Morgan

That's what I sort of assumed, but it never hurts to ask. I know people here know more than me. Hence you and Ragnars list list below. Thanks! ;D Where did you get the list? From the FEDs website? I did a quick search but couldn't find the list. I agree. We almost exclusively read about their successful investments. Or the highlight reel if you will. Thinking about the Buffett/Soy bean arbitrage...how many other trades had he been involved in that were only moderately successful that we rarely hear about? And the book about Cudill is similar. I think in the first 15 years of his career they cover in the book, 5-7 investments are covered. Cundill says he'd usually have 10-20 securities at any given time, so that definitely his highlight reel. Definitely some hindsight bias involved, but it show that it's possible. Not to mention it's fun to read about! ;D Care to share anymore details? What the process in buying the company? When you bought the bankrupt company they just left everything there and you went through it all and found this stock cert? Other than the stock, how did you go about liquidating the assets? Just selling stuff off to the highest bidder? Or did you have some industry connections? I'm pretty curious about your deal! And congrats!

I've been reading There's Always Something to Do and Cundill's career at least in up until the mid 1970's (that's how far I've read so far) he was able to find companies that had significant "forgotten about" value from assets that had been recorded at cost a long time ago and were worth far more than stated on the books. I work in real estate and the opportunity to find real estate and get it for cheap, maybe with a profitable company thrown in for free sounds very good. What strategies do you recommend for turning up these types of situations?

Here ya go: http://www.marketfolly.com/2013/06/michael-prices-presentation-from-london.html

I just ordered this book today after watching the Price speech from the LVIC. I'm looking forward to reading it when it arrives.

Here are the letters I have for Scion Capital. They're a little bit old though and one from 2006. Scion_2000_4Q_Annual_Letter.pdf Scion_2001_1Q.pdf Scion_2001_2Q.pdf Scion_2001_3Q.pdf Scion_2001_4Q_Annual_Letter.pdf Scion_2006_4Q_RMBS_CDS_Primer_and_FAQ.pdf

Great! I'm interested in seeing the annual reports too. Thanks in advance! :D

Thanks! Just listened to a few songs and it sounds pretty good so far!

Thanks for sharing premfam! Sounds like you Dad did nicely there! He certainly bought those buildings at good prices. I don't know much about real estate in NYC, but I'm sure it's not that cheap for equivalent stuff nowadays. You're right about no-brainer deals being less prevalent now in Denver and also in WV where I am because of the gas boom. There are lots of temporary people here so rents and building prices are high, so you gotta negotiate hard and be willing to walk away if it doesn't meet your requirements. There is definitely money to be made, but it's just not as obvious as it was a few years ago! Let us know of any other options you think about to build a fcf machine. ;D

Just ordered the book. The cheapest one left was 1.93 + shipping costs. Looks like 5 forum members bought the book before me! My family has experience somewhat scaling apartment complexes. My dad came to the US in 1979 and bought a apartment complex for lower income residents in NYC in 1983. He told me that back then it wasnt hard to find apartment complexes that were yielding a 20 plus cap rate. Back then the city was in the dumps. Full of crime and banks wouldn't lend to anyone. He finally convinced this bank in chinatown to lend him money. He accumalated units until 1998 when he sold out. He mentioned during the late eighties the city started enforcing rent control. A couple points he made 1.) Buy the best location even when its alot of crime and dangerous 2.) Buy crappy buildings that make cash flow then redevelop the property to charge higher rent rates 3.) Scale as fast as possible. My family is in the apartment business too and what your Dad says is exactly what I'm doing with the company now. After managing an eight unit building during college, we tripled the number of units in 2012 and hope do to the same again this year. Premfam if you don't mind can you add some more specifics about your family's experience with RE? How many units did you guys have at the peak and also when you sold out? Dealing with financing issues? Any thing else you want to add? It's always interesting to learn more from others! Cheers!

