What companies do you currently own?

[watsa_is_a_randian_hero]

Which one or two of the merger arb trades do you like best?  Please explain your VXX trade.

 

Not to excited about any particular merger trades right now...those are all lower return trades.

 

I've been short VXX since 28.  (1) Vix is mean reverting, and it is not a matter of if it goes back to its historical average in teens, but it is a matter of WHEN. It will go to 15 again at some point. VIX of 30 is definitely much higher than historical average and unsustainable (2) VXX is long VIX futures.  Typically futures curve for VIX is upward sloping, and therefore every month when VXX roles its futures the ETF loses money.  Essentially, the ETF was designed to fail.

 

2nd trade I did on VXX involves just selling out-of-money calls each month.  If VIX jumps again I'll just role forward until it falls back down.

 

 

 

Thanks.  Have been thinking for some time about the very same VXX trade for the same reasons.  However, I would only want to do this if I could minimize the unpleasant aspects of shorting.  Puts are the usual way we limit risk, but puts on VXX seem too pricey for us.  Your idea of selling out of the money calls on the forward month looks good.  Are they usually selling at about the same implied volatility as comparable puts?  Or are they not usually nearly as pricey? 

 

 

There is always the possibility the trade could go against a short position, but here as an index that is mean reverting, it seems that the range is much more definite than with a stock that can often go up 10 times or more with a short squeeze or bubble.    Could this risk be limited by sequestering the trade in a separate account that would limit the possible loss?  Or do all margin agreements make the account holder liable beyond what's in a particular account if the value of that account is insufficient to meet a margin call?  

 

The other question is practical , the availability of shares in the VXX  for shorting.  It seems like this would be a popular trade and that it might be difficult to borrow shares at a reasonable price. Or is this no problem with this ETF?

 

You said "we"/"us" above...are you referring to a company your with?  Private fund?

 

I have a Reg D Rule 506 exempt fund I set up for friends/family.  About 1.5 million AUM right now.  These are all of the trades currently in that fund.  Because it is mean reverting, I am not worried about if it spikes and I'm short; it will go back down eventually.  It does not constitute a large position, and the portfolio has plenty of excess liquidity / margin capacity.  I'm selling $30 strike calls on VXX, which is equivalent to VXX 33.  The trade has a lot of daily P&L volatility, but low real long term risk because of the mean-reverting nature of VIX, and the unlikelyhood of some paradigm shift from 15-20 being the range that VIX reverts to, to a new range greater than 33.

[twacowfca]

Which one or two of the merger arb trades do you like best?  Please explain your VXX trade.

 

Not to excited about any particular merger trades right now...those are all lower return trades.

 

I've been short VXX since 28.  (1) Vix is mean reverting, and it is not a matter of if it goes back to its historical average in teens, but it is a matter of WHEN. It will go to 15 again at some point. VIX of 30 is definitely much higher than historical average and unsustainable (2) VXX is long VIX futures.  Typically futures curve for VIX is upward sloping, and therefore every month when VXX roles its futures the ETF loses money.  Essentially, the ETF was designed to fail.

 

2nd trade I did on VXX involves just selling out-of-money calls each month.  If VIX jumps again I'll just role forward until it falls back down.

 

 

 

Thanks.  Have been thinking for some time about the very same VXX trade for the same reasons.  However, I would only want to do this if I could minimize the unpleasant aspects of shorting.  Puts are the usual way we limit risk, but puts on VXX seem too pricey for us.  Your idea of selling out of the money calls on the forward month looks good.  Are they usually selling at about the same implied volatility as comparable puts?  Or are they not usually nearly as pricey?  

 

 

There is always the possibility the trade could go against a short position, but here as an index that is mean reverting, it seems that the range is much more definite than with a stock that can often go up 10 times or more with a short squeeze or bubble.    Could this risk be limited by sequestering the trade in a separate account that would limit the possible loss?  Or do all margin agreements make the account holder liable beyond what's in a particular account if the value of that account is insufficient to meet a margin call?  

 

The other question is practical , the availability of shares in the VXX  for shorting.  It seems like this would be a popular trade and that it might be difficult to borrow shares at a reasonable price. Or is this no problem with this ETF?

 

You said "we"/"us" above...are you referring to a company your with?  Private fund?

