BG2008

Is Scott Hall a reference to Razor Ramon? Great video about WWE and its new distribution model. Looking forward to your video about boxing and MMA fighters' pay. A few guys that I "knew of" from High School wrestling winded up on UFC's roster.

FRPH - Company owns a collection of Flex Industrial assets in Baltimore with additional 1.3 million sqft buildable land on its existing sites, a four phase multi-family/mixed use development on the waterfront in Washington DC, Royalty to aggregate mines leased to Vulcan Materials and Martin Marietta with 20,000 acres of future development land, and additional parcels of land. In short, a sum-of-the parts story with 5-10 years of organic growth. At today's price, buying at 66 cents on the dollar. Worth $53 per share today, but likely worth close to $60 by year end 2016 as they build out phase I of DC and lease up their new flex industrial building. There is a presentation in the FRPH thread that explains the thesis in detail. There is only about $50mm of debt on the company. The construction loan for the DC waterfront development is non-recourse. Company generates about $27mm of NOI for 2015. But corporate G&A, interest, and development efforts brings operating cashflow to about $15mm (excluding Stock based comp add backs and effects of working capital adjustments). It is important to note that the G&A pays for land entitles, planning, and cost of holding land parcels that do not generate cashflow. Standalone cash generating ability is much better than the current structure. Management team has the right strategy. Simply convert non-cash producing assets into cash producing. This means build out the excess 1.3mm land parcels on the flex industrial sites, develop the DC waterfront, and sell excess parcels and convert into income producing assets via 1031 exchanges. Long term, will likely convert into a REIT.

At least its a lot more tax efficient, but on the other hand the 500 original companies of the S&P500 outperformed the index (and when you equal weight at the start even more). So maybe its a good idea to build an index yourself with >100 companies. It shouldn`t be too hard to exclude the crappy businesses. On the other hand you are back to active investing then. Maybe do it like Buffet and make buy once sell never decisions, that should be even better. My goals for 2016 are 1) hold my weight 2) make more friends 3) stop trading options, OTC, microcaps and illiquid stocks and stop making stupid short term trades. (the last one was already on last years list, if someone has an idea to force myself to not do it, its welcome.) For #3, Michael Lewis wrote that the Cornwall guys used to make presentations of their investment ideas. I know that Lewis embellished a lot of the details in the book. But when I see a good advice, I take it, even if it's false. Anyway, I find that I tend to make a powerpoint slide for my largest position. The rationale being that if you have to spend weeks creating a presentation and feel comfortable showing it to people, it implies that the idea has a lot of merit. If you can't get past page 5 of the slide deck, you likely have an awful idea. Perhaps the solution is for you to pause and write down a 1-2 page thesis before you pull the trigger. Just a thought.

I think that GEOS is actually one of the better companies out there. It's just REALLY cyclical and levered to oil price. It's the kind of stock that you buy when the sentiment is so poor that most people would feel embarrassed to own them in their portfolio. The company has four segments. They own the leading position in the land based seismic equipment and basically the entire market share of the permanent reservoir monitoring systems. Their marine nodal system may generate revenue in this dire market. Q1/Q2 maybe a catalyst as there's a $17mm non-binding contract that may start.

Sculpin, I've been eyeing this a bit. Yes, there's a large discount to NAV. But if you look at the NAV, there's embedded leverage behind the NAV. It's a bit easier with the publicly traded positions. The private companies are very hard to figure out. I don't think I've seen a company destroy so much value. It seems like everything that they touch turned into a turd. With regard to the Canadian resets, I also don't think that $25 par is the right price. Many of the rate reset prefers trades substantially below $25 after the reset. Although, larger spreads +4% helps a lot.

GEOS - $205mm in current assets, $40mm cash, $32mm in AR, $124mm in inventory, versus $17mm in Total liabilities. They own their own real estate and a rental fleet of Seismic equipment. Total book equity of $289mm versus market cap of $155mm. Actually has a very good business. Owns large market share in the wireless seismic business. Burning cash right now. Around $5-10mm a quarter. Company is well run, they continue their R&D during downturns and come out and tend to do well. Houston Wire and Cable - Easy to understand distribution business. $133mm in current assets versus $63mm in total liabilities. 1/3 of biz in oil and gas. Versus $87mm in market cap. Not a total net net. But business should be cashflow breakeven. Distribution business, when times are bad, they draw down their inventory and generate a lot of cash. Okay business in the long run. Should be worth 2x its current price. Friedman Industries - $49mm current assets, $3.57mm in total liabilities. Market Cap of $37mm. Related to Oil and Gas. Cashflow break even for now. Distribution business. I own a basket of these. Buy them and own them in 1-2% positions each and just ignore them for a while.

