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top picks for the new year


shalab
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I've got more or less nothing in the pipeline that will make me 20% sure gains.  Thus far, I am betting

 

1) high-quality stocks will outperform the Russell 2000 (long high-quality and short the Russel) and

2) I have out of the money longs and shorts on Silver

 

I think I may increase #1 by a material amount (right now its around 30% of the portfolio) - I may take that up to 75% of the portfolio in the coming days.

 

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Guest Broxburnboy

1. FFH - portfolio of inflation protected and insured bonds & unrealized gains from 2009

2. Silver juniors (near term producers or buy out candidates).. near term correction in silver prices should spur some M&A action here, if not, long term silver price trends intact

3. Gold intermediates - same as silver prices

4. SQM - emerging market growth story- Chilean producer of Lithium

 

5. Have one short position - TBT... long term bond prices MUST fall this year

 

Cheers

BBB

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1. FFH - portfolio of inflation protected and insured bonds & unrealized gains from 2009

2. Silver juniors (near term producers or buy out candidates).. near term correction in silver prices should spur some M&A action here, if not, long term silver price trends intact

3. Gold intermediates - same as silver prices

4. SQM - emerging market growth story- Chilean producer of Lithium

 

5. Have one short position - TBT... long term bond prices MUST fall this year

 

Cheers

BBB

 

Brox, I'd be very interested in your thesis for SQM.  I don't have any exposure to lithium but plenty to other storage media.  My belief is that long term lithium isn't going to be sustainable for much other than small portable devices and that NiMH will never be quite as 'good' but will always be more viable economically for transportation.  In the meantime though, everybody's talking about lithium for EV's and it's highly likely there will be a lot of pressure on supplies of the raw material.

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Own

 

CNA - Huge BV Discount and Hopefully the company is being turned around by a former Chubb VP.

L - Double discounts at CNA, DO, BWP and also Highpoint for free. Run by great capital allocators.

LRE - Profitable insurance which makes money on insurance. Great combined ratio.

FUR - Owner Manager and Strong backer will capitalize on CRE Issues.

FFH- Owner Manager and Excellent Capital allocator with 20Billion in Capital.

ESV - Cheap and Growing offshore Driller

RRR - Cheap Rental Company.

 

 

Watching / Buying

 

AI - Very interesting Company buying Mortgage Securities

MCF - Owner Manager, Cheap Oil & Gas.

SNS - Great Manager at a fair price.

DHT - Seems like a cheap shipping company

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Guest Broxburnboy

 

Brox, I'd be very interested in your thesis for SQM.  I don't have any exposure to lithium but plenty to other storage media.  My belief is that long term lithium isn't going to be sustainable for much other than small portable devices and that NiMH will never be quite as 'good' but will always be more viable economically for transportation.  In the meantime though, everybody's talking about lithium for EV's and it's highly likely there will be a lot of pressure on supplies of the raw material.

 

Got my original "tip" from the Mad Hedge Fund Trader:

 

http://www.madhedgefundtrader.com/November_18__2009.html

 

 

"It’s 1910, and I’m trying to get you to buy a company that refines gasoline, just before the number of cars in the world explodes from 1.3 million to 250 million. That’s what I’m trying to accomplish when I pile investors into Sociedad Quimica Y Minera (SQM), the Chilean company that is the purest play on lithium production (click here for their website). Early believers have booked a 60% gain so far, and there is a lot more to go (click here for my call).  The Electrification Coalition, an industry trade group, says that the number of electric cars on the road is about to go ballistic, with a dozen companies planning all-electric model launches in the next two years.  The first 120 million vehicles will shrink our oil imports by 8 million barrels a day to nearly zero, cutting our bill by $250 billion annually, and no doubt putting a major dent in the price of oil. Fire departments are even training first responders on how to deal with huge lithium batteries in car accidents with “hazmat” teams. A battery charge is 75% cheaper than filling up a tank with gas, meaning our transportation costs are about to fall dramatically. SQM has to increase its production by a factor of ten, or face a takeover by a much larger company looking to move into the alternative energy space, possibly from an American oil major. Is anyone at Exxon (XOM) or Chevron (CVX) listening?"

