BG2008

Wimp, The way to make money in NYC is to buy and never sell through thick and thin. With 2% financing, these bad boys will trade at 3% cap rate eventually. :P :P I'm joking, but kind of serious at the same time.

Citizens Bank

wasn't aware that there was a cap on damages re rejected lease! I knew that, just wasn't so clear

I thought that this is one of the better summaries on treatment of leases in a bankruptcy https://rmfpc.com/wp-content/uploads/2020/09/Bankruptcy-QA_-What-Commercial-Landlords-Need-to-Know.pdf

Pupil, We are either on the cusp of making a ton of money investing in these REITs or we are too dumb and too stubborn for our own good

I am not a FFH expert, but I do understand BRK well and I have a problem of not owning BRK. I think part of it is because my investors can easily buy BRK themselves. This has lead me to hunt for value elsewhere. The reality is that there is simplicity in BRK in that Buffet isn't trying to put on a deflation hedge. Heck, BRK even put on one of the largest winners ever (by dollar value) in Apple. So you have one company that does not make macro bets and another that buys CDS to try to generate a windfall in a deflation bet. One company owns railroads, RV manufacturers (oligopoly structure), building materials (good businesses in general), one of the best run regulated utility business, and See's Candy, etc. These businesses are simply much better than FFH's business. It only took me about 10 years to understand that good businesses just do better in a 10-20 year time frame. You don't have to horse trade as much. You can just ride them. Does anyone know what is the lowest P/B that FFH has ever traded at? If 0.7x is the lowest ever, than this is indeed interesting. MSFT was flat for 10 years and has become one of the best performers recently. Sometimes, things change and market perception change. But I doubt I will make FFH an outsized position. Perhaps, the better time is to actually see some changes in behavior and maybe just more allocation to share buybacks etc.

https://www.cnbc.com/2020/09/02/google-mountain-view-tech-hub-proposal-pictures.html Death of the urban office, Google is building a campus. Granted it's not urban. I think SF and NYC are very different and have some similarities. I think SF is smaller and not conducive to public transportation. NYC has great subway network that should function well once we have a vaccine. These are nuances that I wasn't as cognizant of until speaking to a few SF techies recently.

Oh, do tell

If the investment bank involved is Rodman and Renshaw, Craig Hallum, and Roth. That was the case 10 years ago. Please update me if this is still the case.

Just want to say thank you for all who have contributed. I think Investing Red Flags are very important topics to discuss every couple years. It's a great way for me to improve as an investor.

Just want to present a Case Study on Garret Motion which has been a cluster f of an investment Look at this spinoff presentation from 2018, it just seems like a page from Joel Greenblatt's spinoff play https://s2.q4cdn.com/726657224/files/doc_events/2018/09/1/Presentation.pdf They just announced that they may need restructuring. Honeywell spunoff a potentially legacy/dying business and used all the value investor buzzwords and got an IR guy who was good at talking to value guys. This seemed very trivia at the time because the thesis and fundamental seemed very solid. Someone mentioned that Paul Blalock was very "loosey goosey" with the facts and it made me pause. My friend also told me that once the market deems something terminal, you will never get a good multiple on it. I am so glad I paid attention to those comments because I was very close to pulling the trigger. Some quotes from a message forum "Or maybe holders are growing more distrustful of Paul Blalock alla widowmaker. I kid I kid..." "I met with the IR guy at a NYC conference yesterday and I am starting to see that all the pro-arguments in this thread is something that the IR guy has mentioned. These are purely behavioral observations. It seems like Paul's got a pitch down pretty well. His words were just rolling off. There were no hestitancy. He's clearly been practicing the pitch about the Bosch-Mahle JV and why that failed to gain traction. He had a great explanation on why cars going to be electrified but not pure EVs. I suspect that the 10 to 1 boost in hybrids is a concept/pitch that he came up. It just feels like all the information that is being presented in the write up and in the thread has his finger prints all over them. All the pertanent info of why GTX is a good business and why the future is really hybridization and not pure EV. The explanation of why variable geometry is such an advantage for GTX. When asked about Borg, he basically said that Borg just wants to do projects that generates a return above their cost of capital. GTX and its Honeywell DNA are very discplined about capital allocation and will only move forward if returns on projects are ridiculously high. Honeywell pretty much bought the IR guy inhouse in preparation for the spin. When asked why did they put the debt on GTX, he said "because they can" The IR guy mentioned he went to Honeywell and asked them why Honeywell will retain the tax benefits, the HW response is "because we can, now get out of here." HW asked the IR guy how much of the cashflow from GTX can Honewell take and still build a shareholder base. The IR guy said "half". That's pretty much why the asbestos is capped at $175mm. Now, the IR did push back on a few things and pretty much turned the asbestos liability into a preferred stock where if paying the $175mm were to trigger a defaul, GTX can PIK the asbestos payments at 5% a year. That's a nice feature and the asbestos liability should be thought of as preferred stock rather than debt. " "I am on the sidelines and have not spoken to the company. Just something for people to think about, to the extent the GTX IR person is helping some here form opinions on the stock, I offer a personal anecdote: Once upon a time I owned WLT. And a friend of mine said, “We owned CLWR. The IR guy at WLT came from CLWR. We’d probably own WLT too because it looks cheap, but I don’t trust him.” WLT eventually filed. I lost money and he lost none. Later in life I spoke to this IR person numerous times while at CSTM. I (and apparently, as I later learned, at least one person that worked with him) found him to be pretty loosey-goosey with facts, but always to the upside. That friend’s comment kept me away from CSTM during his tenure, which ended up being a good call." This is perhaps a lesson on how to set traps for "value investors" 2020 version.

