oddballstocks

Here is the line about the coal deposits: "Coal deposits aggregating approximately 92,000,000 tons in place with a net balance sheet carrying value of $722,402 at December 31, 2012 are not presently leased or producing coal in commercial quantities."

How could a company have no incentive to mine it if mining and selling the coal is economical? I obviously don't know the specifics of the situation, but hard for me to see how there can be no incentive. The company is paid some flat fee, they don't get paid more to mine more, so they mine what that need and that's it. I think the company is Central Natural Resources, I should look into them again. So in 10 years the contract will expire and they'll contract someone to extract the $4b worth of coal, guess this is probably worth considering. how sure are you about this. For this kind of money at stake i am sure a lot of things can be done to unlock value How sure? Do two things, first read their annual report, it discusses their coal reserves. You can figure out how much they're worth based on current prices. Secondly call the CEO and ask why they haven't developed those reserves and you'll hear about the contract. No one is allowed to develop the reserves except for the company under contract right now. I'm not disputing that it can't be developed, the CEO stated it could, it's just that the structure of the contract means the current miner will never do it, so investors/the company needs to wait until the contract expires.

This is awesome! The real world equivelant of what we're doing in the public markets.

How could a company have no incentive to mine it if mining and selling the coal is economical? I obviously don't know the specifics of the situation, but hard for me to see how there can be no incentive. The company is paid some flat fee, they don't get paid more to mine more, so they mine what that need and that's it. I think the company is Central Natural Resources, I should look into them again. So in 10 years the contract will expire and they'll contract someone to extract the $4b worth of coal, guess this is probably worth considering.

Beware of hidden assets without a path to monetization. I'm thinking of a coal company that trades for $10m but has reserves of $4b. The name escapes me right now. I talked to someone who called the CEO a few months back, the CEO said the coal is good and worth mining yet it's under contract with a company that has zero incentive to mine it. He said the contract expires in 10 or 11 years, at that time they'll mine it. So there's a huge hidden asset, this thing could be a 10-100 bagger easily, yet you'd need to wait 10 years. What if the market changes so much in 10 years that it's not worth mining?

I've always thought Kansas City Southern was the best rail to own, the problem was the price never came down low enough for me to buy. I haven't read Barrons yet, was there word on their Mexican port yet? If I remember correctly they were going to have this high speed route from a deep water port in Mexico that could get trains deep into the heartland of the US quicker than what Union Pacific or Burlington could do.

These are the holy grail for asset investors, unfortunately there is no systematic way to find these. Here are a few thoughts: -Find companies with old operations, usually something has been in operation that long. -Look for companies that are real estate heavy, Bowl America comes to mind, operating bowling alleys since the 1950s, most recorded on the books at cost (1950s & 60s cost). -Look for neglected companies, or companies no one bothers to value, things like Texas Pacific Land Trust, Aztec Land & Cattle. -Look for things with alternate uses, Aztec Land & Cattle comes to mind, most of their land is grazing land, but being investigated for wind farms. Land was on the books for around $60/acre, selling at $30/acre last I looked. -Look for family owned or controlled companies, they're usually much more tax conscious and try to minimize taxes by eliminating churn, they'll hold onto something rather than sell it. The best way is to just turn over a LOT of rocks. Be creative, go to the library, Carnegie Business Library (in Pittsburgh) has a ton of OLD Moody's manuals and stock reference manuals. Look up real estate companies in editions from the late 1970s and early 1980s, then see who still trades. I'm guessing 90% of the companies are gone, but the other 10% probably still have some of that original land on their books at cost. Here's another angle, this is a hidden asset gimme..download the list of bank branches in the US, then sort them by age, there are a LOT from the 1800s and early 1900s. I'm guessing you'll eventually stumble on a community bank that has four or five branches held at 1930 prices. I couldn't resist, so I ran a query and found that there are 4170 bank certs with more than 5 branches that were established before 1930, lots of potentially hidden value there. I'll note that BAC is at the top of the list with 809 branches established before 1930.

