oddballstocks

I want to second whoever said he needs to look on his own. My parents put the onus on me for all jobs except my first. I was 15 and my mom had to drive me to the grocery store where I was a grocery bagger because I didn't have my license at the time. I worked like crazy there and was promoted twice in a few months. A few years later I wanted a job doing computer stuff during the summer. I typed up a resume and letter and went in person to a number of different companies that I found in the phone book that all had tech-y type names. Looking back that was a ballsy move, but it was good experience. No job from it, but some interesting conversations. Most places were just impressed that a kid showed up trying to pitch themselves for a job. Before anyone told me it wasn't correct my m.o. for finding a job was to go to an establishment, ask to see the owner, give them a resume and pitch myself. Kids need to know how to sell themselves. There is a kid three doors down from us, he's in 3rd grade. He came to sell popcorn, he had worked on a small pitch with his dad and it was killer. The kid was nervous, but I give him credit, he explained who he was, why he was there, what he was doing, and why I should buy popcorn. He didn't stop there, he then went on to explain (briefly, this is key) what the money raised would be used for. I was extremely impressed, I'll make a blanket prediction, this kid is going to be VERY successful in life. Knowing how to pitch oneself is essential. View every interview as a sales call, you are selling yourself to the company. The company has some problem they are looking to solve and they think you might be able to solve it, show the company you can. You also need to identify their problems and issues and sell to those pain points.

Here's an alternative I'm living: Seed the lawn with moss, it's green and never needs to be cut. If neighbors don't look closely they'll never tell. This was the arrangement the previously non-diy, non-landscape owner had at our house. I'm trying to kill the moss, but it does work. I went all summer without ever mowing the front lawn, quite a feat, and it looks decent.

I have zero advice on getting an office type job, but I'd encourage a more blue collar summer job. I painted houses one year and it was an excellent experience. We were paid a bonus by how fast we worked and how well the job was done. We could work as many hours as we wanted and to a college kid the cash was just rolling in. The job was great, it taught me discipline, how to work hard, and that hard work often results in monetary gain. I also learned a skill that's useful even now as an adult. Another summer I worked in an auto parts factory. The money was decent, the work was boring, but it gave me a perspective I could have never received otherwise. I got to know fellow workers, I understood why they had careers in a factory, and learned the types of things I should avoid in life if I didn't want to find myself stamping out car doors the rest of my life. College graduation in a decent field is practically a guaranteed coffee grabbing, cube sitting type job. Use the summers in college to gain experience you'd never get otherwise. Your kid seems like he might enjoy something off the beaten path.

This +100. I couldn't get over the same hump myself and never opened an account. "Just send us a copy of your passport and bank details" is fine if everyone is trusting and everything secure. But what if it isn't? I imagined my details sitting in a manila folder somewhere on a desk just waiting to be "lost".

I looked into this in 2012. Looked at Brawlira, spoke with local Rwandan brokers etc. Google "oddball Brawlira" and you should find a few posts with comments. The comments are from people who acted and made the trade. Africians are very happy to wok with Americans. Email them for info on opening an account and you're off to the races.

This one that Ross812 put together is vote based. http://www.cornerofberkshireandfairfax.ca/forum/general-discussion/corner-of-berkshire-and-fairfax-fund Right, that's not it. I might be able to dig it up, not sure if the author would want it to be posted. He wrote the same thing for VIC, and guess what, results were similar. There are a few people who repeatedly post great ideas, most post average to below average ideas, and when there is a LOT of discussion the idea usually does poorly. The best ideas receive almost no response.

A member wrote a script comparing replies with subsequent performance. There were two conclusions 1 there are some posters who have posted some killer ideas 2 those ideas received almost no replies. The more replies the lower the performance.

