BG2008
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Posts posted by BG2008
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I thought this was a really excellent book and have given it to a number of young people.
What makes this a good book in your opinion?
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More GTXMQ....
wabuffo
Interesting. I sold out at $6.9 or so.
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Added some INDT at $60
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Anyone have some good/great stories about the above to share? Some may not hit the news tape due to the lewd commentary, quirky nature of history, or unflattering result. I mean, a financial genius and a hero of mine (ours) signed his Christmas cards "Sincerely - Susie, Astrid, and Warren". The guy is the richest guy on earth, he can do what he wants I guess.
The few that got me thinking were when Jack Ringwalt went to headquarters to pick up his check for selling National Indemnity, the seller was 10 mins late because he was trying to find a parking spot with time left on the meter. The other was Mrs. B basically unhappy with the fact that she sold her furniture business for substantially less than it was worth so she left the business and started a competitor which was ultimately bought by Berkshire and Buffett made her sign a life time non-compete. (I recently read this on twitter - is this true?)
The Munger story about him setting his date's dress on fire because he was trying to impress her by smoking was incredible. You can't make this up.
Anyway - spend time trying to figure out where the business is going. Just thought some fun stories about the past would be interesting to read about. I can dig up some others if no one has fun, obscure, interesting stories to share. Cheers!
In the Snowball, Alice talked about Jack Ringwalt having second thoughts and was driving around trying to delay closing. Buffet, being the ever folksy grandpa, paints the story as Ringwalt driving around looking for parking spots with time left. I think it was described as every few years, Jack "gets in heat" and considers selling the company. The Snowball is truly a great book as it was probably more true and less propaganda.
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My biggest achievement in 2020 was to sell 90% of my stocks right before the COVID crash as there were many technical indicators showing the top. But I still had a 4% draw down on my account as the remaining positions dropped like a stone, which is a tragic because I had too much fundamental belief in them.
My biggest mistake was to choose not to believe in my technical analysis after the end of March when it says I should be buying aggressively. Being in an inner circle with classmates from Wuhan's CDC and Hospitals, the fundamentals clouded my view too much and scared the shit out of me to buy. I was ramping up exposure on stocks too slowly and ended the year with only a 11% gain.
Muscleman,
Thank you for bringing the Covid crisis to our attention early on. I managed to hold onto our positions but bought a lot of out-of-the money puts to hedge against our portfolio. We winded being up over 20% thanks to you. More importantly, the risk management tactic was a very nice "surprise" to my investors during March/April. Coming out of the crisis, we have gained more of their trust.
If I can offer you a piece of advice is that if you see Vix trade to 80, just buy and hold your nose. It only happened once before during 08/09 in my short 15 year career. So if Vix spikes to over 80, it is just a blaring signal to buy. I hope you can benefit from this piece of advice in the future. Frankly, you can say the same for Vix of 40, or 60. But 80 is definitely a no brainer.
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"News" (and any subsequent words) was ignored because we limit queries to 32 words.
Your search - {"_type":"Ads/NativeAdsRequest","imp":[{"id":"907b57ba-2499-446c-bf8a-b049e29f99cf ... - did not match any documents.
It takes me to WSJ but then it turns into this
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Is Wall Street Journal Down for anyone? I'm using Chrome. Everything else works fine.
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Gregmal's short squeeze ideas and ThePupils LEAP/Options play in Real Estate
Clifford Sosin - Ashtead (Sunbelt Rental)
Packers' US based Telco ideas
Laughing Water Capital
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Honestly, if the 2020 episode worked out like 2008/2009, you would not be having these regrets. The guys who bought Carvana at the lows might have to suffer massive dilution like the banks did in 2008/2009 because the Fed took their time to rescue the banks back then. Now you have a bunch of youngers guys running around thinking they are geniuses because they are up 100-300% in 2020. Ask yourself what does the alternative might have look like? Also you will always miss some incredible bargains during a selloff. You are not going to catch all the amazing deals or all the Pokemons. This is simply a part of life. In 2008/2009, SL Green had dropped from $150 to under $10 and I walked around all over Manhattan going door to door and looking at SL Green buildings. I couldn't buy because I did not understand how bankruptcy works and how equity can retain value in a bankruptcy. That was a 10 bagger that I missed out on. But back then I probably would have gotten a bigger ego and would have winded up doing something dumb with that money anyway.