Thanks for the kind words, I'm doing well so far! I have right around 50 holdings, which if I were a mutual fund would be considered very concentrated, yet seemingly on this board I'm just a stock or two away from being an index fund. Your comment reminds me of an investor I read about who published all of their trades going back to 1994 online. If I remember they had maybe 40 trades at the most, they had incredible returns as well. I wish I would have saved the link..

Reminds me of the Rush lyric, so if you choose to past over a stock you've still made a decision correct? How many are you down to?

I'd highly recommend you look at Conduril, extremely cheap, possibly one of the cheapest names out there, solid business as well.

Yes, own Conduril, familiar with Acme Communications, Vianini Industria.

Cool ideas, based on the responses I'm guessing everyone invests full time or is a professional? I do this on the side, amazingly there are still plenty of cheap companies to pick through, maybe I'm just looking where others aren't or my standards are lower. The market increase has been nice, I've been working on launching a startup and haven't had as much time to research as I normally would, my time is all going into the startup.

It should be pointed out that building wealth isn't a necessity for a successful life. There are many people deep in the hock who are living the life of luxury, and for some it never catches up. They live beyond their means, they have fancy houses and fancy cars, and somehow they cruise through life without any problems. On the converse side there are people who are wealthy where the wealthy is a burden to them. It destroys their family and their relationships, and in some cases it ruins their life. I'm just pointing out that: A) Wealth isn't a golden ticket in life, you can be poor and be happier, or more content than some of the richest B) Bad decisions don't always catch up with those who make them, eventually someone has to pay, but it might be generations later.

Not to mention all the marketing glory he's getting... I continue to pound the table on this issue, there are great investors, and there are great marketers. You can be a rich fund manager with mediocre performance. Or a fund manager with great performance who barely scrapes by because they can't sell. Investments are a commodity product for the most part, the difference is in the sales. Bass is a great marketer, the genius of this trade is he can promote it and promote it and it might take years to happen, all the while gathering assets. If it fails it's 1% of his portfolio, he's not hurt. If it works he can tout it and gather more assets, he wins no matter what happens. Note that HE wins, his investors have a chance of winning, but HE will win no matter how this works. I am always skeptical of people who are rooting for failure. As Buffett says the world is biased towards growth, when Japan/Europe/US start to deal with their debt problems I have a feeling some novel and creative solutions no one has thought about will emerge because the problem is very large indeed. But maybe the solutions will be novel enough that the great destruction everyone is waiting for never occurs. I sometimes think about second order effects with Japan as well. As Plan mentioned they are a creditor nation, they also hold a LOT of Treasuries. What if they decide to sell all of their Treasury holdings to support the Yen, I can't imagine China would stand still and watch the price drop. Maybe China dumps their holdings as well, the one who gets screwed in the deal is the US who'd see rates spike as the price fell. Maybe this is a plausible scenario, maybe it's just as contrived as Bass' scenarios, time will tell.

I've read this thread and I am struggling to see where you have been bashed. Perhaps I am not the sensitive guy I thought I was. You've been given a lot of good advice on this thread, I don't think it's bashing, maybe lowering expectations, but not bashing. Realize what you've done as well, you have essentially popped into a Ford forum and started asking for advice on buying a Toyota.

This is so true in my experience as well. I've been blessed enough to have two 10-baggers, in both cases at any given point in time I felt they were either undervalued by 50% or fairly valued. But both were decent companies I wanted to hold, I just continued to hold and the stock price grew. Biotech's are amazing to me, as a whole they are a money pit, yet they continue to entice investors over and over. The execs of biotechs sell so much hope, if we just get through Phase II we'll be approved etc. I was looking into a biotech two years ago and decided to find some approval statistics. There is a funnel graph out there on the net showing how many drugs enter each stage yearly, and how many exit. I seem to remember the chance of a drug getting from Phase I through Phase III was 1/1000. After Phase III there are a number of other tests and certifications before it can actually be sold. So yes, maybe 1 in 1500 drugs will actually make it to approval and will be the blockbuster drug that everyone is expecting. The reality is that drug was probably researched and pushed by Eli Lilly or another big manufacturer with the experience in the process. And that 300x drug approval is paying for the other 1499 drugs that the company spent money on to research that failed. I would tread lightly with biotechs. Just a random observation, Kraven mentioned Walter Schloss. I just watched an interview with him today and he mentioned he almost always sold things after they went up 50%. Here's a guy who almost never held for a gain beyond 50% and yet had one of the best long term track records ever.