NOCalledStrikes, Is there a back of the Envelope way to calculate what the UBIT would be? For example, can you look at the distribution or a previous K-1 and determine that? Thanks.

I'm trying to start a list of Value Investor Bargain Bins (Some are likely cheap for good reasons) 1. Greenlight - SuneEdison, Consol Energy, Micron Technology 2. Starboard - Macy's, Darden 3. Pershing Square - Valeant, Platform 4. Baker Street Capital - Walter Investment (WAC) 5. Monish - Horsehead Would love to see other names here

If you are married/have a gf/looking to get married, have a deep and long conversation with your significant other. Having them onboard can be the difference between having to fold up shop versus having the staying power. I'm very lucky in that aspect. Figure out whether you're going to set up a fund or use a RIA structure. Starting a fund means minimum fund admin, auditing, legal etc cost. RIA is much cheap, but you run the risk of aggregating 30-40 accounts that you have to trade in separately. It's hard to scale RIA. Frankly, if you have savings, I would look into fund structure. If you dont' have much in the way of savings, go the RIA route. No one will probably talk to you in the first 1-2 years anyway, I was very surprised by this. Things starts getting easier during the third year (mostly due to performance, proof of staying power etc) You will be very surprised by who gives you money and who doesn't.

Any suggestion on what's the best tool to stay on top of company news, earnings release, sec filings, insider buy/sell, analyst upgrade/downgrade (not Zacks) etc without 10 e-mails saying "Stock ABC down 0.5%"

Well, when you're living in Puerto Rico, drinking alcohol, screwing girls, and just sold your business, what else are you going to do?

Does anyone know what kind of EV/EBITDA multiple Berkshire paid for the pipelines that it purchased in 2002 from Dynergy. I'm trying to use Buffet's EV/EBITDA multiple to use as a bear case scenario to gauge how close are the public MLPs GPs and LPs trading relative to Buffet's purchase EV/EBITDA. On a P/Sale multiple, I estimated that Buffet paid about 6.25x P/S for Northern Natural. Nine month revenue was $201 at the time when Mid American bought the pipelines. I used a $300mm revenue full year figure as the $201 was likely not for all the days in 9 months as Dynegy bought the pipeline and then sold it fairly quickly to MidAmerican to raise liquidity. From BRK 2002 Annual Report Last year MEHC acquired two important gas pipelines. The first, Kern River, extends from Southwest Wyoming to Southern California. This line moves about 900 million cubic feet of gas a day and is undergoing a $1.2 billion expansion that will double throughput by this fall. At that point, the line will carry enough gas to generate electricity for ten million homes. The second acquisition, Northern Natural Gas, is a 16,600 mile line extending from the Southwest to a wide range of Midwestern locations. This purchase completes a corporate odyssey of particular interest to Omahans. From its beginnings in the 1930s, Northern Natural was one of Omaha’s premier businesses, run by CEOs who regularly distinguished themselves as community leaders. Then, in July, 1985, the company – which in 1980 had been renamed InterNorth – merged with Houston Natural Gas, a business less than half its size. The companies announced that t

Seems like the Kiln that you're referring to is more geared towards cement production rather than the really dirt cheap $10/ton aggregates that consist of crushed stone, sand, and gravel. I think those materials have even smaller radius where they enjoy tremendous amount of pricing power. Cement is higher up in the value chain and supply can come from further away.

LC, Can you expand on the kilns upgrade? I find that NIMBYism is good moat characteristics for aggregate miners. Most residents are not keen on having a giant rock mining operation near their houses. Hence, it's very hard to get permitting to open up new rock pits. If a community is so desperate that they don't mind of a rock pit, well, that's probably not a community that you want to sell rocks in anyway. That desperate community 1,000 miles away just can't ship the aggregates to your market.

