twacowfca Posted February 10, 2012 Share Posted February 10, 2012 I would not be surprised at all if he added, and he probably added below $6! I think you'll see a handful of other value managers who probably added in the upcoming filings. "Now under new ownership." I wouldn't be surprised either to find out he was a buyer around $5.00 per share because someone put a concrete floor on the price at that level, judging from the price action then. Link to comment Share on other sites More sharing options...
Parsad Posted February 10, 2012 Share Posted February 10, 2012 Again, not directing this at your Parsad, I am just voicing my opinion here, I value your thoughts and think you are a great investor, but just have to disagree here. If you were long for the same reasons as I, there should be no reason you should be raising cash here, because if you are its merely a market timing exercise. Hi Moore, You're perfectly right and correct to voice your opinion. The way we invest, we sit on cash. When things are offered to us, we buy. If they continue to fall, we continue to average in until they stop falling! But once they start going back up, we average out of part of that position, because we tend to go significantly overweight on it. And I'm not talking a 2% or 5% position, but alot more. For really good ideas, we take 10% positions as the minimum and BAC was a really good idea! Unlike virtually every other hedge fund, we have no lockup. You want your money, you can have it in 60 days or less. Usually alot less because we keep significant liquidity. We like it that way, and our partners deserve to have it that way, because it is their money. But that means we average in and we average out to mitigate risk. We don't hedge, because over time the frictional costs do more damage than just simply averaging. So that is why we increase cash once our bets pay off. Incidentally, I haven't sold a single share of BAC or WFC. I said that BAC would be at tangible book by Christmas and book in the next couple of years. I'll review our positions again when it hits each of those marks. ;D Cheers! Link to comment Share on other sites More sharing options...
Ben Graham Posted February 10, 2012 Share Posted February 10, 2012 Go! Go! Go! (3) Cheers for BAC!!! I applaud all value investors who have jumped on the WEB BNSF railroad band wagon to buy BAC dollars for 50 cents or less. We are all from the same family - in knowing when to pull the trigger to buy value. Take advantage of Mr. Market. Always think ahead - Margin of Safety - Buy at a discount, the deeper the better!!! Internet_Explorer_Wallpaper.bmp Link to comment Share on other sites More sharing options...
rranjan Posted February 10, 2012 Share Posted February 10, 2012 Go! Go! Go! ;D ;D Why only BAC? Something on sharp price movements. I hope this happens with all stocks so I can pick my spots and wait .... http://finance.yahoo.com/news/why-bank-america-citigroup-080559149.html;_ylt=Aj5Ivuh8nis5aIinMavDCRWiuYdG;_ylu=X3oDMTQzcDUxZHBoBG1pdANGaW5hbmNlIEZQIEp1bWJvdHJvbiBMaXRlBHBrZwNjMWJkMTYxOS00MGJmLTNmMTgtYWM1Mi1iOTc0OGEyNWI4YTQEcG9zAzEEc2VjA2p1bWJvdHJvbgR2ZXIDNWVmNmE2YTAtNTNiZS0xMWUxLWJmZGQtZjcyMjJlZDhmYjU1;_ylg=X3oDMTFvdnRqYzJoBGludGwDdXMEbGFuZwNlbi11cwRwc3RhaWQDBHBzdGNhdANob21lBHB0A3NlY3Rpb25zBHRlc3QD;_ylv=3 Link to comment Share on other sites More sharing options...
