oddballstocks

I guess it depends on perspective. Banks are relatively simple, and if you understand how to analyze one you suddenly have 1,200 other companies conducting the exact same business that you can compare them to. The money center banks are complicated, lots of black box things there, but if you slide down the scale community banking is very straight forward. Someone mentioned to me recently that with manufacturing leaving the US we now have a market that specializes in being financial intermediaries, so an investor needs to be able to understand banks and insurance companies because that's all that left.

Banks are already up a lot last year. The only one I have is BPOP. It is not up so much probably because of Puerto Rico worries. Other banks like BAC and IRE are already expensive. What other financials are you looking at? Seems like you have a taste for risk. There are a lot of cheap smaller banks with better loan books. I took a 5m look at BPOP..at first glance it looks ok. But what's concerning is the ballooning charge-offs, and the explosion of NPA. Maybe I'm too conservative or something, but my preference is to invest in cheap banks where the credit quality metrics are getting better, not worse. Any insight on this? I'm guessing you're seeing something I'm not, what are your thoughts on this?

I've been able to find ideas without much of a problem. Yes, maybe it's harder than in 2010, but no harder than maybe 2006 or 2007. I purchased a position in a company recently that's maybe the cheapest I've seen in a few years. There are definitely bargains out there, maybe not laying in plain sight. The crash spoiled everyone.

Ok I go definitely acknowledge that, netnets are everywhere in the world. Just hard to find, like it was kind of hard to find in the 50's in the US. But no one can say that collectively the mortgage system's checks and balances did not fail massively. I heard if you go back a little earlier than 50's one couldn't even get a mortgage, one had to buy a house outright. Then came mortgages which probably required a large chunk down. Then came Fannie and Freddy. Then came Bush saying everyone is entitled to a house. Then we had the situation in 2007: NINJA loans (no-income -no-job no-assets), and M Burry found that on some mortgages, people were defaults on the FIRST payment. I sure hope that we corrected that and don't let those people get mortgages again. (the only excuse for missing 1st payment is getting maimed and losing your savings to hospital bills). But yes securitization is the symptom of society looking to screw things up during propsperous times. So yes guns don't kill people, people do. And we will keep finding ways to shoot ourselves. hence I believe the markets are not getting more efficient... I believe mortgages were quite common in the US before the 1950s. They were a different form, much like Canadian mortgages currently are. They would be fixed rate for 5-10 years then would either float or balloon with the balance due. The current 30-yr US mortgage is a direct result of the Depression. Too many homeowners lost their houses when they couldn't refinance or pay off their loans quick enough. The 30-yr mortgage was created to lower payments and give homeowners time and security to pay down their debt. My understanding has been that debt in all forms has been relatively common for hundreds if not thousands of years.

You are right, there is no good evidence of it yet. I just am reading about it some in different places, and thought that people need to consider it when debating this idea. Just one small part of the pro/con on this question. I wish there were wage inflation. All I've seen across my industry and from friends are costs rising faster than wages. Where is there wage inflation?

Maybe I would have an ego about it if I could actually analyze the companies myself, but I can't. I have very little confidence that I can continue these results. Eric, While others are in awe of your options trading strategies I am in awe that you rode an incredible wave, and had the ability to get out on top. Many people who have a run like you do fuel the urge to get "just a little more". It usually doesn't end well, you have done well for yourself and your family. Congratulations!

Hey TTD, I was just curious about the idea. Its something i pitched to the members. I'm thinking building a public track record and maybe getting financing easier could be a positive. We got turned down for financing on a property where we had 30 percent down. It was distressed and 50 percent of the revenue was for staff payroll! Instead of 21 employees we figured the property only needed between 10-12 people. This reduction would have made the property cash flow positive. The bank didnt accept that rationale. This is a family holding company which 95 percent of the assets are real estate/undeveloped land. If the cost makes sense i think floating 10 percent to the public might be worth it to build a public track record and maybe obtain financing easier. Anyway i'm thinking out loud. It all depends on the cost and how the others feel about it. Also, why not just list on OTCMarkets? I'm pretty sure the reporting requirements aren't very stringent, and if you don't have 1500 shareholders you don't need to register with the SEC. This seems like the best course of action, just call up OTCMarkets and ask about getting listed. I think there's a fee to acquire a ticker, and then you can file quarterly or annually on the site depending on what you want. The hardest part is to get brokers and market makers to trade your stock. If you can get two market makers to trade you then they will list you I believe. You'd need to let 10% of the company go and get some trading going. I think some small market makers will also handle closely held offerings too.