Sorry, randomep, I can't really help here. I think oddball is the expert on these kind of situations. Get on a plane, buy him a beer, and go through your positions with him. I'm sure he'll have input. ;) No, seriously. If I had to choose an expert for your issue, it'd be him. ;) The remainder of this is my thoughts that are not directly helpful, so please skip. :) .... .... What randomep described is one reason why I don't do the niche egregiously undervalued stock investing that we discussed with oddball. With mediocre businesses it's very hard for me to know when to hold and when to fold (sorry for repeat of what I wrote to oddball ;) ). Yeah, stocks don't go up. Or they go up some, then go down some, then go up some. And since the business is crappy (ok, not crappy, "mediocre" ;) ) and management is mediocre, you really don't know what you are waiting for. Numbers look so so, maybe OKish, maybe not. Maybe it will get better, maybe it won't. So I lose patience, I lose interest, I sell. And then bam it's 3x+ in next couple years. ;) (See UVIC story). Or I sell and the business goes nowhere for another 10 years and I'm glad I sold. ;) For some reason or other I believe that it's easier for me to hold stocks in good/great businesses with good/great management. E.g. BRK - and I'll include BAC here for cheesiness ;) - and I'll include Malone constellation for "these-are-not-value-stocks-are-you-kidding". We'll see how this works out, since that's also experiment in progress and I don't know if I will manage to hold these forever. With great businesses, the issues are (usually) different. Stocks become overvalued and you have to decide whether to sell or hold. Or stocks are already overvalued and you have to decide whether to buy/add or not. Or stocks are overvalued and they drop a bit and you have to decide whether to add or not. Or business experiences slowdown and you're no longer sure if it's a good/great business (AXP, IBM now perhaps?) and you have to decide whether to buy/hold/sell. ------------------------------ And yeah, whether you do egregiously cheap or great-businesses, you still have to figure out position sizing, which is another 100 page topic by itself... ;) I am always up for a beer. I'm in Pittsburgh, let me know when you're around Randomep.. will also be in Toronto in a few weeks. Appreciate the complements Jurgis. In real estate there's a phrase that your money is made at the buy. I believe investing is similar, in that if you're buying some crappy company you make your money on the initial discount. Let's look at a real world dead money situation, Hanover Foods. This is as dead as dead comes. I believe they went private at $125/share, they're in the $80s now. This is 10+ year later, dividends won't make up for it. I own some, I like the company, it's completely average. They make frozen food, we sometimes have it if it's on sale, it's average frozen food. I couldn't tell the difference between Hanover and some other brand. Anyways it's at $84 and book value is in the $300s, exact value doesn't even matter much at this point. They're showing some growth, a few percentage points a year. Say I have to hold this for 10 years and BV grows at 5%, by then BV will be around $500 a share. Maybe by then the market sees the undervaluation and they trade towards 50% of BV to $250, that's a return of 11.5% a year. Anything higher is icing on the cake at this point. You can do the same exercise with 20 years, 30 years etc. The longer this goes no where the juicer it becomes. Ever seen a company with a $500 BV trade for $84? I have a few times, and every single time they went on to gain 3-5x and sometimes 10x. Maybe worst case scenario it goes 20 years and the price never changes, you'd have $84 shares with $1000 per share in BV. Egregious undervaluations like this are corrected. Case in point Western Lime. Shares were trading for $5k and flying under the radar, went no where for years. Then suddenly they receive a buyout offer, the price? $50k per share. Shareholders who held for years earned 10x at once. There were rumors that Tweedy still owned a few shares from decades ago, and guess what? With the 10x buyout they made a decent return. At the same time you do need to sleep with one eye open. If someone comes along (and in Japan especially) and offers a decent price you get out. A company's metrics will only be normalized in the past, never current, never in the future. In Japan things jump quickly. A stock going from 400Y to 800Y with a 1000Y BV is common, you sell at 800Y because six months later it'll be back at 400Y. I learned this once and never forgot it, after that I sold at each crazy Mr Market opportunity.

After attending two FFH dinners I have come to realize that there are some very well known people reading and hanging out here. At least this was true in the past. I don't think posting on a message board should be taken as a sign for/against anything. On the accounting, sure I can detail the difference and I'm guessing most can. The point is "does it matter?" I own a company that uses tax basis accounting, a little extra mental horsepower there, but that's it. Show me an investment where the invest-ability hinges on understanding cash vs accrual accounting. When I was studying for the CFA I used to think these little accounting things were the difference between a good investor and a poor investor. They're really the price of admission to doing anything related to business. "Accounting is the language of business" is very true, you can be a rough conversationalist and get by, or be perfectly fluent. Question is what's the marginal gain? Here's my tongue in cheek definition: Accrual accounting: What MBA's and public companies use, a company can book revenue and earn a profit without ever seeing a cent of cash, the magic of the public markets Cash basis accounting: What real world companies use, revenue is cash in hand, expenses are paid with cash, what's left is profit. Why any non-public small business would use accrual accounting is beyond me, unless they love to pay CPA fees or they're in the business of multi-year projects.