Ben Graham Posted February 10, 2012 Share Posted February 10, 2012 I would not be surprised at all if he added, and he probably added below $6! I think you'll see a handful of other value managers who probably added in the upcoming filings. And you'll probably see a bunch of other managers jump on board once it hits nine bucks! I remember so many people jumping on board of Fairfax's wagon once it was over $300. Reading the recent article on Biglari Holdings, I couldn't but smile a bit reading Zeke Ashton's comments on Sardar. No one wanted to touch the thing at $3 or $60 post-split. Now people are happy owning BH at $400! I'm far happier looking for the most hated, villified stock out there, and seeing if there is any value to be had. Cheers! Hi Parsad, When I read this it made me so very happy!!! It touched my heart - my core belief coincides with this highlighted comment. This is where you find the most intrinsic value - bang for the buck. Your other comment of "Things will get cheaper again, be it the entire market or an individual stock...just wait for the fat pitch." Also drove home the principle to wait until Mr. Market serves you, then hit it out of the park. Take advantage of a bargin. Sell when the Margin of Safety is removed. Disclaimer: Only buy, if the business is quality, run by good people, and selling well below Intrinsic Value. Link to comment Share on other sites More sharing options...
vinod1 Posted February 10, 2012 Share Posted February 10, 2012 Suppose Berkshire winds up with 1.5b shares (including warrants). That adds $3b+ look-through earnings. How much does that increase Berkshire's earnings power, percentage wise? I think BRK needs to be under 10% ownership of BAC so I think the upper limit is around 1.1 billion shares. So given his 700 million warrants, the max that he is likely to buy is about 400 million shares. Vinod Link to comment Share on other sites More sharing options...
Valuebo Posted February 10, 2012 Share Posted February 10, 2012 Go! Go! Go! ;D ;D Why only BAC? Something on sharp price movements. I hope this happens with all stocks so I can pick my spots and wait .... http://finance.yahoo.com/news/why-bank-america-citigroup-080559149.html;_ylt=Aj5Ivuh8nis5aIinMavDCRWiuYdG;_ylu=X3oDMTQzcDUxZHBoBG1pdANGaW5hbmNlIEZQIEp1bWJvdHJvbiBMaXRlBHBrZwNjMWJkMTYxOS00MGJmLTNmMTgtYWM1Mi1iOTc0OGEyNWI4YTQEcG9zAzEEc2VjA2p1bWJvdHJvbgR2ZXIDNWVmNmE2YTAtNTNiZS0xMWUxLWJmZGQtZjcyMjJlZDhmYjU1;_ylg=X3oDMTFvdnRqYzJoBGludGwDdXMEbGFuZwNlbi11cwRwc3RhaWQDBHBzdGNhdANob21lBHB0A3NlY3Rpb25zBHRlc3QD;_ylv=3 I'm confused by this: In 2009 and 2010, Citigroup, then part-owned by the government, was in the same spot. Its price was in single digits, and it seesawed day to day. It was often the highest-volume stock — as many as 500 million shares changing hands in one day. Last year, Citi reduced the number of shares by exchanging one share for every 10. That brought its stock price up — $33 on Wednesday — and high-frequency traders stopped flocking to it. Volume on a normal day has dropped to 50 million. If high-frequency traders stopped flocking to it, then why is Citigroup's volume still the same in terms of dollars (50m x 10 = 500m)? :-X Or do they simply mean that Citigroup's stock exposure to those HF traders didn't get any bigger despite the growing activity in this field. Just wondering. :P Link to comment Share on other sites More sharing options...
ERICOPOLY Posted February 10, 2012 Author Share Posted February 10, 2012 Go! Go! Go! ;D ;D Why only BAC? It's my only long position. My only short position too (short term put hedges purchased recently). Link to comment Share on other sites More sharing options...
merkhet Posted February 10, 2012 Share Posted February 10, 2012 It's my only long position. My only short position too (short term put hedges purchased recently). You sold off AIG, MBIA and WFC? Wow. I mean, I'm confident in Bank of America's prospects too, but dang... Link to comment Share on other sites More sharing options...
vinod1 Posted February 10, 2012 Share Posted February 10, 2012 It's my only long position. My only short position too (short term put hedges purchased recently). Man do you move fast. What strike/term hedges did you buy? Vinod Link to comment Share on other sites More sharing options...