The stuff that I regret is not buying more Ashtead. Now that's a really good company with a long runway to grow. It traded as low as 10 British Pounds and is now at 40. But it will probably be another 5-10 bagger from here given 5-10 years. That's the one that I regret not buying at the low and not in bigger size. I regret not buying more Berry Global and DuPont at the low. Because I know those companies. They were existing portfolio companies that I knew were going to be 3-4x in 3-4 years. No balance sheet issues, good cashflow, etc. But I decided to diversify into a bit of growth. Frankly, I have done pretty well there as well. Now my portfolio is more diversified and the stuff that I bought are up 30-200%. Overall, I am just happy I didn't blow up and I reallocated pretty well. Clients are happy. Sure I don't have the 100% return that a few managers reported. But I also wasn't the one getting angry phone calls in March and April. The clients are genuinely happy with what I did last year. Like Jake Taylor from the Value After hours says "I'm not designed for optimization, I am designed for resiliency and survival" or something like that.
Can't look at what you know today. Need to remember how you felt in the moment and don't forget that. The world in March/April was not as clear cut as it is today with vaccines that are 90% effective.
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Many years ago, a few years after leaving Africa, my sister got mugged in the London Underground by a 'known' thug. At the time, she was in her mid 20's, doing a two-year internship with one of the UKs leading CPG companies, and dressed in business attire. It was an attempted bag/jewelry theft, plus a shove into the path of an oncoming train.
As most women were, in a different time and place, my sister had been trained in self defense and marksmanship by experts. Uncles and boyfriends had also taught how to tumble safely out of moving vehicles. London's tube stations are often quite deep, and after the initial shock, it didn't go well.
The thug was delivered to the ticket booth, near collapse, with both his RH arm and his RH leg dislocated. Attempting to pass out, he had been 're-awoken' a few times on the frog march up the stairs. The thug was taken away on a stretcher, and my sister had to appear in court a few days later.
Let off with a caution, but it took forever afterwards to live it down.
To this day, her boys proudly display mums caution to passing girlfriends.
SD
How did she dislocate his arm and leg? What technique? #Badassmom
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Honestly, as someone who is finally getting a bit of traction after 7 years. Being at $3mm after 6 months is a pretty good spot. If I am totally cynical, it is probably easier to start 6 months ago with a blank slate and do 7-80% with no "through the cycle" baggage. Investors want to understand the process. Is it repeatable? If you had a value bent and was all cash and went fully invested and had some tech exposure, you can probably do 40-100% in the last 12 months if the capital were deployed during the crisis. Most people I know want to hand over money to someone who 1) isn't going to blow up 2) will compound at a much higher rate than inflation 3) actually have some sort of niche that they can take advantage of and 4) is committed to doing this craft for a long time. Those are the things that they look for. What I am saying probably won't seem important, but you will appreciate it after you try raising HNW and family office capital for 2-3 years. Good luck.
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I read this book years back called "Blind Man's Bluff" about the Cold War that involved submarine espionage based on true stories written by two NY Times reporters. One of the stories involves the USS submarine Scorpion that disappears in 1968 to the bottom of the Atlantic with all hands lost. This sets off a frantic search by the US Navy to find its lost sub. All they knew was its last reported position, the path it was on (it was heading back to base at Newport News, VA after a tour of duty in the North Atlantic) and only vague other bits of information. The area to be searched was a large part of the North Atlantic near the US coast. It was kind of hopeless that the sub would ever be located.
So the Naval Officer in charge of the search operation (a kind of Hunt for Red October Jack Ryan type of guy, I guess) comes up with a novel plan. He doesn't just reach out to experts like other submarine commanders. He assembles a wide range of folks - some with submarine knowledge, mathematicians, salvage ops men - basically a diverse set of knowledgeable people but not all experts in subs. He briefs them with all the information and data that the Navy has related to the USS Scorpion's last voyage. He then asks them to go off on their own, sift through the data and independently offer their best opinion on why the submarine ran into trouble, its speed and its steepness of descent so as to locate where it might have touched bottom. He makes it interesting by offering a reward and prizes to the winner who comes closest to the actual location if/when the sub is located.
The individual's guesses on a map were assembled and using some fancy math (Bayes Theorem) -- a composite guess of the "crowd" was isolated based on the collective estimate of the group as to where the sub might be located. The location was not a spot any individual member came up with or picked. But a search was started focusing on the spot identified by this collective method and five months later the sub was located within 220 yards from where the group's estimate said it would be.