 

Did some more due diligence and concluded that Lithium batteries are "change we can believe in". Chile's neighbour, Bolivia

has huge untapped potential as well, but investing in Chile's booming democracy is much lower risk than the neo-socialist Chavez-onomics of Bolivia.

 

It's also nice to be carrying a real investment in my portfolio instead of hedges. Best of the season.

 

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My current portfolio is 82% cash and 18% US large cap (BRK, JNJ, KFT & WMT) bought a couple of months ago. I am looking for these holdings to give me 6 to 10% per year on average (i.e. not expecting much).

 

The one stock I am thinking about increasing my position in is BRK (again, as a stallwart, holding it in place of a bond) with the goal of getting 6-10% per year.  

 

Should the CAN$ continue to strengthen I will likely buy more BRK.

 

Currently, I do not see much that is priced today that gives me the margin of safety that I want. The past has taught me to be patient... at some point we will have another bear market in either a sector I like or in the market overall. As Buffett says the beauty with investing is you get more than 3 strikes. The trick is having the discipline to wait for your perfect pitch...

 

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Here is a really interesting one.

 

LPHI - They are brokers in the secondary market for life insurance.  This is an interesting alternative investment that is not correlated to the markets and shuld be growing substantially as the boomers get older.  The business model is really interesting and is generating tons of free cashflow.  There is also a huge short position that will have to be covered.  Perhaps a second chance to to kick the shorts around!!!

 

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I don't know how and why MCF isn't more popular.

 

It remains my largest percentage and absolute investment ever.

 

I hope I'm right and that pronouncing this publicly will cause me to review/think about it all for the thousandth time!

 

Please poke holes except for saying gas could go to zero.  This doesn't jeopardize me or MCF.

 

 

 

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Watching the growth of core positions and additions purchased at discount prices in 2008 and 2009, piling up new cash inflows, and finding depressed cyclicals for tack-on minor positions.  2010 will be a focus year for expanding the watch list, developing a deeper understanding of a select few companies, and watching for mis-valuations in under-followed FCF-generating small caps.  Hopefully, 2010 will be a slothful year, but I'm prepared for more.

 

-O

What are the board members top picks for the new year?

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Viking,

 

BRK is selling at a discount in my valuation model.  The operating businesses have a significant upside when the US economy recovers.  US$/CAN$ trade will always have CAN government intervention when the CAN$ affects export markets.  There is usually some reaction around parity.

 

Buying a depressed BRK in CAN$ should raise the margin of safety in your favour.

 

-O

The one stock I am thinking about increasing my position in is BRK (again, as a stallwart, holding it in place of a bond) with the goal of getting 6-10% per year.  

 

Should the CAN$ continue to strengthen I will likely buy more BRK.

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Pof4520,

 

I'm currently reading Klarman's book and re-reading Graham, so this question is top of mind -- Are you a speculator or an investor?  If it's undervalued in your valuation model and you've diligently researched your assumptions, why do you care what others think?

 

Is MCF undervalued based on future cash flows or are you hoping for someone to buy it at a higher price?

 

-O

I don't know how and why MCF isn't more popular.

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I don't know how and why MCF isn't more popular.

 

It remains my largest percentage and absolute investment ever.

 

I hope I'm right and that pronouncing this publicly will cause me to review/think about it all for the thousandth time!

 

Please poke holes except for saying gas could go to zero.  This doesn't jeopardize me or MCF.

 

pof4520,

 

I hold MCF as well, but it is not a huge position for me. Here are the risks I see:

 

1) Much of MCF's production is from one reservoir in the Gulf. Operations there could sustain permanent damage as a result of a violent storm.

 

2) Ken Peak has been selling some stock for estate planning purposes. He shopped the company around last year. I am not sure how MCF will do if Peak retires.

 

3) Will MCF's partnership with JEX -- the exploration company they work with -- last for a long time? I think JEX would be hard to replace. If the partnership falls through, MCF's value will be diminished.

 

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Value 2, do not worry about your english... we all have thick skin. I appreciate the opportunity to explain what I am doing.

 

Here is the simple answer why I hold 82% cash.