Any examples of the sudden changes in when languages changes and subsequent events?

Awesome Post

Jurgis, That's micro-aggression and discriminatory towards those of us ESL speakers. #quit_your_privilege :) Sorry, it's just my OCD & spectrum showing up. ::) Sorry, it's just my OCD & spectrum showing up. ::) Sorry, it's just my OCD & spectrum showing up. ::) LOL

Jurgis, That's micro-aggression and discriminatory towards those of us ESL speakers. #quit_your_privilege :)

Years ago, I did a little presentation on management red flags and it was a lively debate and I walked away smarter than I was going in. So I will this topic up again and list some observations. 1. If an investment manager is being compared to Buffet, be very skeptical 2. If an annual letter quotes Buffet, be very skeptical 3. If a company uses a lot of value investing lingos, be very skeptical 4. If you are doing a DD on a CEO and no one has anything bad to say, be very skeptical. It's because being CEO involves tough decisions. You will have to disappoint and/or piss off some people to make the right judgement calls. 5. Buying back shares to offset dilution, buying back stock for any reason other than it creates a lot of value is a red flag 6. Companies with high ROIC and growth figures that are highly prized by the investing community spinning off a lesser quality company and saddling it with debt and/or environmental liabilities, be careful. Companies have figured out that there are value investors willing to take the other side of the trade and dumping toxic waste into the spinoffs. 7. Contrarian - The market is right more often than not.

People on Corner gets 2.6% 30 year fixed rate mortgages and there are people facing eviction for not being able to pay their rent. Everytime we get a crisis, the Fed lowers rates which unintentionally leads to rich people getting richer and poor people not getting ahead because they are still paying 20-25% for their credit card debt and triple digit % for their pawn loans. There is blood in the street. There are literal blood in the street. People chanting that white people should give up their houses. We can't agree on whether wearing mask. Civil liberties? Most white people and Asian know that we can't speak our minds. Yes, we won't go to jail. But we can easily lose our jobs. This Mccarthyism. This is the US version of the Cultural Revolution. Anything that you said 10, 20, 30 years ago is bound to piss off someone and you risk getting cancelled for it. There is no jail time for these things. How free are you really? I am self aware enough to understand that I now occupy a better place in society. But it is not lost on me that others have it bad. Americans need to get off their high horse and wake up and smell the coffee about this civil liberties and free society and China bad. Countries are just acting in self interest and using propaganda on both sides. To Jurgis' point, yes, there has been a ton of expats looking to make it in China. White privilege is very real there. They literally will hire white people just to lounge around new real estate developments to look more high end. Companies will literally just hire a white person to appear more prestigious. I joke with my part time analyst that if we ever do an Asia trip, I'll make sure that people know he works for me. It would be hilarious to see me bossing around a 6' 4" former college basketball player. I don't know why I engage in this. My time is better spent doing something productive.

