Kraven
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Posts posted by Kraven
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There is good advice here. Houses are money pits. Expect the unexpected with a house. Understand that there will almost always be something wrong that needs to be fixed. Make sure you have funds available to do what needs to be done. I heard at one point that you should assume about 1-2% of your cost a year in upkeep, repairs, etc. I have no idea if that is accurate or not, but over the longer term it's probably as good as anything. The advice to learn a little home maintenance is good, but if you're like many of us and that is beyond you then make sure you find a good electrician, plumber, handyman, etc. You don't want to be scrambling to find someone when you need a plumber quick, for example.
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Thanks for posting Kraven, even if I disagree.
Frankly, I couldn't really give a sh*t about slang here or there. Some jockeying for perceived position or a bunch of other things mostly.
I'm not advocating chaos of course, but generally speaking the form concerns me far less than the content.
If folks are feeling like they're out of touch, then I think they should be trying to connect and do something about it.
Back to content, and quality of it. If I was going to note a pet peeve, mine would (still) be the tech threads.
Basically, I think you've got a bunch of really smart older(ish) members on there who don't recognize their own limitations.
Yet, because they clearly know more than others about most things they turn the place into a personal territory instead of a genuinely open forum.
To my mind, it's f*cking bullsh*t. These same folks are only now realizing that Amazon and Google are far more than what most people consider them to be, yet we all have to kiss ass because we're the newbie's even though we spotted this stuff fairly long ago.
All I'm saying fundamentally, is that this stuff often cuts both ways.
For the most part, I agree with what's been said on here but WTF - what about quality, and openness and so on.
I think some people's priorities are f*cked up because not only don't they encourage newer members to think and speak openly by crafting well-timed and positioned statements and questions, but they actually stifle real intellectual curiosity with their petty f*cking point-scoring and territorial pissings.
And there are many old dogs who do this, and refuse to learn new tricks. Even if it'll be to both their benefit and ours.
So basically, f*ck all that form over substance bullsh*t. Regardless of age or status.
Rant over...
PS. And thanks to all the old-schoolers on here (even those I have problems with), you make this place what it is. However, please let's not f*cking kid ourselves here and pretend that either of us is better than the other.
Happy holidays.
Sincerely.
PPS. Besides that aspect, I agree with a lot of what Kraven is pointing out though. I must be getting old.
Also, I'm nowhere near one of the better contributors on here. I'm very much aware of this. However, I also know I'm not completely full of shit.
I think that's worth something, even if it's not a lot. And if all it gets is constant unconstructive criticism and the like, then the pitiful a$$holes that are handing it out are just as much in need of a hard look in the mirror as me (or others).
My nothing's worth.
A couple of thoughts. First, in terms of the forum being a place where new and/or younger members can speak openly and be encouraged to do so, I would think that it is. I don't believe that anyone is discouraged from doing so. Think of it this way. The forum is in some sense a virtual gathering place.
Imagine you have some people sitting around a room talking. Some conversations might be serious, some might be just bullshitting, but there is a rhythm to it all. The door opens and 2 people enter. The first walks up the group, introduces himself, sits down and says "this conversation is interesting. I had a thought on this, what do you guys think of this?" The second person walks into the room and immediately starts making a nuisance of himself. He doesn't know anyone there, but immediately interrupts the conversation by saying "no, no, no, what the fuck are you guys talking about? I have never heard such a stupid thing. Here is what you mean to say." Which approach would be received in a better way?
Second, in terms of people staking out territories or thinking their better than people, especially as it might relate to older posters, that is life. It's up to each person to establish himself and make his way in the world. To some extent with some grey hair comes some internal strengths and abilities to hold firm in certain situations. No one is better than anyone else. Once you think that you're dead in the water. Respect gets earned and I think members are willing to respect those who are deserving of it.
In all of this, please don't take this to mean that I am saying you are doing these things. I'm responding generally not specific to your or anyone else.
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Looking for book recommendations about CEOs who blew up businesses in legitimate ways (i.e. not Enron). Basically the opposite of the Outsiders.
Billion Dollar Lessons by Carroll and Mui was decent.
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I think Kraven must be celebrating Festivus. This is the traditional airing of grievances. Next come the feats of strength.
