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Evolveus

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    Steven Romick of FPA interview with Gurufocus

    in General Discussion

    Posted

    Interview with Romick over at gurufocus.  He doesn't sound terribly stoked about their HPQ purchase, understandably.  This interview took place before the 13% drop follow HPQ's investor day.  I am curious if FPA would chalk HPQ up to a loss and cut the position, ie, do they feel the story has fundamentally changed or the company permanently impaired in the competitive environment going forward.

     

    http://moneyinstereo.blogspot.com/2012/10/steven-romick-of-fpa-interview-via.html

    MOI interview with Cook & Bynum

    in General Discussion

    Posted

    Thanks for posting this.  Would be interesting to hear them go through their reasoning on some more of their past and present holdings.

     

    I wonder how much coke consumption will grow in the long run, given the obesity problem and the amount of focus there is now on living healthier.  There seems to be a big push to educate kids about looking after their health, way beyond what they did in health class when I was growing up.  That being said, on the rare instances I do feel like a coke I'd probably pay triple whatever they're charging for pepsi.

     

    I'm actually kind of skeptical whether the power of brands in general will be what it was in the last half century or so.  I am sure some will do well, but going forward  I wonder about  the business of just stuffing some corn and soy into a shiny package and advertising the hell out of it.  When I go to Aldi there are hardly any major brands and no one seems to care, and  I wonder how much wal mart's traffic would go down if they did the same.

     

     

    In regards to coke consumption, I definitely hear you on the obesity issue.  A 2010 study by the CDC showed that 35% of American adults are obese and 17% of children.  Its a daunting problem with no immediate solution, and it impacts society on numerous levels.  Even though that is clearly the case, I don't foresee is a big decrease in coke consumption.  It's like Munger's example of the frog that stays in the pot until its death when the temperature slowly increased until it was boiling and too late.  It's such a slow acting agent and second order negative effects aren't noticeable for years, so I can't see what impetus people would have to immediately curtail coke consumption.

     

    I remember taking a pass many years ago on the Philip Morris spin off & Altria when considering how smoking was on the decline in the US because of the gravitation towards healthier living.  Boy was I wrong - those co's still print money.  But that being said, I'm not personally aware of the capex involved in Coke distribution, as I'd prefer the pure play syrup maker.  More color on their positions would be an interesting read.  I'm not plugging these guys - I just found the interview interesting and they have some pretty cool articles on their website. I realize the record is much to short to judge, and as Rimm_never_sleeps said, starting a fund at the bottom, you would expect higher results maybe similar to Oceanstone.

    MOI interview with Cook & Bynum

    in General Discussion

    Posted

    These fellows are pretty young, but its a good interview (as usual with MOI).  They seem to be pretty focused on process, and there were more than a handful of Munger-esque responses from the two of them.  I also like their extreme concentration (for a mutual fund), and a their value orient.

     

    http://moneyinstereo.blogspot.com/2012/10/cook-bynum-another-young-fund-doing-all.html

     

    they seemed like the opposite of these guys from earlier

     

    http://www.cornerofberkshireandfairfax.ca/forum/general-discussion/look-out-klarman!-watch-your-back-dalio!/

    Sam Zell CNBC Interview

    in General Discussion

    Posted

    I've always liked Zell's interviews as he typically pulls no punches.  He's got the 20,000ft view of the economy, which also makes his outlook intriguing.  (Un)fortunately there is a good bit of talk that involves politics, but how could it not considering that government decisions, or a lack thereof, play such a big part in the US economic outlook. 

     

    I'm posting the zerohedge link with all 3 clips on one page.

     

    http://www.zerohedge.com/news/2012-10-02/sam-zell-class-warfare-crap-qe3-unreality-and-why-everything-mispriced-due-fed

    SHOSR - Sears Hometown & Outlet Stores Rights

    in General Discussion

    Posted

    Up a lot again today. I need to read more about this.

     

    let me know what you think.

     

    I thought it would be fully valued + that the run up is do to the shorts scrambling to buy stock that is in short supply (am assuming if they are short SHLD then they are also short securities that are spun off i.e SHOS)

     

    I still don t see rights in my account. I use TD Waterhouse.

     

    Any SHLD holders here receive SHOS into their accounts?

     

    I'm wih Fidelity and I got my SHOS rights today.

    Selling related question

    in General Discussion

    Posted

    I never use trailing stop losses.  In fact, I don't really get the logic of why you would want to use them.  If you estimate intrinsic value and only buy with a large margin of safety, why does it matter if it falls 10%.  In fact, you should welcome it, if you have additional capital to invest. 

     

    Nowhere in your question did you discuss intrinsic value.  Did it hit your IV estimate?  Sell.  Is it close to IV?  Reduce.  Why have a position with a smaller gap between current price and IV make up a larger portion of your portfolio.  If it is still far from IV then hold.         

     

     

    I purposely left out comments about valuation, as I am really curious about the mechanics and scenarios of when/if value investors would use a trailing stop loss.  That's also why I put a fictitious ticker symbol.  In this case, I was looking at my estimate of fair value around $22-24 and the stock got there a lot quicker than I thought.  In light of that, I wanted to lock in my gain as it approached my estimate of IV while still giving it room to run if that were to happen, as many times the market can overshoot in either direction.

