Evolveus

That is correct in regards to Phillips 66. I'm curious if the sales are related to raising additional cash for his elephant gun.

That's a good point...his overseas positions are not reflected there. I read his 2011 letter to investors where he spoke about some of his Japanese based holdings. I should have thought of that - thanks for pointing it out! I don't know/think he does anything with debt related securities, does he? I know that is one of John Malone's tools to fly under the radar with building positions like he did with Sirius.

Pabrai goes with a 6 position portfolio and 66% in financials. http://www.dataroma.com/m/holdings.php?m=PI After 2009, he had spoke about position sizing and taking smaller bets than what he had done in the past, yet this appears to be even more concentrated than before. I guess that speaks to his conviction in the picks as well as his feelings about the overall/macro stability of markets. I also assume that he has earned a great deal of respect from his investors (rightfully so) for them to feel comfortable with that type of positioning.

"It seems like VIC's requirement of posting ideas regularly gets a lot of bad ones on there. To me, there seems to be too many ideas at a time..." I would agree that forced idea submission doesn't always make for the best and most thorough ideas, but there are a few names that I see that are consistently profitable. When I say 'profitable', I mean based on the price at the time of posting, which is included in the writeup. Of course, one should always read the investment thesis thoroughly, do their own checks against provided data and reach their own conclusions. If nothing else, over the years I have learned a great deal about valuation and key numbers/metrics by reading those posts every night. Some folks I find useful: "Lukai" - small cap specialist with very impressive track record and very thorough posts "Olivia" - mainly large cap posts that have been consistently profitable. "Pretium" - excellent record so far in pharma. Pharma is outside my circle but an interesting read. "YCombinator" - dissects complex bankruptcies. "Spence774" - Ken Shubin Stein of Spencer Capital "NCS590" - my guess is that it is Nick Snyder from the most recent OID given the info provided on VIC and OID about CHK & Gastar. The picks haven't performed that well so far, but the write-ups are very thorough and informative. "Charlie479" - frequently discussed on CSInvesting blog, but hasn't posted to VIC in a while. Supposedly discussed as a case study in Prof. Greenblatt's classes (a VIC co-founder). Those are some folks that I find interesting to read with good track records (strictly based on VIC postings, so not comprehensive). Every once in a blue moon, I'll read a write up that really resonates with me, but like all great investing ideas - they don't come along often. Given that there are some big dogs roaming VIC (and Corner of BRK & FFH), I've always found it interesting to wonder who are the managers behind the screen names.

I'd throw Bill Ackman and Glenn Greenberg in there too. Obviously JCP isn't going his way right now but he embraces the multi year time frame that true value investors apply. His break up of Fortune brands was excellent and his entry point on CP was not too shabby either. I heard him speak in Mew York last year and he mentioned that he liked going public with his ideas bc it can help bring awareness to the internal problems he is trying to fix. He also uniquely has the tools to implement real change. Greenberg has a great interview he did for Greenwald at the CBS site from 2006. His track record is outstanding (I don't have it handy, so you'll have to take my word for it) and he takes very concentrated positions. To me, concentrated positions plus excellent long term track record tells me that there is a lot of conviction behind those ideas and a lot of research, so they may be worth diving into. I also like Wilbur Ross and Pabrai. As far as 'copycating' are there any particular VIC members that folks on this board found consistently intriguing/profitable? There are a few names that I regularly look for.

Congrats!

An excerpt from Jeremy Grantham's most recent quarterly letter that is published on their site today: Groundhog Day "The economic environment seems to be stuck in a rather unpleasant perpetual loop. Greece is always about to default; the latest bailout is always about to save the day and yet never seems to; China is always about to collapse but instead teases us by inching down; and I swear the Financial Times is beginning to recycle its reports! In the U.S., the fiscal cliff looms along with debt limits and the usual election uncertainties. The dysfunctional U.S. Congress continues for the time being in its intractable ways. The stock market rises and falls and rises and falls again. It is getting difficult to find anything new to say at client meetings. I, for one, wish that the world would get on with whatever is coming next. One slight change, though, is that fantastic (almost unbelievable) profit margin and earnings gains have finally weakened a little. They, together with Bernanke’s super low rates, have been the twin pillars of the market and not bad ones at all: here we are up 8% for the year in a thoroughly unsettling financial and economic world. With margins weakening, one of the twin pillars is looking shaky and price declines look more likely than before."

