back shares below tangible book value and book value. I don't know why this is a bad thing.
Even if you're a LEAP buyer, and you're unhappy that you'll have to roll forward you LEAPs and incur frictional cost, you have to then balance the accretion to your book value per share and dividend yield per share against the frictional cost. If the stock price treads water for the next 9 months, and you bought at-the-money calls two years out, you should be able to roughly trade time value erosion for the book value per share and dividend yield per share increase...
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Didn't Munger invest all of DJCO's investable capital into Wells Fargo during the crisis? One stock. 100% allocation.
DJCO had ~4 or so positions. WFC was the largest I believe.
http://mungerisms.blogspot.com/2011/02/2010-djco-meeting.html
- Roughlyright pointed out that Daily Journal portfolio perfectly matched Wells Fargo and that therefore now we know that munger must have bought Wells with the entire portfolio. Munger said that that was mostly right - they have a little that's not WFC. When asked why the DJ purchased it a a much better price than say Wesco Munger said that it was all accidental - a circumstance of reality - that the DJ needed to hold cash longer to ensure survival of the business and they got lucky on timing. -
Didn't Munger invest all of DJCO's investable capital into Wells Fargo during the crisis? One stock. 100% allocation.
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Very interesting. Thanks for posting.
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DO you know what is strike price for HIG warrants.
You have to adjust for dividends issued, but I believe it's $9.56 w/ the adjustment and $9.79 w/o the adjustment.
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Looks like Paulson went back to being passive recently...
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More information on variable annuity guarantees in the 10-K
pages 104-107
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I've done a little bit of research on The Hartford now that they've responded to Paulson's demands.
Share Price: $21.04
Book Value: $41.72*
* (excluding AOCI and after the new DAC adjustment)
Warrant Price: $13.26
Exercise Price: $9.56**
** (after adjustments to warrant price and share amounts from dividends)
At the current share/warrant price, you're borrowing $9.56 per share at an effective interest rate of around 2.77% for ~ 45% leverage. That seems to be a pretty decent deal if you believe that The Hartford will at some point be able to trade at or above its book value.
It seems like The Hartford got into trouble during The Crisis when they started chasing after variable annuities business by offering successively higher guarantees to customers. When the crisis hit, they were required to bolster their reserves as their investments took a hit and that caused the company to seek out TARP funds. Since then, it seems like the entire management team has been turned over with Liam McGhee leading the restructuring effort.
From what I can tell, it seems like their reserving practices (in P&C) have gotten a bit better over the last few years. One possibility is that they've gotten much better on short-tail reserving than in the past. Another possibility that I found mentioned in an old VIC writeup is that abnormally high losses from 2001 & 2005 caused P&C insurers, including The Hartford, to model higher losses than necessary going forward, which is why post-2006, we can see redundancies falling through. I'm uncertain whether either of these narratives are true, but they're interesting to ponder nonetheless.
A few open thoughts that I have right now:
(1) They made a big hullabaloo about how they're putting the Individual Annuity business into runoff, and if you read between the lines, it seems to indicate that there's no buyer for the annuities business. (I believe in one of the conference call transcripts I read/heard, Liam or Chris Swift says that it's not a good time to explore alternatives for the VA business but leaves open the possibility that they might explore alternatives in the future...) They've attempted to hedge against their VA liabilities, but I'm worried whether or not they've done a good enough job there... This could very well be hindsight bias on my part though (thinking annuities will get them in trouble because it has gotten them in trouble before...)
(2) Maybe I've been primed to think about things this way because I read the Paulson 13D before I began my research, but, for the life of me, I can't imagine why The Hartford believes that they need to have a Mutual Fund underneath the same roof as their P&C insurance operations. The cynic in me starts to wonder as to whether Liam has an empire building mentality...
(3) If you'll notice their wording w/ the press release, they've only stated definitively that they're putting the annuities business into runoff. They haven't said specifically what they'll do with the Individual Life, Woodbury Financial Services and Retirement Plans businesses -- only that they'll "divest" those businesses. This leaves open the possibility of a spinoff.
(4) When you combine (1) and (3), I can't fathom why they wouldn't just take Paulson's plan to spin off the Life business (including annuities) and fund the debt differential needs by selling the Mutual Funds (my guess is that $1.5 to $1.7 billion is definitely achievable) and the Group Benefits business (for roughly $1.5 billion) -- thus adding to the holding company cash they carry and giving them flexibility to deal with their $6.2 billion of debt in a way that makes a spinoff possible. (The 10-K also mentions that they expect to be able to dividend $800 million up from the P&C subsidiaries in 2012, which provides even more flexibility.)
(5) Still have to look at the Asbestos liabilities...
Anyone else have thoughts on The Hartford?
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I watched CNBC today -- one of the few times I'll ever do so. (Also, one of the few times I watched CNBC and didn't feel like it was making me dumber...)
What struck me most were three things (about Rainwater):
(1) The measure of a man is not how much money you make but rather how many people you know are wiling to go out of their way to help you when you're down. (Hopefully most people on this board already know this...)
(2) Rainwater used to say that if it's not worth putting 25% of your assets into it, why bother?
(3) John Goff and Barry Sternlicht talking about how they came up with a computer model to bid on properties and it spit out $108M and when the ask came in at $112M, they wanted to reject it. Rainwater said "If it's a good deal at $108, it's good at $112," but deferred to them. Sterlicht mentioned that they left $200M on the table.
Not a lot was said about Sears -- I think that I agree that Lampert isn't at his Berkshire moment. He wants to reinvent Sears. I thought what was particularly interesting is the discussion about how the internet is changing things -- Eddie or someone else indicated that distribution capability matters in the new retail paradigm... I'm wondering if he's trying to do something with that...
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i am reading the adjustment clauses on pages S-28/29 from the prospectus over and over again, can't figure out how to get from the wording in these clauses to the 43% increase in number of shares in the buffett example (700 million to 1 billion), it would be great if you could provide some kind of numerical example......
http://www.sec.gov/Archives/edgar/data/70858/000119312510044940/d424b7.htm#tx70043_14
It's in the second bullet point.
Set out all the variables. Put some numbers to it, and you'll see the change in both exercise price and shares per warrant. Remember that each adjustment is quarterly, so you get some excellent compounding on both.
Current Holdings
in General Discussion
Posted
From largest to smallest:
GM B warrants
AIG warrants + calls
BAC calls
Fiat common
Small O&G company common
Cash - about 12.5%