If you do happen do get into real estate, you should really read Real Estate: A Case Study Approach by William Poorvu (http://www.amazon.com/Real-Estate-Case-Study-Approach/dp/0137634838/ref=la_B001IGJM4U_1_4?ie=UTF8&qid=1362591079&sr=1-4). There is one chapter in there that is really great. Of course I can't remember the chapter number, but it's about a guy who owns 10,000 apartments and how he uses creativity and scale to keep his margins high and his properties looking nice. Really good stuff in those few pages. The book is only $0.01 used so it's hard to argue against it. ;D

We have a family friend that opened a franchise a few years ago and she's made apparently decently good cash flow, but she says it's not worth it. Finding help is too difficult and a good manager is basically impossible to find. She also had troubles with the company when the store computer went down. She couldn't just buy a new equivalent one for $300, but she had to buy the one from the company for $1200 and it was a crappy old machine. It's constant troubles for her. She's just working to pay off the debt and then be done with it. So like Parsad said, until you can find and keep a great manager you trust, it's going to be a lot of work.

I'll admit I haven't studied Alwaleed's investments much, but of course he had a larger dollar figure at his age than Buffett did. Alwaleed started with way more money so lower returns are required to achieve a higher dollar amount. Also, both Buffett and Munger say that the huge returns come from compounding for the long term, so can the Prince maintain excellent returns? If he can manage huge amounts of money and still maintain excellent returns, he will likely have a higher dollar figure when he dies than Buffett does (not to mention Buffett is giving a lot of money away). It's interesting to think about why he would want to push his rankings up. Beside's the obvious factor of an ego boost, he has more perceived power when his reported wealth is higher. One downside is if he continues to lobby excessively for the boost and people find out about it, it could undermine his credibility. How significantly so I'm not so sure, but I'm sure he wouldn't want that at all. I really do hope they can create change in the Middle East. Saudi Arabia won't be hurt with more people working and creating and innovating in the economy. Nor will the world.

Here is the entire ~90 minute talk. Buffett is talking to the 1998 graduating class of the University of Florida MBA program. Buffett comes on at about 3:15. http://www.youtube.com/watch?v=X2h9Q9-OqyA

Yes. Yes I am. ;D

I ordered Walker's Manual of Penny Stocks 3rd Edition and it came in so I looked through it last night and found some very interesting companies. All data is old. The newest is from 1999. Interesting to see companies for these valuations, but is absolutely just a start off point. I didn't have chance to look at many of the companies - maybe only 30 or so out of the 500, but there is some good stuff there. One thing I did notice is that many, almost all of the companies I looked at, had very small margins and relatively volatile earnings despite consistent revenues. Getting sued or some other issue seriously kills the bottom line with these companies. Whitney American Corporation Market Cap: $213,301 P/E: 0.24 In 1998 they earned 112k, with 575k in FCF and in 1999 they earned 999k with 1,579k in FCF. So you could have (theoretically) bought this company for 213k and earned a million dollars in the first year. Ridiculous. W W Capital Corporation Market Cap: $325,224 P/E: 3.0 In 1998 they earned 87k with 283k in FCF and in 1999 they earned 105k with 258k in FCF. In 1996 they lost 718k but were profitable for 1997-99. The Coeur d'Alenes Company Market Cap: $694,904 P/E: 6.5 1998 they earned 251k with 22k in FCF and in 1999 they earned 142k with 720k in FCF. Health Power, Inc Market Cap: $6,512,785 P/E: 1.67 This company had some losses in its past, but 1999 had net income of $3.8m with FCF of ~$4.3m. The market cap was only ~$6.5m in 1999, but was taken private in December 2000 for $36m (I think).

Reading google cache can be very useful from time to time. Knowing how to use Google creatively is definitely helpful. I am a DIY-er, but I'm a lazy DIY-er. ;) Going through 3,000 stocks isn't my idea of efficiency, so if there are others to work with (http://unlistedstocks.net) it makes it easier. I'll use the books as a starting point just to learn more about that segment of the market and then get onto the site.

Really excellent site Parsad! I've only been here for a little bit, but have learned a ton! Looking forward to learning more, more, more! Cheers!