Ok - why tell this story. Because collective wisdom is what the stock market operates on. It is why it is generally an efficient market. The various participants individually all have guesses about the fair value of a stock. These guesses are made up of lots of random guesses + a tiny bit of signal information in each guess. As these guesses are aggregated, the random parts cancel each other out and what remains is mostly pure signal.
I long ago gave up on using the Kelly Criterion. That is because according to the Kelly Criterion the size of the bet is determined by the formula: Edge/Odds = size of bet. But here's the thing - according to the formula if your Edge = zero, then the size of bet is "Don't Bet!".
If most of us are truly honest with ourselves, do we really have an edge in picking an individual stock vs the market. Do we think our guess as to where the "missing sub" is located is going to be more accurate and correct than the collective wisdom of a diverse group of actors with money on the line? Are we really just punters when we think we are experts?
The good news is that unlike most gambling games (which are negative sum), the stock market is a positive sum game. All we need is to go with the market via diversification in a group of 10-15 high quality businesses and we will do fine. So my recommendation is to put away the Kelly position sizing stuff because if you think you have an edge then you are making big bets that you alone can locate a "missing sub" better than the market can.
wabuffo
p.s. the USS Scorpion story is also featured in James Surowiecki's "Wisdom of Crowds" book.
Wabuffo,
I think you're pretty good with this Garret Motion stuff. So I think you are underselling yourself a bit.
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Concentrated bets are not for beginners because you need to ensure your bets are all low risk and learning to do that takes experience. I like to own 3 to 5 stocks which puts me at the extreme concentration end of the spectrum. But I’ve been at this a long time and experience has shown me that I have good enough judgement of risk to do it. You have to be able to judge the durability of the business. Factors that increase risk are leverage, financial and operational and a short history. Factors that reduce risk are being in a business that is more at the core of the economy and serve basic unchanging needs. Some companies are low risk because they are more like holding companies and are highly diversified (think Berkshire). I currently own three stocks, two are highly diversified and involved in real estate and infrastructure. The third is a preferred stock in a similarly stable business.
Rod,
Care to share your ideas? Private messages open. Anyone who's got 3 positions in RE and Infrastracture as their complete portfolio, I want to get to know.
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Age and your overall net worth is important as well. People quote Buffet and Munger all the time. But you are not Buffett nor Munger. None of us are. Yes, you maybe an Autist like Roaring Kitty. But that's a special breed of special. If you are in your early 20s, have a good job and good prospect in life and have good safety net, you can probably do a few 30-50% bets. If you are in your 40s, 50s, and this is a lot of your nest egg, you probably want to be a lot more diversified.
Personal story, in 2011, 2012 ish. I put 30-50% into my top ideas in my IRA. The balance was $30k or so. I was buying a cash box at 1/2 of liquidation value. That sizing really helped as I got a payout that was almost double. I did that a couple times and got my IRA into the med to high 5 figures. But once I crossed over 6 figures, something in my mind mentally changed and I realized that I need to be more diversified. I have 15 positions in my IRA now. 6 figures is real money and I am in my late 30s. So I was much more aggresive in my early 30s and now that my balance is about 8x (some contributions, not all performance) from 2011ish, I manage the IRA a lot different. I manage money for other people and it never reached the level of concentration that it did in my IRA. Ironically, it is the stuff that I size in 1-5% that tend to out perform lately. So all this talk about concentrating on your best ideas, sometimes it is good to get some "right tail" exposure to some Saasy companies that doesn't make sense using 2021 P/FCF multiples. But if you understand the business and realize that this is a "winner take all" category that could be worth 5x the current price in 5-8 years, it's not a bad portfolio allocation strategy to put 1-5% into it. I prefer 1-2%. So I have a basket of what Peter Lynch call multi-baggers that I don't necessarily have a ton of confidence in like my Griffin Realty idea. But allocating 10-20% to a basket like that is a wise way to catch some of that "right tail" return. I do think there is something about digital market places, software, and other digital native businesses that are different than traditional manufacturing that makes it different this time around. Famous last words.
There are others that are much smarter than me who have evolved and developed the skills to invest in purely compounders and YOLO investments, I am not there yet. Not sure if I want to be fully there. As Robert Downey Jr said in Tropic Thunder "You never go full retard." I never go full compounder. Sometimes the stuff that you size at 2% wind up returning the same as the stuff that you size at 10% because the former is a 5 bagger the latter is a double. Nothing wrong with that outcome as your degree of confidence is likely much higher in the latter.
Happy investing, good luck compounding, and may your mind be exposed to wonderful growth.
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Look up Kelly Criterion. Never bet full Kelly. 1/3 is probably best.