It is a holiday for the rest of us.
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6. References to Buffett and Munger as "Warren" and "Charlie".
7. As support for a statement using a Buffett or Munger platitude and considering that to be the end of discussion. For example, when discussing a business that is having a difficult time saying "As Warren says, 'Turnarounds rarely turn' ".
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5. New posters who arrive on the board like a bat out of hell. It's like all of these thoughts and comments have been bottled up just waiting to be unleashed on the board. They will add a thought to almost any subject. Sometimes they like to try and establish their position on the board by almost immediately taking contrary views and being argumentative. They remind me very much of Neal Cassady. They are "mad to live, mad to talk, mad to be saved, desirous of everything at the same time."
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In the spirit of the holidays, I think more important than returns are things I would like to see not appear on this board in the coming year. In no particular order and by no means an exclusive list:
1. "LOL", especially when it's just written into the middle of a sentence.
2. Emotions written out like there is a script. Things like "sigh" and the variation on that "*sigh*". Also, related to this would be something like "smacks forehead" after repeating something.
3. Contrasts made by saying "I'm looking at you [insert name of person or thing]".
4. Abbreviations of words that one has to be have been texting since they were 10 years old to understand.
I am sure I will come up with others.
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I like the II but some of Zweig's commentary is off mark (given that he is an efficient market guy). For a starter, I would give him an edition without Zweig's commentary.
Packer
Completely agree. The man's words need to be read without forcing Zweig's views on top of them.
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I thought most interesting is that he learned everything he knows from Tim Sykes, the man who got started trading with his Bar Mitzvah money. All I got with mine was a Colecovision and some games and a new stereo with dual cassettes so I could dub tapes all I want. State of the art stuff.
Hrm... The Colecovision came out in 1982 and Kraven was thirteen at the time... Something doesn't quite make sense here! :D
Joking aside, but Bar Mitzvahs not, I sometimes wonder if we need to do an, ahem, heredity poll here some time. You know, just for curiousity's sake...
First, I am not sure what doesn't make sense. Perhaps you should read it again. Second, what the hell do you mean by a heredity poll? I do not like where you are going with this. Explain yourself.
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The whole idea of net net investing doesnt work anymore. Its too easy to screen for them now. In graham's time you could find 10 companies that were trading at like 25% of their assets. Nowadays every net net has something seriously wrong with it. Maybe in Japan you can find a few, but even then the attractive thing is that they are trading at a discount to cash flow.
Seems like speculating, your holding some asset that might or might not be worth alot more indefinately, that is barely generating any cash. Or losing money. Your basicly waiting for a liquidation or turn around, or a greater fool bidding the price up.
Pretty much every study on the matter disagrees with your hypothesis. Net net investing still very much works. I agree many net nets are hideous companies with poor management, but the strategy still works. Simple strategies based on valuation almost always outperform the broad market over time, even if they are widely know and followed.
yeah but you still need to find a basket. Gl with that. Unless you want to go through the pink sheets. But then you really want to find a catalyst. I mean sure in bear markets you can find 10, but why would you if you can buy companies with a moat for a PE of like 7 or 8. Id much rather have those. Just seems with all the opportunities out there, why the hell bother with this outdated strategy. You had great returns when markets were less efficient then they are now. But I searched in the US for net nets, and I could find like 2 good ones. But that would only be a v small portion of your holdings then.
I supose it could work in like Japan now. And it probably worked in Korea like 8-9 years ago.
The outperformance of the strategy comes from the years after big market crashes and you can only expect to outperform with stocks <50M market cap. This seems to capture the price-to-book premium and the smallcap premium. When you look at the data on greenback`s site you can see that the -ev strategy with <50m stocks is only loosing money in recessions, what is exactly the kind of behaviour i expect from a value investing approach.Perhaps its a good idea to start with a small part of the portfolio to get in touch with the approach.
And its totally clear that these stocks are something where you are better off not thinking about what you buy, because its allways something ugly otherwise it wouldn`t be so cheap. The only thing to do is perhaps try to detec fraud. (so exclude chinese stocks for example.)
Yeah but a much better strategy is to have a watch list of like 100+ good to great companies. And then buy the ones you like when they get really cheap. I would rather put 100% of my stock portfolio in that when everything is cheap, then in some v mediocre company trading at 20% assets. If i can buy a growth story with a PE of 7 or 8 I will make more on that, and it seems less risky.
