So far, it has been a year of bloodbath

[Liberty]

The past week has been a bloodbath for me (EBIX, FTP), and I wasn't even around to see it happen in real time.

 

It's at times like these that I have to go back to first principles and remind myself of Mr. Market, and go back over my analysis, and remember that fundamentals are what matters in the long run, etc.. But even knowing all that, it's still not fun to see your portfolio go off a cliff.  :-\

 

 

[ubuy2wron]

The past week has been a bloodbath for me (EBIX, FTP), and I wasn't even around to see it happen in real time.

 

It's at times like these that I have to go back to first principles and remind myself of Mr. Market, and go back over my analysis, and remember that fundamentals are what matters in the long run, etc.. But even knowing all that, it's still not fun to see your portfolio go off a cliff.  :-\

I have visited the street you are on many many times. One adage I remember that is helpful is "you do not have to make it back the same way you lost it." You are not Edward Smith and your investments are not the Titanic (you can jump in the lifeboat with the women and children and still be a hero.)

[Liberty]

I have visited the street you are on many many times. One adage I remember that is helpful is "you do not have to make it back the same way you lost it." You are not Edward Smith and your investments are not the Titanic (you can jump in the lifeboat with the women and children and still be a hero.)

 

It's definitely something I often ask myself (I always hear that quote in my head said in Munger's voice).

 

I think it applies when you realize you've made a mistake and what you are holding isn't worth or doesn't have the potential to be worth what you expected. In that case, I'd definitely sell. In cases where the drop in price is due to Mr. Market overreacting or other non-fundamentals-related or temporary problems, I think it's fine to hold and ride out the storm, or even average down.

 

On EBIX, I totally disagree with the short thesis and it seems to be pretty much the only thing keeping that stock down, so I'm not selling a share.

 

On FTP, like all shareholders I'm disappointed with the delays and cost overruns, and the macro environment certainly isn't cooperating, but I still think that once all its assets are online it will have enough earning power to provide me with a nice return (and maybe more if the macro improves). Hindsight is 20/20 and had I known things would look like this, I would certainly have waited to build my stake, but as things stand, I still am confident in the business, it just needs some time to play things out.

[ubuy2wron]

Dude, what are you invested in??? The market is up a lot this year.

 

As suggested by finetrader.

 

Commodities (and the worst one like ATPG and I sold OSTK for this crap)

 

And VXX

 

Doh!  Alertmeipp...after everything we've been through, you sold OSTK?  Don't worry, we all have rough years, but it's a marathon, not a sprint...except for Ericopoly who will be out of the game in 2015!  Cheers!

Is that because Ericopoly will by that time have ownership of all of the worlds money (LOL he has had a run for the record books in the last decade)

[indirect]

one of keys of good investment is management. For EBIX Robin Raina fails the smell test.

[ShahKhezri]

one of keys of good investment is management. For EBIX Robin Raina fails the smell test.

 

Agreed.  I broke-even on this last year and quickly got out when it hit a trail stop.  I was on the CC last week and was shocked when he made his "surprise dividend increase" announcement, it seemed to me like he was going after the shorts with a surprise announcement.  Further, he's been repurchasing shares and suddenly he's increasing the dividend...something didn't seem right.  Good luck to longs though, if it works out, it's going to make a great run. 

[Liberty]

I think RR is EBIX's biggest asset. The whole thing is his brainchild, he engineered a very unique software company with very high margins, very low customer concentration, highly recurring revenues, pricing power, and an infrastructure/picks&shovels kind of position in a greenfield market with secular tailwinds (paper is going away in insurance/finance, and SaaS will replace perpetual licenses in most enterprise software), etc.. He is unconventional and unpolished compared to the 'suits' that run most businesses, which is partly why the shorts have such an easy time making him look bad (heck, he even looks like a movie villain), but I believe he's honest and talented.

 

As I wrote elsewhere, the dividend isn't my favorite thing, but merely because it's not optimal, not because it's bad per se (returning money to shareholders isn't the worst thing in the world). It's a relatively small percentage of FCF and leaves them apparently more than enough to reinvest and do buybacks.

 

I think that after a few years of being attacked and publicly dragged through the mud by powerful shorts, it's just human nature to want to make life harder for them, so I don't hold it too much against him. Not sure what I'd do in his position...

[SharperDingaan]

Keep in mind that you have to be right on MANY things, for XYZ investment to pan out. Get most of it right & you’re doing pretty well, even if it didn’t work out – this time.

 

1) Did you get the industry or company direction right - was the tide coming in or going out? 2) Did you get the timing right - the catalyst you hoped for actually occurred when you expected it. 3) Did you get the asset values reasonably right - that 50c $ was not actually 10c, & you didn’t miss the 60c in unreported pension. 4) Did you get the management assessment right – the CEO did not turn out to be Madoff’s cousin. 

 

We find it useful to benchmark our rolling 5yr result against the return on a rolling 5yr Canada, over time. We should be making a lot more, & the difference should reflect the risk we took. Improving spread should reflect the successive successful maturing of investment ideas. A string of worsening or negative spreads is the sign to exit – it’s just not our kind of market.

 

You pay a PM for their value add - the what to apply, why, where, how and when. We call it experience; it takes courage, & years to develop. And you pay, because you can’t do it anywhere near as well.       

 

It took us years to master hedging, but today - in any given year, it typically will contribute well over 1/3 our total return.