Dalio seems to be one of the few prognosticators that tends to get things right when it comes to macro. Not to take everything as gospel, but typically his insights are worth reading. Also I found his other dedicated article explaining a delveraging cycle to be pretty informative. Bridgewater_2012_Q2.pdf

Ballmer's capital allocation/acquisition skills have got to be trying for shareholders vs. Aubrey's land empire building/creative financing.

Interseting article with a little background color on Leon Cooperman. Cooperman is still bullish on stocks...he might be somewhat of a perma-bull, as I've never seen him shy away from the market. On the other hand, he may employ the Buffett/Klarman/Marks view that there is always something mispriced out there, and it's his job to find it. the article: June 28 (Bloomberg) — Leon Cooperman, chief executive officer of hedge fund Omega Advisors Inc., talks about his investment strategy, stock picks and the outlook for global economies. The story is featured in the August issue of Bloomberg Markets magazine. (Source: Bloomberg) “The market is very sick,” Cooperman says. That’s not necessarily bad news for Cooperman, 69, a blustery billionaire from the South Bronx who first made his name as a stock picker during 25 years as an analyst atGoldman Sachs Group Inc. (GS) “We have to take advantage,” he says. “What’s ridiculously priced now?” Omega, which currently invests its $6 billion in assets mainly in U.S. stocks, has returned an average of 13.3 percent annually since Cooperman founded it in 1991, compared with 11.4 percent for other equity-oriented funds, according to Chicago- based Hedge Fund Research Inc., Bloomberg Markets magazine reports in its August issue. For more than 40 years, Cooperman has earned a reputation for consistently ferreting out the most-discounted stocks — no matter what the overall market conditions. “He’s not doing anything terribly fancy; he’s looking for stocks that are undervalued,” says Robert S. Salomon Jr., 75, an Omega client whose grandfather co-founded Salomon Brothers. “He’s had some great success in finding them.” Adds John Whitehead, 90, who was co-chairman of Goldman during Cooperman’s time there, “He’s been around a long time and seen bad markets and good markets, and he’s survived them all successfully.” Euro Fears Markets on this particular day in May are being buffeted by fears about the future of the euro region, the possibility of U.S. tax cuts expiring at the end of 2012 and slowing growth in China. After the Standard & Poor’s 500 Index tumbled 6 percent in May, some money managers bet that the market would fall further. John Burbank, who runs the $3.4 billion Passport Capital LLC hedge fund, told Bloomberg News that he’s shorting stocks because he expects the U.S. and much of the rest of the world to fall back into a recession. Cooperman is more sanguine about the future. As of June 11, his fund was up 6 percent this year–compared with 1.03 percent for hedge funds globally. He says stocks offer the best opportunities for investors, particularly in the U.S., where there are no signs of a recession. Banks are more profitable, household debt has declined and companies are increasing capital spending. Stocks Undervalued Yet stocks have remained undervalued, he says, because of economic troubles and uncertainty over the U.S. presidential election. TheS&P 500 (SPX) is trading at a price-earnings ratio of 12.5 compared with an average of 15 during the past 50 years. “Stocks are the best house in the financial asset neighborhood,” Cooperman says, before adding a caveat: “It’s not clear whether it’s a good neighborhood or a bad neighborhood.” Filling a large room in Cooperman’s investing house today is student loan providerSLM Corp. (SLM), better known asSallie Mae. With total educational debt in the U.S. ballooning to $904 billion as of March 31 from $241 billion a decade earlier, according to theFederal Reserve Bank of New York, some commentators have talked about a looming student-debt crisis. Cooperman sees an opportunity. Sallie Mae throws off lots of cash, he says. Some 80 percent of its loans outstanding consist of government-backed debt issued before 2010, when Congress mandated that the government make certain college loans directly rather than subcontracting them to Sallie Mae. Since then, Sallie Mae has been expanding its private lending business, charging free-market rates that can run as high as 12.88 percent. ‘Kids Have to Borrow’ Cooperman started buying Sallie Mae in December 2007, after a $25 billion buyout deal with J.C. Flowers & Co.,JPMorgan Chase & Co. (JPM) andBank of America Corp. collapsed amid the credit crisis, sending its shares