Oddball, do you have favorite books on failure you'd like to recommend? Billion Dollar Lessons, anything about Enron, When Genius Failed, The Match King, Invisible Giants (Van Sweringen Brothers book, very off the radar, engaging book)

These are good points. For my own returns I've beat any relevant index while I've been doing this, but I purposefully don't post returns. I posted returns once, they were great and I was fending off "can you please management my money" questions for months, it wasn't my goal. I'd rather post about ideas and process and let the results speak for themselves. But I also appreciate the idea that maybe what's easy for me isn't easy for others. I like to run, I ran cross country in high school and have continued to run since then. I was never fast, I had to work like crazy to get a halfway decent time. There were a lot of guys on the team who just showed up on Saturday after a night of drinking and ran minutes faster than I did. I never understood it, but as I'm older I do. They were just good at running, they didn't do anything, they just 'got it', it was natural. I don't want to be boastful or anything, but it has crossed my mind that maybe I'm like those better runners in some way with business analysis or investing. It's possible that there's something that I get that others don't, but since it's impossible to be objectively introspective about ourselves I myself don't understand what I'm doing that others aren't. I've passed on a number of dud companies that others have invested in. The problem is I can't quantify why I passed. I looked at the data and decided it wasn't a good investment. I think that's what's maddening about this. I didn't follow some repeatable 5-step method that eliminated an investment, I just looked at some data, had some gut feel after thinking about it and walked away. This is tangentially related. I've never liked books about success because of what I mentioned above. I think success is objective, some things work for some people and not for others. But I LOVE books about failure. Failure is 100% repeatable. If you take something that's working and engage in a series of steps you can ensure failure. In a lot of ways I like to study failure, then look for ways to avoid it. By avoiding failure I work to increase the odds of success. Since we're baring our hearts here. My failures: -Failure to hedge currency. Just sold a Japanese net-net that doubled, but with currency depreciation I only had a gain of 18%. -Hanging on too long to companies that I should have sold. I own one 'moat'/'niche' play, it has done poorly and I still hold it thinking maybe it'll be better in the future. I need to sell.

The fact that people spend hundreds of hours evaluating financial statements of various companies (and even worse on macro or TA) and still don't outperform just blows me away. Perhaps they should just buy BRK. :P ::) This hits on a deeper point. What always drew me to value investing, or the concept of it was you could find things egregiously undervalued on a simple basis. A company with $100 in cash selling for $30. You don't need to be able to model the future to know that something is wrong. My philosophy has been to continue to buy $100 for $30, even if the $100 is wrinkled, partially shredded and has been crapped on with the idea that it's probably worth $100, and if condition means anything maybe I get $50 or $60 and I'm still happy. This is how I still run my portfolio, simple situations, no need to be a business guru or determine the future, just buying cheap assets and something cheap earnings (but at a bigger discount). I think the realization is there aren't many people doing this. The comment by Buffett that there is no such thing as value and growth is true. With the proliferation of modern business school everyone is buying growth, it's just shades of growth. Look at almost any thread on this board. People are saying BAC will do $2.5 in EPS in 2017 so it's cheap now. Maybe that's value, who knows. But how is that different from some guy on CNBC saying the same thing? Here's the problem as I see it. If you go to school for finance and you work in a large finance company...(hedge fund/mutual fund/bank) you can't get away with picking some low P/B stocks and then sitting on your hands the rest of the year. Much of what goes on is make-work, these giant reports about things that are unknown and everyone seems and feels smart. But a part-time investor just picking raw cheap things and then going on with their life has as good of a chance if not a better chance of out performing. Everyone is so down on indexing, but doesn't anyone realize that Berkshire has essentially created an index fund for the US economy? Maybe their companies are better (it's debatable, not sure what competitive advantage DQ has over the local ice cream joint, but I digress) and they earn a few bps above everyone else, but that's it. In this thread people are arguing about BRK earning 8-9%. Graham had a formula in Security Analysis that said the largest companies can basically earn GDP + inflation + productivity gains + multiple expansion = return. So we're looking at 2% GDP growth, 2% inflation, maybe 1% of productivity gains and we're saying we'll get a 3% multiple expansion premium. The math seems to make sense, maybe they have an extra 1% in there because they're 'better', so the multiple expansion is 2% or so, I'm just speculating here. If you want outsized returns start your own business. Or go fishing in small niches that no one else is. But this insane amount of brain power trying to predict the future, or find companies that will compound at outsized rates is crazy. I think the veil has finally been lifted, although it will just take another 5-10 years before this is en-vogue again.