     

    'Cutting losses before they become big losses' is something that is hard for me to wrap my head around.  It is impossible to know which way a stock will go in the short term.  I never start with a stop loss order, bc as Eriksen mentioned above, if I can buy something cheaper with a margin of safety, then I would welcome the opportunity.  Immediately putting a stop loss under a new position seems more like locking in a loss than letting the market be a weighing machine.  The book "HF Market Wizards" definitely has a trading slant to it, which is not my bag, although it did have several interesting chapters/interviews with value folks like Kevin Daly and Joel Greenblatt.   

     

    Slightly different version of the question: if a stock hits your estimate of IV, does anyone use trailing stops to capture any unforeseen upside (even if irrational) and put a floor on the downside to existing gains?

    Selling related question

    in General Discussion

    Posted

    I was curious if folks here on the board use trailing stop losses, and if so, how do you decide how tight to put them.  Selling is clearly very difficult, and I found that the trailing stop loss can be helpful in that regard.  I wish I would have known how to use them when in '06 I sold my AAPL @ $85.00.  I have toyed with different setups and I'll use my most recent experience as an example.  I would be curious to hear from others if I am am thinking about this correctly.

     

    Ticker: £¢§

    profit: +56%

     

    I wanted to lock in my gain because the price had run a good bit in a short amount of time.  I have only owned the stock about 9 months.  The stock has been pretty volatile, with regular moves of 1.5-3%.  My thinking was that I'll set the trailing stop loss at 6% under BID.  First, I'd lock in a 50% profit (barring a major gap down overnight) and secondly under BID as opposed to ASK since the BID price is the lowest of the two. 

     

    Since then, the stock is up another 11% and the trailing stop loss has moved up accordingly.  In this case, it seems to have worked nicely, but I was curious of other risks that may be inherent with using such a strategy.  I know I've been stopped out of things that I didn't want to be out of, and I think that may have been a function of having the trailer too close to the stock price. 

     

    My most recent investment read was "Hedge Fund Market Wizards" by Jack Schweger and a recurring theme in the book is to cut losers before they become big losses.  The book does have a lot about trading, and that's not in my DNA, but I have had small losses become big losses before bc I sat idly simply thinking, 'it's ok, because I'm a long term investor.'  I am seeking to remain truly long term oriented while locking in profits and mitigating any losses from becoming bigger than they should.  Curious of the board's thoughts on that.

     

    Have you been selling into the rally? What companies are you waiting on?

    in General Discussion

    Posted

    I have a short list of companies to buy at the right price. UPS, RLI, MCD, BAC at $7.50

     

    I think BAC at $8 is cheap, but I think it will trade down with the market. I think the chances of this rally continuing for another 3 months with the Eurozone Central Bank resuming debt crisis talks this week and the fiscal cliff resolution relying on a lame duck congress is less than 50%. I still own all of my BAC warrants but selling Sept. calls on the common for .50 today made some sense to me with the S&P at a four year high and the previously mentioned negative catalysts. 

     

    Respectfully, I think its stupid to wait to buy a stock at 7.50$ when you think the stock is cheap at 8.00$. You might be right on the stock could it 7.50$, but what if it doesnt and goes to 20$?

     

    On one side you could save 10% and on the other side you could miss a 150% gain or more. Buffett has make that mistake with Walmart and it cost him a few billions $.

     

    I tend to agree with that because I learned the hard way. I still remember vividly having a limit order on MA at $224 a long time ago. That day it got down to $225...but not $224. It basically never came back. I still could have bought it all up through the $200's but my anchoring bias to that price, using a limit order, and only buying stocks on the way down kept me from doing so. Im not suggesting to chase prices, but that was obviously a huge mistake and I've tried my best to remember and learn from that.

     

    "I'd rather be roughly right than precisely wrong"

    -Charlie Munger

    EMH alive and well?

    in General Discussion

    Posted

    I recently was on the receiving end of a presentation from a major fund company with billions of dollars under management that many here are probably familiar with, at least in name. Their whole premise and strategy is based on the market being totally efficient. I think it is to an extent, but not to the degree that they do. they hold between 800-1000 positions. I believe in diversification but not to the extent they do.  They have funds based on an efficient market theory with a "value" slant. If the market was totally efficient how could there be a vast existence of "value" stocks? 

     

    I spoke to another local money manager who gave me a few book recs on EMH and suggested that evidence shows that zero managers have out performed indexes past 20 years.  He was a big proponent of ETF's which can play a part in overall portfolio strategy, but he was adiment about the Efficient Market Hypothesis and the lack of value provided by any active manger.

     

    The point of my post is that I was shocked to still see such large pools of money strictly adhering to EMH. Like most on this board, I believe in a value philosophy as defined by Graham and Buffett. I read value blogs, boards, websites and publications on a daily basis, so as naive as it may sound, I was shocked to still hear folks trumpeting the unquestionable efficiencies of the market place. Is EMH as alive and well as it seems to be?

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