I recommend this book as well. Very interesting perspective on wealth and gaining it.

I second Jeff's blog (ragnarisapirate.blogspot.com) some off-beat quirky stuff on there. His series on purchasing an apartment complex is awesome, if nothing else go and read that. The synthesis of online investing and real world investing (SYTE) is fascinating as well. You're looking for a return right? I would presume? Some random ideas, I have considered many of them myself at various times: 1. Purchase timberland 2. Purchase land with natural gas rights 3. Purchase foreclosed cabins in Sheriff sales in rural counties, fix up the cabins and re-sell to city dwellers as cheap weekend getaway locations. (this is still on the radar, just need to get my butt up to Northern PA in Sept when they have these things.) 4. Purchase cheap equipment from distressed sellers on Craigslist. I see a semi on there for $45k right now, buy this then lease it out to a LTL hauler. One semi should be able to gross around $200k a year if you can schedule the jobs right. 5. Build a little shed that sells coffee on a main route where you live. Friends of ours did this, provided a nice income for years, invested $250k into the business, sold it for $500k. 6. Buy this game store for $30k: http://pittsburgh.craigslist.org/bfs/3864227413.html Wonder what the book value of that inventory is, this is a chance to buy a real world net-net (possibly). 7. Buy refundable airline tickets and book flights likely to get bumped, then ask for cash compensation or rewards before refunding your ticket. You have enough capital to buy some pricey legs 8. Buy distressed receivables and work them out 9. Buy distressed credit card debt and attempt to collect on it

Desk and bookshelf picture, not very exciting but this is it..

Yes, that's it. My response to Packer16 on Tweedy was heavily sourced from this book. The book is worth purchasing, especially since used copies are $.01.

Who's currency are you worried about being devalued? I invest internationally and don't hedge anything. I've had it hurt me, and had it help me, overall it's close to a wash. I like the Tweedy paper, over long periods of time things do seem to work themselves out. Another perspective, I want some currency diversification if possible. My job is in USD, emergency savings in USD, investments in USD, if anything were to ever happen to the dollar I'd be screwed. Having some foreign holdings mitigates this risk. I think American investors are probably the most currency-ignorant investors out there because we have a dominant currency. This board is dominated (?) or at least has a very strong Canadian contingency, they are all discussing US stocks and are buying in USD. I'd be curious to know how many hedge, my guess is not many. Most non-US investors don't have enough investment options in their country alone, so they're forced to go abroad for investments. This forces them to take on currency risk as well.

Money Masters was written in 1980, so 1959-1979 presumably, maybe 1960-1980. I have Schloss to his OID interview in 1989. The relevant Tweedy record is the one to the mid 1980s, after that is what they have on their website after they switched strategies. The return mentioned in Money Masters was that Tweedy had a 20 year record of doing 15% annually with a portfolio that consisted of 1/3 net-nets, 1/3 inactive (unlisted stocks), 1/3 companies they ended up controlling because they continued to buy as they were cheap. The book mentions that the returns are good, but not excellent, 15% a year net of expenses is good enough for me. It says they had over 1,000 holdings during this time, with position sizes ranging from $50 to $400k, and a few in the millions. They managed $50m at the time with this strategy. The average holding period was three years, on average 5% of the portfolio was merged or acquired a year. Also of note it says that around 1980 Tweedy acquired Asset Investors Fund, a CEF which only invested in net-nets. I wonder if anyone could get the track record of that fund off a Bloomberg or something. Here are Tweedy's results from 1975-1996. As of the early 1980s they were still doing the net-net/unlisted stuff. I'm not sure when they drifted away, but they absolutely killed the index up until 1987.

