oddballstocks

Very interesting article, intuitively makes sense. There are other factors at work with rates, but this seems to be a strong factor.

You can buy Greek stocks directly on exchange with Fidelity. I believe commissions are competitive with other European countries. Haven't done it myself, but I know it's an option. No idea on the quality of what's over there, but I know there are a few net-nets that are probably worth considering.

This is a great comment, lots to think about here. I'm say that there aren't any great passive drug company investors. Which probably means that the only way to be successful in this space is to have non-public information. Drug companies are great drug company investors. The big pharma companies have successful track records of creating/buying new drugs and brining them to market. It seems two factors are needed for that, a LOT of cash, and a stable of experts at your disposal. My guess is that to correctly ascertain whether a drug has a chance you need to conduct a non-public due diligence phase. An acquiring drug company can sign a non-disclosure and have access to the researchers developing the drug as well as all projections. They can fact check what the company is saying with internal resources. Outside investors save the largest ones just can't do this. There might be some very specialized hedge funds or venture fund that can do this. I met someone in Pittsburgh who had a venture capital fund dedicated to a very specific type of drug. The fund was partially owned by a hospital system and he had the resources of a research department that specialized in this drug to screen candidate companies. I think biotech is similar to distressed debt investing. They are both segments of the market inaccessible to investors without significant capital or expertise.

Yeah, sure. Go talk to CEOs. Cause they really gonna chat with every value investor doing scuttlebutt. Good luck. It might be a great practice for someone who wants to build up confidence in cold calling and maybe build up their rolodex (haha). But I think that for a huge percentage of individual investors this is not realistic. Of course it is not realistic for a huge percentage of individual investor, but that is why people are on this forum to begin with, to separate themselves from the pack. Obviously, you are not going to get to talk to many CEO, just as obviously you are not Warren Buffett. This after all is a quote from WEB, the gist remains: talk to knowledgeable people in the industry, go down the corporate ladder and even talk to former employees. Buffett started talking to the janitor at GEICO, who led him to the future CEO. (By the way as an MBA student, I did in fact cold call CEO's of listed companies, including Intel and National Semi, and one of my friends walked up to and talked to the head of Citi and one of the bigger insurance companies. So it is doable.) And if you go to industry conferences and annual meetings, you should be able to ask a lot of questions. Here's the funny thing about calling CEO's. Everyone assumes that everyone else is calling, but my experience is that's not true. There are many of these guys sitting in an office waiting for the phone to ring. In larger companies you're going to have better luck getting questions answered by IR. But small companies will direct your call to the CFO or CEO. If you have intelligent questions, know the industry some and aren't a complete idiot you'll probably have a nice conversation. For all the introverts out there here's a tip my dad gave me regarding cold calling (he was in sales most of his career). People LOVE to talk about themselves. All you need to do is ask intelligent questions to get people talking about things they like or are passionate about. So ask things like: "can you walk me through what makes your business unique?" "Why would a potential client choose you over a competitor?" "If you could start this business from scratch what would you do differently?" "Where do you see opportunity?" Simple questions like that. Be respectful, ask great questions and get out of the way. You'll be able to learn a lot. I've learned a LOT more in conversations with others about how industries work compared to reading primers. An hour on the phone is more valuable to me than reading some giant 80 page primer that I'll forget most of.

What screens did you use? Just ran it on a Bloomberg

Ah yes, I forgot he's only invested in 20 investments in his life right..those punches or something...? One must remove their ignorance before swinging at one of the 20 fat pitches on their punch card. Someone needs to create a Buffett/Munger expression generator. Then a little bot for the forum, after a few posts the bot will exclaim "When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever."...BOOM thread shutdown.

I ran a screen with your criteria (P/E <= 12, 5yr growth rate 25% a year, mcap > 1B): 717 stocks So I'd say there's a lot to look through. Here are a few random ones in the US: HFC, TRW, TAL

On gold I see its purpose as being a common denominator to money. The value in it is that you can take anything and convert it into gold and then convert the gold into something else. The value it has is its convertibility. I'd put out there that at some points investors highly value that and the price rises, and other times they don't and it falls. But speaking of gold, I have some non-financial friends who are starting to really talk about it. These aren't fringe-wacky types either. Not sure what it means, just a point of reference.