plummeting. On April 21, 2011, the company announced that it would reinstate its dividend, sending the shares up 13 percent to $16.13. Cooperman paid an average of $7.36. SLM closed at $15.20 on Wednesday, and Omega predicts that it will rise as high as $22. Omega is the eighth-largest owner of the company, with a 3.51 percent stake. “Ultimately, it’ll work,” Cooperman says of SLM. “Lots of kids have to borrow money; their parents have to cosign the loans. It’s a profitable business.” JPMorgan Loss Not all of his bets work out. Omega had considered JPMorgan Chief Executive OfficerJamie Dimon the best in the industry, and the bank’s management had been aggressively repurchasing stock. Omega started buying shares of the New York bank in 2009 at an average cost of $37.14. JPMorgan disclosed on May 10 that it had a $2 billion trading loss because of riskier-than-expected credit securities. Omega sold about two-thirds of its position the next day, taking a loss: The shares tumbled 9 percent on May 11, closing at $36.96. They traded at $36.78 yesterday. At Omega’s staff meeting in May, one of the portfolio managers suggests that JPMorgan shares may now be ridiculously cheap. Cooperman launches into a tirade about how Dimon has been unfairly pilloried by Representative Barney Frank and other critics. “I’m incensed by some of the sh– you’re reading,” Cooperman tells his managers. He says he’ll hold on to his remaining shares as a vote of confidence in Dimon. Cooperman, a self-described workaholic, says there’s no magic formula to finding good stocks. Sailing and Research “With an average IQ and a strong work ethic, you can go far,” he says, adding that he sees himself as proof of that. “I don’t have a lot of outside interests. I don’t do well with leisure. I like a structured life.” Cooperman expects stocks to return 7 to 8 percent in the future, below their historic 10 percent returns. Barry Rosenstein, co-founder of the $3 billion Jana Partners LLC hedge fund in New York, admires Cooperman’s work ethic. Rosenstein was a teenager when he first met the fund manager at a sailing club on the Jersey Shore of which both were members. Cooperman would show up with a stack of annual reports, disappear onto his boat and read them all weekend, Rosenstein, 53, recalls. “If Bruce Springsteen is the hardest-working man in rock ’n’ roll, Lee is the hardest-working man in the investment business,” he says. Cooperman was one of the first to invest in Jana when Rosenstein founded it in 2001. Share Buybacks As he scours reports and quizzes executives on earnings calls and at conferences, Cooperman is trying to discover stocks that have a low price-earnings ratio, lots of cash and decent yields and that are trading for less than their net assets are worth. He also looks for what he calls smart managers who own big stakes in their companies and for firms that buy back their own shares cheaply. While he was at Goldman, one such hit was what’s now called Teledyne Technologies Inc. (TDY), whose founder, Henry Singleton, made acquisitions using the company’s stock when its price was high. When the share price went down, Singleton bought back shares repeatedly. Under Singleton, Teledyne expanded its defense, aerospace and industrial businesses. Cooperman recommended the stock in 1968, and for the following two decades, it generated a 23 percent annual return. Cooperman displays a framed 1982 letter in his office fromWarren Buffett congratulating him on his analysis of Teledyne. Betting on Apple One of Cooperman’s largest holdings today is Apple Inc. (AAPL), which Omega portfolio manager Barry Stewart says he likes because of its $110 billion cash hoard. Apple’s prospects for growth are strong, he says, with the market booming for its iPhone smartphones, MacBook computers and iPad tablets. Cooperman pounced on the stock at an average of $376 a share starting in July 2010, around the timeConsumer Reports said a faulty iPhone 4 antenna could cause the phone to lose its signal. The problem proved to be a hiccup, and Apple shares have since risen to $574.60. Stewart projects that the stock will go as high as $710 in the next year. Stewart is also betting that growing demand for 3G and 4G mobile phones made by Apple and others such as Samsung Electronics Co. will boost the fortunes ofQualcomm Inc. (QCOM), the largest producer of semiconductor chips for the devices. Omega began buying Qualcomm last August at an average price of $53. The shares traded at $54.91 on Wednesday, and Stewart says they could rise as high as $85 in the next 12 months. Smart Management One of Cooperman’s worst-performing holdings this year is McMoRan Exploration Co. (MMR), an oil-and-gas drilling