Nothing beats experience. Figure out what industry you really know. Figure out what industry has low impact if you get it wrong. If you buy a grower at 10x revenue, if it turns out you are wrong, that downside is probably pretty high. If you buy Union Pacific, you probably don't get a zero. Do some pre-mortem on what could go wrong. If you see a chance where it is a zero, then you need to size it very differently. Obvious stuff, but people get caught up in the weed.
Over time, you will get better. The books are guidelines, experience helps.
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Chicken legs
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While some of us in Boston were twiddling with our ... pencils...
... dis dude ...
Oh well.
::)
That's why we are still on CoBF
Jurgis, you seem like an awesome guy to have a few drinks of single malt whiskey with
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More MO. I'm sure eventually the BTS crowd will figure out it's undervalued but it'll probably be one of the last ones. Until then I'll just clip the divvy.
BTS?
The WSB boys got nothing over the BTS army.
Who wins in a fight, Beyonce's Beehive or BTS army?
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The Legend's investment process is right up this board's alley:
This action hero also ran a 4 minute mile. Legend!
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BTW, I am incredibly happy with my fund admin and I hope they never change. Patke was fine until they got acquired and their DNA has changed. I am not some grumpy guy who isn't willing to pay for good services.
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This is going to be a rant and I want to compare notes with other managers on here. Patke was acquired by WipFli about 2 years ago and the client experience just isn't the same anymore. They have basically increased my audit and tax fees from below $10,000 a year to about $16,000 for an US based strategy. They started nickel and diming everything. They have increased the cost for the GP tax preparation by over 100%. They are definitely pissing off this customer. They have become a bit more client unfriendly and flat out told me that I am unprofitable for them. Frankly, the guy who does my audits can't get his shit done by Aug or Sep. There has been a ton of stop and go. I suspect that they are unprofitable because the guy would work on it in March/April/May and then go away and work on it again in July/August. So I wind up in a 10 months audit hell all year around. I'm pretty much done with them. I am 99% sure I am moving over to Spicer Jeffries for 2021. Does anyone else have similar experience with them after the WipFli acquisition. At the price that they are quoting me, I am probably better off going to a Grant Thorton or someone bigger.
It's been so aggravating everytime I get an engagement letter from them. Because it is a back and forth on why is this up X%? I think a 2-5% annual increase in services makes sense to be inline with inflation. But they have lost their soul and their core client base. That's fine if they want to go up market.
If you guys have any other recommendations, it would be greatly appreciated to compare notes.
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Excluding SPACS which I think of as a cash account:
35% - Simpson
This has been my majority position for almost a decade. This is the only position I’ll keep regardless of pandemics or word wars.
29% - BYD
Followed Munger with this. Wasn’t expecting the EV frenzy. What does everyone think about their 92B valuation?
Rest:
ADSK - I know very expensive but they have a such a strong competitive advantage. I’ve been complaining they’re too expensive for a decade
DEO - strong brand in the one industry that can’t be disrupted (can it?)
DIS - this is a bet that parents will continue to spend money and will care about their kids in the future
DISCA - Malone convinced me. They have a competitive advantage and are now following the example of Disney. Reminds me of Autodesk following the example of Adobe.
STNE - following the Berkshire duo with this
TYL - Tyler, Daily Journal competitor. Learned about it from a Munger video. Smallest of my positions. Keep meaning to learn more about it to see if it’s promising
I guess you can call your portfolio "50% clone of BRK?" haha, JK
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Billy Boy Ackman just bought more of Howard Hughes Corp
I don't think that is necessarily true. I think what you are seeing is rebalancing between funds and OTC put assignment.
he got more shares put to him. he now owns 25% of the company, all in simple long stock form (no options/swaps).
“On January 6, 2021, the Reporting Persons restructured and rebalanced its investment in the Issuer,” according to the filing
On January 6, Pershing acquired shares via the obligation to purchase common shares pursuant to previously written and reported put options which expired on Jan. 6, the unwind of 3.5 million previously written and reported put options expiring in 2021, and the purchase of shares of common ctock, according to an amended 13D filing
The previous 13D/A filed on June 5, 2020 showing Pershing’s 19.9% stock ownership also referenced 32.5% beneficial ownership, an amount reflecting a case where all put options were exercised
Thank you guys for keeping me straight!!
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Billy Boy Ackman just bought more of Howard Hughes Corp
Put candidates for Bubble Stocks
in General Discussion
Posted
You made a put position 5% of your capital?