BG2008

Beat the Streets - Inner NYC Wrestling Program to Keep Underprivileged Kids Off the Street For those value investors who are current and former wrestlers, there's an organization in New York City called Beat the Streets. They intend to get underprivileged kids off the streets in NYC and get them to wrestle. I think wrestling as a middle school and high school activity is particularly important in this day and age. It teaches kids to work hard and teach the correlation between effort and wins/results. Personally, it has made me a better value investor as the endeavor can be lonely and un-rewarding at times. Beat the Streets provides funding in the form of donating wrestling mats, headgears, paying for tournaments etc. Unlike my high school, where wrestling is a well funded activity and we worried more about winning county championships, NYC school do not have the same funding, coaches, and equipment. Beat the Streets gets fringe kids who might've spend time getting into trouble to wrestle. For those kids who would've hang out on the street and start accumulating arrests, BTS gets them into wrestling rooms and teach them about hard work and discipline. These kids may not wind up becoming ivy league hedge fund managers, but converting a potential lifetime criminal into a hardworking blue collar plumber, electrician, waiter etc is a great triumph. Again, most high school wrestling program focus on winning and beating their rival schools. Beat the Street spends more resources on bettering the lives of these kids and they offer more "life skill" coaching than most wrestling program. They offer seminars on how to attend college, eating etiques (knife, fork, etc), writing thank you letters to donors, etc. These are all very basic skills to most people on this board. But these skills changes inner city youngsters' lives because of their family background. http://btsny.org/

Was Macquarie Infrastructure at risk of a default back in 2009? That's quite crazy. It really forces you think about holding cash for those crazy occasions

I think General Growth equity post bankruptcy was a 100 bagger for Bill Ackman SL Green trading at under $10/share in 2009 should have been a no brainer for me. I did the walk of the asset and back into a $400-500/sqft figure for Manhattan retail/office where the market equity was less than $100/sqft. It was easy to conceive that the equity was anywhere 3-10x of what it should've traded at. It trades at $107/share today. Dollar Thrifty - I was not close to this one. But in 2009, it traded down below $1 per share and then got bought out at $80/share. The CEO convince lenders that it's worth more as going concern. Apple - It was a 100 bagger and a company that we all know about and it happened slowly over time Priceline - This one is a bit closer to home, traded to or over $1,000/share in late 90s, crashed to below $10 at one point. Then did a 100 bagger and now trades at $1,463. This one is a bit close to home as the original founder went to the same college and I've seen him on campus to give speeches etc. Valeant - So much smart money and people got it so wrong NYC Multi-family - Had you bought at the peak in 2006, you would've still generated a 10% ROE assuming 20-30% downpayment. Most multi-family had very strong cashflow and vacancy was not that big of an issue.

The problem is when you're on hold and can't get to anyone at all for 15-30 mins

Follow up, just spent 50 minutes trying to resolve a trading issue. They don't make it easy for you to do business with them.

I've had it with these guys. Been on hold for 15 mins to resolve trading issues

First, categorize them. Do you own a multi-year compounder? Do you hold an asset play (50% of intrinsic, but intrinsic won't go up too much over time) or do you hold a call options where time is the most important element? With a multi-year compounder, when the stock work it could be because the rest of the market realize the long term prospect of the company. Your company may have network effects, pricing powers as it grows larger, etc. In this case, you have to ride your winners. In a way, you have to think of a 10 year holding horizon and apply a discount rate and decide if today's price is still attractive. Goog, FB, Amazon tend to fall into this category. Asset play - I tend to own this type of asset. For example, I know company A owns X amount of real estate. I know what's it's worth if it's sold today. The cash on cash return is the cap rate of the RE asset. At a 50% of intrinsic value, I'm comfortable holding X%, at 70%, I'm comfortable holding Y%, at 85%, I don't want to hold any shares. This is perhaps the easiest to add/trim. You simply ask yourself "If I don't own any today, would I buy any and how big would I size it?" It becomes very easy for me to add when the shares trade down and trim when the shares trade up for this category of value investment. Calls/melting ice cubes - I'm still trying to figure this category out. It's tough.