company whose price plunged about 40 percent from a high of $14.55 on Dec. 30 after an equipment malfunction caused delays at one of its wells in the Gulf of Mexico. Cooperman is still enthusiastic about its prospects because it meets his requirement of smart management. James “Jim Bob” Moffett, the New Orleans-based company’s CEO, is also chairman ofFreeport-McMoRan Copper & Gold Inc. (FCX), the world’s largest publicly traded copper producer, and has a track record of making deals in far-flung places. McMoRan formed a joint venture with Chevron Corp. (CVX) to drill for oil in Louisiana. Omega paid $10 on average for the shares, which traded at $12.30 on Wednesday. If the company strikes oil, Omega predicts that the stock could reach $25 to $30 within 18 months. When a company considers its own stock a bargain, Cooperman wants in too. That was the case withAmerican International Group Inc. (AIG), the New York-based insurer majority owned by the U.S. government after its 2008 bailout. CEO Robert Benmosche has bought back shares from the U.S. Treasury and repaid funds tied to AIG’s government bailout. When a company considers its own stock a bargain, Cooperman wants in too. That was the case withAmerican International Group Inc. (AIG), the New York-based insurer majority owned by the U.S. government after its 2008 bailout. CEO Robert Benmosche has bought back shares from the U.S. Treasury and repaid funds tied to AIG’s government bailout. Lane Bryant The company bought $3 billion of its stock in March, and $15 billion of planned asset sales should fuel more buybacks, Omega portfolio manager Mahmood Reza says. Omega bought the shares this year for an average of $30.47 and anticipates that the price could rise to $53 by the end of 2013. They traded at $30.82 on Wednesday. Cooperman also hunts for takeover candidates. Omega zeroed in on Charming Shoppes Inc., the owner of plus-size-clothing retailer Lane Bryant, after visiting the company’s executives. The company’s cash exceeded debt and had the potential for higher profitability as part of a bigger group. He started buying the shares at less than $3 each last year and added to his position after David Jaffe, CEO ofAscena Retail Group Inc. (ASNA), formerly known as Dress Barn Inc., told a conference that he was interested in buying companies. Omega amassed a 13 percent stake in Charming Shoppes. In May of this year, Ascena agreed to buy the company for $7.35 a share. Azerbaijan Deal In 1998, Cooperman bet big on emerging markets — and lost. The misstep was compounded by Omega’s investment of more than $100 million with Czech financierViktor Kozeny in a plan to take over Azerbaijan’s state oil company. New York state prosecutors accuse Kozeny, who now lives in the Bahamas, of stealing Cooperman’s investment, while U.S. prosecutors say Kozeny led a multibillion-dollar bribery scheme in connection with the Azeri deal. In 2007, Omega paid $500,000 to the U.S. to resolve the – bribery investigation. Omega didn’t admit wrongdoing while it accepted legal responsibility for the actions of an employee who admitted joining Kozeny’s bribery scheme. Kozeny denies wrongdoing. In all, Omega lost a total of $500 million, or 13 percent of its total assets in 1998, after which Cooperman fired almost the entire emerging-markets team. (He later recovered some of the money.) He says the episode was the worst chapter of his life. Goldman Career The younger of two sons of Polish immigrants, Cooperman bagged fruit and changed tires to make money as a teenager in the Bronx. He learned how to analyze securities from the late Roger Murray, a professor at Columbia Business School. Another professor’s recommendation earned Cooperman a job as a research analyst at Goldman. Cooperman’s office is filled with mementos of his years at Goldman, for which he still manages an undisclosed amount of money. A framed copy of the company’s business principles is displayed in Cooperman’s office, near a curled-up whip — a gift from Goldman salesmen after he completed a 30-city, 20-day roadshow to market a stock fund in 1990. After years in research, Cooperman founded Goldman Sachs Asset Management in 1989. Despite being a billionaire, Cooperman, who has three grandchildren, says he has no plans to retire soon. “He’s the first one in the office, the last one out,” says Tomas Arlia, head of hedge funds at GE Asset Management Inc., which has had money with Omega since its inception. “He loves what he does.” A piece of paper taped to his computer monitor reminds Cooperman of the simple investing rules that have helped Omega weather market storms for the past two decades: “Buy low, sell high, cut your losses, let your profits run.”