ERICOPOLY Posted February 10, 2012 Author Share Posted February 10, 2012 It's my only long position. My only short position too (short term put hedges purchased recently). Man do you move fast. What strike/term hedges did you buy? Vinod March $7 and April $6. I simply don't trust the Greek drama. Link to comment Share on other sites More sharing options...
mhdousa Posted February 10, 2012 Share Posted February 10, 2012 It's my only long position. My only short position too (short term put hedges purchased recently). Man do you move fast. What strike/term hedges did you buy? Vinod March $7 and April $6. I simply don't trust the Greek drama. Just for clarification as I'm relatively new to options: is your thinking that if Greece causes a panic in the markets and BAC drops, you can sell your position at $7 or $6 and buy more at the panic price? Link to comment Share on other sites More sharing options...
ERICOPOLY Posted February 10, 2012 Author Share Posted February 10, 2012 It's my only long position. My only short position too (short term put hedges purchased recently). Man do you move fast. What strike/term hedges did you buy? Vinod March $7 and April $6. I simply don't trust the Greek drama. Just for clarification as I'm relatively new to options: is your thinking that if Greece causes a panic in the markets and BAC drops, you can sell your position at $7 or $6 and buy more at the panic price? I have a margin loan -- the hedges protect not only the margin loan, but also provide enough locked-in value to provide for my family in the guns and canned food scenario. Link to comment Share on other sites More sharing options...
bmichaud Posted February 10, 2012 Share Posted February 10, 2012 Go! Go! Go! ;D ;D Why only BAC? It's my only long position. My only short position too (short term put hedges purchased recently). Wow!! That is awesome, seriously. Love the conviction. 8) Link to comment Share on other sites More sharing options...
Santayana Posted February 10, 2012 Share Posted February 10, 2012 You have balls of steel Eric! How much of your position is covered by those puts? I could make some comment here about stupid retail investors and their hedges, but I won't go there ;D Link to comment Share on other sites More sharing options...
Shane Posted February 10, 2012 Share Posted February 10, 2012 Eric - how much of your wealth do you personally manage? Your ability to handle concentrated bets is amazing to me. Just an interesting note: There is a wealth management company in my home town that specializes in developing options plans for CEO's of public companies who have a very high percentage of their wealth in 1 stock. I always wanted to intern for them and learn about their process but its a small operation Link to comment Share on other sites More sharing options...
PlanMaestro Posted February 10, 2012 Share Posted February 10, 2012 So it looks like celebration and optimism is allowed in this forum! Well, I will continue with my paranoia. One short question. Does anyone know of a forum for employees of AIG, Bank of America or Citigroup? Link to comment Share on other sites More sharing options...
StubbleJumper Posted February 10, 2012 Share Posted February 10, 2012 It's my only long position. My only short position too (short term put hedges purchased recently). Man do you move fast. What strike/term hedges did you buy? Vinod March $7 and April $6. I simply don't trust the Greek drama. Just for clarification as I'm relatively new to options: is your thinking that if Greece causes a panic in the markets and BAC drops, you can sell your position at $7 or $6 and buy more at the panic price? I have a margin loan -- the hedges protect not only the margin loan, but also provide enough locked-in value to provide for my family in the guns and canned food scenario. So you're long the stock, long some puts and your shorting a bond (by using margin). My vague recollection of the theory of put-call parity is that you've set up a position that roughly mimics a long position in a call. Is there a particular reason why you just didn't buy leaps instead? Just curious. Link to comment Share on other sites More sharing options...
