So Whos makin money?

[Cardboard]

People here are getting quite excited! Lots of discussion about bank warrants, options and mentions of not owning enough...

 

It sounded very different only 2 months ago. While I agree that U.S. numbers are continuing to get better, it would only take one small thing to reverse everything. Things are still fragile and I don't like what is going on with Iran. And it sounds like that we will finally, yes finally stop hearing about Greece, but then Portugal and others may be next. I also don't like the extreme correlation that remains. I would prefer to see more stocks moving somewhat independently from the market.

 

While I still see a lot of upside in my portfolio and someday, the Dow and other indices will have to hit new highs, I have a feeling that we will see some bumps between now and then. Anyway, I don't recall a year since I started investing where there has not been a 5% to 10% pull-back of some sort. I guess it will happen again this year, but when and how I don't know. It would be nice to have some dry powder when it happens.

 

Cardboard

[SharperDingaan]

We're with Cardboard. We would also remind board members that hedging was invented for a reason, & that we're all playing the long game - not the short one.

 

Once earnings season, & FB, is over it's pretty hard to see why going forward - long & margined is better than T-Bill & Options. Textbooks speak only to the level of risk, they do not speak to the stability of that risk.

 

SD

[PlanMaestro]

We're with Cardboard. We would also remind board members that hedging was invented for a reason, & that we're all playing the long game - not the short one.

 

Once earnings season, & FB, is over it's pretty hard to see why going forward - long & margined is better than T-Bill & Options. Textbooks speak only to the level of risk, they do not speak to the stability of that risk.

 

SD

 

Sorry SD, so an investor should not buy a company at less than 2x normalized earnings, less than 0.3x book value, with capital ratios that can withstand any macro event, because of ...

 

I thought that the long game was to buy companies that are here for the long run at a substantial discount. The game where BAC keeps increasing capital, keeps winning legal battles, keeps streamlining the organization/resources and keeps reducing its credit issues.

 

Amazing how the macro event of three lifetimes can distract people so much from the real game. I will leave the why hedges were invented for for another time.

[Cardboard]

Hey, I own BAC. All I am saying is that people seem a little exuberant. For example, many seem quite interested in the warrants. They are long term so that is ok, but if we have a crash for some reason, then book value will likely decline and time will become the enemy of shorter term options. Especially if far out of the money. I have been burned before, so I sleep well with straight equity. I also had home runs with options and know how tempting it is to try to do it again...

 

I am even looking at the AIG warrants which seem to be much lower priced than the BAC-A warrants and with 2 more years to expiry.

 

Cardboard

[twacowfca]

Bought IRE at 4.30 and 6.25 -- half my portfolio at this point.  Yes I am out of my mind.

 

I wish I were half as crazy as you.  Tell me what you see for IRE.

[PlanMaestro]

All I am saying is that people seem a little exuberant.

 

Peace

[rranjan]

If its good enough for Prem and Wilbur, its good enough for me.

 

I think it is wrong way to approach investment. If you independently came to conclusion about undervaluation and Prem/Wilbur happened to also share the ride then it's a good company to have. Discovering the ideas due to Prem or anyone else is fine but buying due to their purcahses is not the right approach.

 

If you are putting so much weightage due to Prem and Wilbur then you need to ask one or two very important questions. Have they been wrong in past? Do they have 50% of their portfolio tied up there?

 

I don't have any opinion on your holding though and you might end up making good money there.

[ERICOPOLY]

Hey, I own BAC. All I am saying is that people seem a little exuberant. For example, many seem quite interested in the warrants. They are long term so that is ok, but if we have a crash for some reason, then book value will likely decline and time will become the enemy of shorter term options. Especially if far out of the money. I have been burned before, so I sleep well with straight equity. I also had home runs with options and know how tempting it is to try to do it again...

 

I am even looking at the AIG warrants which seem to be much lower priced than the BAC-A warrants and with 2 more years to expiry.

 

Cardboard

 

I don't like the BAC warrants that much either. 

 

We've got 7 more years to expiry.  Break even point is $16.78.

 

The $12 strike 2014 calls are 78 cents (break even at $12.78).

 

They keep your foot in the door while deploying only 20% of the money.  In 2014 you'll have a much better idea of how things are tracking vs today.

 

So the break even point is fully $4 less and you are at that point only left with 5 years of remaining life on the warrants.

 

There won't be significant dividends paid over the next two years.  So you'll start 2014 $4 ahead (on a break even basis).  At that time you can probably buy 2016 $12 strike calls or $15 strike calls or whatever.  You'll have your foot in the door.

 

Meanwhile you've got far less cash deployed.  Things go very wrong over the first two years and you lose 1/5 as much.  Things go as I expect with 99% of my heart and most likely you wind up with a spike to $20 in the first 3-4 years and you've got a lower cost basis as you roll your options.

[Uccmal]

All I am saying is that people seem a little exuberant.