 

I have a Reg D Rule 506 exempt fund I set up for friends/family.  About 1.5 million AUM right now.  These are all of the trades currently in that fund.  Because it is mean reverting, I am not worried about if it spikes and I'm short; it will go back down eventually.  It does not constitute a large position, and the portfolio has plenty of excess liquidity / margin capacity.  I'm selling $30 strike calls on VXX, which is equivalent to VXX 33.  The trade has a lot of daily P&L volatility, but low real long term risk because of the mean-reverting nature of VIX, and the unlikelyhood of some paradigm shift from 15-20 being the range that VIX reverts to, to a new range greater than 33.

 

 

The "we" means that there are sometimes fiduciary obligations, involving BOD's, in addition  to personal and charitable funds as well as more than one individual involved in the investment process.  Almost everything is family related. We don't have outside funds under management.  A few friends ask for advice, but they make their own decisions.  The investment community we deal with thinks we know what we're doing, and there is great flexibility to go just about anywhere and buy just about anything from anybody. We can also be very concentrated, without having to follow conventional rules of diversification which drags down returns under a false cloak of security.  However, this is just a small, family related organization.  Our flexibility means that a type of investment that might be unsuitable in one account may be perfectly fine in another.

[bookie71]

FBAK

LUK

BRK.A

BRK.B

Fairfax

DJCO

FRS

LOJN    :'(

WSC

& CASH

[ericd1]

Basket of financial PFDs, PGF and bond funds - PHK, PFN, PTY

FFH

Emgr Mkts ETFs - EWZ (Brazil), BKF (BRIC), RSX (Russia), EMF, EEM

China coal - YZC, PUDC

Energy - SU, BBEP, EVEP, MLPL (2x AMJ)

Infrastructure - BGC

Bank/Finance - WFC, NICK, NBG, GLAD, ,PNNT

Tech - ARAY, NVEC, BYDDF

Ship/Trans - SSW, TRBR, TRMD, FLY

Misc - LUK, GCE, PRM, GE Leaps, Rare earth mining basket

 

 

[watsa_is_a_randian_hero]

 

The "we" means that there are sometimes fiduciary obligations, involving BOD's, in addition  to personal and charitable funds as well as more than one individual involved in the investment process.  Almost everything is family related. We don't have outside funds under management.  A few friends ask for advice, but they make their own decisions.  The investment community we deal with thinks we know what we're doing, and there is great flexibility to go just about anywhere and buy just about anything from anybody. We can also be very concentrated, without having to follow conventional rules of diversification which drags down returns under a false cloak of security.  However, this is just a small, family related organization.  Our flexibility means that a type of investment that might be unsuitable in one account may be perfectly fine in another.

 

I like the flexibility. 

[StevieY]

Watsa is a Randian,

 

Just curious as to why you are short UA? That seems a little too dangerous to me!

[Partner24]

My positions:

 

FFH

BAM

SHLD

LUK

MKL

BH

Bidvest

BYD

MCF

LRE

EBIX

Some gold companies related to Robert Mcewen

 

Hi Christopher, there is a lot of interesting "jockey stocks" in that list. I think that's the first time that I hear someone who own shares of Bidvest, one of the most undercovered success story that I know. I've owned shares of that company since a few years now. Where did you hear about that company?

 

Cheers!

[Christopher1]

Hi Partner,

I feel very close to your ideas about jockey stocks, the only difference maybe is that I use a greater level of diversification.

I try to stick with these stocks (if I'm fortunte I can find one jokey stock per year)

in order to know them very well and try to arbitrage their relative under/over valuation

mantaining a core position in each stock and allocationg the excess cash in the cheapest stocks in the portfolio.

Regarding Bidvest, I heard about them in 2006 from a frind of mine living in Cape Town.

He told me that in South Africa existed an extraordinary company lead by Brian Joffe that had compounded its value

more than 30% for 15 plus years in a very consistent way adopting the same decentralized model of Warren Buffett.

And in South Africa the range of products that Bidvest sell is really wide.

From their history I think that Joffe goal of achieving a target of 30% ROE and 50% Return on average funds employed

is a high probability event, so I hope that Bidvest investment will be fine.

