Morgan

Poorvu is the "po" in Baupost from what I read a long while back. I think a few families gave Klarman ~27m to manage after he graduated undergrad. He must have been simply amazing to be given that back then. Granted it wasn't a typical 2 and 20 setup like it nowadays. I think he earned a 35k salary and eventually they sold him the company. As for RE, read all of Poorvu's books. They're great and cheap too. Another interesting and old one (1969) is "How to Get Rich in Real Estate" by Robert Kent. This book is about getting 2-6 unit buildings and how to deal with tenants to some extent. It's a cheap book and a fast read. Basically if you're on here you probably have a value bent, know how to do some decent analysis and can figure out how much you're likely to earn from a building. Take that and see what your returns will be compared to how much cash you have to spend to buy it. If you use creative financing (leverage) you can get into more buildings more quickly and thus increase your FCFs pretty quickly. To be honest, arranging the financing is the easiest bit. Dealing with tenants and doing maintenance is far more time consuming than financing. Read "How to Win Friends and Influence People" by Dale Carnegie. Good book regardless which industry you're in. Also get some books from the hardware store on home repair, plumbing, electrical, basic building concepts, etc. Watch youtube videos on specific stuff. In general, get good tenants, be nice to them, fix problems quickly and properly. Don't half ass things. Do it right the first time and you'll probably do pretty well. If you're looking for info on REIT's I'm not the person to talk to. Never really looked into them.

How do small companies structure their deals to use, within reason, as little cash as possible? Something like a LBO? Some other option? Can you point me to small companies (1-2MM rev or less) that have grown to at least a decent size (100MM rev or bigger), where there is good detail from the early days? That way I can try to understand their thought process and financial picture and how they obtained funding for growth. Thank you for any advice in advance!

Visa/MasterCard seem very inflation proof. They must maintain their network though. Real estate is generally good too. Collecting generally increasing rents. Not as good if there is deflation and there is still a big mortgage attached to the property. I don't have any numbers, but I bet equipment and car rental companies are quite inflation proof. Does anyone have numbers offhand?

Well, I'm just a young guy with no Wall St. experience, but I'll say she is probably a very intelligent person considering she works at GS and has a CFA. Perhaps not, but probably. That said, she operating in a system that has incentivized her to write anything to help sell products. Her incentives are aligned with her employers other business operations. Also, if anyone gives her or GS trouble they can say it is her opinion, not fact. Look at incentives, opinion vs. fact and always do your own research. You probably know that though. ;D But yea, kinda silly sometimes lol

Was anybody able to find a copy of the case study by Thomas DeLong mentioned in the article? I searched briefly and didn't find anything.

I don't know if there will be a major conflict by 2025 that has huge human costs. But it does seem likely that wars will be fought significantly differently than they have been in the past. Going forward, there will almost certainly be a shift to unmanned human controlled fighting machines as well as almost completely AI forces. As this shift happens, it will likely be a war not simply about the number of human bodies, but of economies. Whoever can build and maintain the largest and best drone/AI military force will dominate. Another option, assuming there isn't a radical change to a drone/AI military, is nuclear wars. If it comes to that, hopefully only one nuclear weapon will be launched and whomever is attacked will not retaliate with nuclear weapons. That is is almost certainly the best option for human kind. We absolutely do not need a nuclear war. Lets say though, that the attacked do retaliate and it grows into a global nuclear war. It's likely that the largest cities would be attacked (with nukes anyways). 35 million people, I think, could easily be killed with todays modern nuclear weapons. An attack and a retaliation - two nukes - on any of the top ten metropolitan centers would definitely do 35 million people in. 175 million people would require a significantly larger war, but probably could happen. A long, drawn-out, world war could probably do it. I hope it doesn't happen though, but I can imagine it. Hopefully violence in the world will continue to decline as suggested in Steven Pinker's book The Better Angles of Our Nature, but he also states that it may not continue it's decline. Nor does it seem that humans will collectively decide to abandon violence and wars in the next 12 years.

I'm not sure if this has been posted on here yet - it was just put on YouTube a few days ago. How the Tesla Model S is Made: I know nothing about manufacturing so maybe this is mostly common stuff, but I found the video to be absolutely stunning. And the robots are extremely capable. It's so cool to see how it all goes together. Literally from coils of aluminium to a Tesla. Amazing. I really would love to own a Tesla.

But the ROE must be terrible right? I assume the ROE was pretty decent. I don't know the details of his purchases, but it was probably financed conventionally (20% down) and he didn't blow up. So he had decent leverage combined with good operations so he probably made decent money in the early years and now that his mortgages are paid off, his profits are very high. He has done well on these investments.

It can be a high margin business. I know a guy who has owned some properties forever and has 70%+ net profit margins because he no longer pays a mortgage on them. That being said, I know another guy who developed a big apartment complex that didn't work out and he went bankrupt and the property sold for ~38% what it cost to build 5 years prior. It goes both ways. Be sure to have a margin of safety.

Could you post that report here? Or PM it to me? I'd love to read it over.

Where did you get that data? I'm not saying you're wrong. I'm just curious. It'd be cool if you had some big trove of data on the industry. ;D

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