Yes, this can't be negotiated. Both families are here. We like being around our extended family. Keep in mind that I don't live in Manhattan. I live in Forest Hills, NY. There actually is a forest out here about 1.5 miles away. At times, I would go on my walking trip which would total 6-7 miles and take 2 hours. It does wonders to clear my mind and help me catch up on conference call and what not. There are time when i just want to think and contemplate. Forest Hills truly is the best place in NYC if you want to be a start up manager. It's a 20 min subway ride into Manhattan, you're near a forest, an university library, an expressways that can get you access to Long Island and the suburbs. I do own a car. Can you suggest a few places in the Adirondacks that I can Airbnb? I've thought about a getaway weekends for myself for a couple people that I respect to just get away and think deeply and strategically.

Maybe you have your answer. Is there a college library that's open late? Spend the day doing what you want, then go to the library and steal the comfy chairs at night for a few hours. Another option is a co-working space. In Pittsburgh you can get a private office at one of these places for $350/mo. Oddball, Great suggestions regarding the college library. I just realized that Queens college offers a program where you can get 6 month access for $50. It is quiet with large open space for studying. It is located about 2-3 miles from my apartment. This will give me a walking workout in. It truly is the best option. I'm glad that I didn't take that space. I signed up on the spot for the library access. Getting out of the apartment and walking will greatly help with my sleep patterns which tends to get out of whack when you work from home everyday. All in all, this is a great deal and thanks for suggesting the library option. Coincidentally, I looked into local public libraries and they tend to be loud and attract homeless people. I did go out and buy a Bose QC35 headphone which I have already started to listen to conference call while I'm walking and taking subways. When living in NYC, you lose time by sitting in subway cars going from one place to another. I have found the QC35 to do an incredible job at lowering the decibel and allowing me to concentrate. I'm the kind of guy who needs library type quietness to concentrate. Dinner on me the next time we see each other because you just saved me a bunch

I think it is important to clarify one key thing. I live/work in the Queens, NY where space is very expensive. I suspect that many on this board live/work in an area where real estate doesn't cost an arm and a leg. For me, the reason to get an office is that I don't have that extra room in the house. I live/work in a large one bedroom (900 sqft) where the living room and office space co-exist. I am thinking of paying extra for an office literally to create a special purpose "reading room." It's a place with books, reports, and a monitor for reading. Buy a nice comfortable reading chair (still trying to figure that one out). In short, the purpose of being in this office (reading room) is to sit down for hours and read and think. Personality wise, I'm the type that works best in a library. Even small movements in the same room tends to distract me. This is why I tend to do my best work after 10PM when the rest of the world has gone to bed and there is no distraction from e-mail, phones, spouse etc. The large window will help to regulate the body clock. So it maybe a distraction for others, but it's vital for me.

So my fund business has grown a bit lately and I have been thinking about what's the highest return on incremental dollar. One of the things that stands out in the last few years is that I am not as effective working from home versus a purposely dedicated office space. There's been a lot written/said about Buffet/Munger and other respected value investors who simply read non-stop. I want to create an environment where it fosters this non-stop voracious reading habit. I am currently in the market for a 10 ft by 15 ft office with a large window. The question is how would you layout this space to create an environment that would foster non-stop reading and deep thinking. Any suggestions that includes: - furniture - lighting - noise cancelling headphones - reading chairs - TV monitors best fit for reading news, filings, etc - Dry Erase Board for strategizing, war room style boards to show vertical integration of businesses - General Setups etc would be greatly appreciated. Room_Layout.pptx

I think we need to add the element of "people will be hurt" if Buffet doesn't clarify rather than "please satisfy my curiosity". I've looked into this a lot and frankly and can say that concentrating on your best ideas when you can "afford" early on via earnings or young age really does move the needle. But it also depends on your strategy. If you're the 500-hour-per-investment kind of guy with a deep expertise in a particular sector that are not known to blow up or face rapid transformations (this would most likely preclude energy, early stage tech, early stage biotech etc), you can probably compound at high % for a few years. 50% is very hard.

Someone should write to Buffet and say that we deeply respect him but members on the board are actively discussing this and the suggestions were to use heavy concentration and leverage. In the interest of preventing people from taking on oversized risk and losing their shirt in the process, can he provide more detail on what he meant and how he would do it, if it deemed to be sustainable. In the interest of helping some people blow up, he just might respond.