This post is great. You are absolutely right. Net nets are no good. Don't even bother looking at them. I don't even think there has been one since the 1950s or something. Even if there has it's probably some crappy company that doesn't even have a moat or any kind of competitive advantage whatsoever. What kind of compounding machine is that? Stay away.
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I thought most interesting is that he learned everything he knows from Tim Sykes, the man who got started trading with his Bar Mitzvah money. All I got with mine was a Colecovision and some games and a new stereo with dual cassettes so I could dub tapes all I want. State of the art stuff.
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A new Lynn Tilton Christmas card.
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Some interesting points but he was fawning like a 12 year old girl over Justin Bieber.
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Even I don't own just net-net's, they make up maybe 20-25% of my portfolio, potentially less right now. I own other types of value stocks as well, low P/B, hidden assets, sum of the parts, cheap earnings etc. I do not concentrate in any holdings, or even in any style.
To yadayada's point I think you're looking and thinking about these incorrectly. People look at some mispriced large cap and say "but with such a brand at 5x earnings it's misplaced." No one expects that some acquirer will come along and buy it at fair value, they believe in the gravity of the market. Something so egregiously mispriced will be pulled to fair value eventually. That's the same thing with net-nets, no one is liquidating these things, these are egregious valuations. The gravity of the market will eventually pull them towards fair value.
It's easy to get hung up on terms or categories of things. Investors doing Graham net-nets, or Buffett moat stocks or whatever. Forget the terms and think in terms of the cheapness spectrum.
There is a spectrum of value ranging from free to expensive, every company falls on this spectrum. A net-net is just something that's clearly on the cheap end of the spectrum. Maybe a high flier is the opposite of a net-net, clearly on the overvalued side of the spectrum. Yes, some net-nets do self destruct, just like some high flying growth stocks never come back to the ground, they continue to fly higher. Over time the gravity of the market is strong and pulls all things towards the center.
To me a net-net is a shortcut, I know the company is cheap the second I start looking at it. I don't have to divine that it's cheap like I might with a moat or some great business at a fair price. Yes, you could probably compare a net-net to some large company that's hit the rocks, and guess what, if you studied both maybe the large company is much cheaper. The key is there is a lot more work required. I go for simple and easy, this is a quantity game. I'm not looking for the world's cheapest business, I just want to buy a ton of cheap stuff and sell it higher.
This is like a garage sale. I fill the garage with a number of items, I sell some for much more than I paid, some for a little more and maybe some never sell, but overall I generate a satisfactory return. Many investors approach investing like owning five classic paintings. They are searching for the absolute best paintings with the most value, they want to maximize the value they sell these paintings for. They're hunting for these paintings and won't settle until they find the best paintings at fair prices. That's fine, it works for some. I'm buying paint by number water colors, and some old grandmother down the street is buying them at my garage sale. I don't care that it's a paint by numbers of some farm or a rooster. If I can sell it for more than I paid, and I can do it in quantity I am happy.
For me there is no purity in investing. If I discovered a way to trade options profitably and consistently tomorrow I'd do it. At the end of the day I start with a pile of money and I want to grow it. I have found for myself that I do best with the warehouse of cheap stocks approach. It's the simplest and most reliable way for me to make money. I don't have pie in the sky hopes for my returns either. People on here want to do the Buffett 50%, I'll let them have it, I am content with 15%. If I do 15% for years I'll be a hero to my wife and kids, the ones for whom the money matters. None of my friends are into investing, they will ask general questions about the market. There is no pride if I own AIG or BAC or Bowl America, no one recognizes any of the names in my portfolio anyways.
This is a small rant, but there are a LOT of smart people on this forum. I think smart people are prone to tinker and try and figure out the best solution. I have found in life that being good enough and consistent is much more valuable than being the best at anything. There is a lot of intellectual thrashing on this board trying to distill the absolute best investments. I'm happy with good enough investments. I enjoy investing, I enjoy thinking about business. But I'd rather play with my kids and spend time with my wife or go running or skiing rather than read an AIG 10-K. I recognize that this fatal flaw of not being obsessed or committing my life to investing won't make me the best, but I don't care, to me there are much more important things in life.