1.) I do not feel compelled to be 'fully invested' (i.e. to be holding something). The investment industry does a great job saying one should put their 'money to work' and that earnings 1% will not fullfill ones retirement objectives. My current investment advisor has been trying to get me to buy anything with the belief that holding such a large amount of cash is almost sinful. 

2.) I will only put my money in something new if the margin of safety is very large. And I have to understand the investment reasonably well.

3.) Rightly or wrongly I also have a macro view that happy times are NOT back. FFH hedging 25% of its equity portfolio is interesting to me.

 

Wrapping the three together, keeping what I have is job #1.

 

Right now I do not see a bear market in any asset class or valuations in any specific security that I understand to get me excited. So I will wait.

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LNR-T

 

You wouldn't want to touch it untill after their Q4 results have been published (write-downs), but after that you may want to hold it for 3-5 years or so. They are better known as a Cdn auto sector supplier, that is closing plants & getting hammered by the high $C. Lots of resultant negativity.

 

But they also make the very large 2nd generation windpower generators, they have material technological advantages over their competitors, they are the 1st name in this market, & the size of these generators makes it uneconomic to ship from Germany or Asia. Green energy sells at a premium & these things are substantially cheaper on a delivered MW basis, as they can continue to operate in a wider variety of conditions. Eventually the auto-sector side of LNR's business will return, & you'll essentially have this windpower business for free; ideally as a spun-off company.

 

Merry Xmas

SD

   

 

 

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A few stocks that I bought earlier this year and intend on holding

 

Fortress International Group - FIGI

Itex - ITEX

Chromcraft Revington - CRC

Fortunet - FNET (this stock was a great pick, it just kept giving and giving)

 

A few stocks that I may buy at some point, the price obviously being athe determinant factor

 

Defense Industry Intl - DFNS

Southpeak Interactive - SOPK

Ash Grove Cement - ASHG

US One Industries - USOO

AutoInfo - AUTO

Signature Eyewear - SEYE

Chanticleer Holdings - CCLR

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Quote from Viking

 

"The one stock I am thinking about increasing my position in is BRK (again, as a stallwart, holding it in place of a bond) with the goal of getting 6-10% per year.  

 

Should the CAN$ continue to strengthen I will likely buy more BRK."

 

 

 

Attaboy  ;D, I think BRK is the easy safe investment staring us at the face. I would be surprise however that you'd get less than 10% a year over the next 5 years. the stock is selling at a minimum of 25% discount and the effect of the elephant capture (bnsf) will certainly be a strong plus compared to the hoard of cash the company had been dragging until now.

 

 

 

 

 

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LPHI started trading on NASDAQ on Jan 2, 2009.

 

http://files.shareholder.com/downloads/LPHI/807493359x0x286301/ff817784-ba17-4279-81b4-8542ff33c6e9/286301.pdf

 

 

Shortly after the short attack began and lphi had to issue the following press release (Feb 11, 2009).

 

http://ir.lphi.com/releasedetail.cfm?ReleaseID=376514

 

 

The latest share count that I have been able to find:

Insiders - 50%

Institutionals - 25%

Mutual Funds - 13%

Shorts - 16%

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LPHI started trading on NASDAQ on Jan 2, 2009.

 

http://files.shareholder.com/downloads/LPHI/807493359x0x286301/ff817784-ba17-4279-81b4-8542ff33c6e9/286301.pdf

 

 

Shortly after the short attack began and lphi had to issue the following press release (Feb 11, 2009).

 

http://ir.lphi.com/releasedetail.cfm?ReleaseID=376514

 

 

The latest share count that I have been able to find:

Insiders - 50%

Institutionals - 25%

Mutual Funds - 13%

Shorts - 16%

 

http://www.citronresearch.com/index.php/2005/10/21/stocklemon-reports-on-fairfax-financial/index.php?s=For+investors%2C+this+Life+Partner+might+not+be+good+for+you+%E2%80%A6&submit=Search

 

So what in there do you disagree with? Are you willing to talk about why you disagree with it? Being neither long nor short in LPHI, I am merely trying to get both sides of the story.

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