Wow - thanks for pointing that out! I guess I didn't do my due diligence on Pay with a Tweet. Having spam posted from my twitter account - not cool.

saw this tweet earlier today from MOI for a free SuperInvestor Issue. The "cost" is a tweet saying you downloaded it. Interesting to see break downs on these investors' portfolios, even if it is from March. http://www.manualofideas.com/tweet/

I would think automated dollar cost averginvg into an s&p index. I am a long term owner of fairx and a fan of wintergreen, but what would happen if Winters or Berkowitz had to close up shop? Then investment decisions would have to be made all over again. Greenblatt's Valueweighted Index Looks interesting. It has solid back tested numbers...but I haven't researched the expenses and turnover. http://valueweightedindex.com/ While not investment related, Something that would make things easier for spouses is an Advanced Medical Directive or living will. That way the remaining spouse wont have to make that decision about life support as each spouses wishes are already written down and enforceable. Also a suitable life insurance policy owned in/by an ILIT so it's not included in your estate.

Very interesting story. In a way it parallels Michael Lewis's "Don't eat Fortune's cookie" speech because though never explicitly mentioned, an undercurrent of the story is White's luck to have been Ackman's guide. That chance meeting opened the door, then of course White had to be competent enough to walk thru it. I guess a little bit of luck never hurts.

Some recent comments from Steve Romick about margins: Steve Romick: There is a lot of reversion to mean theories out there in looking at the operating margins. I would argue, when looking at U.S. operating margins, that the mean over the last 23 years is not as relevant. And it's not as relevant because there has been a structural change in the makeup of corporate America. We've moved our manufacturing offshore. Manufacturing historically has been a lower-margin business. So, we've taken our lower-margin business out and moved it to another country, and ... we've become more of a services-based economy, that are higher margin in many of these different businesses. Plus that which we do produce certainly has higher margins, you know a lot of these businesses, like Oracle or Google and others. So, I think there is a structurally higher normal for operating margins today. That does not mean that operating margins can't go down. I think there's a very high probability that they will fall off of their peaks. I think that a lot of these companies, when there is more inflation, will not have the pricing power to offset their input costs, and those companies without the moats are going to be challenged as a result.

Maybe Rueters has a mole inside CHK. How else to do they keep ending up internal emails, or know to go dogging thru public records for specific entities?

I just got my copy of "Competition Demystified". Heard great things about it and it helping to better understand what makes a great business. "Value Investing and Beyond" was also a good read.