Guess it all depends on how much time you want to devote to this. Have a good friend who owns some dealerships, talked to him recently about buying a car. On a new car there's usually a few grand of 'play' between the invoice and sticker price. You might be able to go back and forth and get a new car for a few hundred dollars below invoice, on a new car that'd be considered success. Used cars are different. You can go the private seller route and look for the motivated seller if you are patient. My friend just purchased a used car this way. The boyfriend took out a loan in his name to buy his girlfriend a car, they broke up. He wanted to dump it, but had financing and it needed to be purchased with cash. My buddy had cash, took it to a mechanic and all that and got a great deal. He looked for almost a year waiting for this type of situation. So you can be patient and wait, might be six months to a year. We recently purchased a used car from a dealer. In Pennsylvania there are some high volume dealers who turn over a lot of cars and don't negotiate. Their business model is based on volume with a smaller margin verses working the customer over. We went to this place and paid the sticker price. What's interesting about it is the price wasn't even set by the dealer. They use a third party service that looks at all comparable used cars and sets the price to be competitive. The price we got was excellent, so we were happy. Somewhat. My wife didn't like not negotiating. I asked her if the price was $2k higher and they came down to what we paid if she would have felt better, even though it was the same end price. And sure enough she would have preferred the higher price that was dropped. Everyone likes feeling like they got a good deal, whether it's true or not. Used car pricing is interesting. This is all from my friend again. In the sub-$10k market you can negotiate like crazy. Dealers will pick up a car for $4k and sell it for $9k sticker. So you can come in and get a few grand off. Above $10k and especially in the $15-30k range for used cars there isn't as much room. There aren't as many buyers, and the supply isn't as strong. So same as a new car, you can maybe save a few grand from a dealer. But with the internet prices are a lot more competitive. Just hunt around online, AutoTrader, Craigslist etc. We drove 1.5 hours to get our car, was at a rural lot. Sometimes rural lots can have great deals, other times it's in the city. At the end of the day I'd find a 'good' price and not worry about extracting every last cent from the dealer. That is unless you absolutely love to negotiate and work these guys down. So say you save $250 or $500 by stretching things out a few weeks. Is it worth it? Is it worth the stress, obsessing about the deal? If you're on this board I'm sure there are much better things you can do that earn a few hundred dollars. Like most things in life my mantra is to find a good deal, but not the best. The marginal return going from good to best isn't worth the time. Oh and auctions...I'm not sure I'd go there unless you are mechanically inclined. Most dealers dump cars at auction that they don't want to sell on their lot, condition, mechanical etc. There are other dealers who specialize in buying these, putting some money into them and flipping them. Can be a great business, but you need very cheap labor. If you can drop a tranny on your own then by all means go for it.

Almost done reading it based on the recommendation from this thread. From the Amazon reviews I discovered that the first edition was shorter and less repetitive, so picked it up for a few bucks.

Is his strategy scalable? It works great for normal folks and he's showing he can do it with a few million but he'll end up like the endowments if he tries to scale... I guess it depends on how scalable you mean. I don't want to speak for him if you have questions you should contact him, but I believe he could handle upwards of $100m with what he does now unchanged. If you're looking for the next billion dollar manager it's probably not Dave. For the tiniest and most illiquid stuff I believe what Sonkin had ($40m) is the upper limits. That's to essentially be concentrated in small stuff. I've talked with plenty of managers who run hundreds of millions and own a lot of small illiquid stocks. They're hanging around in the back of the portfolio in separate accounts and remain unreported.

Interesting. What are his historical returns like? I'm not sure if he's publishing his returns or not this year. I know they beat the pants off the market this past year, it was his first year in business. If you want to see his thought process he writes at blog: http://www.otcadventures.com Not that this matters, but I've told my wife is something happens to me all of our money goes to Dave to manage. He has incredible character, really cares for his clients, and our investment approaches are similar.

Dave Waters at Alluvial Capital http://alluvialcapital.com

Guess it depends on your perspective. From management's perspective it's run well, they get FAT paychecks and the business keeps rolling forward. For shareholders we're losing out..