Shell will cost you a lot more than that. You also have to be careful what type of shell you buy, because there is still legacy liability risk depending on the type of business that operated under the shell previously. Cheers! My quote is from a few years ago, I have no idea on current prices. Your main point about past risk is great, I think that's the biggest risk in this. You don't want to buy a tainted shell.

Buy a shell for $10-15k from a broker and do a reverse merger. If you want to be OTC listed accounting costs would be no different than what you're already paying your accountant.

In other news I think I've found the formula to gain friends online. Go on the message board and bash the person it's named after.... I might have to turn in my value investor certification soon. I just hope I don't run into any value investors in a dark alley after that. I can't imagine being hit over the head with the 1968 Moodys manual...

So if I just read 500 pages a day, drink Coke, eat hamburgers, and buy good companies at great prices I'll be as rich as Buffett right? This is like Michael Jordan saying he warms up by throwing 100 free throws, and some high school player thinking that throwing 100 free throws is what makes him great. I'd argue that it's the synthesis in Buffett's brain that makes any reading he does more valuable that us mere mortals might do. Blindly reading 500 pages because someone said that's what they do is worth less than reading and thinking and considering something thoughtful that might only be 30 pages. The average person reads one page a minute, that's the average, so 500 pages a day of truly reading every single word at an average speed is 8 1/4 hours of reading a day. I would hope these guys pull their heads out of a book for at least an hour a day to maybe think about what they're reading, instead of just mindlessly plowing through all this material. I get that some of you guys on here are super-human and can somehow read 500 pages by the time they're done with breakfast. I have trouble reading dense legalese and comprehending it quickly. Does everyone who reads 500 pages before breakfast also run a 4 minute mile and do 200 pull ups before lunch as well? This is the Internet, so I understand, we're all skinny and married to supermodels as well. I won't argue that there are probably a lot of members who are just sitting around in big comfy armchairs reading all day straight. Some of us don't have that luxury. We have jobs, families, kids, houses to maintain. If I need to read 500 pages, then sit and think about it for four hours I'm left with barely any time to eat or go to the bathroom before I need to sleep. Call me crazy, but I'd rather forget the books and enjoy life. Instead of blindly mimicking Buffett et al, why not switch on the brain and think about shortcuts to this. I would prefer to find a system where I have to read a small amount and have similar results. I'd rather find a system where I minimized the time I spend for similar results. I'd love to see some sort of an equation of performance broken down by time spent on an investment. I personally do this, I have a return on research. I look at how many hours it takes to research, then my potential gain. If the potential gain for the amount of research isn't as high as my hourly wage the investment isn't worth it. I guess the formula breaks down for people managing millions or billions, but it would be cool to see something normalized. Sorry for the rant. I'm tired of the blind Buffett following. Maybe he said pages per week, or maybe per day, or maybe per month. Maybe he's older and doesn't remember perfectly. The guy's not God. I have this sense that if he said everyone needed to wear a pink tutu and dance a jig each morning to find great investments we'd see threads about where to find the best tutu deals...