ERICOPOLY Posted February 10, 2012 Author Share Posted February 10, 2012 So you're long the stock, long some puts and your shorting a bond (by using margin). My vague recollection of the theory of put-call parity is that you've set up a position that roughly mimics a long position in a call. Is there a particular reason why you just didn't buy leaps instead? Just curious. My strategy has two key features that I like: 1) you can move up the strike price of the hedge as the share price rises (you can sell the original hedge to harvest some of the value) 2) tax advantages (if this becomes a long term holding you don't get to take a tax loss on the call option volatility premium until you sell). But the put premium can be deducted as soon as it expires (or you sell it) Scenario (call): 1) You bought the $5 strike 2014 call in December when it was trading for $2. 2) Stock moves to $10 and you want to move up the strike price of your hedge? Can't do it. Scenario (margin+put) 1) You buy the common with margin at $5 per share in December and the put costs you $2 to hedge 2) Stock moves up to $10 and you want to move up the strike price? 3) Answer: Buy the $10 put and sell the original $5 put Link to comment Share on other sites More sharing options...
ERICOPOLY Posted February 10, 2012 Author Share Posted February 10, 2012 Eric - how much of your wealth do you personally manage? Your ability to handle concentrated bets is amazing to me. Shai manages about $100k. The rest is in my trading accounts. Link to comment Share on other sites More sharing options...
ERICOPOLY Posted February 10, 2012 Author Share Posted February 10, 2012 You have balls of steel Eric! How much of your position is covered by those puts? I'll still have 20% of my present net worth if BAC is at $0 per share tomorrow morning. Your brother almost got shot dead while in the Eiffel Tower. I'll stay away from that crazy country with their handguns and I'll be fine (I'll be safer in LA perhaps -- he never almost got shot when he lived there). Link to comment Share on other sites More sharing options...
Santayana Posted February 10, 2012 Share Posted February 10, 2012 You have balls of steel Eric! How much of your position is covered by those puts? I'll still have 20% of my present net worth if BAC is at $0 per share tomorrow morning. Your brother almost got shot dead while in the Eiffel Tower. I'll stay away from that crazy country with their handguns and I'll be fine (I'll be safer in LA perhaps -- he never almost got shot when he lived there). LOL.....you can still go to Paris, you just have to hedge your ticket with a kevlar vest! Link to comment Share on other sites More sharing options...
Valuebo Posted February 10, 2012 Share Posted February 10, 2012 "There are weeks, sometimes months, in fact, when I don't make a bet at all, because there simply is no play. So I wait. Plan. Marshal my resources. And when I finally see an opportunity, I bet it all." Ericopoly = Arnold Rothstein from Boardwalk Empire 8) Link to comment Share on other sites More sharing options...
PlanMaestro Posted February 10, 2012 Share Posted February 10, 2012 "There are weeks, sometimes months, in fact, when I don't make a bet at all, because there simply is no play. So I wait. Plan. Marshal my resources. And when I finally see an opportunity, I bet it all." Ericopoly = Arnold Rothstein from Boardwalk Empire 8) hehehe but he thought of himself a gambler not a value investor ... and he died young I think http://en.wikipedia.org/wiki/Arnold_Rothstein Link to comment Share on other sites More sharing options...
ERICOPOLY Posted February 10, 2012 Author Share Posted February 10, 2012 "There are weeks, sometimes months, in fact, when I don't make a bet at all, because there simply is no play. So I wait. Plan. Marshal my resources. And when I finally see an opportunity, I bet it all." Ericopoly = Arnold Rothstein from Boardwalk Empire 8) hehehe but he thought of himself a gambler not a value investor ... and he died young I think http://en.wikipedia.org/wiki/Arnold_Rothstein I believe what I do lights up the same reward centers in the brain that keep gamblers at the table. It feels good when it goes up, I want to buy more when it goes down, it's never "enough". That's a gambler. However that 20% is still a nice amount of money that pays off our mortgage, funds the education for the children, and leaves a few year's of my prior pre-tax earnings to fund our after-65 nest egg. So I'll still be comfortable. It will be one of those "better to have loved and lost than never to have loved at all" stories. My kids might actually grow up much better seeing us as a normal working family -- did you see that photo of the Romney boys??? Yuck!!! Link to comment Share on other sites More sharing options...
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