Allan Mecham 2016 letter

[Snorky]

See attached the 2016 letter of Arlington Value and enjoy reading.

[AzCactus]

Thanks...Possibly the most selfless post of the day :)

[eclecticvalue]

Thanks for posting.

[dcollon]

Congrats to Arlington!  Another great year.

 

Thanks for posting

[Steven B]

Snorky,

 

If you're ever in Cleveland I owe you a beer.

 

Thanks

[Artha158]

Thanks for posting.

[undervalued]

1.2B AUM.

[Guest]

thanks for posting. Allan is the man. I just wish I could meet the minimum investment (and if they didn't close it). :(

[StockDuck13]

Thanks a million!

[Guest]

anyone have the 2015 annual letter? I've read it somewhere but can't seem to find it.

[matthylland]

Thank you for posting!

 

I love this line:

 

"Beating the market by 4% is a tall task, though a recent article stating that 60% of millennials trade on Trump tweets bolsters our confidence that we've got a fighting chance."

 

[Snorky]

The 2015 letter

[racemize]

Worth noting that the last three years reported performance is gross of fees, so they need to be subtracted down a bit (seems like the 2.4% is the one to use).  Regardless, best performance I'm aware of.

 

Anyone have any letters prior to 2006?

[Guest]

Thanks, Snorky! :)

[Guest longinvestor]

Thanks for posting.

 

He does write very well, sort of reminds me of another letter writer ;)

 

His commentary on Berkshire is interesting. He may have well crossed the line drawn by several on this forum with his suggestion that he bought BRK for value not as a museum artifact. Hmm, I've to think about that one a bit more.

[SlowAppreciation]

Thanks for posting.

 

He does write very well, sort of reminds me of another letter writer ;)

 

His commentary on Berkshire is interesting. He may have well crossed the line drawn by several on this forum with his suggestion that he bought BRK for value not as a museum artifact. Hmm, I've to think about that one a bit more.

 

Still looks cheap, no? ~$107/share in cash/stock/bonds/warrants and then you get the operating businesses—which have grown at a 20% CAGR over the past 20 years—for something like 7x earnings?

[Guest longinvestor]

Thanks for posting.

 

He does write very well, sort of reminds me of another letter writer ;)

 

His commentary on Berkshire is interesting. He may have well crossed the line drawn by several on this forum with his suggestion that he bought BRK for value not as a museum artifact. Hmm, I've to think about that one a bit more.

 

Still looks cheap, no? ~$107/share in cash/stock/bonds/warrants and then you get the operating businesses—which have grown at a 20% CAGR over the past 20 years—for something like 7x earnings?

I think so. To keep it simple, Berkshire has been selling below IV for a while now,like since 2009. Allan Meacham suggests that by being an opportunistic buyer. But Buffett is also dragging ass, you know ;) From here on to eternity one would be foolish to be buying BRK. There are the new generation of take it all growth names, FANG. They're selling for a modest 60x earnings. You don't get growth for nothing, you know.

[LowIQinvestor]

Anyone know Arlington Value's fee structure?

[AzCactus]

I think I heard it was something like either 1/15 or a flat 2.25% or something. 

[racemize]

I think I heard it was something like either 1/15 or a flat 2.25% or something.

 

2.4% I believe.

[StockDuck13]

I think I heard it was something like either 1/15 or a flat 2.25% or something.

 

2.4% I believe.

 

They offer both, see attached:

Arlington_Value_Capital_Presentation_12.31.14i.pdf

Arlington_Value_Capital_Fact_Sheet_12.31.14i.pdf

[flesh]

Looks like they are using leverage.Based on my math results are impossible without

[KCLarkin]

Looks like they are using leverage.Based on my math results are impossible without

 

2016 results are impossible without leverage? Or overall results?

 

They've definitely used large amounts of leverage in the past (leveraged BRK position) but he seemed to imply he was net cash in 2016.

 

[flesh]

Looks like they are using leverage.Based on my math results are impossible without

 

2016 results are impossible without leverage? Or overall results?

 

They've definitely used large amounts of leverage in the past (leveraged BRK position) but he seemed to imply he was net cash in 2016.

 

I know they levered brk in 2013 heavily ,otherwise it hasn't been clear in the past 4 years I've followed the portfolio closely whether or not they have in other years. In 2016 they most certainly did. Of course I have no idea what hedges they had in place. Even if you assume avm caught nearly the bottom in most holdings jan/feb 16', a yuge assumption, they had to use some leverage. It's not hard to see they should have been around 20%, which is good.

[nafregnum]

I know they levered brk in 2013 heavily ,otherwise it hasn't been clear in the past 4 years I've followed the portfolio closely whether or not they have in other years. In 2016 they most certainly did. Of course I have no idea what hedges they had in place. Even if you assume avm caught nearly the bottom in most holdings jan/feb 16', a yuge assumption, they had to use some leverage. It's not hard to see they should have been around 20%, which is good.

 

I admit this sounds crazy, but could he have done it by trading in and out of some of his stocks on a daily / weekly basis?  What if what appears in the 13F report is just the net buys or sells?  (since I never see 13F data showing both buys and sells of a stock in a quarter)