Worst capital allocation ever

[ageofsocrates]

Munger always said Invert.

 

So wanted to start a new thread to focus on the worst capital allocation ever as a way to dissect investment mistakes.

 

My pick. Time Warner/AOL Merger.

 

A decade ago, America Online merged with Time Warner in a deal valued at a stunning $350 billion

 

http://www.nytimes.com/2010/01/11/business/media/11merger.html?_r=0&adxnnl=1&pagewanted=all&adxnnlx=1401962619-JOAjptD+WWsNWXwVBWmRZw

[Guest]

Ah yes, that's certainly up there.

 

THe JDS Uniphase and SDL merger was crazy too. JDSU bought them for like $41 billion. Now the market cap of the entity is... $2.5 billion.

 

http://www.jdsu.com/News-and-Events/news-releases/Pages/jds-uniphase-and-sdl-agree-to-41-billion-merger.aspx

[ourkid8]

Bank of america buying countrywide!

[rmitz]

Munger always said Invert.

 

So wanted to start a new thread to focus on the worst capital allocation ever as a way to dissect investment mistakes.

 

My pick. Time Warner/AOL Merger.

 

A decade ago, America Online merged with Time Warner in a deal valued at a stunning $350 billion

 

http://www.nytimes.com/2010/01/11/business/media/11merger.html?_r=0&adxnnl=1&pagewanted=all&adxnnlx=1401962619-JOAjptD+WWsNWXwVBWmRZw

 

Munger isn’t dead yet.  And it was a great deal from AOL’s perspective. :)

[augustabound]

I spent the better part of 1990-1992 buying baseball cards.........

[Guest]

I spent the better part of 1990-1992 buying baseball cards.........

 

 

+1  ;D 8)

[Uccmal]

Me selling Rim puts when it was above $40.00 despite all evidence against it. 

 

FFH buying TIG.

 

Ffh buying Canwest Global common stock right to the days before the bankruptcy.

 

sorry couldn't resist....

 

Thousands of Canadians buying Brex at a price higher than all the gold allegedly in the ground.

 

Millions buying Nortel when it had a market cap of 200 b US with no profits in recent memory.

 

 

 

[DCG]

Maybe not the worst ever, but Eddie Lampert buying back billions of SLHD stock at prices between $100-$150/share was pretty bad. Pretty sure Michael Dell made a lot of awful buyback decisions as well.

[Palantir]

How about Microsoft's investment into Apple when Apple was a few weeks away from bankruptcy?  ;D

[OracleofCarolina]

Bank of america buying countrywide!

 

Wachovia buying Golden West

[Sportgamma]

Native Americans selling Manhattan?

[ItsAValueTrap]

Insiders lining their own pockets.

 

This happens very frequently in the stock market...

[Guest wellmont]

Buffett buying Berkshire Hathaway.  ;)

[Mephistopheles]

Pretty sure Michael Dell made a lot of awful buyback decisions as well.

 

Yeah but he made up for it by stealing Dell at a good price. :P

[frugartarian]

Tulips

[krazeenyc]

In May of 2010 Laszio offers to buy a couple of pizzas for 10,000 Bitcoin -- hopefully they were delicious.

 

I'll pay 10,000 bitcoins for a couple of pizzas.. like maybe 2 large ones so I have some left over for the next day.  I like having left over pizza to nibble on later.  You can make the pizza yourself and bring it to my house or order it for me from a delivery place, but what I'm aiming for is getting food delivered in exchange for bitcoins where I don't have to order or prepare it myself, kind of like ordering a 'breakfast platter' at a hotel or something, they just bring you something to eat and you're happy!

 

I like things like onions, peppers, sausage, mushrooms, tomatoes, pepperoni, etc.. just standard stuff no weird fish topping or anything like that.  I also like regular cheese pizzas which may be cheaper to prepare or otherwise acquire.

 

If you're interested please let me know and we can work out a deal.

 

Thanks,

Laszlo

 

https://bitcointalk.org/index.php?topic=137.0

[JBird]

This is a great thread!

[OracleofCarolina]

Native Americans selling Manhattan?

 

Not so fast...from Buffett 1965

 

One story stands out. This, of course, is the saga of trading acumen etched into history by the Manhattan Indians when they unloaded their island to that notorious spendthrift, Peter Minuit in 1626. My understanding is that they received $24 net. For this, Minuit received 22.3 square miles which works out to about 621,688,320 square feet. While on the basis of comparable sales, it is difficult to arrive at a precise appraisal, a $20 per square foot estimate seems reasonable giving a current land value for the island of $12,433,766,400 ($12 1/2 billion). To the novice, perhaps this sounds like a decent deal. However, the Indians have only had to achieve a 6 1/2% return (The tribal mutual fund representative would have promised them this.) to obtain the last laugh on Minuit. At 6 1/2%, $24 becomes $42,105,772,800 ($42 billion) in 338 years, and if they just managed to squeeze out an extra half point to get to 7%, the present value becomes $205 billion. So much for that.  Some of you may view your investment policies on a shorter term basis. For your convenience, we include our usual table indicating the gains from compounding $1,000,000 at various rates.

[randomep]

Buffett buying Berkshire Hathaway.  ;)

 

You are joking right? That's Buffett's worst investment, but there are hundreds of thousands of money managers who are dumber than Buffett, their worst decisions must be worse than Brk? no?

[Stone19]

Edgar Bronfman getting rid of Seagrams and rolling the family fortune into Vivendi.

[ASTA]

Stone19

Thanks for sharing did not know that story my 5 min research just baffles me :D

[Stone19]

Made no sense.You would think you would be happy with a huge liquor company.I know that's why I own Diageo it makes me very happy.So does it's products lol

[KCLarkin]

Buffett buying Berkshire Hathaway.  ;)

 

You are joking right? That's Buffett's worst investment, but there are hundreds of thousands of money managers who are dumber than Buffett, their worst decisions must be worse than Brk? no?

 

Yes, but Buffett's mistakes compound at a much higher rate.

[randomep]

OH ya, good point.