There was no mention of price. So, I would say that Vulcan Materials and Martin Marietta are wide moat companies. Here's what Peter Lynch has to say. I'd love to own one of these companies, but their prices isn't so attractive. I’d much rather own a local rock pit than own Twentieth Century-Fox, because a movie company competes with other movie companies, and the rock pit has a niche. Twentieth Century-Fox understood that when it bought up Pebble Beach, and the rock pit with it. Certainly, owning a rock pit is safer than owning a jewelry business. If you’re in the jewelry business, you’re competing with other jewelers from across town, across the state, and even abroad, since vacationers can buy jewelery anywhere and bring it home. But if you’ve got the only gravel pit in Brooklyn, you’ve got a virtual monopoly, plus the added protection of the unpopularity of rock pits. The insiders call this the “aggregate” business, but even the exalted name doesn’t alter the fact that rocks, sand, and gravel are as close to inherently worthless as you can get. That’s the paradox: mixed together, the stuff probably ells for $3 a ton. For the price of a glass of orange juice, you can purchase a half ton of aggregate, which, if you’ve got a truck, you can take home and dump on your lawn. What makes a rock pit valuable is that nobody else can compete with it. The nearest rival owner from two towns over isn’t going to haul his rocks into your territory because the trucking bills would eat up all his profit. No matter how good the rocks are in Chicago, no Chicago rock-pit owner can ever invade your territory in Brooklyn or Detroit. Due to the weight of rocks, aggregates are exclusive franchise. You don’t have to pay a dozen lawyers to protect it. To top it off, you get big tax breaks from depreciation your earth movers and rock crushers, plus you get a mineral depletion allowance, the same as Exxon and Atlantic Richfield get for their own oil and gas deposits. I can’t imagine anyone’s going bankrupt over a rock pit. So if you can’t run your own rock pit, the next best thing is buying shares in aggregate-producing companies such as Vulcan Materials, Calmat, Boston Sand & Gravel, Dravo, and Florida Rock. When larger companies such as Martin-Marietta, General Dynamics, or Ashland sell off various parts of their businesses, they always keep the rock pits.

It's one of the many things that I look at. Typically when there vix is above 35-40, there's either 1) temporary dislocations or 2) widely available bargains. Fundamentals still trumps.

The Marcellus region is notorious for lack of takeaway capacity. The $1 price that you quoted is for spot price that doesn't have committed pipeline capacity. In reality, producers with dedicated capacity can realize much higher price. There is also no shortage of companies building pipeline capacity to takeway production including EQT and Columbia Pipeline Group. The addition of new pipelines may encourage producers to drill more which may lead to additional production which may dampen prices. Any thoughts on this?

Large export or not, there are certain sectors that have more pronounced China exposure. Some of them may not seem obvious at first. NYC real estate is propped higher by Mainland buyers who are eager to pay all cash. Luxury brands such as LVMH have been hit hard. Obviously commodities is experiencing some of the toughest times ever. CNBC is full of idiots. I watch clips of it on Roku on large down days to amuse myself.

The flow of gas historically has been to import foreign nat gas into the US via the Gulf Coast and then transport them to the rest of the country. Now the Marcellus Shale is the most productive and least expensive region to drill for nat gas in the US (the world really). If you think about it, PA, OH, and WV is a lot closer to New York. Many pipeline companies are actually reversing flow from the Marcellus to the Southeast and the Gulf so that Nat Gas can leave the US and be transported to Europe and Asia. This is my high level understanding.

As a great admirer of BRK and Buffet, I find that idea to be quite troubling. I probably would if they separated the re/insurance business from the OpCos. I'm perfectly okay with owning the amazing sets of OpCo assets, but the speciality risk underwriting scares me and would keep me up at night. I think that it takes someone of Buffet's ability to be able to provide oversight on the udnerwriting standards for the various insurance entities. I would suggest reading the book "fatal risk" to better understand how Greenberg's forced departure from AIG might've lead to AIG's downfall. I also think that there will be more skeletons that gets flushed out when Buffet passes away. We do not know what they are now. Fiefdoms will likely occur as Buffet is clearly not keen on appointing a new CEO in the same cloth as him. My two cents. There's been an slow over-reaction for a long while already, purportedly due to concern over the transition. This is much more of an opportunity to go 100% into BRK. For those who would like to, can rationally do so over time. I'm one such, surely there are more out there. The headline like opportunity that you're talking about will be short-lived and the 100%ers are not likely in that pond.

I second Eric's opinion about hedging. If you believe that a certain position has 2-3x upside and you can buy a put at 10-20% below current trading price at a fairly cheap price, I would put 100% of my networth in that trade/investment. Granted, there are a few things to take into consideration. Is your networth already a huge dollar figure? Is your networth small and you can easily recover a 10-20% drop via time and income? Is your investment a solid 2-3x upside with virtually no downside? Or is there some sort of tail risk event that may render it impaired? The beauty of buying the put is that if the price of your underlining stock falls dramatically, you can take the proceeds from the put protection to either re-allocate towards a better idea or to own more of your existing position. Now you own a larger position in your favorite idea at a much lower cost. See how the fundamentals is very important here? If your thesis is wrong, then you have to move on and lick your wounds that you suffer a 10-20% impairment. I don't advocate the above strategy for everyone. This would be a terrible advice for a Walter Schloss type investor. I happen to own a fairly concentrated book and I tend to have a "feel" for what the catalyst for some of my ideas are. If you're naturally a diversified investor with 30+ positions, I probably would recommend that you never put 100% of your networth into a single idea. I agree - all I need is an options market in the stock I want to buy. I've done it with BRK, done with FFH in the past, done with ORH, and now doing it with VRX.