I have Schloss to his OID interview in 1989. The relevant Tweedy record is the one to the mid 1980s, after that is what they have on their website after they switched strategies. The return mentioned in Money Masters was that Tweedy had a 20 year record of doing 15% annually with a portfolio that consisted of 1/3 net-nets, 1/3 inactive (unlisted stocks), 1/3 companies they ended up controlling because they continued to buy as they were cheap. The book mentions that the returns are good, but not excellent, 15% a year net of expenses is good enough for me. It says they had over 1,000 holdings during this time, with position sizes ranging from $50 to $400k, and a few in the millions. They managed $50m at the time with this strategy. The average holding period was three years, on average 5% of the portfolio was merged or acquired a year. Also of note it says that around 1980 Tweedy acquired Asset Investors Fund, a CEF which only invested in net-nets. I wonder if anyone could get the track record of that fund off a Bloomberg or something. Here are Tweedy's results from 1975-1996. As of the early 1980s they were still doing the net-net/unlisted stuff. I'm not sure when they drifted away, but they absolutely killed the index up until 1987.

There's a section on Tweedy in The Money Masters that states that for a while in the 1960s and 1970s Tweedy only purchased net-nets at 2/3 of NCAV and sold at 1x NCAV. They purchased anything and everything that met their criteria and their returns were great. The problem was they eventually outgrew this strategy and adapted as they took on more money. I would be happy with Schloss/Tweedy type returns.

Louis, good question. I know myself, and I know I'm not Buffett or Munger, I have no hope of having investing returns like they did when they were small. Buffett is truly a genius, I look at him like a star athlete. He has a natural talent that I don't have, and no matter how hard I practice or try I will never perform at the superstar level. On the other hand Graham laid out a great investing philosophy that can be implemented by anyone. I will never become a billionaire, but I believe over the long term performance will be acceptable, and more importantly risk will be under control. The greatest example is Walter Schloss, he continued to apply Graham's practices decade after decade. He did 15% over the LONG term. I think that's a reasonable goal, if I were to hit 15% over the long term I'd be very satisfied. Realize my goals are different as well. I'm investing my own money. I can understand how someone managing OPM might want to shoot for incredible returns in an effort to attract investors and earn more money for themselves through fees. I think a lot of people look at Graham's style of investing as too pedestrian, it's simple and boring. Most in finance are smart, very smart, and doing something simple and boring isn't exciting, in some cases people view it as "below them." It's much more exciting to dig into the nitty gritty of companies, talk to managements, model out the future rather than buying junky little companies below book value or below NCAV and holding. Someone else asked how I can keep track of my portfolio, it's simple, it doesn't require much time at all. Most companies I own don't report anything except maybe an annual report and possibly an interim report. For example, Carlo Gavazzi reports in June and November. It takes me about 30m to read each report, so 1 hr a year to keep up with that position. Many of my tiny US companies send an annual report once a year that I can read in 15m or less. The beauty of investing in boring, sleepy companies is that I am now worried that I don't hear any information for a year. In almost all cases almost nothing has changed, the companies continue to execute as they have for generations. Sometimes I'll get a random letter in the mail from a company announcing an acquisition or a record quarter, but mostly it's quiet. If I were invested in a number of names with high newsflow I'm not sure how I'd keep up with them. Right now I don't need any filter on my information, if I'm sent something by a holding it's important, so I just read it. Hope this helps! As seen from most portfolios posted investing in sleepy, boring, junky companies isn't for everyone. One last thought, as to Buffett's thoughts on this, there was a video posted on neatvalue.com (looks like the site is dead now) where someone asked how Buffett would invest if he managed less than $10m. He said he'd do the low book value stocks and below working capital stocks, like what he did with the Korean net-nets. Then he quickly went on to say that he can't do that because he's much more successful. I don't have anywhere near $10m, so there's no need to invest as if I manage billions.