Man, complaining on a ski lift... Yes, and yet there is a much greater percentage of the population today that is wealthy enough to get on a ski lift to complain than there was in 1970. I agree and disagree. Skiing is one of those things that has skyrocketed in price. In the 1970s and 80s there were a lot of local cheap ski hills. This opened the sport to anyone. Now those places are all gone, they couldn't afford to buy snowmaking systems that would keep them in business through the dry years. What's left are resorts and giant complexes with huge systems that can keep snow on the mountain even when it's warm and dry (like this year). Skiing is much more expensive, but the technology is far superior. Lifts are much quicker, and the places that are still in business can be open even when the weather doesn't cooperate. In terms of affordability it is probably less affordable to the general population. But the experience a lift ticket purchases now verses then isn't comparable.

I tend to agree, but this is the super standard consensus view that is repeated ad nauseam in every newspaper, on television and on every website. So even if this is correct it might very well be priced in already given the strong USD, CHF, weak EUR, low European stock prices, etc. and we shouldn't feel to smug about our macro insights. Basically we are just following the herd. At least Nate is original :) . And he might just be ruffling our feathers a bit. Let me flesh this out a bit further. I'm thinking much longer term. The US when you consider all of our promised obligations like social security and medicare is deep in debt. I know most economists 'forget' about those because they're off balance sheet. That's fine, but putting them off balance sheet doesn't mean they'll never need to be paid or settled. Europe is deeply in debt as well. We're both in a similar spot. But right now Europe has realized they have a problem and are doing something towards it. The US hasn't done anything to solve our long term insolvency issue. I'm not thinking 12-18mo like most financial media is thinking, I'm thinking the next 20-30 years. For a brief period in the US we were talking about getting the debt in line. But the truth (mentioned above as well) is no one cares about the debt, they just care about the deficit. How much extra debt we're incurring per year. Maybe since we're a larger and prominent country we're a special snowflake and will never have to deal with this. I don't know. We haven't had to so far, and maybe we never will. It's similar to the Japan situation, they still haven't dealt with it, so we might have another good 20-30 year run without this problem plaguing us. The best analogy I can think of is this. Both Europe and America are at a party and drunk, but Europe has realized they're drunk and has begun the process of calling for taxi's. The US claims it's not drunk at all and keeps drinking. One day the party will end and we're going to need to go home, will any taxi's be left? Maybe we'll luck out. For my own sake I hope that the US is the luckiest country, I live here, it seems like a nice place. I'd rather have a nice and prosperous life without any external problems whatsoever. I'm not sure I can count on that though...

I seem to remember that no sovereign debt is ever really paid back. It's inflated or devalued away. We've already experienced some of this. Was on a ski lift last week with a guy ranting and raving that if you made $20k in 1970 you were liven large. Now it is 3-4x that amount to have the same lifestyle.

I've had a thesis for a while that because Europe is moving faster than we are they're going to eat our lunch. It's the first to clean up debt/devalue etc that moves forward. Granted Europe isn't perfect and there are a lot of problems, but they're moving much quicker on these things compared to the US. I own some European companies that might benefit: Installux, Precia, Conduril

I'd just charge 2% flat when you're starting out. Maybe even 3% flat if your asset base is smaller. Tell investor that once your AUM grows over a certain point you'll lower your management fee. You can negotiate with accredited investors individually and work out a performance structure. As a small manager you want to: 1) Make sure you can eat. Managing capital isn't going to be much fun if you know you can work fewer hours at Costco have health benefits and earn more there. 2) Focus on investing and growing your brand. I don't know of the true breakdown, but I'd say you should probably figure 20-30% of your time will be administrative tasks. Another 20-30% will be raising money and the other 50% or so finding investments. Remember you're running a business, businesses need sales, marketing, finance. If all you do is hole yourself up in a room and invest you will probably be plagued with a small AUM and have trouble meeting life's expenses. It's easier to raise $1m than it is to double $1m.

How dare you mention those two things on this board. Don't you know only lousy investors diversify? Buffett only has 20 punches, Munger says 3 stocks are all anyone needs, how can that now work? All Cardboard needs to do is put 100% of his portfolio into SD, someone above said it will double this year. There you go, all his losses back in a single gain. In all seriousness, I appreciate the candid post Cardboard. Introspection into mistakes is where growth comes from.