 

In general, or with regards to BAC, perhaps.  I have struggled with this one since I first bought warrants 1.5 years ago, thereabouts.  Most of my position is in jan2013 and 2014 leaps now.  BAC is trading, for now, off of its capital improvements.  The first leg up for the stock will be the easiest and quickest as institutions decide they had better not miss out on this one.  I figure TB within a month or two, and 15 around the end of the year.  After that it will trade off earnings, good or bad. 

 

The S&P is up on tech and financials.  Not much else has rallied so far.  So there has been extensive sector rotation, so far. 

 

If its good enough for Prem and Wilbur, its good enough for me.

 

I hope your rationale is better than that....  i.e if you followed Prem into Dell, Rimm, JNJ, fbk, etc., you may not be happy right now.  I know twacowfca has done their research as I did on this.  I decided it was too early.  Safer in this case to let FFH buy for me.

 

[moore_capital54]

Bought IRE at 4.30 and 6.25 -- half my portfolio at this point.  Yes I am out of my mind.

 

I wish I were half as crazy as you.  Tell me what you see for IRE.

 

Again, it is my humble opinion that it is important, in order to keep this forum as intellectually honest as possible, that posters who say half their portfolio is in IRE, add a small note such as, (But I am in College and have a $5k portfolio) just so we all know what were dealing with.

 

Last time I mentioned this all hell broke loose, but it was really something I felt strongly about only because I see the level interaction on here, and how much time posters will spend responding to almost anyone.

 

 

[ERICOPOLY]

I figure TB within a month or two, and 15 around the end of the year.  After that it will trade off earnings, good or bad. 

 

I think so too.  It's hiding too much in the open for this to take long.

 

 

 

[twacowfca]

Bought IRE at 4.30 and 6.25 -- half my portfolio at this point.  Yes I am out of my mind.

 

I wish I were half as crazy as you.  Tell me what you see for IRE.

 

Again, it is my humble opinion that it is important, in order to keep this forum as intellectually honest as possible, that posters who say half their portfolio is in IRE, add a small note such as, (But I am in College and have a $5k portfolio) just so we all know what were dealing with.

 

Last time I mentioned this all hell broke loose, but it was really something I felt strongly about only because I see the level interaction on here, and how much time posters will spend responding to almost anyone.

 

I disagree, assuming a modicum of skill.  A Bayesian analysis recognizes that all information is useful.  I don't have a particularly high opinion of the skill level of most large fund managers, at least when it comes to picking securities, present company excepted.  They are greatly handicapped by having to have a large, diversified portfolio that generally keeps their returns around the market averages.

[rmitz]

Sheesh, sorry I'm not a millionaire.  Just trying to learn and get feedback here.

 

No one is saying you need to be a millionaire.  But when you're younger and have a smaller portfolio it does mean that it makes sense to take bigger risks for bigger payoffs--a setback will not be so bad relative to your current earnings.

[Uccmal]

Sheesh, sorry I'm not a millionaire.  Just trying to learn and get feedback here. 

 

That's entirely reasonable.  Many on this board with small or larger resources have outperformed all mutual funds and all indexes over a few years.  I learn from most everyone, even the most aggravating posters.  It doesn't take very long to move from small to larger once you get a process that works for you.

[jeffmori7]

I see the level interaction on here, and how much time posters will spend responding to almost anyone.

 

And honestly, that's what is great about this place! Everyone can speak with everyone, no matter who you are or where you come from!

[meiroy]

 

"So Whos makin money?"

 

The U.S. Bureau of Engraving and Printing. That's who.

 

 

 

[mevsemt]

FWIW I'm off to a great start this year (but given my dismal 2011 performance, my 2012 bounce is more of a relief than something to be proud of: http://mevsemt.blogspot.com/2012/01/2011-returns.html)

 

At the end of December I made BAC warrants about +10% of my portfolio:

http://mevsemt.blogspot.com/2011/12/trying-something-different-again.html

http://mevsemt.blogspot.com/2011/12/adding-to-bac.html

 

In November I bought a big position in JEF.  At the end of November I added to my positions in JEF and AIG warrants:

http://mevsemt.blogspot.com/2011/11/couldnt-resist.html

http://mevsemt.blogspot.com/2011/11/reshuffling-deck.html

 

Also in December I added positions in Sears and Sears options:

http://mevsemt.blogspot.com/2011/12/kmart-smart.html

http://mevsemt.blogspot.com/2011/12/more-sears.html

 

And I've had a big position in LUK for years, which is also off to a good start.  And that's it, I only have positions in those 5 companies. 

[twacowfca]

 

"So Whos makin money?"

 

The U.S. Bureau of Engraving and Printing. That's who.

 

 

LOL  ;D

[txlaw]

 

"So Whos makin money?"

 

The U.S. Bureau of Engraving and Printing. That's who.

 

You know, there have been a couple of posts stating that the recent run up was due to the US government printing money.