The business is being provided for free, but not the inventory. All the fixtures are included, and goodwill is included. I have some of my own inventory, but would need to purchase more. I would actually probably buy a significant amount more, as I would try and sell lower end items and supplies & consumables. That is good for local sales I would think. There is also the possibility for another smaller retail business. I was thinking of first trying to rent it out. If I get a tenant, that is great...if not, I have plans for a second business that is totally unrelated. If I do buy the building/business, I would focus on the existing business, get that going strong and then open the second business. There is another building sitting vacant next door that is also intriguing. An absentee owner bought it, fixed it up, and then made material improvements for the business he wished to put in. He spent a lot of money on infrastructure and then ran out of capital. It has been sitting for some amount of time. I would love to buy it for a huge discount, and then finish it out. I actually think it would be an EXCELLENT business for that neighborhood. If I owned BOTH buildings and was running/owing 3 different businesses, that would be pretty wild. I could work 14 hour days every day. Take the cash flow and start really accumulating significant stakes in micro-cap companies... First things first though... Threads like this make this message board extremely valuable, I love reading this stuff. This sounds like a very compelling opportunity that you alone have the ability to take advantage of. You know the business you'd be taking over, so you can add value. You seem to know the area, and you have the capital to take on the next door building and expand that. I think to most readers of the board this sounds like a complicated mess. Why deal with all this 'stuff' when you can sit in a big comfy arm chair and click around SEC.gov and buy and sell online. To me this sounds like the type of opportunity you want to take advantage of. If I were presented with this it wouldn't be compelling because I don't have a complimentary business, and don't have the skills to maximize this. Heck, I'd go as far as saying you could post the address and nitty gritty relevant details and you still wouldn't be facing any competition. Others have posted the illiquidity issue. For those clicking their mouse to buy and sell this is an issue. For the 99% of small business owners in the US they've accepted that. You will deal with illiquidity, you have an illiquid building, and an illiquid business. But you also gain a lot, you control the outcome. You are running the show. You also get to keep 100% of the cash flow that this generates and do with it what you wish. Investors clicking around just get to rant on forums about what they want to happen with the cash flow, you get to decide. I would say that's a good trade off for the illiquidity. One more thought on this. I've been sticking my finger in the private business world for a little while and I've come to find that it's not as illiquid as one might think. If you have a business that's profitable and you can separate it from yourself (someone else can run it), you'll be able to sell it fairly quickly through a broker.

To ensure there is no ambiguity...I'm not endorsing that book. I'm just saying that I had a former boss who loved it, talked about it constantly and I found it amusing that it exists.

Just to be clear, my post was a joke. It seems to have gone over most people's heads. I am happily married. Speaking of books, a former boss swore by this book as he was getting divorced: http://www.amazon.com/Screw-Bitch-Divorce-Tactics-Men/dp/1559500697/ref=sr_1_1?ie=UTF8&qid=1393963303&sr=8-1&keywords=screw+the+bitch I'm hoping that there were at least a few people out there laughing, but maybe my humor doesn't translate well into words. Now back to those 10-K's, I have 387 pages to go today and time is slipping away...

Exactly...I think I wrote about it in the thread last year too, asking how it is humanly possible. The "per week" was a relief to hear, especially when repeated it as you mentioned! OH MY GOSH...IT'S PER WEEK!?!?!?!?! Thank goodness, I was just surfing Amazon to find a book on divorce, our marriage is on the brink. I can't even think about the bills from Amazon, let along spending time with my family, I need to hit my daily quota. I'm a learning machine... I couldn't wait to add "divorce" to my list of mental models....

Packer, I'm not going, but as I read your message a thought came to mind. I wonder if you could rent out a home on VRBO, then offer it on the board or something to other investors. It might be cool to have a value investor house or condo for the meeting weekend. A quick search on VRBO brings up some places that sleep 2-6 for about $300 or less a night, if you split that six ways you'd be at $50 a night, pretty reasonable. Heck, here's a "beach house" (beach defined VERY midwest and loosely), a week for $1800: http://www.vrbo.com/463299# I'm not sure how exciting a bunch of value investors would be at a pseudo-beach house in May, but it sounds cool at least.

WEB should definitely do this, I mean I'm sure CNBC would pay him more than the pithy $100k he makes at Berkshire. He should also look at writing a book "Manage your company like Warren Buffett" and maybe even open some sort of online MBA program. He might even make enough to move out of that tiny house in Omaha and buy a real car. Maybe he'll be able to afford to move out of Omaha to NYC where all the big shot finance people live. Everyone knows you're not a real investor unless you're from NYC...

Something new isn't always better. Reading this thread has me thinking of an analogy. This board reminds me of a startup who's located in tight quarters. There's a real team atmosphere even with the close quarters. From that a great culture develops. Once the company moves to spacey digs in a better part of town a lot of that culture is lost, not intentionally, it just is. So what if the forum software isn't perfect, why change what's working so well? There's a great culture and great set of people here. This is the only message board I've ever participated in that is/was so compelling I'm getting into my car and driving to Toronto in April to meet other members. When people are willing to travel across the country to meet up I'd say something is working well. I think you could probably rent out a ballroom in Manhattan Kansas and you'd still get a solid turnout.