 

Best regards

[rmitz]

ATSG (Largest)

BRK.B (Common and 2012 LEAPs)

FBK (Recent)

PVD (Have owned twice since 2006--picked it up this time in March 09)

LRE

BRFS

TPL

 

[Packer16]

Largest Stakes

SALM

SGA

FFH

MGAM

NRG

ACME

LNET

SURW

LICT

SSW

FUR

Petrobank

SOQ

 

Smaller Stakes

SKM

ICO

 

Packer

 

[watsa_is_a_randian_hero]

Watsa is a Randian,

 

Just curious as to why you are short UA? That seems a little too dangerous to me!

 

Stock is trading VERY high PE relative to others like Nike.  UA's original product (that dry-fit stuff) is copied by everyone now.  UA is running out of room to expand into.  Also, notice almost all my shorts are related to consumer discretionary - I think **IF** we double-dip, consumer discretionary will be the hardest-hit sector.

 

 

[watsa_is_a_randian_hero]

ATSG (Largest)

BRK.B (Common and 2012 LEAPs)

FBK (Recent)

PVD (Have owned twice since 2006--picked it up this time in March 09)

LRE

BRFS

TPL

 

 

I also own PVD.  I think I found out about this based on posts on this board??? May have been you???

 

I like the moat of the business.  Chile is growing fast (some say its very overheated), but long term should be solid.  I picked up around 46.  Earlier this year.  At 54 now, +$3 dividend. 

[Myth465]

ATSG (Largest)

BRK.B (Common and 2012 LEAPs)

FBK (Recent)

PVD (Have owned twice since 2006--picked it up this time in March 09)

LRE

BRFS

TPL

 

 

I also own PVD.  I think I found out about this based on posts on this board??? May have been you???

 

I like the moat of the business.  Chile is growing fast (some say its very overheated), but long term should be solid.  I picked up around 46.  Earlier this year.  At 54 now, +$3 dividend. 

 

I think Harry brought it up first. I plan to look into it and EBIX a bit more.

[T-bone1]

ELNK

FTR

PDLI

CIM

 

FBK.to

FFH.to

 

CHK

SD

 

SENEA

HDNG

SPMD

 

2012 Leaps on MHP and KGC

[rmitz]

I also own PVD.  I think I found out about this based on posts on this board??? May have been you???

 

I like the moat of the business.  Chile is growing fast (some say its very overheated), but long term should be solid.  I picked up around 46.  Earlier this year.  At 54 now, +$3 dividend. 

 

Nope, wasn't me.  I'd never discussed the company here before.  I think I bought originally around $24, and sold around $40 to raise capital during the downturn.  Of course there were dividends in there too.  I re-bought at $15 during March 09.  I'm not totally convinced it's a great investment at these levels.  The reason I continue holding is that with the basis so low, I figure sitting on the dividend generating power is totally adequate.  It's also not a large position, and I'm pretty sure that we won't see that kind of price again (unless the company itself is having bigger problems).  That said, I should be doing a valuation to determine when I would need to sell.

 

I do also appreciate the Chilean economy, and think they are the best place in South America to be doing business.  My original thesis for PVD was definitely tied to the anticipated bright future of Chile, as a way to get involved in a foreign economy without being in an index fund.  On the drawbacks, there are some structural benefits to PVD in particular that can change over time, and the actual earnings of the company are significantly tied with overall market performance.  I was a little surprised by that last time, but I don't think they would be in the situation of the company itself being at risk.

[ericd1]

I did a rough recap of the companies listed...There were 12 stocks, or options in three, or more portfolios. The average return of these top 12 have out-performed the market by a nice margin over YTD, 3 Yr, 5 Yr and 10 Yr.

 

Here are top 13

BRK 14, FFH 13, JNJ 8, KFT 6, SD 4, SSW 4, BAM 3, Dell 3, LUK 3, PVD 3, SHLD 3, XOM 3

 

Top 13 Avg - YTD 4.6%, 1 Yr 7.2%, 3 Yr -4.6%, 5 Yr 3.2%, 10 Yr 8.7%

S&P 500  -  YTD 2.4%, 1 Yr 7.8%, 3 Yr -6.6%, 5 Yr 0.2, 10 Yr -0.8

 

The favorites BRK & FFH quite a bit better better

 

Top 2 Avg - YTD 14.5%, 1 Yr 15.9%, 3 Yr 10.1%, 5 Yr 14.9%, 10 Yr 10.4%

 

The numbers speak for themselves...