 

However, my understanding is that Operation Twist was sterilized and, therefore, there was no expansion of the money supply.  So if it's money printing that's causing this rally, I would think it's due to Europe and China printing money.

[Santayana]

Bought IRE at 4.30 and 6.25 -- half my portfolio at this point.  Yes I am out of my mind.

 

I wish I were half as crazy as you.  Tell me what you see for IRE.

 

Again, it is my humble opinion that it is important, in order to keep this forum as intellectually honest as possible, that posters who say half their portfolio is in IRE, add a small note such as, (But I am in College and have a $5k portfolio) just so we all know what were dealing with.

 

Last time I mentioned this all hell broke loose, but it was really something I felt strongly about only because I see the level interaction on here, and how much time posters will spend responding to almost anyone.

 

The guy who starts a thread on a value investors board where we should be focused on the long term, in order to brag about his 2 month performance, is worried about intellectual honesty.  That's a good one.

[moore_capital54]

Santayana this is the 10th post out of your last 40 which has been directed at me, in a negative fashion.

 

The other 75% of your time was spent on worrying about the markets, not believing the job numbers, or BAC's Tier  ratios, and asking the board "how a tender works".

 

Simply put, If there was a way to block you I would have done so by now as you provide zero intellectual stimulation, contrary to posters such as Bmichaud and Munger, who I thoroughly enjoyed engaging with even when I disagree.

 

Back to my last post. All I asked, or suggested was that a poster who says 50% of his portfolio is in XYZ just follow it up with (but I am in College etc.) which the poster then confirmed, exactly as I had suspected.

 

Nobody has to do anything, these are just suggestions.

 

 

 

 

 

 

[Blue61180]

2011 results down 2%,

The good 

Bought Build america Bonds end of 2010 and early 2011( thank you Whitney on your call!!!)

Cash in Hussman total return.

 

The Bad

My equity funds, but in particular

Fairholme

 

2012 YTD up 9%

started buying warrants November 2011 in  the following,  Bac A, and BAC B, Citi A, Comerica, JPM, Hig and FFBW,also bought Citi and Bac stock, Bought closed end fund(JMT) Mortgage-back securities,

added to fairlome position

 

Biggest warrant  position is in Citi A.  Like to hear thoughts on why BAC B will out perform Citi A

 

 

 

Selling some of  the BaBs

 

[Santayana]

Santayana this is the 10th post out of your last 40 which has been directed at me, in a negative fashion.

 

The other 75% of your time was spent on worrying about the markets, not believing the job numbers, or BAC's Tier  ratios, and asking the board "how a tender works".

 

Simply put, If there was a way to block you I would have done so by now as you provide zero intellectual stimulation, contrary to posters such as Bmichaud and Munger, who I thoroughly enjoyed engaging with even when I disagree.

 

Back to my last post. All I asked, or suggested was that a poster who says 50% of his portfolio is in XYZ just follow it up with (but I am in College etc.) which the poster then confirmed, exactly as I had suspected.

 

Nobody has to do anything, these are just suggestions.

 

You could just not respond if you want to ignore me, but if you do respond please don't lie about my posting history.  You instigated the personal attacks with the message below and I responded a couple of times.  And by the way, I never worry about the markets.

 

Moore_Capital said:

Santyana Misterstockwell and Bmichaud, this is not necessarily a fair argument, but I am willing to bet that the combined line you swing in the market in terms of assets is equal to maybe 1-2% of my personal net worth.

 

I am sorry I had to resort to this but you have to put things into perspective. I am a professional investor, a fiduciary and a capital allocator that serves clients who demand I allocate their capital and provide exposure to equities.

 

You guys are waiting to time the market with your small lines, but there is no doubt that even if you buy at the bottom of bottoms on the perfect low of the day of the lowest low the markets print, my nominal performance will be substantially better.

 

Now we can debate about this all we want, but I have absolutely never met a professional investor with your frame of mind, only small time RRSP style investors with $50-500k to invest, who go to sleep at night thinking they're the next buffets.

 

I get paid 2 and 20 to deploy capital on a daily and monthly basis.

 

Take this however you feel, but time will prove I was right. We can check back in a year or two.

 

You guys waste so much time thinking about capitulation wet dreams because you can afford to, your swinging a small line in the markets and your insignificant, you are retail investors, that most probably clip coupons as well.

[twacowfca]

Cool it!

[watsa_is_a_randian_hero]

Simply put, If there was a way to block you I would have done so by now as you provide zero intellectual stimulation, contrary to posters such as Bmichaud and Munger, who I thoroughly enjoyed engaging with even when I disagree.

 

This is not directed at Santayana, but I have had the desire to block or at least "prioritize" posts in some way.  Anything where you could "follow" specific people, or threads were assigned stars (like yahoo finance), where you could quickly sift through what is a BS thread and what is not.

 

In addition, I'd like to vote to add a "Macro" category.  It seems like a lot of discussion under investment ideas or general discussion is related, I think this would help organize the board better.

 

my 2 cents.