Here is an interesting PDF I came across that is Bruce Greenwald lecturing about his idea of investment process. It goes chronologically starting with tangible assets, then moving on to EPV and AV, and then talks a bit about growth and how it can be destructive in some instances. It's about 40 pages, but an interesting read when you have the time. I was always curious if Greenwald has an actual track record. I oft think of the old saying: Those who can't do, teach. I think he is one of the great minds in Value Investing, I just wonder how well he has applied his theories. I remember when he was highly critical of Buffett's BNSF purchase saying that Buffett over paid. I think Warren is doing OK on that deal... h/t csinvesting greenwald_2005_inv_process_pres_gabelli-in-london.pdf

Good read. Curious about the new position they are building. Is anyone here registered for the webcast of this event? www.persqevent.co.uk

I am a little disappointed to see that literally the entire issue is about CHK. The interviews with Snyder are excellent, but some of the Longleaf commentary is dated back to Sept 2011. Another thing that is a bummer is that I believe this is considered a "double issue" so it counts as two issues against whatever your remaining issue count is. ~Tony Danza

I've noticed, whether coincidence or not, oid has extremely timely publications: march 09, mid or late 2010 (issue not in front of me), and the chk issue at a time when chk is one of the most hated companies. Just an observation.

Yes, good clip. Marks has tremendous clarity when he speaks and writes. I thought he was indirectly touching on the "Art" of investing toward the end.

Anyone know any background about the Snyder fellow of Snyder Morris that's pounding the table on CHK this issue? I saw a couple of Munger-esque quotes in there which are encouraging.

The Fable of the Fishing Boat Then there was the time in 1978 when the bear market was taking its toll on Putnam’s holdings. Walt (The technical analyst of the firm) just couldn’t make the portfolio managers understand that bear markets trump even the best fundamentals. So he circulated the following memorandum to Putnam’s investment department, which he considers the best thing he ever wrote: Once upon a time, there was a big fishing boat in the North Atlantic. One day the crew members noticed that the barometer had fallen sharply, but since it was a warm, sunny and peaceful day, they decided to pay it no attention and went on with their fishing. The next day dawned stormy and the barometer had fallen further, so the crew decided to have a meeting and discuss what to do. “I think we should keep in mind that we are fishermen,” said the first to speak. “Our job is to catch as many fish as we can; that is what everyone on shore expects of us. Let us concentrate on this and leave the worrying about storms to the weathermen.” “Not only that,” said the next, “but I understand that the weathermen are ALL predicting a storm. Using contrary opinion, we should expect a sunny day and, therefore, should not worry about the weather.” “Yes,” said a third crew member. “And keep in mind that since this storm got so bad so quickly, it is likely to expand itself soon. It has already become overblown.” The crew thus decided to continue with their business as usual. The next morning saw frightful wind and rain following steadily deteriorating conditions all the previous day. The barometer continued to fall. The crew held another meeting. “Things are about as bad as they can get,” said one. “The only time they were worse was in 1974, and we all know that was due to the unusual pressure systems that were centered over the Middle East that won’t be repeated. We should, therefore, expect things to get better.” So the crew continued to cast their nets as usual. But a strange thing happened: the storm was carrying unusually large and fine fish into their nets, yet at the same time the violence was ripping the nets loose and washing them away. And the barometer continued to fall. The crew gathered together once more. “This storm is distracting us way too much from our regular tasks,” complained one person, struggling to keep his feet. “We are letting too many fish get away.” “Yes,” agreed another as everything slid off the table. “And furthermore, we are wasting entirely too much time in meetings lately. We are missing too much valuable fishing time.” “There’s only one thing to do,” said a crew member. “That’s right!” “Aye!” they all shouted. So they threw the barometer overboard. “When the time comes to buy, you won’t want to.” – Walt Deemer h/t CSInvesting

I'd like to see more pain before pulling the trigger(s).