OK let's talk about her then. I always hate when people compare to others like that......you sit there and bitch about politicians but i dont see you out there trying to change things...Its almost as if you feel this is your contribution...to bitch....at least Hillary(any politician ) has the stones to enter the maelstrom. If you dont like the candidate then get out there and try to become one. And I get it. I'm a coward...I'd rather stick my head down and be in my accounting book...and go to the gym and maybe have time to spend with a high schooler teaching hi/her mathematics then enter the politics....but if you should really try to change the world instead of just bitching about it......it does no one good and doesn't help change the situation. People act like voting is the most important thing they can do to change the world....news for you anyone can vote...its not that hard. Actually doing something...like sitting down and teaching is much harder.....and as a whole much more beneficial. be the change you wish to see in the world Let me guess, you're in your early 20s? Everyone is out to change the world right? If you can't change it then what's your purpose.. I think that concept is silly, the world is not static, and everything we do is changing something. Unless you're a hermit who lives in the woods and never interacts with anyone you're always doing something. It's cool that some people have this desire to build a grand legacy, but I think only a few get there. And the ones who get there are power hungry and can create legacies no one wants. My own view on this is I am building three legacies in my house, my three kids. I get to raise them and influence their character and how they look at the world. For some reason this is undervalued. It's lauded to ignore ones family and 'change the world' while your own kids are blowing up, makes no sense to me. Get things right at home first then work from there. I consider politics the Great American State Religion. Every few years people are worshiping some person with the idea that this person is going to change everything and solve all of their problems. This political savior will either reduce their taxes and make their business successful, or will somehow eliminate their poverty, or blow up some boogeymen they're afraid of. They will come in and completely revolutionize the system. It never happens, and it never will. But people still live and die by this. America has religious roots and as people go to church less they're turning on CNN and Fox more, they've just shifted their focus. I've met people who are so fervently political it would make the most devout nun blush. And they're political for what? Part of what makes the US work is that we have this giant machine that continues to move forward regardless of what the figure head is. I've heard the genius of our system is that it's impossible to get anything done, and because of that we only get incremental changes. No one can come in and sweep things away. Locked in incremental changes create stability. I rarely vote, the system is the same regardless. But if you do want to make a change ignore national politics and focus on your local school district and township. Those people have the ability to truly impact your life. And yet most people could care less about local politics but instead are focused on some abstract national thing that rarely changes.

This study and others like it played into my thesis for investing in Mastercard years ago. I'd seen it personally, and in friends. It's easier to spend more with plastic.

Me too. It's surprising that none of the major sources have it. I guess I have to ask why you're surprised? Pricing data is extremely expensive. To have free data someone would need to either scrape the data and host it free with legal ramifications. Or else someone canabalize their business. Quandl has the best prices on this stuff. It's $150/quarter for what you're looking for as an individual. I was quoted at $800/mo from Morningstar for something similar with only 1,000 tickets. That was EOD, real time even more expensive. I guess you need to determine the value for yourself. On Quandl you can download the whole historic set at once. So if you don't care about updates its $150. That seems really cheap to me. But I guess to a bunch of value guys anything over $0 is too much.

Not free, but you can buy it through Quandl

I want to add to my last thought. It seems (anecdotally) that the lower end sedans are where corners are being cut by all companies. Probably because these are hardest to make margins on. So companies give out nice to haves like leather seats and Bluetooth sound systems that work with iPhones then gut the engine compartment. Higher end models seem fine. Pilot, Ridgeline etc. Probably because there is a bigger margin. I've driven newer Dodges and Chrystlers recently, they were either junk (the minivan) or underwhelming. Interestingly newer GM vehicles seem very solid, more than I would have expected. The Ford SUV I drove last year was playing the same tricks as Honda, nice interior and underpowered engine. If I had to have a sedan I'd probably go Camry, Hyundai, or possibly a GM.