My last thought is this, I'm not surprise that maybe 70-80% of investors dismiss net-nets, that's the reason these companies are cheap. Most investors, including most on this value board write these types of companies off, that's exactly why they are valued so low. The arguments that people put up against them make sense, that's why most investors believe them, and that's also the same reason why these opportunities exist.
This post is perfect. It's 100% correct, yet my guess is about 99.9% of board members will dismiss it. So many people want to collect stocks to fill an art gallery. Step over here and admire this KO or BRK or WFC hanging on the wall. The purpose of investing is to make money. That's it. If you love it and enjoy it (and I do) that's a bonus. But at the end of the day it's all about making money. If you can do so by technical analysis or predicting the future, more power to you. It's not about being pure. As the kids used to say back in the day, it's all about the Benjamins.
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VF Daily has obtained the latest in Dan Loeb’s long string of activist letters to company leadership. The target this time? Father Christmas himself.
http://www.vanityfair.com/online/daily/2013/12/dan-loeb-letter-santa-claus
Wow, that is . . . really weird. I imagine he thought he was being quite witty and amusing by penning that, but it just comes out very strange and amazingly unfunny.
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For example, it appears that Sears Re is directly held by the parent. This means the retails subs can go under and shareholder can still have Sears Re. But how much is it worth? I can't find any data. Someone online said its float is more than the SHLD market cap, but I don't know how to verify that.
Has anybody been able to find anything useful on Sears Re's float? Thanks.
I googled and found this:
I haven't read it yet, so I don't know if it's a joke or serious research:
He is slowly transforming these wasted assets into amassive reinsurance firm. He is following Buffett’s precise playbook.
And so far... almost no one knows it.
Today, Sears Reinsurance holds an incredible $35billion in assets. Very few people know anything about
this insurance company. And since it’s not publicly
traded, Sears Reinsurance largely flies under the radar.
Edit: the article is very well written; one of the best that I've read about SHLD. The author is bullish on SHLD, so bears won't agree with much of what is said. JCP is also mentioned…
I read that a while back. It has some serious flaws and demonstrates a complete lack of understanding about what is possible in securitization. A party cannot form a special purpose vehicle, dump their best assets in it and claim the assets are ringfenced. Doesn't work that way.
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I agree with wellmont... if it was a corporation, would they not write down the value of the options to zero and claim a loss? Then if it was sold in the following year for a nominal amount, that amount would be some type of recovered gain. Would the same thing work for an individual?
I'm not a tax guy. I believe though it's the difference between cash and accrual basis. For a cash based payer I would think that it truly needs to be worthless to be realized as such. So something like a bankruptcy might mean that it's worthless prior to maturity. Agreed on asking a tax attorney. I would think this is a straightforward question. Might be worth a few bucks to get an answer. A good accountant could probably take care of it too.
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Contact the equity derivatives desk at a few IBs. Tell them you'll sell them the position for a penny. You might get a bite on that.
That's probably a good suggestion as well except I don't know how to contact the equity derivatives desk at investment banks. I think this might be the same path that 'Indirect' has more recently put me on to, but I'm not sure. I don't know a lot of the ropes that you guys do.
I am sure if you asked there are any number of people on the board who could put you in touch with someone or at least give you some names and numbers.
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I have to believe you can at the very least transfer it to someone for a penny.
Good luck.
See, I may be overly paranoid but I've been worrying about the optics of something like that.
Perhaps I make an arrangement with a buddy that whenever he needs a tax loss (and I don't), I have him bid above market for one of my worthless assets (a deliberate loss for him). This allows me to sell the asset at little tax hit to me, and allows him to take a big useful tax loss.
Between us, if this goes on for years and years, we can cheat the taxes a bit -- he uses my low tax bracket when convenient, and vice versa.
It could be abused as a tax-bracket arbitrage thing.
So I just figured it would be best to avoid that kind of thing if at all possible, simply because I don't want to do anything that might be annoying (and potentially costly) to defend against accusations.
Of course. You don't want to do anything that is or could be viewed as flouting the tax code. I am not talking about that at all. My point is that if this is truly worthless then someone buying it for a penny is paying a penny more than it's worth just to take it off your hands. Either there is value here or there isn't. If not, then someone getting it for a penny is getting a good deal. At the end of the day, I think that if you put a market order out there someone will probably bite.