My coworker is one of those guys. The wall of his cube buts up to mine but we are in different divisions. He's in a technical training capacity. About 2 years ago he took a week seminar about trading FX. For the last 6 months he sets up daily trades at this desk and says he does day trading but hold each position 1-3x. He has been telling his staff for the past few months that he was picking up pennies as the Swiss defend their currency and he trades it as they will bring it back in line once it starts to move away. He has been out sick the past few days. Wow...feel bad. Saw that 70% of FXCM's clients lost money last year, this isn't a retail game. Had a co-worker years ago who was into day trading. Would send out these IM messages thought the day "just made $800 in a few minutes" "another $1k". I was derided for being a long term investor who didn't know squat. Then suddenly one day the IM's stopped. A couple days later I asked how he was doing he said "I lost interest" or as another co-worker put it "he took a bath on a few trades and his wife found out what he was doing and told him to stop." Seemed like the currency market was perfectly setup for a blowup. Bloomberg Markets magazine had a big article on currency trading in the last issue. The ones making the money in this market are the brokers and those selling seminars on how to get rich. How do you get rich trading foreign currency? Start a seminar series telling people they can get rich trading.

On other threads everyone is talking about hedging Yen in case of a fall. With currencies sometimes you get lucky. I have a Swiss holding that is down about 3%, but in dollar terms is up quite a lot! Will be interesting to see how this plays out.

Nicely done. Do you find Fido to be accurate in computing the returns? I think it is fairly accurate. I figured it out myself a few years ago and got reasonably close to the Fidelity number. I take out money rarely, if ever, and only add a few times per year. My accounts are all for separate things (IRA, taxable brokerage, ROTH IRA, my wife's ROTH IRA, the kids UTMA accounts, etc, so I never move money back and forth between them, just deposit money from the outside into the appropriate account. I think the calculation is pretty straight forward. As long as you don't invest in international equities they are accurate. If you have an account with $1000 and invest $200 in a German stock Fidelity counts the $200 as a withdrawal and only computes performance on the remaining $800. If you sell the stock and put it back in to dollars it's considered a deposit. I keep a lot of my cash in foreign cash, which to Fidelity means it has disappeared.

An update on this, a very timely one. Purchased a car recently and received my insurance information in the mail today. Our annual premiums are $574 for this car for the year. Here are some figures: Comprehensive: $60 Collision $215 Property Damage: $104 So those three are $375 of the $574 are those three items. Then there's bodily injury at $96, medical expenses at $21, uninsured motorists $59 (this is the no-fault state thing) and a few random items like funeral benefit for $1 and accidental death for $1. This just re-affirms what I posted earlier, unless you drop most of your coverage messing with the deductible isn't going to result in much savings. You need to drop collision and comprehensive and maybe move your liability protection down to the legal minimum of $10k or whatever it is. I guess I'd have to echo Eddie Willers, it's the Prius. $825 for six months is high. We have three cars (one to be sold) plus an RV and it's $1671 annually. In other words we're paying the same amount but have full coverage on three newer cars and an RV.

I'm no insurance expert, and markets are highly state dependent so what I say might not apply, but here's what I've found in Pennsylvania. I've talked to the agent extensively about different options for lowering payments. What it comes down to is reducing liability from $300k to $100k reduces the 6mo amount by a few dollars. In PA the only way to significantly reduce insurance expense is to go no tort vs full tort. No tort means if you get in an accident you have signed away your right to legal recourse. There is no reason to ever go no tort unless you're crazy. My conclusion has been this. There is a base price to insure a car, say $100/mo. If you lower deductibles and get the max liability it might go to $115 a month, but unless you go no tort you can't get it lower. At one point I had a $100 deductible, I asked what it would be to go to a $1000 deductible, they said a $10 difference per year. The payback on that isn't there. On my insurance at least it shows how much each category costs and costs beyond the base are negligible. We found the best deal with Erie Insurance. They were lower than Nationwide and State Farm, easier to work with and had a good reputation from friends. Had Geico at one point, crazy high prices. Tried to insure with them again, tried calling and getting a quote. They never called me back, so not sure what's going on there. I combine everything, homeowners, car, rv on the same insurance, easier that way. I pay annually to save as well. My favorite insurance story is when we had Nationwide we received a letter in March or April of 2009. The letter said "due to recently increasing house prices and limited availability in the homebuilding market we're raising your homeowner rate." I should have framed it, in the middle of a housing crash they sent a letter saying rates were going up because house prices were high and it was hard to get a homebuilder to work on a house.