Nope not true for the Honda's. As a matter of fact with the new Honda Accords. They have luxury features that were in BMW or Mercedes at a cheaper price point and work really well. The one thing is you have to go to the service center to get your car updated with the latest software. It is free though. If you live in the Southwest or barely drive and keep it garaged you'll be fine. Sure the interior is nicer but I'd say the mechanical systems have gone down in quality. Look at the mechanical build of a 1995 Accord vs a 2015 Accord. Honda cut costs to have the nicer interior. It looks nice and rides nice but I doubt it'll still be running in 20 years. My mom has anew Accord, I can feel the quality difference between it an my 98 Accord. Sure you can flash the software but how does that help with bad clear coat or cheap gaskets? Not a downer on Honda either, I like their stuff. But the quality decline is real

Correct, I don't think the warranty is a good value either. We were offered a warranty on a Sequoia we purchased. We paid $24k for the Sequoia and the warranty was $3,800. My wife wanted it for the 'security' aspect, but I thought about it and declined. Having $3,800 worth of repairs is a LOT, I could purchase an engine from a junk yard and have it installed for less than that. It was a three year warranty. So far only issue we've had is a high side pressure sensor went, $400 replaced. The aftermarket warranties don't cover as much as you think. I had one years ago, had a cracked exhaust manifold. Was quoted at $2k to fix it (a crap estimate) and the warranty only covered a portion of it. I complained like crazy and the dealer where I purchased it just repaired it on their own at no charge. Here's how most of these warranties work. They cover a portion of something, but the dealer loses money doing the repair. The reimbursement cost is low. So what the dealer does is fish around and finds something else that needs to be fixed that they can make a margin on. You take it in for a rough idle and suddenly you need a new alternator. Had someone try this on my wife recently. Went in for a discounted oil change (that they messed up, put in conventional when we paid for synthetic..had to redo it) and suddenly our radiator is supposedly going bad along with a litany of other things. I popped the hood and verified in about 2 min that this dealer was full of crap, all of it a lie. My recommendation is this. Do all of the requirement maintenance on the car, whatever the manual says do it. If it says change the fuel filter at 60k miles and you're thinking "it's running fine, why do I need to change it?" ignore yourself and listen to the manufacturer. There is a lot of maintenance up front that people love to ignore, but it comes back and bites them later. All of those easy things early on extend the life of the engine. Take care of it and it'll last. Do things like change the plugs every 15-20k miles, religiously change the fluids (including all differentials/transfer case fluids if 4x4, most people neglect this). Engines properly maintained, or even improperly maintained and then brought up to date can last a LONG time, often much longer than the body of the vehicle lasts. If the body and frame are ok then you're in good shape.

In what?

What are you thoughts on Hingham? Why's it the best bank?

Good points. I wish he would have discussed operating leverage, in many cases it can be much worse than financial leverage. But operational leverage isn't on the balance sheet so a lot of investors miss it. Some of the best investments are companies that have high operational leverage and are at the bottom of the trough before revenue ticks above the roll-over threshold. Suddenly earnings explode out of nowhere. Likewise the worst investments are ones with high operational leverage with falling revenue. Investors believe the decline path will be steady and smooth when the reality is it's steady then falls off a cliff.

No

$0.26 of that was a non recurring charge in 2nd Qtr of 2015 so that does reduce the normal deficit somewhat. With the likelihood of new management with a focus on cost cutting, margin improvement and realignment of the business, there is the potential for a significant turnaround story. Activist investors have also been increasing their % ownership recently. Earnings for Qtr 4 are out tomorrow and that will provide some more insight - estimates approx -$0.11 per share. I have not invested -just watching at the moment. I haven't looked at it, but these are a toss-up. The theory says that money losing net-nets tend to outperform, but you need to own ALL of them and as a group they outperform. They also have a lot more zeros. I always had a problem owning money losing net-nets. I understood the theory, but I'm not a computer. I'm a person with emotions, and I need to sleep well at night. I would trade slightly lower performance for peace of mind. Because for me peace of mind meant I could keep the strategy rather than stick in for a bit and quit because I was worried. I'd encourage anyone looking at these to re-read the chapter on net-nets by Graham. In essence a net-net is a shortcut for an absurd valuation. But Graham points out that it's better to own something at an absurd valuation that's profitable and is growing rather than destroying shareholder value. If these guys are burning cash then it might be perfectly reasonable to trade for less than NCAV. I've seen plenty of net-nets where the business sucks and burns cash. And guess what in a lot of those cases the valuation was right, the market was right that value would never be realized. Turnarounds rarely turnaround. Now if they're going to do something dramatically different that's another story. But turnarounds are rare, unless there are circumstances that indicate otherwise I usually pass on turnarounds.

There are complete transcripts out there for free. Is there a value-add to your notes? Not trying to rag on someone looking to make a buck, just curious.