It's really strange to read stuff that was published on the web in 1996 (I'm a youngin). Especially regarding a company and its financials. I find it completely strange that these books could be of much serious use considering the data is so old. I guess it's a good starting point to learn of the existence of companies in your circle of competence that may be inefficiently priced then do follow up research. But man... it seems strange to look at financial data from 10-15 years ago and hope the companies are still similar (or in business). Although you can get the Walker's Manual of Penny Stocks from 2000 for ~$4 on Amazon. So why not right? Walkers Manual Penny Stocks 2000: http://www.amazon.com/Walkers-Manual-Penny-Stocks-2000/dp/0970001002/ref=sr_1_13?s=books&ie=UTF8&qid=1361415440&sr=1-13&keywords=Walker%27s+Manual Walkers Manual of Unlisted Stocks 2000: http://www.amazon.com/Walkers-Manual-Unlisted-Stocks-2000/dp/0970001010/ref=pd_sim_b_1 Walkers Manual of Micro-Cap Stocks 4th Edition (2002): http://www.amazon.com/Walkers-Manual-Micro-Cap-Stocks-4th/dp/0972068813/ref=sr_1_14?s=books&ie=UTF8&qid=1361415440&sr=1-14&keywords=Walker%27s+Manual (I don't make any money if you click those links)

That's true, it probably is smarter long term assuming we continue to use the same resources for fuel as opposed to other renewable sources. But I wonder though, how would US policy makers ensure we use their resources first without noticeably damaging the economy and/or getting kicked out of office?

Gustave Le Bon's The Crowd: A Study of the Popular Mind. This isn't as much as history of bubbles (let alone recent bubbles), but a primer on mass psychology. It talks about how crowds form, think and how leaders are selected, etc. It's still applicable to modern times as humans haven't changed much in the last 100 years. You can probably get a used copy on Amazon for a few dollars. I found it to be worth my time to read it.

I agree 100%. Though I also like to have a fcf generating machine that I can control. The reason is that a (more or less) predictable stream of cash helps very much reducing what Mr. Klarman in “Margin of Safety” calls “the opportunity cost”. Of course, it could also be reduced through special situation investing, or through high-yield bonds investing. But I find the nitty-gritty of business management and decision making to be much more fun! :) giofranchi I tend to lean towards the fcf machine and control aspects. I've discovered that I'm better at making money in real estate than in stocks. I have far more control, but it's definitely not as passive at all. Buying and holding BRK, FRFHF, LUK, BDVSY, etc would make you money, but in my experience I'd be more likely to make more money in real estate. Buy anyways premfan, the choice is ultimately yours. Good luck and let us know what direction you go!

A few thoughts... Free Cash Flow Machine: Creating an enterprise that shoots out cash that can be redeployed into new investments is very important to growing. But it also needs to be combined with scalability (or somewhere else to invest it at least). Management: As others have said, the Patel Way works very well. There are other ways to do it, and one way is to hire excellent, trustworthy management. Maybe you have to pay them above average salaries, but then you'd be freer to look for other investments. Scalability: Building a business that you can grow and eventually get to a point where you're not dealing with the day-to-day, but are focused primarily on capital allocation is hard, but possible. Most small business owners, I think, don't think about (or don't care about) growing their business into a billion dollar enterprise that other people manage for them, so they don't go into businesses that are inherently scalable. I don't know exactly what you're aiming to do, but creating a large hotel chain from one hotel has been done and it will be done again. Could you do it? Do you even want to? Lots to think about...

Maybe I'm not thinking about this in the right way, but depending on how you finance this deal, you might be able to make a good return and grow nicely. It costs $900,000 to buy and if you can get away with only putting up $100,000 cash and have the seller finance the remainder of the down payment and you make $100,000 a year and you can reinvest that in another hotel and then two more... extrapolating out a few years, you might own a few hotels and be making a good chunk of change every year. Maybe your hotels wouldn't have the best margins or occupancy rates, but if you can make 5x your money in five years and do that multiple times you'd be doing nicely in life. Just a thought.

I've been interested in hotels for some time and a big obstacle seems to be making the jump from owning one or two hotels and being there all the time, to creating a larger chain and having other people run it mostly. As Parsad says, getting quality and trustworthy management is key. Just out of curiosity premfan, how big is the hotel you're looking at? I always find it interesting to think about the numbers...

Absolutely agree. This is so cool!