Sanjeev, Have you ever considered adding a 10% fee to the event tickets to raise money to support the board? I doubt many would have an issue with it. This could fix some of the ongoing funding needs as well. Maybe you're already doing this, I don't know. To echo what others have said. I like this board the way it is, keep up the great work! Nate

Connections and AUM. When I see this math I wonder why someone's taking the risk of managing money? Most people doing this can make the same amount doing the same thing for someone else with zero risk. There is zero liability risk etc. Unless you can raise a substantial amount of capital, or you're doing it on the side for some spare pocket change the economics are tough. On the other hand I know someone who opened a RIA. They are managing any and all capital. If a retiree wants them to manage their 401k they have a strategy for it. If someone wants a value strategy they have that as well. They aren't AUM constrained, I like that approach a lot.

http://www.seclive.com/policies/TOUandPrivacy/ Agreed, those are great terms. I know T&C are a requirement for any software but I find them fascinating. From talking to my lawyer they are the ultimate gray area. In theory they might have some semblance of enforceability, but in reality they are close to worthless. I believe software piracy prosecution is based on copyright enfringement, not a T&C violation. After I posted this I realized that I didn't give any context. Seclive is saying all content is copyright by them. Yet they for the most part are redistributing free information. You can't take something that's public domain and then try to slap a copyright on it. If this were possible someone would download EDGAR, slap on a copyright and sue any and all users. They also say in their terms you are not allowed to make money from this data. Um...isn't that the purpose of reading SEC filings..to invest and make money? Again, I am no lawyer. My view of contracts and agreements changed recently as I had my lawyer review some things. What I thought was bullet proof is Swiss cheese in court.

http://www.seclive.com/policies/TOUandPrivacy/ Agreed, those are great terms. I know T&C are a requirement for any software but I find them fascinating. From talking to my lawyer they are the ultimate gray area. In theory they might have some semblance of enforceability, but in reality they are close to worthless. I believe software piracy prosecution is based on copyright enfringement, not a T&C violation.

This is the same thing that's said about every short seller. When I short a company I believe to be fraudulent I don't think to myself, 'I can't wait until all of the workers get fired and lose their source of income.' What I hope for is the market to recognize the facts of reality. Every day that it doesn't is a day that capital is misallocated. I imagine the same is true of Mr. Bass. Do you really think he's sitting there thinking, 'I hope that millions of people lose their jobs and are starving in the street'? Unless he's psychotic, I doubt it. When the market does not reflect economic reality, that is categorically bad. Assuming the Japanese economy is on the brink of collapse (I don't have an opinion), think of all of the capital invested every day on the assumption that it is not going to collapse. Keeping a charade going isn't good for anyone if you're thinking beyond the immediate moment. I think you have a healthy point of view. My experience is that most who short don't have that same view. I have used Salesforce.com, I've seen it change businesses. The stock is overvalued, when I talk to short sellers about it they are hoping doom and gloom and that the company crashes and burns. They can't separate the stock valuation from the actual company. In theory the stock could go to zero and the company continue to hum along like nothing happened. Bass clearly benefits from the Japan gloom and doom trade. If Japan fails his mortgage is paid off with cheap Yen, his fund makes a mint and he can go on TV again and say he was right and attract even more assets. I don't short anything, I don't think there's anything wrong with shorting, but I'd rather be optimistically biased. I'd rather things turnaround and do well than fail. In the end I want everyone to do well.

Yet your actions speak louder than your words. If this is truly at Japan's doorstep why are you still living there? If their collapse is as bad as everyone predicts I would be moving now to secure a job somewhere else to beat the wave of Japanese emigrants. Or do you think some sort of debt restricting will happen but it won't be that bad? I'm curious at the disconnect.

Here's the author's webpage: http://people.clemson.edu/~airedal/ I love how he describes the books "this book is not choo-choo nostalgia...It is a story of business strategy, transportation economics, transportation technology, commodity movements, regulatory law, labor productivity, labor relations, and mostly about the people in railroading and in government who made it all happen."