A bit dated, but I imagine that it provides a good glimpse of how the Greeks think about the situation

1. Lift weights - It increases your testosterone level and increases muscle mass, hence it helps to burn more calories while you're sitting. Plus, I find it much more fun than doing cardio. 2. Bring a book with you on the subway - You'll be surprised how much reading you get done 3. Download Earningscast and listen to your conference calls on your iPhone on the bus, out walking, doing cardio at the gym, etc. 4. Buy a kitchen timer. When you really need to focus, wind it up for 25 minutes. For 25 minutes you can't do anything else other than your task at hand. 5. Time savings tips for eating healthy a) Buy pre-made soup, ground turkey or rotisserie chicken, and kale or other healthy veggies. For ground turkey, heat up with a bit of olive oil and add soup and kale/veggies, put into tupperware container. For rotisserie chicken, pull apart the meat and add to soup. You now have multiple meals of healthy, high protein, high fiber meals that you can bring to work etc. b) Sweet Potatoes - Heat on high in microwave for 4 minutes, turn over and heat another 3 minutes, you've now got a high fiber, low glycemic complex carb c) Cast Iron Pan - Buy a cast iron pan and a stainless steel chainmail cleaner, you can cook your steaks, burger, etc on it and mimic the taste of an outdoor grill d) Fage non-fat yogurt and berries - Great high protein snack during the day with minimum calories e) Track your calories at myfitnesspal.com f) Buy Quaker's old fashion oatmeal and electric hot water boiler - Boil water using electric water boiler first thing in the morning, add to a bowl with 1/2 to 1 cup of Quaker's old fashion oatmeal and let steep while your brush your teeth etc. Add fresh blue/black berries or banana with brown sugar. You just had some complex carbs with lots of fiber in it. g) Poaching eggs - For breakfast, boil a large pot of water, drop a plate on the bottom, turn off heat. Gently put 3 egg whites and 2 whole eggs onto the plate and let sit for 5-6 minutes. You'll have poached eggs with runny yolks. You also don't have to scrub the bottom of your pot. 5. Buy book called Pomodoro Technique from Amazon, it's worth the money, buy a timer and force yourself to work on one task per 25 minutes 6. Read this pdf on how to improve your fund performance 10_Ways_to_Improve_Your_Fund_Performance.pdf

Something that no one has really talked about is your "expected rate of return". If your expected 5-10 year runway is 20+% return (speaking hypothetically here), I think it becomes a no brainer to contribute into a Roth. If you think you will compound at a high rate, you will wind up with a large sum when you are 59 years old. Even at a lower tax rate, the absolute tax dollars can be quite high. My feeling is that when I'm 59, my assets that generate income, Real Estate, securities, etc that throws off income will likely push me into a fairly high tax bracket anyway. Assume you own $10mm of assets when you're 59 years old and the assets throw off 3% income (assume normalized interest rate), you're in a fairly high tax bracket already. I think the Traditional Vs Roth argument applies more towards people who earn 6-7% rate of market equity return. If you're generating returns that beat that threshold by a meaningful amount, it's probably best to go Roth, take the pain today, and not have to worry about taxes down the road. Of course, the govt can change the tax rules and you can still get screwed, but I'll take that risk.

I'm faced with a thorny Roth IRA Excess withdrawal/Re-characterization question and I'm hoping members on the board can help with walking me through the decision matrix 1) I typically wait till year after to deposit money into my Roth IRA 2) Recently, I executed a trade where I was forced to deposit capital into the Roth IRA because unsettled funds can't be used to buy options (puts for hedging purposes) in the same day 3) Let's assume that the balance was $100 in my Roth IRA and I think that the balance at year end may be substantially higher, say $150-200 (strictly hypothetical, but let's entertain the idea) 4) While I'm not at the $180k contribution limit yet, but it's highly likely that I will hit that this year. This will render my Roth contribution to be disallowed My choices are a) Leave the contribution as is and wait till tax filing to determine whether I need to withdrawal the excess/re-characterize or if I can just leave the contribution as is or b) Withdrawal/re characterize today to avoid paying taxes on excess contribution. I'm leaning towards the withdrawal/re characterization in order to avoid additional taxes. Any comments on the pros and cons of either option is greatly appreciated. Anything to watch out for if I do make the withdrawal/re-characterization? Differences between Withdrawal versus Re-characterization? If I re-characterize, can I convert into a Roth if it turns out my income is below the $180k threshold? Many thanks!!