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I don't think it can be declared worthless until the contract is up since theoretically there could be value unless there was a bankruptcy or something like that. I don't know when the wash sale limitation would be up. If by 12/31, then it can just be thrown out into the market at whatever someone will pay for it and a loss will be taken or it could be sold to a friend or something for a penny.
The last BAC trade I made was on November 7th. So the wash sale period is indeed up soon. I may have needlessly freaked out simply because the bid on the Feb $11 strike put is already "no bid". And the one that I own, the Jan $12 was already at 2 cents and perhaps a very short ride to "no bid" as well.
But even if no bid, perhaps it will execute at some tiny price with a "market" order? Is it ever the case that a market order doesn't fill? Surely Nassim Taleb would like a chunk of BAC puts for a fraction of a penny?
I think you're probably overly stressed out about it, although in fairness I haven't had to do this exact thing before so I can't assure you it will be done. That being said, I can't see why it wouldn't. Looks like you will be free from the wash sale restrictions by early next week. So once you are just put an ask out there for a market order. Give it a little time and see if it hits.
To me, if it doesn't hit in a day or 2, then I'd start looking at other things. See if you can get someone to buy it from you for a penny or something. Maybe a friend or a parent, someone outside of your house. I have to believe someone on this board would arrange to take it from you. If not, I think I mentioned in another post that you can try calling a few equity derivatives desks and see if they'll take it for a penny. Someone here can probably give you a few contacts and maybe even some names.
Finally, and this is a longer shot assuming you can't do any of the things above, you may be able to just "discard" it. I don't know if this still works, but essentially just have your broker throw it away basically as worthless. So remove you as owner, the equivalent of throwing something into the trash. I once was involved in a situation where someone owned a worthless security. Different from this it actually had some remote obligations, but was truly worthless. They couldn't sell it and couldn't even pay someone to take it. They ended up literally throwing it away basically. They were removed as the record owner and no one was the owner. In that case I was never quite sure how that worked since someone was supposed to be on the hook for certain things, but they were able to get it done. I don't know if a retail brokerage would do this though, although I guess you could ask, but I have to believe you can at the very least transfer it to someone for a penny.
Good luck.
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Can't you transfer the position to someone else? You can always sent some near worthless put options my way!
I'm not positive, but I think if you just give it away you don't have a loss per se. Think of it in the context of a donation. If the position was donated the claimed amount would be the current worth. I don't think that gets you a loss. It somehow has to be realized. I haven't read this thread in enough detail to know if the answer is somewhere in here, but I think Eric said he can't sell for wash sale reasons. I don't think it can be declared worthless until the contract is up since theoretically there could be value unless there was a bankruptcy or something like that. I don't know when the wash sale limitation would be up. If by 12/31, then it can just be thrown out into the market at whatever someone will pay for it and a loss will be taken or it could be sold to a friend or something for a penny.
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Contact the equity derivatives desk at a few IBs. Tell them you'll sell them the position for a penny. You might get a bite on that. Or ask a friend to take them for a penny. You get your loss and they get a free option.
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A lot of frivolous and light reading here. I just read the new Stephen King, Doctor Sleep. It's a sequel to The Shining. I've waited 30+ years to find out what happened to Danny Torrance. Redrum!
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I'm not sure if anyone here enjoys photography, but some French artists have put together an amazing gallery called 'The Ruins Of Detroit'.
They've gone around the city and taken pictures of various buildings and places where the former grandeur has started to become almost completely enveloped by substantial amounts of neglect and decay.
It's a beautiful project. Quite haunting, but then again it's also genuinely poignant and so many kinds of awesome.
http://www.marchandmeffre.com/detroit/index.html
Thanks for posting. Very haunting. Very sad in many ways how a once great city like that has disintegrated. If they want to raise some money they should start marketing themselves to Hollywood. It could provide the set for post-apocalyptic movies. The producers wouldn't have to change a thing.
Things Not to Do for 2014
in General Discussion
Posted
You can try, but I fight dirty. Pull hair, poke eyes, groin stuff. Whatever I gotta do.