I've been thinking a lot about this. I think if you're going to use leverage there are better ways than portfolio margin. If you typically traffic in extremely large caps like BRK, Apple, etc. You'll probably never get margin called with 10-20% leverage unless you happen to own Valeant and Energy. It appears that a better source of leverage can be achieved by doing a cash out refi on your investment property. Assuming it's not your primary residence (well, it's kind of hard to lose your house. You don't want to lose your equity portfolio and find yourself homeless at the same time), you can do a cash out refi on your investment property, fannie and freddie qualified mortgages are sub 4% interest. Net of taxes, it's closer to 2.0-2.5% for people in the highest tax bracket in states with income tax. Your mortgage is a 30 year fixed rate. The leverage is on your rental property and not your portfolio. Your rental property doesn't get a market to mark once you take out the loan. This allows you to have "leverage" not subject to margin call and you can buy illiquid micro caps. If the market is down a whole bunch and you wind up in an emotional fetal position due to the leverage, then that's a different story. Frankly, I'm probably okay with this on my highest conviction ideas that I've done a ton of work on.

Feels like a late bull market syndrome. Some of the most sophisticated investors that I know of are holding a large amount of cash. Most of them are doing so not by design but because they feel that opportunity sets are kind of poor at this moment. Probably okay following massive market selloff. But then hindsight bias.

Guys, this was really helpful. I booked the hotel at Quality Inn for $102 per night. I may save more with an Airbnb but then I'll have to worry about parking. Net net, it probably cost about the same. By the same token, if any of you ever visit NYC, I recommend staying at hotels in off the Express E,F stops in Queens such as Roosevelt Ave/74th St, Forest Hills, or 61st Street Woodside or even Flushing Queens. They look far away on the map. But if you catch the express train into the city, sometimes it only take you 20 minutes to get into midtown. So there's no need to pay $400 for a hotel in NYC.

I will be visiting DC to attend a conference at the Trump International Hotel on Pennsylvannia Ave on October 20th. All the hotels cost over $300 per night. Being a value investor, does anyone have suggestions for hotels outside of DC that's a quick drive to the event venue that would save me a bundle? I would really appreciate a local's suggestion for places that I can stay within a 20min drive from the Trump Hotel. I'm not opposed to staying at a Holiday Inn Express or an Extended Stay America. Motels are no goes. I've never used AirBnb before but I wouldn't be opposed to it. Thanks in advance.

XIRR is the best tool in Excel

I'm really curious as to how your landlord view this? Are they aware? Are you in a doorman building or just a walk up? I am NOT affiliated with the IRS or landlord or anything. I really just want to know better as real estate is key focus of mine.

Any fund managers here have a separately managed accounts via Interactive Brokers in addition to their fund? Would love to understand the mechanics of setting up a SMA structure, trading permission etc.

Own some rock quarries. It's hard to disrupt a business where you sell a whole ton of crushed rocks, sand, aggregate whatever you want to call it for $10. But it cost $0.15 cents per ton mile to truck it. So, if someone from 50 miles away wants to compete with you, he's got a $7.50 per ton cost disadvantage against you. It's hard for me to imagine that this cost advantage to be disrupted by Silicon Valley. The business is cyclical. But it seems like rock quarry owners tend to be able to pass their wealth down many generations. In an ideal case, your quarries are located in a desirable location. Once depleted, they can be re-purposed into higher value added real estate projects.

Does anyone have the contacts for the loan broker? I'd like to talk to one.

Ray, Can you share your process for searching for the best mortgage deal? I'm in the market for similar services/products at this moment and I'd like to get a sense for price discovery. From my perspective, I would prefer higher LTV for a cash out refi with 30 year fixed rate. How do you keep the fees, appraisal, loan origination etc to a minimum if you're applying for loans with 5-10 lenders? I think each application cost a few hundred dollars. Thank and happy to talk privately if you want. BG2008

Any weird 15+% drops in price that gets quickly re-rated today? Seems like Lancashire Holdings dropped down to 467 and then snapped back to 555. That's a nice 19% gain in a 15 min span. Someone on this board got filled.

I'm surprised that no one has asked this question at the Daily Journal meeting