 

 

[rmitz]

I did a rough recap of the companies listed...There were 12 stocks, or options in three, or more portfolios. The average return of these top 12 have out-performed the market by a nice margin over YTD, 3 Yr, 5 Yr and 10 Yr.

 

Here are top 13

BRK 14, FFH 13, JNJ 8, KFT 6, SD 4, SSW 4, BAM 3, Dell 3, LUK 3, PVD 3, SHLD 3, XOM 3

 

Top 13 Avg - YTD 4.6%, 1 Yr 7.2%, 3 Yr -4.6%, 5 Yr 3.2%, 10 Yr 8.7%

S&P 500   -  YTD 2.4%, 1 Yr 7.8%, 3 Yr -6.6%, 5 Yr 0.2, 10 Yr -0.8

 

The favorites BRK & FFH quite a bit better better

 

Top 2 Avg - YTD 14.5%, 1 Yr 15.9%, 3 Yr 10.1%, 5 Yr 14.9%, 10 Yr 10.4%

 

The numbers speak for themselves...

 

This is kind of an apples and oranges comparison.  With the later stocks, timing is everything in terms of the investment value.  With FFH and BRK, timing is important, but their longevity can make up for buying mistakes over time.

 

[oec2000]

The numbers speak for themselves...

 

 

I'm not saying it is the case but the numbers could also be the result of investing with rearview mirrors (i.e. money chasing performance). Given the nature of this board, it is less likely but we have to be careful with statistics.

 

If we could find an old thread like this and then check for the performance since, the results would be more convincing.

[Josh4580]

The last thread like this was on July 20th, 2009 located here:  http://cornerofberkshireandfairfax.ca/forum/index.php?topic=870.0

 

My positions than:

 

26% GGWPQ ($4.78 to $15: up 214%)

22% MCF ($51.06 to $47.22: down 7.5%)

20% SNS  ($235.4 to $330: up 40%)

15% Cash

10% SFK ($.71 to $.93: up 31%)

8% TXCOQ  -100%

 

S&P 500 up 8% since sept 30, 2009

 

Current Positions

 

AAG.TO

ATPG

DJSP

EXXI

FBK.TO

GYRO

HAWK

KIRK

LALLF & WLK

MBRKQ

MDT

MHH

MMPIQ

MON

MYGN

PRXI

RVX.TO

TRXAQ/TRXBQ

 

Short SMH

Short IYR

 

[jasonw1]

I believe it's the first time DJSP is mentioned on this board. I also hold DJSP and think it's cheap, and it's also a good hedge on job and economy won't be getting any better soon.

[elltel]

just wondering if anyone owns anything in the UK? Is anyone (apart from me) based in the UK?

[Myth465]

I have HAWK and HERO on my watch list. I think they will either be big duds or you will make out like a bandit. My problem is there rigs will be the last back to work and the first to be stacked. The  new rules regarding plugging wells should be good for them.

 

I am heavy into Oil and Gas.

 

I own.

 

SD

ATPG

DVR

ESV

ATSG

L

FUR

FTR

LNET

SSW

FBK

LRE

TRXBQ - a small bit

 

[Smazz]

Rim - trading stock - last week - have held many times before

Al,

whats your current take on Rim? Ive never had it on my "investment" radar - just as a piece of interest type thing but see its trading somewhat like a "normal" company as premiums to sales and earnings etc etc but with no debt - WOW!

From the little I know I feel they have a bit of market share but this is REALLY out of my area of expertise (I dont even own a blackberry or Iphone HA)

 

I believe there was talk on Rimm in a thread here a while back but I think it was buried in a thread of a different subject?

[keerthiprasad]

Recently sold a few holdings, but still own:

 

FFH

SHLD

ISIS

ATSG

 

[beerbaron]

 

Rim - trading stock - last week - have held many times before

Al,

whats your current take on Rim? Ive never had it on my "investment" radar - just as a piece of interest type thing but see its trading somewhat like a "normal" company as premiums to sales and earnings etc etc but with no debt - WOW!

From the little I know I feel they have a bit of market share but this is REALLY out of my area of expertise (I dont even own a blackberry or Iphone HA)

 

I believe there was talk on Rimm in a thread here a while back but I think it was buried in a thread of a different subject?

 

Jim Balsillie has been unloading so many shares in the 80-60$ range it's quite scary. Aren't you affraid when the most knowleadgeable insider sells massively?

 

BeerBaron