Spheres of Influence https://upload.wikimedia.org/wikipedia/commons/7/73/KCRC_China_spheres_of_influence.jpg I think people in the west often say "why is China so aggressive" and the media often paints China as the culprit. It was only a century ago when Western powers divide up China into "China Chunks" and sold opium to China when they outlawed it in Britain. We can't sell this dope in our country, let's go find a large market and enforce our rights with our guns! I think most westerners today will list the aggressive acts of China when their actions plunged China into a century of despair and poverty. It only took them about a century to climb out of the hell hole. So forgive them if they are suspicious of the US and the West. You think anyone in Iraq or Afghnistan sees US war planes flying over their head thinks "Thank God, we are being liberated." or are they thinking "Shit, we are about to bombed!" I am generally a supporter of the US military and police because I am practical. In an unfair world, you want the biggest guns and the mightiest military protecting you. But I am not ignorant enough to not recognize my hypocrisy. Anyone who looks at the US/China relationship without looking at the history going back to 1850s is just being an idiot. If you incorporate some of that history, then a lot of the political moves seems logical. Regarding Apple, China is their biggest customer. What are you going to do? Not sell to them? I own some multi-nationals in my portfolio such as Dupont and Corteva. It does worry me.

Spheres of Influence https://upload.wikimedia.org/wikipedia/commons/7/73/KCRC_China_spheres_of_influence.jpg I think people in the west often say "why is China so aggressive" and the media often paints China as the culprit. It was only a century ago when Western powers divide up China into "China Chunks" and sold opium to China when they outlawed it in Britain. We can't sell this dope in our country, let's go find a large market and enforce our rights with our guns! I think most westerners today will list the aggressive acts of China when their actions plunged China into a century of despair and poverty. It only took them about a century to climb out of the hell hole. So forgive them if they are suspicious of the US and the West. You think anyone in Iraq or Afghnistan sees US war planes flying over their head thinks "Thank God, we are being liberated." or are they thinking "Shit, we are about to bombed!" I am generally a supporter of the US military and police because I am practical. In an unfair world, you want the biggest guns and the mightiest military protecting you. But I am not ignorant enough to not recognize my hypocrisy. Anyone who looks at the US/China relationship without looking at the history going back to 1850s is just being an idiot. If you incorporate some of that history, then a lot of the political moves seems logical.

I think that entire 13F is less than 10% of what Himalaya manages. Yes, they own it. But not to the degree of concentration that the 13F may lead you to. Do have a source for Himalaya being >$10b? Just useless rumors and speculations on the internet

I think that entire 13F is less than 10% of what Himalaya manages. Yes, they own it. But not to the degree of concentration that the 13F may lead you to.

Thanks for your thoughts Spek. There are definitely some good frameworks for thinking about the issue in your comments. Here are a couple of questions. Wouldn't a 0.1% position still likely lead to regret? And how is that different from thumb sucking? Would a tracking position mainly differ by scale (0.1% vs 0%?) and the benefits of having a position might come at the cost of diworsification and increased tracking costs. Should we be looking to improve the odds of fully committing to the correct decision? I like the idea of using pepper oils to prevent thumbsucking, but I see a couple of issues: -First, have you already made the mistake by the time you are sucking your thumb, or is the thumbsucking itself the problem? -Second, we really want to encourage the right decision which is to take an action in the real world and take a risk on other people or a company, which is more akin to sucking someone else's thumb. Putting pepper oil on someone else's thumb might prevent you from sucking that thumb, but that would mainly be of use when it would be inappropriate to suck on someone else's thumb, and what we are looking for is the rare opportunity when you should encourage yourself to act in scale when an opportunity presents itself. Plus, it is a little socially complicated to try to go around putting pepper oil on other people's thumbs. So maybe we should be looking for positive reinforcement, rather than negative reinforcement? I find that putting 20-30bps into a position forces me to look at it and pay attention. Lots of time, I don't add to it After 18 months or so, if the fundamentals aren't improving, I sell it. If the fundamentals are working out, I'll add to it. It helps. CEO of Markel talks about this.

Are there any companies with good corporate governance in Hong Kong, Korea, or Japan? Share buybacks, running with more western like balance sheets. Focus on single product/sector etc.

ha, legit laughed at this. Please tell Steve Roth that he works for us and he needs to get the stock price up. Chop Chop, time is money Mr. Roth. If you are really liberal, you can buy 1 share of Alexander's and tell people that "you are the landlord to Michael Bloomberg and The Donald did not have the staying power to hold onto the most fabulous building known as the Bloomberg Tower." One billionaire pays you rent and one pseudo billionaire/US president couldn't hold onto these assets. Sounds ways more exciting than sourcing deals in the private market.

great list, but when my wife texts/emails, it cant wait Too about the wife funny! I tell people to call me if it is urgent (and a true real emergency is extraordinarily rare). Deep work by Cal Newport was a great book for those that have not read it. What's a good book on sleep? To help you sleep better that is.